Q1 2020 Earnings Call

Ladies and gentlemen, please continue to hold your conference call will begin momentarily.

[music].

Conference call.

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I would I like to hand, the conference to Mr., Derrick Nueman apparel as head of Investor Relations to open the call. Thank you. Please go ahead Sir.

Thanks for joining us.

With me today.

Our Seattle Breaded chicken.

And our COO sung Lynn.

<unk> for called <unk>.

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Commentary today.

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With that let me tell her number to call the kroner freida.

Thanks, Derek and Hello, everyone.

In times like these it's a privilege to be part of the company, whose products and services are in more demand than ever.

We have never before seen more users offer news or up RPC and your smartphone browsers.

Our job is to manage for the near term implications that the cobot 19 endemic fastener business.

They prudence, but at the same time, taking advantage of her strong product portfolio, our financial strength and our brand assets.

The aim to exit this period I'm, an even stronger trajectory than what we entered its way.

In 29 team, we grew our revenues by over 94%.

Twentytwenty, we originally guided revenue gross of 63% at the midpoint, including 123, two 133 million for the first quarter.

As we shared with the market in April we ended Q1, even ahead of this guidance. That's the Corbett 19 impact came on late in the quarter.

Some then we'll talk about our operations and how we continue to proceed full speed towards our ambitions in parallel we are balancing risk and reward and appreciate the uncertainties the pandemic brings with it.

In anticipation of near term challenges in key countries like India in Kenya, we significantly reduced our micro loan volumes from mid March.

Further.

That's also shared with the Mark good in April we took an extraordinary additional loan loss provision at the end of the first quarter to capture a conservative views on repayments probabilities. That's our borrowers are affected by the various measures taken to help dependent.

For our browser and news business. It's every other AD based business model there will be near term monetization in fact more visible in Q2, I think Q1.

However, we believe that hold at 19 has accelerated the underlying sensation from offline to online in our key markets and we see early indications that the monetization trend is already improving versus say low points in April which is encouraging.

Beyond revenue cost discipline has always been very high that's helpful.

A certain end markets businesses faced delay or self imposed limitations at syndication case of Microlending.

Adjusted our cost structure, accordingly, and move to more lightweight local operational structures.

Our strength to scale up rapidly also makes it easier for us to contract when justified and we are confident in our ability to re scale well when conditions normalize.

So to sum it all right now we are an unprecedented pipes, we are facing new challenges, but also significant new opportunities.

We are fortunate to represent a company that is financially solid and well capitalize that has products in high demand and that consists of a talented and highly dedicated global workforce that is maintaining full momentum to execute against our growth strategy.

And finally, we are seeing early signs of a recovery in terms of increasing monetization beginning the initial steps towards ramping back up.

Our fintech efforts and our key markets, taking meaningful steps towards normalcy.

With that let me hand, the call over to someone for some operational highlights then I'll review Q1 and speak in more detail around recent friends.

Sounds hurdle and a high they want.

Just to echo photos cold months, I'm very pleased with how all employees and the company overall have navigated those unprecedented times.

Oh I'm careful has continued to more or less affected and all products have never been more desirable.

There is no delay to drive a lot about long term potential.

All commercial teams are walking with additional cost them off that want to promote rail services, how long inventory and the continue to take advantage of the de accelerating offline to online transition.

Well I'll products Linky was off with digitally inflammation facilitate equal most and the for like App based cashless Fintech. So this is.

So well Corbett my team impacted us toward the end of the fourth quarter all animals into the second in both good and bad place all optimism around all day long term prospects his in depth and the way I believe that I'll focus on the facilitation of online content Calamos answer Nextshares.

Well so buswell so was that just let me now I'll get into a detail.

Oh, the also business continues to perform well and drive sustained growth.

A lot your mom is a deal to all efforts to do especially at all products, which has become even more beneficial during this call. This 19 times.

Beginning with PC or we have extended seven to 3 million and use those he much up 11% year, although deal to all highest level at all.

Just to provide some context, what has about 44 million pieces off in March 2017.

And well they probably that all casino the product innovation has it leads to Oprah been selected by minute asked at what kind of tier twos L. defaults PC, but also.

Usually engagement and to use all the especially the pcls lack of building chats hasn't really spike.

Additionally, all gaming specific gx, Brazil continues to perform well above expectations well. He was also by more than 80% sequentially either portal to exceed three me then you much.

We believe that all six this was also gx and now already recalled strong monetization from the Gagnon second and highlights I'll ability to drive, but also girls by focusing on less specific of old school all use on need.

[laughter] automobile side like also a bulk to be excited about.

Oh flagship model, but also multiple and George accelerated its trajectory to all kinds high user level, you watch with strong growth in Europe as a superior I'm over all Salt Lake differentiating de shows like that'll supports fault lifts 3.0 in house to redeem all bets are off line page after this.

Acceptable.

Then we would also focus a bit all Africa, well I'll try meaning Brasil has significant scale brand relevance and remains well above the biggest infinite entry point for use also in the region I was always Google and Facebook.

So lets vocalocity portal about all they thought management about a proposition and efforts to expand this by launching dental plans study was MTR and ill tell you Nigeria. So.

Recently, we have expanded those f. all ways all for those also in Kenya, then Bill I'm Gonna. That's now also have a strong pipeline all the additional tradeoffs.

This has now become even more relevant as you are those in those regions more than ever need efficient and affordable access to unlike something.

So already about 14 million you those have picked all the bulk of each of those joint it'll plans, where the engagement levels up to 50% Ababa average for the region.

So in general we believe these efforts will provide an efficient way philosophy will use off Syngenta, all branch, Andy and Chris using loyalty by addressing a cheap and pulling all relatively expensive dates all in Africa.

I also spend sometime I often niels.

I'll use a base Hasbro, 21% yield the yield to want to 18 million monthly active users in the fourth quarter.

Oh for though you much Oprah meals has a rich about recalled number you lost well over 190 minutes.

This strong results well really driven by several hospitals, so forth offer meals have to be called the critical information source during the call, there's nothing crisis, which about very probable.

Second Oprah Neil's hop has now expanded well beyond Nigeria to also Kenya, Ghana quota Diva, South Africa and Egypt.

He is really the increased engagement.

And finally, we launched new ways to ask this offer meals, including open the line unless they probably don't see about.

Also the ability to access offer Nils directly from the bad.

So overall often meals how did he told me a crucial component to initial access to relevance neil's for local communities. During this special times.

We really see this trend continuing into Q2 was often deals for the manifesting. It's staples absent the pulp go to place for comfort on the consumption in the region.

[noise] all classified offering oldest continues to rapidly grow. If you go base was also meal that 50% gross yeah. They use Trump is on bulk too much averaging 4.5 million and are you using the portal.

And also benefiting as colby's nitin pushes more after <unk> online.

So well know aggressively developing additional officials and functionality for our offering that we'll be introducing acid the yield progresses.

Looking to extend this to some additional geographies you Africa.

As we have the stated previously we believe as they run to usage. It's the overall opportunities to get involved in transactions and also to leverage our ethel in advertising beyond offering meals and all bras offerings.

Another area, although strong long term potential is all Europe Fintech initiative around payments and open banking so simple to all other if all the accelerated transition from offline to online transactions uncle, most well be a tailwind to get all whereas the easy.

Legislation that opens up European banking.

Just as a reminder, this will build on our growing 15 minute European Brazil user base and offer attractive new product.

Our full step was the acquisition of Fintech stocked up focus. This ends our next step well be too long shelf false payment and the banking products.

So for the past the field trials, we have made a lot of progress developing all initial stream and are currently testing all digital wallet and costs.

I'll go what remains to launching one bucket they told US heal and then roll out to other coffee countries in Europe.

When it comes to monetization and there's not surprising that to the Colby I think that bad because that's both such as advertising revenue.

We have seen import into categories, such as traveling sports being severely impacted.

Hopefully we are also seen strong performance from ecommerce and all I streaming talking off and we do expect those will importance as the year progresses.

For example, wallboard key equal must talk now has approximately doubled its revenue contribution yeah. Several European countries. So overall well seem that some on indicates that the peak Colby no impact to monetization maybe behind us.

He has improved the metrics as of late April.

Although it's still hard to predict the shape all the lance over the recovery at this point.

Although we believe that the momentum all ability to facilitate the call most and transactions will position us well as the structural trend of offline spend moving online accelerates.

Finally, all Fintech business in social and Africa had a very strong January and February.

Revenues were up significantly and the credit losses was slightly down from the proud portal.

It also comes into the ethylene.

Expand and evolve our offerings to provide the marketplace off off my multilateral and the other payment products in cooperation with local banks and Pos enough.

Absolute dimension was it looks to nail that Colgate sniping would impact all key markets led to the strategy. In addition truly deals Neil Cole credit exposure will usually if it's well effects all mealtime gross horizontal wells opposition to rapidly scaled out business batch.

<unk> was condition that he called me favorable and have already begun testing in preparation for this.

So just to sum up approach is progressing and <unk>. Despite some neal come challenges.

Our loan from potential is at least as attractive as it was trial to cope with my team and the way ACIM initial signs that recovery is on the lake.

I look forward to a update you on the overall progress I think the crushing again next quarter and I'm hopeful that I'll be able to speak about structural benefits such as continual Tropic again, and the hallway are benefiting from the accelerated offline to online transition.

So with that let me add it back to further.

Thanks, John.

Let me get into details about the first quarter and provide an update on recent trends before we open up the call for questions.

Approach delivered record first quarter revenue of 138.2 million up 177% year over year and above our guidance range.

Search revenue represented 14% of total revenue or 19.7 million down 4% year over year.

Research revenue was impacted significantly in the back half of March.

Advertising revenue represented 12% of total revenue or 16.8 million up 18% year over year and similar to search experience significant headwinds in late March.

Fintech revenue represented 69% of total revenue or 94.7 million.

In spite of late March limitations. This revenue category increased 32% sequentially from the fourth quarter.

Retail revenue represented 3% of total were 4.7 million.

And the technology licensing and other revenue category represented 2%. The total for 2.4 million inline with expectations. As we are facing out nonrecurring revenue related to services provided to our C. Hoping.

Total operating expenses were 116.9 million in the first quarter and I'll go through the main components.

Compensation expenses were 20.5 million down about 2 million or 9% versus the fourth quarter.

The decrease was mainly due to a reduction in share based compensation expense as well as certain limitations on end market activities towards the end of the core.

Marketing and distribution expense was 18.1 million, a slight increase of 3% versus the fourth quarter.

Cost of revenue was 27.6 million.

Within this 20.3 million related to Microlending, representing 21% of Microlending revenue.

4.4 million related to retail 1.3 million related to browse through news and 1.1 million related to take licensing and other right.

Credit loss expense will 69.5 million and mainly related to Mike for that.

This figure includes the extraordinary loan loss provision of approximately $27 million to address collection risks associated with cold at 19. In addition to ordinary loan loss provisions predicts that based on late period collections and historical data.

Earlier in Q1, we observed a continued decline in credit losses for our existing brands.

While ultimate losses may prove to be lower we believe it it's prudent to take a conservative view given the unprecedented nature of the cobot 19.

Net loss provisions are loan book stood at 45 million as at March 31st 2020.

Of which 43 million has been collected since then with 2 million no remaining so in other words, we are on track to collect more than once we expected as we close the first score.

The sum of all other operating expenses, including depreciation and amortization and nonrecurring expenses was 18.4 million corresponding to a sequential reduction of one person on the recurring expenses.

That's a result.

We saw an operating loss of 15.9 billion and they net loss of 20.9 million.

Adjusted EBITDA loss was 8.6 million.

Excluding the extraordinary additional credit loss provision adjusted EBITDA would have been within our guided range for the quarter.

On the balance sheet, we ended the quarter with 215 million in cash and marketable securities an increase of 33 million versus 182 million at year end funded 90.

As of this quarter, we are providing the full breakdown of our cash flow components.

In the quarter benefited from positive underlying operating cash flow as well as our actions to significantly reduce our outstanding loan.

This was partially offset by certain investing and financing activity, most importantly, archie or share repurchases and our focus is acquisition.

With that let me look a bit ahead as many of you know we grew our 2020 guidance in April due to the cobot 19 end up.

While we are not yet ready to provide new guidance due to the challenge of predicting the timing and slow off the return for its normal we do want to provide some data recent trends.

Beginning with our browser products and offer a news our traffic trends were strong in both March and April carrying the promise of incremental revenue potential once monetization bird turns towards normal.

On monetization, both search and advertising so year over year revenue declines starting in late March.

In April we started to see a recovery in search monetization.

We also started to see encouraging signs in advertising, though the recovery. It's not good that's pronounced as search primarily due to the traveling sports category and Africa is behind Europe, and North America.

While there are advertising categories like travel that may take a long time to recover others like E Commerce and online gaming are growing.

Also categories like sports should return to the historical norms in the intermediate term at sports League, such as food to sneak up and the EPA ill return.

To sum up while it is difficult to predict the shape of the recovery you have no doubts that we remain structurally well positioned for long term sustained revenue growth.

Now moving to Microlending.

As we've discussed the business was continuing to perform at a very high level for most of the first quarter before we elected to proactively and meaningfully reduce the issuance of new micro loans as of mid March to reduce our credit exposure, that's our key markets experienced government mandated loss.

Films.

This is meant that there has been very low activity quarter today.

And this will lead to materially lower revenue in the second quarter versus the first quarter.

With that said.

There are some encouraging signs that look down in India, our largest market shifting to be state by state determine to enable economic recovery, where the spread of the virus is mostly.

Further we have recently been testing on a small scale, which will enable us to make sure nothing is changed and adjust our loan offers an AI credit scoring as needed.

We expect this business to ramp rapidly once we are comfortable with the risk profile of Newbuilds.

And compare to prior periods of rapid.

This time, we haven't additional benefit of a large known user base of repeat borrowers that always repaid their pets loans.

Further we believe nothing is structurally changed and we currently expect microlending as well as our plans to widen our fintech offerings the rapidly re scaling and the second half of the here.

Looking beyond this year, we believe the most lasting effects, we will see from cobot 19 is the growth and reduction of our products and thereby a positive that combines with the underlying growth of online monetization opportunities in our key markets.

With that said in the near term, we are taking a more conservative approach towards our cost structure.

Specifically, we've reduced the number of hires we plan to make this year, we've lowered our spend on external labor and consultants and we expect lower marketing and distribution spend primarily following reduced unit economic costs.

While subject to ongoing evaluations at a minimum we expect to realize 20 million of cost savings versus what was expected back in February.

Most importantly, we are executing this in a way that should have minimal impact on our long term growth.

Additionally, we always look for opportunities to opportunistically accelerate our trajectory and drive valley.

This could be as simple as specific marketing or product initiatives, making additional tuck in acquisitions to build out on our current product portfolio.

The other steps to unlock the value potential off our businesses.

To wrap up in light of Cobot 19, we are pleased with our first quarter results and how we are navigating and adjusting our business.

We are encouraged by initial signs of recovery and remain optimistic about our future prospects.

We look forward to keeping you updated on our progress.

So with that we can now open up the call for questions.

Thank you Sir as a reminder to ask a question you would need to press star one on your telephone.

To withdraw your question. Please please press the pound key.

Please standby, while we've compiled acuity roster.

I show our first question comes from Lee Crown from B. Riley FBR. Please go ahead.

Great. Thanks for taking my questions and.

[laughter] or one as well when wherever you might be.

One of the first started off on the lending business seems like from pretty solid growth and very well managed.

The risk side of things.

First question is just aren't on revenue contribution from from the newer product features.

Material in the quarter, Anna and I guess is that a part you offered to existing customers are you targeting a different cohort with the by now pet later type functionality.

A highly thanks. This is a who is speaking.

I would say broadening the portfolio, we start to see transaction on on it but it wasn't really immaterial parts off.

After Q1 results [noise].

Okay.

And then you guys you talked about.

Leaving roughly $20 million on the cost front is that imply that you still intend to invest about 10 million because they think incremental expense previously was $30 million or is this is this $20 million.

No cost savings net of those gross investments.

Oh, so all of the potential savings a very big component. This actually that the unit economics, so marketing and distribution is getting cheaper. So all else equal we can maintain good volume Portland.

When it comes to the newer initiatives I think as we've spoken about now the ambitions for those are.

Our unchanged or some.

In market limitations that can cause certain delays and with that there will also be some some cost benefits but.

But for the for the most parts I would say.

It you, it's not the want to water.

With the overall savings and once we do on new initiatives I think.

The big or bulk is actually a centralized cost marketing distribution.

And Lee this is Derek that's the one point I would add to it that is.

Our we're trying to be more efficient cost savings and again marketing was one but on an overall basis, our focus is continuing to.

Try to grow this business and continue to fund our initiatives that we have a better chance the good outcome.

Got it and then just last question for me.

I know obviously the works changed since you provided guidance in February but it seems like all else equal the growth initiatives you products remain on track for their scheduled launches.

Would that imply that that 10 million targeted revenue for the full year is still a target that's achievable or or is that unlikely just given the macro backdrop.

We haven't so we've been cautious we didn't want to provided guidance, yet or the remainder of twentytwenty, so being a little bit careful to call month on sort of specific components.

We it's a bit premature to oh to conclude on that we the most important thing for US is how we manage to scale those operations that we get them lie and that's we have a good run rate as we exit twentytwenty and into Twentytwenty want.

Whether that's will be a sort of accumulated revenue impact of 10 million or if it will be a little bit less.

It's too early to say right now but.

Yeah ambition is to say.

Got it thanks for taking my question because.

Sure. Thanks Lee.

Thank you I next question comes from John Godyn from Lake Street Capital. Please go ahead.

Yes, thanks for taking my questions I hope everyone is doing well.

First just thinking about India as the government starts to loosen restrictions in an open things back up a little bit what are some of the key milestones or trigger points that you're looking for that would give you confidence to start.

More rapidly.

Going back into that market and then second just thinking about the competitive landscape.

Obviously, the the Fintech space in both Africa, and India is quite competitive have you seen anything change there.

Just due to.

Economic slowdown in maybe anything changing with some less capitalized competitors.

Thank you.

Sure John I'll go first so India, it's interesting there lots down four point, though I guess they call it which is scheduled to and at the end of this month.

It's really move has already moved to the quite state by state as I mentioned.

More local local policies. So the what's what's initially very strict this now becoming a bit more and more loosened up I would say so for example would be.

Our office. This there are now starting to reopen again initially you can a 33% capacity.

Okay well.

That too to scale up.

So and I think that as an indicator of sort of broader economic activity, which and then India and.

Helps our users to get back to work Jen and to get back to having an income I think those are positive signs.

When it when it comes through our.

Scaling up again on the business I think she advantage that we have this year, which we didnt have in 2019, when you could say we scale that business for the first time is that now we have a proven user base. So now we have millions of people that taken loans pay them back and you have seen have used to serve this a bit like we would use.

Credit card.

And and sort of.

Having that that's the basis.

It's very important for us as we scale. It up so we will definitely begin with so I guess once we could call.

Trusted users are proven users and then as always we did also in 2019 started off with smaller amounts and then and then Scanlin scanned though from there.

And I think this these are considerations that we will be taking the local.

It's a market than the policy conditions into accounts, where we think its where wherever we think its most sustainable to two starts getting again, so that it's been up the testing that we're doing now and it looks we'd expect to.

To be rolling out.

When it comes to the broker landscape.

Sorry.

Gone for <unk>.

Yeah, Brian landscape.

The aware of any material you know, yes, we are well founded the company and we are very solid company and we will be there.

The market picks up.

I'm not aware of any.

[music].

Major problems for for our competition there.

Huh.

John This is Derek I would add one point I think our view of where this business and the potential hasn't changed.

We.

Back to continue to scale, our lending facts to.

Offer different products.

And you know its credit said, we're testing and once we feel comfortable that she said with a smaller people that things have returned to normal we can scale very quickly.

Thank you.

Oh I show. My next question comes from Mark Agentwo from Lake Street Capital. Please go ahead.

Hey, guys.

Most of our questions. So.

Thanks.

Thank you.

I show next question comes from Lance Vitanza from Cowen. Please go ahead.

Hi, guys. Thanks for taking my questions.

I wanted to talk he gets about two areas if I could that's the search and advertising and then and then just your liquidity picture.

But on the on the advertising side, you talked about Miss a little bit Frodo, but could you could you review again, a little bit maybe it a little bit more detail.

How are your categories. How you index two categories that are poorly performing like travel on the one yet and you know.

Categories like gaming jet or was there anything there that are actually continuing to grow just trying to get sets for how you stack up relative to the overall contribution of these sectors to shift to total advertising.

Uh huh.

So I would say important categories for us in <unk> E Commerce and includes gaming as you know, we even have a gaming browser. It includes travel nothing much flights, but more hotels and sort of local reservations.

And it involves sports and then I would say, let's say general mobile advertising.

Overall as a as.

I say.

As a representative up and large user base that we can market products.

So these verticals they are affects the differently.

We see that E commerce, and even like Compton streaming and gaming verticals are on track to two to do quite well and then we have others like travel. That's we expect will take longer to recover and and sports that.

ER that of course slowed down given the cancellation of events and so on but but it's encouraging to see that's almost a major European football events. For example are starting to come back.

So there that could also be a question of whether.

We will see the basin revenue more than more than actual losses. When we look at the result.

But we havent given any public sort of splits between these verticals.

So I'd, rather just focus on talking qualitatively about it.

No. That's helpful actually I appreciate it said that search revenue you mentioned was down 4% for the quarter, but it was doing much better obviously through January and February could you could you sort of give us an idea of what that growth rate in church had been kind and as you started to kind of fall off into the.

And to the crisis in March and then.

Sure.

And then it down.

Bridge doubts doubts or was it less pronounced.

Yes, so I would say.

We had our Q4 called in late February and that's when we gave our original guidance for Twentytwenty. So on that what we guided for Twentytwenty was of course.

Colored by what we were seeing at the time.

We guided search and sort of the the mid mid single digits, and we guided advertising to be higher than the 18% year over year gross we had seen and 2090.

Perfect. Okay, maybe just moving to liquidity quickly.

The liquidity you know when its cashless marketable securities Rose 35 million I know that you have the cash flow statement I haven't been able to sort of sit through that as much detail, but it looks like the big driver. There was just a shrinking of the loan book.

Which I suppose is now pretty much at its kind of at it and it sort of a trough level. So as we think about cash flows in the second quarter, probably won't see a big increase from from additional shrinking of the loan book what other factors should we think about as we kind of.

I can play your ability to continue generating cash over the balance of the year.

As I mean, maybe first to speak speak to Q1, we had Ah we had an operating cash flow of 51 million as you mentioned.

Off that.

48 million came from a conversion of short term volumes to two cash as we were scaling down that business and limiting our credit exposure.

Again.

And then you asked I mean look ahead. So so I mean, that's the starting point.

For Q2 on the Microlending side as we mentioned we had severe so our in Q2, we've continued our restrictions on our micro lending business.

As I mentioned earlier, often we ended Q1 with the loan book of 45 million.

So far in Q2, we have collected 43 million are indicating that we may have been a bit too restrictive as we close the loss provisions for Q1, but we've had continued strong conversion all outstanding amounts to cash in the second quarter, which a lot.

I will benefit our Q2 cash flow.

I'll be.

So careful to guide cash flow.

Or sort of during the remainder of the year, but.

I wanted to.

Good point out those yes, no. Thank you for clarifying that says basically so another big cash inflow from continued monetization of those loans in this quarter and maybe just lastly from me and I know nobody has a crystal ball here, but if you just think qualitatively about sort of the outer years 20 to 2023.

Et cetera.

As you are and you think about the impact from co that you know over the longer term I'm just trying to understand whether we think Colgate is is it a onetime hit what's the quote unquote, new normal looks like for both worked for all of offers businesses and how long it takes to get to that new normal.

Should we be thinking about the business having been.

You know impaired or augmented anyway or is it just sounds like it was lifted we go back to where we were.

Mm Hmm.

So.

We've tried to get to some that are on this call.

It's an area that while it's given us some short term challenges we've had to modify but our approach with our fintech business in particular, but the other things happening is something that.

That is quite exciting the fact that our user base is growing really well and that we're seeing that more and more people are are both trying our browsers that offer news has really become a true hub for constant them information then payment in the markets, where we focus is it something.

To us that's why we set in there that.

We believe our long term potential is at least that's given us it was before the call good night.

Situation came around.

So that.

That's actually carries with it some promise and some additional upside that we had expected.

When it comes to sort of like the detract from here towards normalcy, just aren't going to mention were ready to scale up very quickly on on the micro lending and the broader fintech side, that's a bit different than the other ones because it's actually the map is super high it's just us limiting it's because we're not we haven't been comfortable so far in Q2 with the risk profile.

And I think on the on the advertising in search and the verticals that.

Just the went through.

Of course, Bill will follow will follow the markets. We expect monetization will come back there could be but we'll be careful not to be two enthusiast big but the fact that I mean this can also represent an additional accelerate or on the shift from offline to online.

That that can be positive for us as we look ahead.

Okay. Thanks, so much for answering the questions take care.

Sure.

Thanks, Thank you.

Thank you as a reminder to ask a question you would need to press star one on your telephone to withdraw your question press the pound key.

I show next question comes from Alicia Yap from Citi. Please go ahead.

Hi.

Good evening I'm wanting an afternoon management.

Thanks for taking my question.

So given the strength in the user traffic.

In the op Rodney within.

Such.

How will that translate.

The average dollar coming mountains right. After we come out from a call. Thank you Pat and I guess.

Ecommerce can sell off their teachers to content I actually misleading so.

Some of that actually come along with our traffic strange.

Oh.

The guidance I understood.

He's trawling got but.

Do you give us a.

The big hotter in comes off the second quarter.

I'm, hoping that meet you right off the sequential growth rate, how should we think about on the such weakness on the authorized meals business I know under Finpac site called lithium actually makes it quite but then on that side.

Yeah benefiting from some body called like.

E Commerce, so any color on just the many of the sequential trends I would be helpful. Thank you.

[noise], Yeah, Hi, Hi, Bill So it's only hill I think I'll just try to chime in a bit just on some of the categories that you mentioned, so I mean, I think high level, let's just say it's true that you know I think we're basically Michel the view that you know the gross that way, we see that's impacting on desktop which is really good gross and.

So the growth with you on the heels Oh wait believed that it's definitely dependable.

After the call <unk> <unk> and also you know like maybe also just to be catch on what's really saying before that we feel that yes, we definitely saw a behavioral changes.

I've been loan company, how about change or structural Chad.

Although the field and Luckily me I think because we are mostly aligned well almost like keeping an example online continental has leveled off line.

That that this is actually exactly beneficial to US right you know given up in most utilities as you know points that we see that you called most as we said how batumi growing well some of 'em hopping off you, but you can kill to ride with just the last time and letting that will stay because you know lots of people getting used to buy.

All in all place I think we'll see that trend will continue on the be saying about the gaming maybe even more built in gaming that when they get used to actually play again, it's hard to browse. So now we think that a good chunk they will stay.

So that grows very nicely.

And maybe also added good color into Neil's right I think.

Despite all the you know general acute your cost it's going to be top full adds the whole out business you know not only I thought the whole industry news.

After months of this young Neal disaster relatively stable Why's, just because it's such a major gross of users and usage well actually beat you. A you know a stable Nils I you know adds revenue last badly Cassie and actually it's still a big gross compel was lost deals. So it's a big LTL girls on Neil was one cents. So I think all this probably.

At least with a belief that without the oldest not gonna stay I'm gonna have a positive even past even after the call. The times. So so I think this maybe just attitude <unk> asking.

In Tom's all the actually Q2 exact guidance I have to be honest I think wish that still needs to be very prudent on Israel has lost to tell maybe what I can say that's on the such and you know we definitely see that you the job about data of course way I'd be limited by by the likes of Google and ancillary studied yandex because they are the ones.

Actually you know provided is actually saw Chen the after ads on top of it. So it's always almost the they'll for your reference they'll guidance to have a feeling what you know what can actually impact us I think we'll probably be if at all just because the way have more usage this and that.

So I think developed lots to be prudent because we calibrate it also predictable them.

I mean, that's Michigan in my Quake, let's take on this and I think the same I'll have that's of course Palbo sales also related to other like so if it's been Google. So I'll show you know it's to be dependent with all how you know whether they can probably as well to perform.

The next few mouse.

I think we can say that the would definitely see it's a bottoms you know, it's becoming flat or by April and we'll see some recovery trends, but I think the battle, we don't predict those things, but then just see how the trend goals.

Okay. Thank you.

Thank you. This concludes our attorneys session at this time I'll like to turn the call over to Mr. Jacobson CFO for closing remarks. Please go ahead.

All right, Yeah, I guess that wraps up our call for today.

Special times, but as we've talked about mirror quite pleased with how we have navigated the so far and I'm quite excited about the long term opportunities that we are working towards these days.

So thank you all for joining us on this call them I have a great rests though today.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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