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Good day, and welcome to the OneSmart International Education Group Limited 2020 Earnings Call. [Operator Instructions] Please note, this event is being recorded.
I would now like to turn the conference over to Ms. Rebecca Shen, Director of Investor Relations for OneSmart International Education Group. Ms. Shen, please go ahead.
Thank you, operator. Good morning and good evening, everyone, and thank you for joining OneSmart International Education Group Limited First Fiscal Quarter 2020 Earnings Conference Call.
The company's earnings results as well as supplementary slide presentation were released earlier today and are available on the company's IR website at www.onesmart.investorroom.com.
Joining me today are Mr. Steve Zhang, Chairman and Chief Executive Officer; and Mr. Greg Zuo, our Chief Financial Officer and Chief Strategic Officer.
I'll remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 these and other risks, uncertainties and factors is included in the company's filings with the U.S. Securities Exchange and Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required in the law.
With that, I will now turn the call over to Steve. Please go ahead.
Thank you, Rebecca, and thank you all for your interest in today's earnings presentation. We would like to extend our sympathy to those affected by the coronavirus situation, especially Wuhan. The company has been taking active measures and the highest standard of a social responsibilities to help out. I'm deeply impressed by our team's strong execution capabilities under the current circumstance, where high service quality and the customer satisfaction play a -- more important role than before. The situation requires us to evaluate the expansion of our online platform, OneSmart Online. The online platform was built on deep understanding of online education demand and the products and the technologies, through a number of online businesses that we invested in over the last 5 years. OneSmart Online, we are focused on providing premium personalized education services. This OMO offering, which we are rolling out to more than 10 cities in China, enables us to serve a much broader addressable market.
Going forward, our offline centers will continue to focus on Tier 1 and major Tier 2 cities. While our online platform will expand into the vast and lower-tier cities. I am very confident that with our well-recognized brand, excellent teacher quality, operational efficiencies and the continuous investment in technology, we will quickly build up the largest of premium online education platform in China.
Now I will hand over the call to Greg, who will give you more details on the company's recent business and financial updates as well as walk you through our well-developed online strategy. Greg, please go ahead.
Thank you, Steve, and thank you all for joining us. Let me start by sending our deep concern and care to people, including our students and parents who have been affected by the ongoing coronavirus situation in China. We would also send our sincere appreciation to our employees for their tremendous efforts and outstanding achievements made during this particular time.
Let me now update you on active actions the company has taken against the outbreak situation. The management was active in monitoring the situation during the January, and was prepared by the time serious government policy were announced to contain the virus outbreak.
The management quickly taken series of solutions into action during the Chinese New Year holiday. We trained our teachers and services staff and prepared our technology system for the massive conversion of students to our online platform. As such, our online system has been operating stably and didn't experience any major disruptions.
Within the first 2 weeks since the beginning of February, when we launched the online commercial initiatives, the company has successfully migrated the offline students and operations across the country to online. As of February 15, we had successfully converted more than 80% of our HappyMath and FasTrack students, approximately 60% of our OneSmart VIP business students online. The conversion was lower for VIP business as it takes time for our service staff to reach out and set up online system for those large volume of VIP business students.
Those students who currently have taken of online classes more than twice as frequently as they took offline classes previously, thanks to the stability and high-quality of online classes supported by OneSmart Online. We expect conversion rate to further increase in the next few weeks. As of February 15, we have approximately 100,000 enrollments taking classes on our online platform. These online courses will be taught by the same regular teacher with the same curriculum, support real-time interactions between teachers and students, powered by AI technology to smartly adjust the teaching content and quiz questions. As a result, the overall [ return ] rate has been well in line with the historical level.
In our current estimates, we expect to generate RMB 250 million to RMB 300 million net revenues through the online platform for February months alone. It may further improve in future months, when we have larger student migrate online and the learning centers may gradually start to reopen.
On the other hand, to actively manage the short-term financial impact, we have implemented temporary cost and expense control policy. We expect labor costs to decrease as a large part of the pay structure of our teachers and service staff, disproportionately tied to their daily production. We benefit from favorable measures of rental reduction being promoted by relevant local authorities and parties. We expect our G&A and marketing expense to reduce a fair amount as a lot of these activities are on hold due to the situation.
Looking forward, if schools reopen in the coming weeks or months, if the virus situation is contained, we expect the catch-up effect from the school closure period that may lead to an increase in consumption of our offline courses once our study center reopened. A large majority of our VIP students may take our courses to prepare for school exams, particularly, the college and high school entrance exams, which take place in June.
Our schools will have to prepare, no matter the circumstances, and that they need to catch up on the study they have largely missed during the closure of public schools. Additionally, we expect OneSmart to continue to generate strong incremental growth, also acquired this through classes through the online platform.
With that, let me now turn to the earnings presentation slide that we uploaded on to the website prior to this call. Let me start on Page 3 with a bit of industry background here in online education sector. You may have realized how tremendous a potential the market has, driven by the rapid of penetration of -- by online education in China. Online after-school tutoring market is growing 4x faster than market average. That is to say around 41% of a penetration by 2025, up from 15% in 2019, translating into 54 million of students. The recent coronavirus outbreak situation may lead to a rising online adoption rate. Speaking of online student's distribution, 61% of online after-school tutoring students in China are from lower-tier cities as student population in lower tier city take about 70% of total K-12 students in China. Meanwhile, lack of quality teachers in lower-tier cities leads to demand for online after-school tutoring providing quality teachers, and lower competition is largely due to the lower penetration rate by offline after-school players.
This page shows OneSmart's position in premium market to provide more effective learning experience and outcome for both online and offline. For offline business, premium sector grows much faster than overall market. Premium 1-on-1 provides most effective learning, if you look at high school admission rate of 94% by student study at OneSmart versus 50% China average, which means half of students couldn't go to high school in China. This creates an enormous demand for school improvement that can be effectively addressed by OneSmart.
We believe our products and services are more suitable for those students compared with regular advanced learning services, a big class player of the industry. OneSmart Online also ensures the effectiveness by high engagements, tailor-made programs and AI-powered smart teaching. It is suitable for younger students, while online big class are more suitable for self-driven older students. OneSmart Online leverages OMO model, integrated with offline operations to ensure service quality and manage customer acquisition cost. OneSmart Online products are designed based on our understanding of customer demand.
Please turn to Page 5. So we have identified 3 major types of incremental demand that our offline centers cannot yet cover, but can be offered by our online platform. We provide convenience to our existing students by offering weekday online courses, provide the same teacher, and follow the same curriculum they take it from offline classes. It provides convenience to students by saving time from commuting and then increases in frequency, and for instance, accretion to student lifetime value.
Another scenario takes place in cities where we don't have sufficient coverage of offline centers yet. We adopt the OMO model and approach new students in our offline centers, while the classes are delivered online. OneSmart Online also served the need of people looking for better teachers for high school as higher quality teacher often gather in the larger city, such as Beijing and Shanghai. Besides Gaokao is more standardized countrywide, and those students are more self-driven. That's more concentrated when doing online classes.
That said, online offerings provide a much larger addressable market. Please turn to Page 6 for our growth strategy in different city tier metrics. Consistent with our previously disclosed strategy, we will drive offline growth by upgrading to more premium products and further scale up the top 20 cities to achieve economy of scale. We expect to continue to achieve incremental growth and margin expansion, driven by ramp-up of the 237 centers opened in the last 2 financial years. For other Tier 2 cities that we have limited center network, we will rely on OneSmart Online and its OMO model to cover the fast-growing demand in Tier 3 or even lower-tier cities, where our current online centers do not yet cover.
We would like to elaborate a bit more on our OMO model on Page 7. OneSmart OMO model differentiates us from those pure online player as it provides supplementary, but compelling value propositions. In the offline business model, we serve the needs of those who prefer the effectiveness through on-site 1-on-1 tutoring. In OneSmart OMO model, we start the process by interactions, demonstration of services in our local study center. Through those opportunities, we can not only effectively convert the sales, but more importantly, we will assess the individual students, and in order to develop a more tailor-made tutoring program, then with online platform to deliver classes. Our online platform provides convenience and is time saving. It requires no limitation on distance and provides choices of high-quality students -- teachers.
Students get to select more subject and shorter-term packages, and the class format can be 1-on-1 or in group. Some discounts will be applied to online pricing, but will be offset by rental savings, efficiency and the low customer acquisition cost, which may lead to a unit economics comparable to offline model. We'll roll out a series of online products, which are built from the -- they're well matched from our 3 major business lines as shown on Page 8.
Endorsed by OneSmart, a well-established brand, we provide weekday online platform programs to students of OneSmart VIP, HappyMath and FasTrack English students.
In addition, under the OMO model, we provide online 1-on-1 courses to middle school and high school students as well as online small group class for primary school and kindergarten students.
Let me move on to talk a little bit about our online product and technologies. Our continuous investment in online sector would help us with faster development of online platform. Our strategic investment include Yimi Online Tutoring, a leading premium online tutoring service provider. UUabc, which provides online kids English taught by a native speaker. BestMath, which provides online young children math group classes. And Fish Pond [Foreign Language] which provides online kids' books, teaching and tours. BestMath Online was first initiated in early fiscal year 2018 by launching [Foreign Language] powered by AI technology, provides live 1-on-1 broadcasting with their programs to existing offline students.
The OMO model was developed since early 2019, has rolled out to over 10 cities today after we previously carefully tested it successfully together with Yimi. We are currently developing our second-generation of AI algorithm powered smart online teaching system. The system will better help our online 1-on-1 tutoring system to automatically detect the responses from students, including their facial expressions, time takes to answer questions, common areas of mistakes, et cetera. Those information will be used to smartly update future teaching materials and quiz questions to create more effectiveness.
Now let's turn to Page 9 and review of ramp-up data to the latest quarter, FY '20. The ramp-up data continues to demonstrate satisfactory results, both in Shanghai and top 10 cities outside Shanghai, which, once again, proves a highly efficient operating system. We believe that margin expansion trend will show up in our financial, later part of the fiscal year, with the ramp-up of those young [indiscernible] learning center being marginally on track.
I would like to provide an update on where we are in center opening for FY '20.
Now I would like to turn the call over to Rebecca, who will go through details of our financial results during the first fiscal quarter of 2020.
Please go ahead, Rebecca.
Thank you, Greg. Let me provide key financial highlights then discuss the performance in our core business segments, and lastly, walk you through the key financials during the first fiscal quarter of 2020.
Let me start with strong growth markets. New student enrollment increased by over 53% year-over-year to provide visibility for future growth with OneSmart Online, with OneSmart Online well positioned to generate incremental growth.
Our margin trend mirrors stabilization and on track for expansion. Due to the impact by the ongoing coronavirus outbreak in China, we will likely revise our fiscal year 2020 outlook that we announced last quarter. However, as the situation is still evolving and the degree of full year contribution by our rapidly growing online products requires more data to assess, we plan to provide the updated full year guidance next quarter, where we believe there will be more clarity.
Now let me go through the business highlights. Our newly launched VIP 1-on-1 Education services, which is an upgraded version of our existing VIP program, supported by higher quality teachers and more premium services provided through OMO technologies, to address the consumption upgrade trend in Tier 1 and major Tier 2 cities and strengthen our premium brand image has put cash value of over RMB 48 million for the initial 2 months of operations.
Net revenues outside Shanghai grew by 37.2% year-over-year, and its share of total revenue increased to 45% compared with 41% in the same period last year. Net revenues of International Education program, our premium 1-on-1 training services for students attending international schools grew by 200 points -- 205% year-over-year. With regards to HappyMath, our premium young children math education programs, to adapt to the regulatory changes in the area of school admissions practiced, particularly, in Shanghai. We have updated our programs to address a broader market demand for young children math education. The new programs have attracted 132.2% year-over-year growth of new students than in the same quarter last year.
While the existing students sign up for earlier versions of programs have been quickly running off. This represents a healthy reshuffle in our student's base and it indicates more sustainable growth going forward. We are implementing AI-powered software and hardware systems in 10 centers to improve teaching quality and enhance student's learnings experience. We plan to roll out into more centers in future phases. And the recently launched new HappyMath VIP program, which is an upgraded premium program, aims to advance math scores, while learning English at the same time, has received positive feedback by our students, and is expected to generate sizable growth in the near future.
For FasTrack English, our premium young children English education program, the business continue to record rapid growth driven by strong market demand. And we will continue to focus on cities in Yangtze River Delta to strengthen our advantage provision. Net revenues from cities Yangtze River Delta region grew by 30 -- grew by 73% year-over-year. We launched student teacher program, which supplements on-site costs by live broadcasting programs taught by a native English speakers, leveraging OMO technologies. The program has been well received by students and parents. We launched i-makii, an interactive app to connect school directors, teachers, students and their parents to enable enhanced services and also access to recorded classes for parents review post classes.
OneSmart Online, the premium online education services. We continue to enhance OneSmart Online products and technologies. We are currently developing our next-generation of AI-powered smart assessment and teaching system to create more effective online learning experience. We jointly tested OMO Model in multiple cities of China since the beginning of 2019 with Yimi Online Tutoring, a leading premium online 1-on-1 tutoring services provider, that we hold a minority stake. The initiative received positive outcome and validated the profitability of the OMO model. And we are rolling out OneSmart Online OMO model in more than 10 cities. We have received strong initial results and plan to roll out to more cities in the next phase.
Now let me walk you through the other key financial details for the first fiscal quarter of 2020. Net revenues were RMB 797.2 million, an increase of 23.2% from RMB 647 million during the same period last year. The increase was mainly attributable to the growth of consumed class units and increased ASP. Consumed class units increased by 21.4% year-over-year. ASP for the company during the quarter increased by 1.5% year-over-year.
ASP of OneSmart VIP increased by around 4% compared with the same period of 2019.
Cost of revenue increased by 33.6% year-over-year to RMB 516.6 million. We increased teachers' compensation to attract more experienced teachers, added rental costs to support the growth of the business and to support allocation of some of our learning centers to regulatory compliance centers and increased a fair amount of learning centers renovation costs to upgrade the learning centers.
Selling and marketing expenses increased by 17.7 -- 17.1% year-over-year to RMB 194.9 million. Non-GAAP selling and marketing expenses, which excludes the share-based compensation expenses were RMB 194.8 million, an increase of 17.3% from RMB 166 million during the same period last year. The increase was as a result of sales and marketing activities to support new student enrollment growth and adoption of a more effective sales and marketing channels.
General administrative expenses increased by 29.3% year-over-year to RMB 204 million. Non-GAAP general and administrative expenses, which excludes share-based compensation, were RMB 172.7 million, an increase of 25.8% from RMB 170 -- RMB 137.3 million during the same period last year. The increase was primarily due to a rise in R&D efforts of education technology, teaching systems and curriculum materials, associated with both our premium offline business and a newly launched online business and added personnel to support the growth of this business.
For this quarter, we included a total of RMB 7 -- 37 million R&D and related spending on online products and technologies and other teaching materials upgrade. This compared to RMB 77 million, such spending incurred last quarter.
Let me now move on to cover some other key financial points for the first fiscal quarter 2020. Capital expenditure for the first fiscal quarter of 2020 were RMB 90.2 million, an increase of RMB 10 million from RMB 80.2 million in the first fiscal quarter of 2019.
The increase was mainly due to the payments of leasehold improvements. As of November 30, 2019, the company had cash and cash equivalents of RMB 1,191.6 million and short-term investments of RMB 444.2 million.
OneSmart's prepayments from customers balance, which represents cash collected from enrolled students for courses and recognized proportionately as the training sessions are delivered were RMB 2,425.7 million at the end of the fiscal -- the first fiscal quarter of 2020, an increase of 9.3% from RMB 2,219.1 million at the end of this first fiscal quarter of 2019.
This concludes our prepared remarks. I will now turn the call over to the operator and open for Q&A.
Operator, we're ready to take questions.
[Operator Instructions]
The first question today comes from Sheng Zhong with Morgan Stanley.
I have two questions here. One is, thank you for sharing a lot of updates on your OneSmart Online strategy. So I just want to confirm that the -- your online business is 1-on-1 online only, right? And also, what the timetable of the business? And I think now it's already available to your OneSmart Offline students. So when -- when will you launch this product to non-OneSmart Offline students? And what the -- your strategy to -- as you mentioned, that your -- you will use this online to cover more lower-tier cities. So wondering, what's your strategy to acquire students in this low-tier city? And my second question is on the coronavirus impact of your operation. Can you give us more update on what the current status of your offline students translate to online? And also, since March to August, that 2 quarters are the strong season for your business. So will the coronavirus impact your new student enrollment for the strong -- for the coming strong season?
Yes, this is Greg here. Thank you for your question. Let me answer your first question regarding the OneSmart Online strategy. So you asked about whether this online product offered primarily on 1-on-1 format. The answer, which is more clear on Page 8, by the way. So the answer is that we -- our -- currently, our -- OneSmart Online product is offered in multiple formats. It depends on their nature of business lines in what we're working on. For example, for the VIP business, our strength is 1-on-1 tutoring. And we believe the effectiveness and the premium service that we provide. So for the weekday online classes and OMO model we develop for the VIP K-12 students, we're using primary 1-on-1.
But for the young children education, we're using -- we'll continue to use small group classes because we believe in the interactive format within a small group is the best format for young children to learn and keep focus. So on the online platform, we continue to adopt this online group formats for HappyMath, for FasTrack, for other primary school and kindergarten students.
Your question regarding whether we -- the current OneSmart Online platform is -- will be serving incremental new students rather than existing offline students. Just so you know, we are serving both kind of students, although currently because of the coronavirus situation, we're serving currently majority -- the students are from offline, students converting online. But as we mentioned earlier, we have been rolling out the OneSmart Online strategy and platform, especially the OMO model a few months ago already. So right now, it's operating in 10 cities. We have quite sizable business volume already, even for Q1. And we decided to -- business is still in the early stage of rolling out. So we're going to roll out to the entire 30, 40 cities we have. By next quarter, we expect to provide detailed numbers, how we rapidly develop the business.
The growth, I can answer you, is very, very strong under the OMO model, when we have been generating pure incremental students from the local market. So this is your first question.
The second question regarding the current coronavirus situation. So as I mentioned, we have been well prepared. As already -- as the Chinese New Year holiday season, the management have been meeting every day, and we have been launching a series of measures and actions to prepare for the situations. So by the time when we start to convert student to the online platform, our teachers, sales and service staff are already well trained for the new platform. So that's why I mentioned, within just 2 weeks, the majority of offline students have already migrated online. And the number is quickly increasing on a daily basis. So we expect by the end of this month -- so vast majority of our students will take classes online. So which means we'll protect a big chunk of our revenue for these months.
Your question on -- so rolling forward in March and beyond. As you rightly mentioned, March and beyond is the peak season for us because our services, especially the 1-on-1 tutoring services are, particularly, very effective and welcomed by students to prepare for the Zhongkao and Gaokao entrance exams, which are held normally in June. So as we get closer to June, the demand is stronger. But given the current situation, whether there will be an impact. However, we are conservatively optimistic about this because we -- as I mentioned by the end of February, we expect vast majority of students would be taking our classes. And as you know, now the students are having time to study at home. As of today, they're taking twice as quick frequent as than before in our online platform than the offline platform. So the demand is there, the needs are there. Because at this time, their public school is right now closed. So when they get closer to the entrance exam, for example in March and April, that there will be more demands coming in -- to kick in place. So we are conservatively optimistic about our revenue performance going forward.
So I want to double check that, you say -- you said that the -- now you see the cost consumption is twice as fast as the normal pace because you convert it to online, right?
I said, they're taking twice more frequently as before. For example, the data point is. Normally, on average basis, our 1-on-1 VIP business students take 1.5x per week. Normally, each time they take 2 hours of classes or 1.5x per week. Today, on the online platform, those students on average basis are taking 3.3x per week. And each time they take 2 hours classes. That's what I'm saying. It's more than twice as frequent than before. So that's why as the reason, you can imagine, all the students are staying at home today. And they cannot attend the public school to study. So the one of the few choice is really through the online platform. And we are there trusted and very effective study service provider. So they go to us for their studying needs.
[Operator Instructions]
The next question comes from Felix Liu with UBS.
Just a follow-up question on the coronavirus and online. Could you -- I think it is very encouraging that now students are sitting more frequently after getting converted to online. But I understand that February, we still have a ramp-up period in terms of the conversion, online conversion, on the VIP segment. So could you just, say, remind us how much revenue does February typically contribute to the overall winter quarter revenue?
And the second question, in terms of online. I know we're running predominantly, I'd say, 1-on-1 business in online. And judging from my information on the sector, online 1-on-1 typically doesn't have a strong track record in terms of probability, especially on the selling and marketing side. So could you share us the unique economics that you are seeing when doing your online strategy? And how you differentiate from the peers?
And also, my third question is on the pace of expansion. I noticed that our learning center, the net increase in learning center has been relatively slow this quarter. So any update on the capacity expansion guidance for the rest of the year?
Thank you, Felix. Really appreciate your questions. So the first question regarding how much February's revenue generation take as a percentage of total for the whole year? As you know, Q1 is a seasonally slow season for us because it's from September to November.
That's a little bit far away from entrance exam, where we typically serve for the demand. So roughly Q1 is about half of the peak Q3 and Q4, which are March to August season, so it's only half the revenue. That's why I see -- on the cost structure, you will see a little bit downwards situation.
To answer your question regarding February. February, as a result, is about -- normally based on the last couple of years, is about 8% of the total year's production. As we mentioned earlier, this year -- this February is very special because we're dealing with -- the whole country is dealing with the coronavirus situation. And we literally started migration of our students from February 1. Right now, we're in the middle of the month, we have already migrated majority of students online. We expect the trend to continue towards the end of the month. So we're being fortunate that we have already built OneSmart Online platform, which is very robust and very stable during this time period.
Now let me answer your second question regarding the new OMO model. How is the profitability look like? So for the -- this model has being tested, the business, the technology as well as the operational process, how you work with offline operations to generate new volumes and produce classes online. So in our test model, we have roughly 27% operating margin for a typical OMO model and a 57% gross margin. But given that the model just rolled out to a little bit over 10 cities, the data point is still limited, the business is not sizable yet. So we have seen numbers such as 15% operating margin in a few cities, and other cities may be a little bit lower. We expect the number to ramp up as we size up the operation until the operation becomes more mature. I hope that answers your question, Felix?
Yes. And also, third question on the capacity expansion. I think for the first quarter, it was a little -- it was a relatively small compared with -- in terms of the absolute number of learning centers. So any update on the capacity guidance for rest of the year?
Yes. Let me -- a little bit -- elaborate a little more. I just want to make sure that's the question you are asking. And let me expand a little bit more why we think the OMO model can still generate comparable margin to the offline business. That's because as you know, we -- on the pricing side, we offer some degree, but not that much discount on pricing currently, 10% to 15%, that's what we are offering. Because we think the price discount can be offset by the rental savings, some of the efficiencies to be generated as we size up the business and we can drive more utilization rate, for example, for the teachers utilization as well as the system service quality that we can do it online.
And also importantly, we are saving a lot of cost on the amount of time we can teach and how frequent we can use those hours. So that's why, all in all, you can see we have a little bit discounted pricing, but we can save a lot of the cost. As a result, on net basis, the margin is comparable to our offline model. Because that's very important. As a successful profitable business, we'll make sure any new initiatives will be profitable and has the potential to size up. So we think OneSmart Online, in particular, the OMO model is quite a very attractive business. So we are very excited about it.
And I move on to the last question, regarding offline study center expansion plan. So start -- Q1 is a typical quarter, we would start -- open up learning centers. In my last earnings call, I said our plan was to open roughly 50 learning centers for the full year. So of the 50, we already opened 20 learning centers, roughly 20 learning centers. But due to the situation, we may slow down and postpone some of the center opening plan. But in the meantime, we are actively looking at our center portfolio to test if there -- would that data support, whether this is the right location for us. So as a result, we are considering, unless you're taking actions, to close down or relocate some of the centers which hasn't been proven, doesn't have a promising future. So we actively manage our center portfolio but the number is small. Normally, less than 5% in terms of repositioning and readjusting.
So that's the answer to your question #3. Felix.
[Operator Instructions]
And there appears to be no further questions. This will conclude our question-and-answer session. I would now like to turn the conference back over to Rebecca Shen for any closing remarks.
Thank you, operator. In closing, on behalf of the entire management team, we would like to thank you, again, for your participation in today's call. If you have any further inquiries in the future, please feel free to contact us.
This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.