Tongdao Liepin Group

HKEX:6100

Earnings Call Transcript 2021-Q4

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Tongdao Liepin Group 2021 Fourth Quarter and Full Year Earnings Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, Sunday, 20th of March 2022.

I would now like to hand the conference over to your speaker today, Ms. Xueni Wang. Thank you. Please go ahead.

[Xueni Wang, executive]

Thank you, operator. Hi, everyone. Thank you for joining us on today's conference call to discuss our results for the year ended December 31, 2022. The company's financial and operating results will be published and were posted on the company's IR website at ir.liepin.com.

On today's call, Mr. Rick Dai, company's Chairman and CEO, will kick off with our business operations and highlights. The remarks will be in Chinese, followed by English translation. After that, Mr. Ge Tian, our CFO, will continue with detailed financial review. After the prepared remarks, we will be available to answer your questions.

Before we continue, I would like to remind you that this call may contain forward-looking statements made under the safe harbor provisions. Such statements are based on management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties and factors is included in the company's filings with the Hong Kong Stock Exchange.

The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under law. Please note that certain financial measures that we use in this call are expressed as a non-GAAP basis. Our GAAP results and reconciliation of GAAP to non-GAAP measures can be found in our earnings press release.

I will now turn the call over to our Chairman and CEO, Rick. Please go ahead, sir.

[Kebin Dai, executive]

[Foreign Language] Hi, everyone. I'm glad to share with you the business and financial performance of Tongdao Liepin Group in 2021. During the year, China successfully combated the pandemic and achieved a steady economic recovery. Meantime, the global situation was still complex and the pandemic continued to spread, helping many uncertainties to economic [indiscernible]. Against this backdrop, it is our goal to take opportunities through uncertainty and serve the common goods with technology innovation.

We will also continue to implement our mission to help enterprises and talents to achieve greater success. With the company's full year efforts, our business performance has shown strong growth, exceeding the guidance that we provided at the beginning of the year. Our revenue reached RMB 2.65 billion, a year-on-year increase of nearly 42%. Our non-GAAP operating profit exceeded RMB 370 million, a year-on-year increase of 50%, and the net profit attributable to shareholders increased by 150.7%.

[Foreign Language] The report on the work of the government pointed out that the target of new jobs in 2022 is more than 11 million, and prioritizing the employment related issue remains one of the most important policy directions. After achieving steady growth become the guidance of this year's national economic development, the industrial upgrade will be reinforced and the employment structure will be adjusted accordingly. These changes put forward higher requirements for talent, skill sets and capabilities.

In 2021, the national job posting to talent ratio remain at a relatively high level, and the mid- to high-end talent shortage index keeps in the second half of the year, reaching [ 1.46 ], meaning that high-quality talents were still in severe short supply. The number of higher education students in China has exceeded 200 million. The number of mid- to high-end talents have also surpassed 100 million and those numbers continue to show a growth momentum. In the long run, improving the efficiency of talent-job matching and promoting the mobility of high-quality talents across industry will always be major topics in the talent service market. During the course, we deeply sensed that the market demand for professional talent service providers was stronger than ever before.

[Foreign Language] At the beginning of 2022, the micro economy was under pressure and the constant news of layoffs in certain industries also led concerns about this year's recruitment market. However, according to our research on the mid- to high-end market after the Spring Festival, more than 70% of the enterprises were still confident in this year's recruitment market. About 80% of the enterprises would rise or achieve their recruitment budget.

Regarding the number of new job postings after the Spring Festival, the recruitment demand for energy and environmental protection, automobile transportation, health care and high-end manufacturing industries have surged in 2022. We accumulated rich know-how in this expanding industries. Together with the government's determination and support to solve the employment problem, the structural adjustment of high-quality talent and our unique position in the mid- to high-end market, we are fully confident in the upcoming 2022.

[Foreign Language] 2021 marks the 10th year of the Liepin. We have achieved a milestone of our surpassing 1 million registered business users, a year-on-year increase of nearly 39%. Our paying business customers were 73,000, a year-on-year increase of 32%. In the aftermath of the pandemic, the trend of the enterprise digitalization transformation is more apparent. Enterprise and individual users are more adaptive to online talent services and many become loyal users.

Our efficient and user-friendly SaaS product offers customized combination of multiple modules. Together with our professional consulting services, we can better meet different types of users, recruitment needs and improved user stickiness. The characteristics of our products and service mentioned above contributed to the robust growth of our 2B revenue by 34%. The growing number have proved our unique advantages in the mid- to high end on our recruitment market and our sustainable growth capability across cycles.

[Foreign Language] Over the past year, we continue to increase investment in R&D to achieve more accurate and intelligent talent-job matching. The operation of our IT constructor has greatly improved the efficiency of product test and the speed of product duration. The new labeling system easily empowered our algorithm, improving the machine learning of our users and job postings. It also allows us to dig deeper into different industries and accumulate relevant know-how.

With available data, we improved the accuracy of our margin algorithm by 3 percentage points. These technology upgrades and user experience optimization has greatly improved our users' activity level stickiness and recruitment efficiency. We further [indiscernible] our data and technical barriers that were difficult to replicate in the mid- to high-end market.

[Foreign Language] In terms of sales and services, in 2021, we have firmly implemented the strategy of splitting the sales team into new customer acquisition team and existing customer renewal team nationwide. The effect of training systems and timely organizational structure adjustments led to our improving sales efficiency for the past 5 years, leveraging our digital systems and big data analyzing capabilities. The new customer acquisition team focuses more on exploring and converting potential high-quality customers, and the existing customer renewal team pays more attention to the retention of existing customers and the improvement of ARPU.

Therefore, we continue to execute precise and multichannel marketing strategies. As a number of small and medium-sized high tech enterprises become our loyal users, we successfully further expanded our user coverage. As we continue to see deep customer relationships and further strengthen customer stickiness, the dollar retention rate of our SaaS products on the 2B side has exceeded 100% in 2021, and our ARPU reached a record half at RMB 31,800.

[Foreign Language] Regarding individual users, with the increased mobility and activity level of mid- to high-end talent, Liepin is more than a place where they can find jobs, but also a way to keep them posted with the latest workplace information on market dynamics. High-quality mid- to high-end talent have always been the cornerstone of the development of national [indiscernible]. Talent [ development ] will be the mainstream of [ informed ] market in the next decade. At the end of 2021, our cumulative registered individual users reached 73.90 million. The newly registered individual users in the fourth quarter of 2021 amounted to 2.34 million, an increase of nearly 30% over the same period last year.

We have paid close attention to the job market for the younger generation and actively expanded our user coverage in the mid- to high-end market. Among the newly register user in 2021, the proportion of young users under the age of 25 has increased to 47%, 8 percentage points higher than in 2020. The influx of young and high-quality job seekers effectively expanded our user base and improved the activity level of our platform. At the same time, as the extension of our services to individual users, we continue to develop our online professional education business, benefiting from the continuous enrichment of our product mix. In 2021, our revenue from individual users reached RMB 341 million, an increase of 137 percentage over last year.

[Foreign Language] In 2021, we innovatively rolled out live streaming recruiting programs. With high-quality content and user-friendly format, we have attracted well-known enterprises in the field of new energy, finance, Internet and high-end manufacturing as well as founders of the companies in cutting-edge sales. Job seekers can have a thorough view and a more integrated understanding of the positions and enterprises. At the same time, benefiting from our high quality and comprehensive talent-match, we applied our matching capability to our live streaming activities.

So far, we have held more than 200 live streaming activities with the highest total number of viewers per session exceeding 60,000 and the highest number of resume delivery precession exceeding 2,000. The outstanding results from past activities drove more traffic and attention to our spring live stream recruiting festival this year.

[Foreign Language] Employment is highly related to economic development and people's livelihood, we have been committed to scientifically promoting the healthy and sustainable development of industries with technological advancements. In time, we conduct comprehensive reviews of our product and data usage with the strictest standards and firmly safeguard national cybersecurity and public interest. Our data security department, legal department and other relevant departments work together to ensure the stable, healthy and compliant operation of our products.

In 2021, we introduced a more secure and reliable way of interaction and a series of customized user privacy protection functions. During the year, we were invited multiple times to assist the PRC Ministry of Human Resources and Social Security and the PRC Ministry of Education in carrying out employment supporting activities. These activities fully assisted in promoting the high-quality development of China's talent construction.

[Foreign Language] The outstanding performance in 2021 further proves the efficiency of our long-term strategy. In 2022, we will continue to see growth opportunities in a challenging macro environment, emphasizing the business model of platform plus SaaS plus service. This year, we comprehensively upgraded our product to a more sophisticated recruitment SaaS program Liepin Pro catering to the enterprise digital recruitment needs. In addition to helping our customers connect to high-quality candidates, Liepin Pro will become a heavy tool in solving personnel management and organizational coordination issues during the recruitment process.

The capability of agilely allocating and assigning resources allows us to better utilize the main SaaS account system. In the future, we will launch more modules such as dashboard, talent management, interview management, et cetera, to help enterprises improve recruiting efficiency and facilitate internal collaboration. User experience and stickiness will be further strengthened.

[Foreign Language] We will maintain high R&D investment and continuously strengthen our advantages in technical capabilities in the mid- to high-end market. The capabilities will lay a solid foundation for our algorithm optimization, product innovation, and ensuring data securities. In addition, we will promote the decentralization of our organizational structure, letting regional teams take more initiatives in business development. Such organizational upgrade will contribute to continuous improvement of sales and management efficiency.

In the past decade, we have pioneered the mid- to high-end online recruitment market and launched innovative products to serve tens of millions of people. Now that amid the constant resurgence of the pandemic and complex economic condition, we showed a greater responsibility of promoting stability of national employment, enabling digital transformation of enterprises, and realizing compliant and healthy development of the talent service industry.

As the pandemic recently resurged in certain domestic regions, we made quick moves. We launched 3 live stream recruiting activities for enterprises in target regions, shared our insights to the latest employment dynamics and offered digital recruitment tools. These actions especially alleviate organizational management dilemma for enterprises and recruitment information mismatch problem for talent. Our endeavors supported steady economic growth amidst the pandemic.

[Foreign Language] Compared with the rapid growth in 2021, we will focus more on optimizing the product metrics in 2022. Improving [indiscernible] efficiency, expanding scale effect and serving up the profit margin. We will continue to promote industrial innovation and development through technological advancements in order to help achieve the optimal allocation of human capital. We believe that Chinese enterprises' needs for high-quality development will further emphasize the value of professional talent services. As we firmly march forward, we bear in mind the mission entrusted to us by this era, as focused on supporting the upgrade of the Chinese talent structure and the development of Chinese enterprises.

Now let me turn it to Tian to walk you through the key financial highlights of our groups. Thank you.

[Ge Tian, executive]

Thank you, Rick and Xueni, and thanks again, everyone, for joining our 2021 annual results conference call. We are pleased to see a robust top line and bottom line growth during this year.

The total revenue in 2021 was RMB 2.65 billion, a 41.8% increase from RMB 1.87 billion in 2020, resulting from the high user retention of our SaaS products, our diversified business streams and our successful execution of agile sales and marketing strategies under the dynamic macro environment. More specifically, we continue to see a more balanced revenue mix on 2B and 2C sites, driven by our diversified value-added products and services. The revenue generated from the talent acquisition services and other HR services to business users was RMB 2.31 billion, up by 34% year-over-year. And the surge of the recruitment demand for mid to high-end talent amid economic recovery and national industry upgrades is the main driver for the growth.

Our revenue generated from the talent development services to individual users was RMB 341 million in 2021, up by 136.7% year-over-year. A major uplift in 2C business mainly reflected the incremental revenue from the consolidating of our certification training business. Our gross profit was RMB 2.07 billion in 2021, up by 41.9% year-on-year. And our gross margin remained at a high level at 78%, slightly higher than the year before due to improved operational efficiency.

Turning to operating expenses. Our sales and marketing expenses were RMB 1.2 billion in 2021, a 44.3% increase from RMB 849 million in 2020. The lift was primarily driven by additional marketing expenses arising from certification training and related to the branding campaign as planned at the beginning of the year, additional online marketing measures and increased sales personnel in response to the surge in business demand. Our sales and marketing expenses as a percentage of revenue slightly increased to 46.2% in 2021 compared to 45.4% in 2020. As we step up our efforts in marketing and branding, we continuously improved sales efficiency by firmly pushing forward organizational structure optimization and digging deeper into regional business development.

Our G&A expenses were RMB 355 million in 2021, a 10.8% increase from RMB 321 million in 2020, reflecting the increase in management costs as a result of our business expansion. Our G&A expenses as a percentage of revenue in 2021 and 2020 were 13.4% and 17.1%, respectively. The improved G&A gross margin was mainly driven by the scale effect of our fast growing top line and a decrease in the loss allowance for expected credit losses as a result of better internal control on trade receivables.

In 2021, we continued to invest in R&D to optimize our matching algorithm, strengthen data security capability and improve our infrastructures. Our R&D expenses were RMB 337 million, up by 40.5%. Our R&D expenses as a percentage of revenue remained comparatively stable, slightly decreasing to 12.7%. We realized more efficient product development due to upgraded IT infrastructure and achieved scale effect due to our business expansion. As a result, our profit from operations in 2021 was RMB 231 million, up by 58.2% year-over-year. Meanwhile, as Rick just mentioned, our non-GAAP operating profit, excluding share-based compensation and amortization of intangible assets resulting from acquisition, was RMB 373 million in 2021, a 50% increase from RMB 249 million in 2020, and the non-GAAP operating profit margin was 14.1%.

Credit to a flourish in talent acquisition business and steady growth of other businesses in 2021, our net profit for the year was RMB 191 million, up by 106.2% year-over-year. Our profit attributable to equity shareholders of the company amounted to RMB 134 million, a year-over-year increase of 150.7%. Our net cash generated from operating activities in 2021 was RMB 697 million, a year-over-year increase of 49.5%, reflecting our healthy business operations and strong cash generating capability.

And starting from this year, the complicated global situation and resurgence of the pandemic cost fluctuations in enterprise business operations and global capital markets, we remain confident in the resilience of China's economy and the crucial role of securing high-quality employment of national development. Like Rick mentioned in his remarks, we will continue to provide superior and trustworthy products and services in order to seek opportunities brought by marketing changes. While expanding our market share, we will continuously improve our operational efficiency. And our commitment to delivering sustainable growth and creating long-term value for our employees, customers and shareholders remain strong.

With that, operator, please open the line for questions.

[Operator]

[Operator Instructions] And our first question comes from the line of Melody Chan from Jefferies.

[Melody Chan, analyst]

I have 2 questions. First, I want to ask about strategies on the [indiscernible]. Can you just share a bit more detail on the [indiscernible] and how are we going to capture the opportunity of [indiscernible]. And the second question is about possible target? How [indiscernible] about the growth with [indiscernible] support?

[Kebin Dai, executive]

[Foreign Language] Our strategy to attract more young talent in 2021 was very meaningful. We attracted many brilliant young students, especially the young mid- to high-end talent, like students from culture school and overseas returnees. This year, we are also going to implement multiple strategies. Firstly, we will put more efforts into promoting live streaming recruitment activities. Live stream is an innovative recruitment channel catering to young users. We invited a number of good companies to co-host our live streaming [indiscernible] directly interacting with the candidates.

And we also visited this company and hosted live streaming activities inside the company. Therefore, our candidates can have a deeper understanding of the company's atmosphere and culture in order to make more suitable career decisions. So our live streaming recruitment activities impressed our customers by high-quality content. And we roll out 8 tailored recruitment programs like [indiscernible] live streaming, [ executive ] live streaming to cater to different users' needs. And this March, we've already hosted more than 130 activities during our live streaming festival.

[Foreign Language] So in our product design, we see students as one of our key target groups. We attract and retain students through a new registration process and customized matching algorithm. And this year, we will pay more attention to user operations, especially student groups, in order to improve their stickiness. The projects that we offered, like job-related skills training and job preparation, were highly -- they are highly welcomed by young users. And the statistics on user retention and activity level totally the same.

In addition, on the business user side, we also expanded a lot of relevant positions for students this year. The results were remarkable. For example, last week, our [indiscernible] campus position doubled compared with the same period last year. It can be seen that Liepin's brand is gradually jumping out of our traditional image and its attraction to young students keeps increasing.

[Foreign Language] So your second question is about flexible staffing. And my view is that in recent years, national policies on flexible staffing were constantly issued. And last year, the executive meeting of the State Council made clear the measures to further support flexible employment. And in January this year, the 14th 5-year plan, digital economy development plan, also demonstrated the country's support for individuals to take part in the flexible staffing.

So this is demand for a flexible staffing as an alternative for individuals for the employment channel while continue to release with the continuous improvement of the policy and regulations.

[Foreign Language] Flexible staffing stands for a huge market, but the penetration in the Chinese market is still very low. For now, flexible staffing is still more prevalent in the urban service industry or other primary blue-collar and gray-collar positions. So from a job seeker's point of view, flexible employment is being accepted by more people. And according to the data published by the National Bureau of Statistics, by the end of 2021, around 200 million people were employed through flexible staffing. Referring to more mature and developed overseas markets, we think that flexible staffing will continue to penetrate into what I call a position initiating from the urban service industry. We keep believing in the future of the flexible staffing industry. But at the same time, the supervision and regulation of the industry will be stricter going forward.

[Foreign Language] So we differentiated our flexible staffing business by its online feature. Customers can manage and track their [indiscernible] in real time through our SaaS system. Liepin will continue to optimize our IT infrastructure by building operational systems and mid-office functions for our flexible staffing business. Our insights into market dynamics and trends can also deeply empower our flexible staffing business direction so that it can exceed more growth opportunities while operating in both compliance.

[Operator]

Our next question comes from the line of Steven Tsai from Morgan Stanley.

[Steven Tsai, analyst]

My first question is related to the demand outlook. How should we think about the revenue growth in the first quarter and for year 2022, considering the [indiscernible] its staff and then the resurgence make some [indiscernible] demand in the short term. Could you comment on the reason recruitment activity can subscribe annual subscription renewal trend you have [indiscernible] so far? And my second question is on sales and marketing spend, because we observe the main color peers remain very aggressive in bringing [indiscernible]. So how should we expect your spending level in the first quarter? Would that be similar to or even higher than the last quarter?

[Ge Tian, executive]

Sure, Steven. I got your questions. I think I'll take your second question about the margin, then I will leave the first question to Rick for his feedback. So if you think about the marketing between last year and this year, I think spring is definitely the peak season of the recruitment industry, especially for the mid- to high-end recruitment market that may consist of experienced tenants. So therefore, we will still actively try to seek market dynamics, firmly implement our flexible and [ free size ] marketing strategies and try to win more market share.

And in 2021, due to the one-off spending related to price upgrading, the overall marketing expenses increased significantly compared with 2020 the year before. So benefiting from our experience is from market tests and our efficient marketing strategy. We will refine our approaches, improve the ROI, and reduce our marketing cost margin while still achieving the expected results. In addition, our sales and marketing expenses mainly consists of sales personnel expenses. That's why the efficiency will continue to improve with our organizational optimization that, in a way, we're talking just now and also the scale effect that we're going to see in the rest of the year.

Therefore, the overall sales expenses margin is expected to be further optimized this year and the years going forward. And Rick, what's your feedback on the first question of Steven?

[Kebin Dai, executive]

[Foreign Language] So my view is that the resurgence of the pandemic and fluctuated global situation have indeed brought pressures to the economic development lately. So if we [indiscernible] at the recruitment market, especially compared to the rapid economic recovery from last year, the market sentiment was milder, but still much better than that at the beginning of 2020.

In terms of the structure of the market demand in the mid- to high-end segment that we're position at, the replacing recruitment demand for intelligent and skilled talents are very strong. And for our business customers, they are relatively more resilient and digitalized. So they show very stable recruiting demand on our platform. A survey that we conducted in March also proved the above points.

And on the other hand, although some industries like the Internet, the real estate, were heavily affected. But other [indiscernible], new energy vehicles, biochemistry are -- and also some traditional companies under digital transformation, they still generated release for business development and talent recruitment. [Foreign Language] Although some companies for longer internal recruitment process recently, which was mainly due to the simple restrictions in cities like Shanghai or Shenzhen caused by the pandemic, we did feel their recruitment demands were still there. So that lately, we have been promoting our innovative recruiting tools, such as online interview and live streaming. And also with our comprehensively upgraded product, namely Liepin Pro, we can assist more companies in working online collaboratively and improving recruitment efficiency.

These value-added functions will further enhance our user stickiness and retention rates. Throughout the year, we will still look at micro environment with a very positive attitude. And as I mentioned about, we will ensure steady operation and the efficiency improvements during the market expansion in 2022 and keep improving economy of scale. We are looking forward to achieving revenue growth of around 20% and further increasing profit margins.

[Operator]

And our next question comes from the line of Wei Xiong from UBS.

[Wei Xiong, analyst]

Rick, Tian, I also have 2 questions. First is I want to follow up on the COVID impact because management just briefly talked about the near-term impact, which seems to be limited on the platform. And I wonder, if we look at longer term, since the COVID breakout, enterprises are getting more used to using online recruitment services. So what are the barriers or opportunities that we can do better in terms of product innovation, so we can further drive up the online [indiscernible] of recruitment services?

And second, I noticed that our business user base just exceeded 1 million in 2021. So given the better, large user base, how do we think about the balance between business user growth and the paying user conversion? Could management please update your strategy to further improve the business customer growth for this year and next?

[Ge Tian, executive]

Sure. Thanks. I think I will take the first question. And later, Rick can comment on the strategy on the customer growth. So regarding the influence from the pandemic, the business -- so basically, if you think about it, right, benefiting from our country's scientific provision of the pandemic, and the enterprises experiences in combating the pandemic and also the currency [indiscernible] has much less impact on our business compared with the time when the pandemic just broke out in 2020 -- 2 years ago. Internally, our efficient and collaborative remote office system actually helped us to overcome the physical barriers and ensure stable operation of our business in various regions and cities. This has been what we observed in the past couple of weeks.

And also externally, we also provided the enterprises with multiple support such as free live streaming recruitment programs, online interview products and online training. In addition to that, we also offered free career coaching to college students and special reports to relieve employee's pressure and mental stress that were needed. These activities help us to keep strengthening our bond with our customers and support their healthy development. And also in the aftermath of the pandemic, I would say the digitization trend was reinforced in each vertical, especially in the recruitment industry. We see a great Liepin users' adoption and user frequency of online recruitment products.

And also this year, the fully upgraded product we talked about multiple times just now, Liepin Pro, strengthened these SaaS features, on top of its fundamental recruiting functions, and it can help the enterprise to recruit -- collaboratively improve recruitment efficiency, and also the managerial problems during recruitment process. And meanwhile, we continue to explore new business models with our [indiscernible] ecosystem and empower the recruitment industry with the technology innovation. And I think for this part, we can -- we're probably going to share more in the second half of 2022. And Rick, please.

[Kebin Dai, executive]

[Foreign Language] So this year, the number of our registered business users, which saw a milestone of surpassing 1 million, almost doubled from 2019. The rapid growth of our registered users and paying users in recent years have drawn a clear picture of our future goal, which are more extensive user coverage and greater market share. This year, our strategy is still to encourage new customer acquisition and convert high-potential users into paying customers. At the same time, considering maybe overall market conditions this year, the key focuses of our existing customer renewal team would be driving up ARPU and securing the existing customer retention.

[Foreign Language] So our market space is extremely huge in the long term. User growth is still our priority under more stable micro environment and market conditions. We will firmly implement our platform for SaaS service strategy. Based on the abundant resources accumulated on our platform, we will provide updated SaaS products and diversified talent services to our users. And in terms of the technical advancement, we will continue to optimize our labeling system to empower our matching algorithm and provide more detailed user know-how to our business team.

And regarding our sales teams. We will keep pushing forward the execution of sales team split, streamlining the sales team structure by shortening reporting lines and upgrading our evaluation mechanism. And we will continue to drive our customer paying ratio and customer retention ratio.

[Operator]

[Operator Instructions] And there are no further questions at this time. I would like to hand the conference back to today's presenter, Ms. Xueni Wang, please continue.

[Xueni Wang, executive]

Okay. Thank you, everyone, once again for joining us today. And if you have any further questions, please contact us through IR e-mail [e-mail]. Have a great day. Bye-bye.

[Ge Tian, executive]

Thank you.

[Operator]

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.