Q1 2021 Net 1 UEPS Technologies Inc Earnings Call

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All participants will be listen.

He will be an opportunity to ask questions need to change the constraints.

Didn't need assistance during the call see signaling Alfredo headlight pacing I think yeah. Keith note that this call is being recorded.

Like in the pumping assign two diabetics Pease go ahead ma'am.

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Thank you I am sorry.

First quarter 2021.

Yes, Hey, listen Easterday, CFO and CEO [laughter].

Hi, Terry.

[laughter] available on our Investor Relations site.

[noise] reminder, during college, we won't be making forward looking statements.

[noise] yeah.

I sure language to fade in their press release regarding risk and uncertainties associated with forward looking statements.

During this call they will be using certain non-GAAP financial measures.

[laughter].

These non-GAAP financial measures.

The most directly comparable GAAP measures.

Scott.

I can right, which is a non-GAAP measure, we analyze Arizona operations internationally right after.

Sure I understand the underlying.

Hi, [laughter] as you know the Companys results can be significantly affected by the crisis actually seems to be changing that.

[noise] well have too many I can tell you that Aaron.

So with that.

Let me turn call over to [noise].

Thanks, Darren and good morning to everyone and thank you for all for joining us on our first quarter earnings call.

We hope everyone staying healthy safe during these difficult times.

On today's call, we'll run through the follow as well.

I will review some of the financial and operational highlights from the quarter.

Then discuss our short term initiatives, which will include some more insight into our investment Company Act issues.

And provide a progress report on resolving the matter, which would lead into all related capital allocation plans.

Finally, I'll review or long term initiatives relative to our new strategic focus before opening it up for questions.

First I would like to say, we've seen some encouraging signs in our operational and financial results. This quarter as the business returned to relative normality. According to lift in various loved and restrictions that began in early June.

We were fortunate as a group and then the easing in June allowed almost all of our operations to return to full activity.

Well, it's maintaining older necessary proportions in terms of social distancing and provision of sanitizer personal protective equipment.

We are extremely grateful to all our employees for their dedication that they've shown.

During these times and continuing to deliver services to our customers many of whom are among the most vulnerable in our society.

[noise] their commitment to ensuring the safety of all of our customers and colleagues has been unwavering.

With the return to full operations, we have seen increased transaction processing volumes.

Loan originations and the significant increase in the utilization of our ATM infrastructure over the last quarter.

In addition, we're relatively small in number to date, we saw increased demand for all consumer bank accounts easy Easypay everywhere well <unk> in September and this has grown further and I'm talking about.

Indeed October will be the first month nearly two years.

We'll be able to report positive net additions to our <unk> customer numbers.

These new IEA customers, many of whom are returning to the company well then have access to the full suite of associates, It's financial services products.

Which would lift activity levels across many of our operations.

We believe that there is a significant opportunity to increase its momentum in the coming months and this is one of our key short term initiatives.

Our cost base in South Africa remains stable and that's the level that can support significant growth in business activity.

As a result, a relatively large percentage of any revenue growth in the coming quarters should drop to the profit line.

As such we have a clear path to reaching breakeven in South Africa, and then to achieving profitability at the corporate level.

Our plan is to reach breakeven in South Africa on a monthly basis in Q4 this year.

As mentioned earlier, South Africa remains under limited locked down restrictions, which continue to affect the broader economy.

These effect is to the extent that they affect activity levels in the South African economy.

South Africa was it knocked on level three up until the 18th of August 2020, and then level to up until the Twentys The September 2020.

Currently so that's still remains at level, one lump done which is the lowest homes locked up.

[noise]. Unfortunately over the course of the pandemic to Pandemics to date. It is estimated at 2.2 million jobs have been lost a GDP has contracted sharply.

Expectations are that the economy may contract by up to 10% this year.

Despite this outlook, we did see a number of bright spots in the quarter.

The number of active bank accounts remained stable at around 1 million.

Our ATM ATM network utilization seen a meaningful recovery since June and September 2020 transactions through a fixed and mobile ATM is worth two year highs.

Total transactions for the quarter were up 13% compared to the prior quarter.

15% higher than the same quarter in fiscal 2020.

Oh lending book has recovered since restrictions were eased with loan originations strong in June through August.

So a little more subdued in September primarily due to the loan cycle.

The loan books finished September 2020.

384 million Rand versus 307 million Rand at June Thirtyth, 2020, 341 million rent at September 2019.

This increase of 77 million rent well, 25% represents a 10% increase in the number of loans bonds and a 15% increase in the average loan outstanding.

Transaction volumes through our easy pay switch were up quarter on quarter as we've added a number of new bill extreme customers to the platform and this also reflects consumers moving to digital channels in these times.

[noise] as we discussed in our previous call. We have taken the decision to close down our international RPG operations and this process has been underway for about two months now.

The decision to close was not taken lightly it was mainly as a result of the strategic reviews, which raised doubts over the commercial prospects supporting continued investment.

It was also about ensuring that our focus was on what we believed to be a more compelling opportunity in South Africa.

The closure process is progressing according to our expectations and.

And we are cautiously optimistic that we will be able to largely conclude the exercise by the end of the second quarter.

It will require some attention beyond that date that will be low and meet the effect of more administrative matters.

We wish all of those involved an RPG over the last few years, all the best in their future endeavors.

Additionally, given the upcoming closure of our international operations, we are re segmenting, how we report our financials.

The segment's Oh processing financial services and technology.

We have also restated prior periods for easy comparison.

We believe this should provide increased transparency allow investors to better track our progress and also be more in line with reporting from other fintech companies.

That said I would like to briefly review a few other key financial highlights for the quarter.

[noise] quoted one <unk> total revenue was $37 million, which was a 12% decrease year over year in rent, but 39% increase in so that's good revenue compared to the previous quarter.

The sequential increase was partially due to technology hardware sales in the quarter as well as the return to normalized operations and organic growth.

Well the revenue for the prior quarter was depressed by Covanta Sakes adjusting for these we did still achieve double digit increase in sustainable revenue.

The decrease in revenue compared to the prior year was largely due to a number of nonrecurring revenues in the first quarter fiscal 2020.

The U.S. dollar 16 ran 77 to the rent in the first quarter of 20.

21 a.

I appreciate that 14% against the Rand compared to the first quarter of 2020.

Adversely impacted our reported results.

The Rand has recovered somewhat since the last quarter appreciating by 3% against the dollar from 17 28 to 16 77.

[noise] first quarter 2021 fundamental loss per share was 23 cents compared to a two cents fundamental loss per share a year ago.

This compares to fundamental loss per share in the fourth quarter of fiscal 2020 or 22 cents.

We reported an adjusted EBITDA loss from continuing operations of $9.8 million, which was a sequential improvement from the $12.2 million reported for the fourth quarter of 2020.

Some of this can be attributed to the receding effects of the pandemic.

The international operations, which we are closing remains a significant contributor to this loss, which shouldn't be largely eliminated from the third quarter of two.

2021.

[noise] Oh segment processing reported revenue of $24.5 million in the first quarter of 2021 down 7% compared to the first quarter of 2020 and up 33% from the fourth quarter of 2020.

2020, but on a constant currency basis.

The comparative to somewhat distorted by once off events and the impact of the pandemic, but.

Coal processing revenue has shown a pleasing increase in the quarter.

Operating loss level processing recorded a loss of $7.3 million in the first quarter of 2021.

Compared to $5.5 million in the first quarter of 2020 and $10.1 million in the fourth quarter of 2020.

Our financial services segment generated revenue of $8.3 million in the first quarter of 2021.

34% compared to the first quarter of 2020 and down 8% from the fourth quarter of 2020 based on a constant currency basis.

Well our loan book has increased there is a lag effect for the benefits of this to flow into the results and the decline in revenue reflects the loan originations at the last quarter.

Operating loss level financial services recorded a loss of $2.4 million in the first quarter of 21.

Compared to a profit of $23 million in the first quarter of 2020, and a loss of $1 million in the fourth quarter of 2020.

Lastly, as I mentioned earlier, our technology segment revenue was $6.2 million in the first quarter of 2021.

Operating loss and operating profit level technology recorded a profit of $1.8 million in the first quarter of 2021 compared to a profit of $1.1 million in the first quarter of 20 $20.1 million in the fourth quarter of 2020.

Corporate costs were slightly higher at $2.8 million for the quarter on higher advisor costs that much of this is oneself and nature.

Net interest expense was negligible for the quarter, reflecting the cash on our balance sheet.

Well the associated interest income is relatively low in the current environment. It is sufficient to largely offset the interest expense associated with funding our ATM.

Our equity accounted investments generated losses of $19.1 million for the quarter as a result of losses at Finbond and a substantial decline in the share price, which resulted in an impairment of our investment.

More detail on the performance of these investments will be provided later in the call.

At September 32020, we had unrestricted cash of $209 million and zero debt.

U.S dollar denominated balances were $174 million out of the total.

[noise] operating cash flows are somewhat distorted by the payment of $15.1 million of U.S. federal taxes, primarily connected to all Ks net disposal.

This was offset by the recovery of withholding tax from Korea, a 20.1 million during the quarter.

Which is recorded as part of the proceeds from the disposal and included in cash flows from investing activities.

Our weighted average share count has remained relatively constant.

57.1 million shares in the first quarter of 2021.

I'd also like to get some feedback on developments in our various investments in the quarter starting with Finbond.

Then bone had a difficult first off the basis of their fiscal year being the six months to August 31 2020 as.

Is this period for the full brunt of the Pandemics impact on the North American and South African businesses.

Well the short to shorter term loan book, they were more impacted than the airline business.

And then could significant losses in the period.

In addition, they listed share price decline from two ended 30 June Thirtyth to one random four at September Thirtyth.

And as a result, we are required to pay a carrying value of our holdings by $16.4 million in the quarter.

They have seen some improvement in performance towards the end of day reporting period and will look to build on this in the second half.

[noise] Bank Frick performed well during the quarter exceeding expectations.

Well they have increased provisioning against some of the loan portfolio. The performance of the bank and other areas has been strong.

Nevertheless, with Europe, and the group for the second wave of infections, the pandemic and some countries reintroducing restrictions. This could have a negative impact on the banks results going forward, particularly in our third and fourth quarters.

Meanwhile, in Nigeria, carbon and started to see some normalization in that business.

He thinks that the pandemic and the associated restrictions have been reduced.

Well revenue remains below the level seen before the start of the pandemic proactive management action it seem that profitability levels recover more quickly.

They have recently received a license for accepting deposits in Nigeria, which will enable them to improve their offerings and is another step towards that goal of providing a full digital banking service into their customers.

[noise] might be quick has also started to see a recovery in processing volumes and revenue during the quarter.

And is it and is expecting to return to pre pandemic levels of revenue by the end of the calendar year.

They manage cost effectively holding kashi, but don't EBITDA losses under a million dollars for the quarter.

But we believe there should be a quick recovery as conditions normalize.

In particular, there have been several developments during the pandemic that we believe should be very positive for mobikwik longer term growth prospects.

We continue to carry the value of also see investment at zero as of September 30, 2020.

So see continues to make progress, albeit slow on its recapitalization plan.

But in the meantime has overhauled its operational model and is delivering improved operational results.

If the capital structure can be Rightsized. We believe there is just a sustainable business that can emerge.

[noise] No importantly, I went through wanted to review some other initiatives.

As we said on the law school change is a journey rather than a single event.

And this new adventure is just beginning.

First I'd like to provide a thought or updates on our investment Company Act status.

For a bit of background in respect to this issue.

The 1940 investment Company Act is an act of Congress that regulates investment companies.

In doing so it established a definition of investment companies.

Which is primarily based on some analysis of the company's financial statements.

Investment companies are distinguished from operating companies.

Under the act has meaningful meaningfully different reporting and regulatory requirements.

Some of these regulatory requirements may under certain circumstances restricted investment companies ability to perform certain actions but.

Particularly in relation to its capital structure, including share buybacks and dividends.

The calculation to determine whether a company is indeed, an investment company is quite complicated.

And while we won't get into the details on this cool, it's essentially having greater than 40% of the firms assets derived from investment securities with cash balances being completely ignored for the purposes of this calculation.

Investment Securities generally include among other things any companies in which a firm has a minority interest unless the firm is the entity having primary control of these companies or an exception is available.

We believe that based on the way that that one is managed and operated it should not be regarded as an investment company.

However, we've made a number of strategic partnership arrangements and investments over the years.

With the decline in our South African business following the SASSA contract expiration.

Coupled with the sale of Ks net which was a wholly owned subsidiary the investment company calculation was brought to our attention is something we need to be mindful of going forward.

Having said that scene I can confirm that we are proactively dealing with this situation.

We're working with the top law firm, who specializes in this field as the legislation is somewhat arcane and complex.

The most direct way to address an investment company issues is to submit a detailed application to the FCC supporting our status as an operating company as well as explaining all future strategic corporate development plans in order to reinforce this conviction.

We are in the process of discussing this possibility with the FCC.

Given the complexity of the application and that's it and that's it is somewhat outside of the ordinary course, there is no fixed period of time established for this process to conclude.

Based on current assessments this could take up to six months, though it could be concluded sooner or later.

Well. This is progressing we continue to pursue our strategic aims in South Africa, and this could naturally cure or assist in the resolution of the current uncertainty over all status.

[noise] I wanted to provide this background granularity because this issue is understandably top of mind with our investors it.

It is also the only one thing preventing us from returning capital to shareholders as we've been indicating we would do ever since we divested from Tas net.

We will continue to keep our investors updated on our progress with this matter and it will remain a priority for us.

Now I'd like to shift the conversation to the Companys overall capital allocation plans.

And from our press release and 10-Q, we currently have over $200 million in net cash on our balance sheet.

And we would like to provide additional guidance on how we plan to deploy those funds.

As we mentioned on the law school, we have formed a capital allocation committee of the board you are tossed with ensuring that capital in the business is allocated prudently and responsibly.

This committee is comprised of recently appointed non executive directors the majority of him our experienced investment professionals.

In terms of the corporate strategy, we articulated on our last call we.

We believe that we've identified significant opportunity to build a unique and sustainable fin Tech business in South Africa and we.

We plan to implement this strategy through a combination of organic growth and strategic acquisitions.

For example, the <unk> financial services business is most likely to be through organic growth.

<unk> still require some capital for instance to grow our loan book.

However for our processing business largely focused on merchants will be to be activity.

We will look to make strategic acquisitions to more quickly reach operational scale.

Possibly to fill out our product offering and distribution channels.

With this in mind the company has put a plan in place to satisfy both initiatives I eat returning capital and implementing our plans for growth in order to address the expectation of all stakeholders.

As soon as our investment Company Act status is clarified we will look to allocate approximately $50 million for return to shareholders most likely in the form of a buyback.

The balance of approximately $150 million will be able to fund available to fund the organic and acquisitive growth we have targeted in our new strategy.

In light of sharing this capital allocation plan I think it's important to remind our investors just how big a targeted opportunity is.

And the Tailwinds, we're experiencing that will continue to help us with these initiatives.

We did lay this out in detail during our fourth quarter report.

And I would also refer you to our fourth quarter supplemental presentation.

Breaking this into two broad categories of consumer banking and financial services time will total addressable market.

Which is estimated at approximately 57 billion Rand were approximately $3.4 billion annually.

And the merchants financial services time, which is estimated at approximately 104 billion Rand or $6.2 billion.

In addition to the substantial size of these markets the South African market is primarily a cash based economy.

Approximately 60% of consumer retail transactions still being conducted in cash.

Our primary product offering.

Well do though superior distribution channels provide for an exceptionally competitive offering for both categories of markets wishing to prices cash and to transition to electronic digital payment platforms.

This includes the provision of financial inclusion to under service consumers, which exceeds unsecured credit transactional banking insurance as well as revenue generating value added services offered through our easy pay switch.

Easy pay is the market leader in terms of prepaid and postpaid services, including bill payment and electricity.

[noise] through all deployed infrastructure, we have the ability to align the last mile, thereby providing us with the perfect opportunity to penetrate the largely untapped markets and provide secure payment methodologies as well as to provide a comprehensive ecosystem.

Our recent strategic review identified our strengths as well as the requirements to substantially scale, our business model on an incremental basis.

Well, we are in a very strong position in respect of distribution infrastructure technology and licenses, we've identified drilling areas that require focus.

Firstly, the distribution of N. V compliant to point of sale terminals.

Into the SMB market that will facilitate card processing and acquiring as well as value added services.

We have completed an agreement with a large south African bank to bridge. This gap and have commenced a pilot project.

Secondly, whilst obtaining a banking license is preferable and will result in better economics in our business model as well as facilitate an efficient response to market. It is not a prerequisite for the successful imprudent implementation of our strategic intent.

[noise], a corporate activity as well as our M&A activity <unk> focused on South Africa is currently in progress to facilitate a strategy alongside or stated organic initiatives.

Finally, another key initiative for the board is the appointment of a new CEO to replace Herman Gazza.

Well, we don't have anything tangible to report today. The board is very engaged in the process to identify and identify and hire a replacement. It can drive the implementation of our strategy in South Africa.

We will keep our investors updated on this progress.

[noise] wrapping up I'd, just like to reiterate we are seeing positive signs in the business and currently largely unaffected by the current level of coated related lumped ends in South Africa.

We are engaged in clarifying our investment Company Act status, which will lead to a share buyback and we are focused on exploiting a huge opportunity to grow this business into a meaningful fintech player in South Africa.

[noise] before taking any questions I wish to extend my appreciation to the next one team and specifically to a customer facing employees has continued to provide an excellent service to our customers during an unprecedented an uncertain time.

I look forward to their continued contribution to the company.

Claudia if we can take any questions now.

Thank you ladies and gentlemen, if you were trying to ask a question Keith Star then one on your Touchtone phone keypad on your screen. If you decide to exclude a question. Please press star one thing to remove yourself from the less again, if you would like to ask a question Keith <unk> Dod and once the first question comes from.

P.J. salads from Potomac Capital Management. Please go ahead James.

Hi, good morning.

I'd be Jay Thanks for the the transparency in somebody's issues, it's good to see the some.

Some of the metrics in South Africa, coming back with transactions and loan growth.

I guess in terms of capital return a few questions there.

The 50 million is it still a possibility that that could be in a ongoing buyback or a tender.

Yes, Thanks BJ.

I think there's a couple of aspects to this I mean first of all just to reiterate we are we see an enormous opportunity in.

South Africa.

Which is experiencing an acceleration from a cash economy to digital and plastic card transactions.

And so you know M&A opportunities are a big portion of what we would be looking at to establish.

You know profitable sustainable business.

In terms of the 50 million, we've earmarked for near term for capital return.

I think we read I think its a feasible to try to buy back more stock than that unless we are looking at it over a longer time period.

We obviously think the stock is inexpensive at these levels, we want to be opportunistic well cement simultaneously addressing the wishes and concerns of all our stakeholders.

I suppose this number could grow as.

As and when we sell other nonstrategic assets.

And if the opportunity to repurchase stock at attractive levels persist.

Look we do have $100 million repurchase plan approved by the board.

In case things change so that's something that will stay under review as we move forward through the implementation of the strategy.

Okay, great and on the topic of acquisitions I guess.

Well what does the pipeline look like I guess with in terms of size, Yeah. What would you go out and spend $100 million, probably unlikely and you fill in some pieces of smaller amounts.

Yeah look, it's a little bit and eager to really start, giving any sort of guidance around what the M&A activity might look like.

I mean, and I think it was still a little way off in terms of being able to use to lend any M&A activity.

I think you know where we would probably look at you know we did with the intention to scale that we'd look at you know reasonably sized transactions.

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But we want to be very strategic allocation of capital and make sure that you know it is that those acquisitions alone.

And you know I'd be surprised if we can complete anything before you know the fourth quarter or so of this fiscal year.

Okay.

Lastly.

It's good to see you continue to a target breakeven in South Africa by the end of your fiscal year.

I guess aside from any acquisitions that might accelerate that or help you get there is the biggest step function between where we are today in terms of run rate losses to getting there I just continued growth in the loan book or removal of IP GE losses, or what are the big levers there.

So really the bulk P.G. losses is a is a is one of the leaders I think the the bigger one is is the growth in the loan book and read the development all the number of GP customers.

And I you know I think our focus is probably shifted a little bit towards the development of the ERP customers, which will naturally lead.

I'd say the growth in the loan book, well that perhaps a little bit of a lag.

We have seen I think I mentioned on the call that in the prepared remarks that we seen renewed interest in the in the product.

From off from our target base.

And.

You know Teva, we should should be the first month in some time, but we'll see.

Adjusted net additions to the customer base.

And these customers once they brought onto the base there.

It was to buy insurance, they take out loans and they utilized utilize our ATM.

So great in these accounts is really key and you know we we were feeling confident that we can do that.

Just to give you some flavor around that I mean.

We think that for every hundred thousand accounts, we that we add we would probably be at about $3 million of annual revenue.

And that's based on our expectations of about.

Two goes 50 per month of ARPU average revenue or revenue per user.

Our account.

So you are talking about the breakeven if we were to I'd say 400000 accounts before year end that would.

Give us a a run rate of $12 million annually of additional revenue.

That would you know.

Fundamentally a lift to the performance of the South African business.

Yeah, the incremental on that is very high rises that like Oh, yeah, absolutely 50%.

Yeah, if not more.

The the benefit of.

You know, having a largely fixed cost base in terms of the provision of those accounts is that a lot of that of that revenue just flows through the bottom line the Inc.

Incremental costs. So you know provisioning some insurance claims and.

The cost of Oh, so putting that cash into the ATM to go into the ATM network. So.

Not substantially in the in the context of of the revenue line.

Okay, great. Thanks, a lot.

Thank you. The next question comes from Raj Sharma from B. Riley Securities. Please go ahead Raj.

Hello, Good morning.

Thank you for the additional clarity.

And the visibility.

I wanted to understand your.

I wanted to go back and get some probably get some more color on the breakeven and in one I wanted to understand the cost base how.

How do we how do we look at.

How do you look at the gross margin the existing business and you know their DNA line should be should we see that the as I was increasing or staying stable because that's what.

Play into.

You know getting to breakeven and getting higher incremental revenues could you. Please.

Hi, like some color there.

So.

I mean, I think just sort of from a high level you need to look at the segments that we've now produced on the technology side, that's largely hardware and software type sales, which.

Would have caught a high degree of variable cost associated with it so direct cost associated.

Cost and then the other area is the processing in the financial services or more I guess fixed cost in nature with a much smaller component a variable cost so.

When we talk about the stability in the South African cost base, it's around iridium.

We're really referring to that fixed cost base that sits and services the processing in the financial services side of the business and that has been pretty consistent stability over the last couple of quarters.

And as I was mentioning in terms of the last question you know the operational leverage effectively in that in that part of the business is very strong and a lot of the revenue that you can add in drops to the bottom drops to the bottom line.

You know you might have picked up the cost basis.

That's moved up quite a bit in this quarter, if you compare it with last quarter.

And there are some distortions in there related to you know some pandemic effects in the last quarter.

But I love, probably 80% of that of the growth in that cost base is coming out of that variable cost I'm talking about in terms of some of the.

A lower contribution side of the business to hog, the hardware and software sales and a.

Some of the you know.

Associated revenue streams.

Right and then so the way am I understanding it is basically if you plan to get to breakeven vital that on a monthly basis, but fourth quarter yeah.

That implies adding accounts.

Absolutely yeah.

That's going to be the primary and yeah.

Yeah.

Right and and the rate at which you think you can add accounts.

As you just indicated support 1000, new accounts by yearend should get you to a breakeven.

Easily get you to a breakeven status.

Yeah, we think that would largely get us to the breakeven point.

And you know that suddenly over the over the order of a number of accounts that with the wait till that seemed to be a test to be asked by the end of the of Q4.

A 2021.

Right and in the past you talked about a an eventual level too you know two plus million in a few years is that is that the right way to look at I know the overall opportunity is much bigger.

But but you could get to 2 million.

In in a years in a year or two years time.

Yeah look we would you know that's still the target. It's a level we were at before you know it some events that happened what 18 to 18 months ago two years ago.

Than we know there's a customer base out there that's had experience it was previously the.

Is there a price in the right way, but with Oh I'm sure will come back to us and so that the 2 million still very much a targeted.

Level of accounts.

Yeah, I would you know if we if we can add the 400000 or additional accounts. This year, we would certainly look to do.

We continue to grow and that sort of pace going forward. So.

I would we.

I would hope that we could get there within so in the space of 18 months following the the into this fiscal year.

Right and then I just have one more question and then I'll and then I'll get off.

Offline.

You talked a lot about last quarter about the you know substantial underbanked merchant.

Merchant category, how is that can you add some color are you seeing traction in that or is it just additional costs.

Initiative right now.

It's the there is some traction in terms of you know we have basically entered into an arrangement with.

So one of the large banks here in terms of around [noise].

I'm trying to facilitate the ecstasy put.

Point of sale devices, but it's at a very early stage at this point I don't think it's not contributing any sort of significant revenue at this point or.

Really any significant cost at this point so it's.

An area that.

Well the M&A M&A activity is probably the most relevant.

And we'll.

We'll be looking to explore that over the coming quarters, but.

This point is.

Not a huge amount of tangible progress to the to report other than.

But we are starting to implement that strategy.

Great Yeah, I and thank you again for the clarity and the streamlining Oh go reporting yeah I'll take it offline. Thank you all right. Thanks a lot.

Thank you very much we have no further questions in the queue, ladies and gentlemen that completes today's conference. Thank you for joining US you may now disconnect your lines.

Okay.

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