Q2 2021 HeadHunter Group PLC Earnings Call
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Great.
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Good day, and thank you for standing by and welcome to the second quarter 2020 financial results Conference call.
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I would now like to hand, the conference over to your first speaker today.
One ought to Oman. Please go ahead Sir.
Okay.
Hello, everyone and welcome to <unk> group's second quarter 2021 earnings call on the call today, we have <unk> Zucker, our chief Executive Officer.
Greg room, we save our Chief Financial Officer, Anthony <unk>, Chief Strategy Officer, a press release containing our second quarter 2021 results was issued earlier today and the Koch you may be obtained through our website.
Yes.
Jason how are you.
Before we begin we would like to remind you that today's discussion will contain forward looking statements actual results may differ materially from the results predicted toward in place.
Such statements are forward looking statements made today speak only to our expectations as of today.
We undertake no obligation to publicly update or revise these statements.
For a discussion of some of the risk factors that could cause actual results to differ please see the risk factor section in our annual report on form 20-F for the year ended December 31.2022.
During this call we will refer to some non <unk> financial measures. These non I first financial measures are not prepared in accordance with IRS. A reconciliation of the non <unk> financial measures to the most directly comparable <unk> measures is provided in the earnings release, we issued today and the slide presentation each of which is available on our website.
Let's invest or Delta change they'll tell you now I would like to turn the call over to Mikhail. Please go ahead.
Thanks Herman.
Everyone.
Thanks for joining us today.
Hopefully through 2021, and I'm increasingly optimistic about the strength of our business driven by fundamental market trends. We are currently seeing dramatic corporate activity in the recruitment market. This is evidenced by historical highest number of references on our platform and the record intake.
For new customers as a result, our total paying customer base in the first half of 2021 exceeded 300000, along with customer base expansion. We have completed the migration of our users to the new pricing model for subscriptions, allowing us to improve monetization and set the ground floor.
Future enhancements.
Im also excited about our product developed in terms of the second quarter. For example, we released 2 million, so far where users and in platform functionality of de risked and income communication between candidates and employers.
Messengers are becoming an increasingly important ways people consume various digital products. So we're focusing here or integrating recruitment is a broadly used interfaces. Another example, with.
Launched course positive options for our clients to advertise their vacancies across Europe lots of platform, thereby extending their candidate outreach. All of these are crucial steps in order to help our clients to succeed in this challenging labor market situations.
Now, let me turn it Dmitry to walk you through the key highlights of the second quarter. Thank you.
Thank you Michelle and good afternoon. Thank you for joining us on this call.
As we have said we are very happy to report that our business continued to gain strong momentum and significantly accelerated in the second quarter delivering across all strategic priorities.
Against the low comparison base last year, our revenue in Q2 was up 155% year on year, driven by average consumption growth accelerated intake of new small and medium businesses on utilization rollout and the full consolidation of newly assets acquired.
Despite some diluting effect from skew us up a lot of consolidation, we improved our profitability with adjusted EBITDA margin came above 2% to 7%. Our capex comprised just two 3% of revenues contributing to our strong cash flow generation over the quarter.
Turning now to our resolve the customer segment as a result of our organic growth and acquisition of the block that we have increased our customer base by circa 125000 customers and Ed over the first half of 2021, we are already have more paying clients and the entire pre COVID-19.
During the second quarter, almost all client categories demonstrated triple digit revenue growth with small and medium business segment being more driven by customer base expansion, both organic and inorganic while key accounts segments.
Also reported stronger IPC growth.
This concludes would be explained by target monetization initiatives.
Revenue in Moscow, and St. Petersburg increased by 145% year on year, while revenue from other regions of Russia went up by 178% year on year now original reaching nearly 36% share in total revenue.
In terms of product dynamics, we're seeing tremendous growth in job Boston categories sorting by circa 240% year on year and capitalizing Congress the density of high demand for labor and labor supply.
And small and medium segment. The consumption grows explained circa 70% of total job Boston growth well in key account segments consumption growth and pricing were nearly equal contributors.
If you look at the base access and bundled subscriptions demonstrated 133% and 95% growth year on year, respectively.
This quarter, we completed transition of our clients to our new subscription model and we see that circle at 75% of CVD be revenue increase in key account segment is explained by the purchase of additional contacts extra exceeding our original expectations. So overall in terms of top line performance. It was arguably the best quarter in our recent history.
Yeah.
Having the strong historical numbers, coupled with a very robust leading indicators such as a long term subscription bookings in packaged vacancy purchases, we decided to significantly upgrade our official guidance on full year revenue growth basis, the range of $63, 68% year on year.
Of course, it assumes continued recovery trend in economy and no major restrictive measures in the second half now his graduate to talk about our profitability and our other financial metrics.
Thank you, Mike and Hello, everyone.
Give you some detail on our expenses a large us first.
As Tim just said, our adjusted EBITDA margin has increased to almost 58% in the second quarter of 2021 compared to 43, 4% the second quarter of 2020.
This improvement was mostly due.
Due to the increase in our revenue.
Consolidation of levels or whatever else kill us time to digest that EBITDA margin by circa three percentage points. Therefore, the inquiries that larger in our organic business segments.
Deeper.
Consolidated basis.
Our operating costs and expenses increased by 93%.
Second quarter of 2021.
There are three key facts are stubborn goals first we added to express ourselves our plot that scale us which explains about one third of the growth second there was a low base effect as our expenses in the second quarter of 2020 are quite low on the back of course and related cost savings.
Third we increased our head count branches and marketing expenses in accordance to our 'twenty to 'twenty one budget let.
Let me briefly discuss the key expense buckets.
Our personnel expenses increased by 95% compared to the second quarter of 2020 at the <unk>.
<unk> driver here was the additional Farfetch kilos personnel expenses, which express or the one third of the total growth in this bucket.
The growth was also driven by the low cost base, our cost savings program in the second quarter of 2020 to say what that was about 60 million wearables for industrial and bonuses.
Also our performance based sales teams, both or just inquiries by circa 65 million variables in the second quarter of 2021 on the back of our performance in the internal sales team stargates oil in the second quarter of 2020 performance sales performance based bonuses, which are quite.
Quite low.
Finally, not included is our fault that skill is consolidation, we increased our headcount by circa 13% or 120 people over the last 12 months, primarily customer support development and our sales teams and it also creates wages by circuit Delta shelter in the second half of 'twenty Atlanta L.
By circa 7% in the second quarter was twice as long as you want it.
As a percentage of revenue personnel expenses, excluding share based compensation and other items have decreased from 31, 4% in the second quarter of Brexit Wednesday.
223, 1% in the second quarter of 2021, or one eight percentage points, mostly due to the increased revenue.
Moving onto our luck the next milestone they increased by 53% year on year. The growth was driven mostly by expression of our luck. The next best across various channels to the courthouse with our annual budget, while approximately one third of the goal was to put the customer in April.
There was also a moderate low way its effect before our cost savings last year as a percentage of revenue market that has also decreased quite sensibly from 15, 3% in the second quarter last year to landfill and 2% in the second quarter of 2021 or by circa six percentage points again, largely due to the increased level of revenue.
Our other general and administrative expenses increased by 141, 6% compared to the second quarter of 2020 key driver here again, unless the additional software <unk>, which contributed approximately one third of the growth in the bucket and the other factor as far as P. S purely related to asbestos offset with <unk>.
Many of our bullshit in the second quarter of 2021.
The low base effect of the Covid related cost savings program in the second quarter last year and the increase in cost of sales of the bicarbonate increase of revenues from other veterinary other services. This year as a percentage of revenue other general and administrative expenses adjusted for various non operational items were Atlanta land for sale.
During the second quarter flat compared to 10% in the second quarter of legislature.
Our margin is achievable in the second quarter of 'twenty to 'twenty. One are explained by a significant revenue increase while our cost base being somewhat conservative level take Walton County.
Table marker waterfront.
So we don't think these kind of margins are sustainable in the short term and would expect that it will trend down towards 50% plus weighted average of the year.
Moving onto other key indicators, our capex in the second quarter of 2021 was 88 million or almost compared to 41 million in the second quarter of 2020.
This increase was mainly due to our investment in infrastructure.
The infrastructure on the back of the increasing user traffic.
Our stainless have capex of about 3% of revenue in the second quarter, our net working capital as of June 32021 was negative $4.8 billion compared to negative $3.8 billion.
As of December 31st 2020, the change was primarily due to customer advances were asking for last six months.
Income tax expense in the second quarter of 2021 was 414 million rebels compared to 75 million in the second quarter of 2020. This increase was driven by the increase in revenue and consecutive increase in the taxable profit.
Our effective tax rate in the second quarter was 24, 5% relatively flat compared to $23 nine in the second quarter of 2020.
Now I'll turn it into cash generation metrics in the second quarter of 2021, we generated $1.7 billion rubles from operating activities compared to one 5 million in the second quarter of 220.
The growth was primarily driven by the increase in sales.
We used 803 million rubles and investment activity as compared to 28 million used in the second quarter last year. The increase was mainly due to the consideration paid for acquisition of additional 40% of all electric interest in <unk>.
We used to kind of dial five meaning we're bolstering financial activity as compared to $572 million in Houston, the second quarter of 2020.
This decrease was mostly due to timing of bank loan repayments last year due to COVID-19 related fewer working days.
Our net debt decreased from <unk> as of December 31st 2020 to $2.6 billion as of June 30 of 2021, primarily due to the inquiries relative proliferative acute says.
On the back of the decrease in love their LTE increase in adjusted EBITDA leverage decreased to 0.4 times adjusted EBITDA as of June 32021.
<unk> to one two times adjusted Ebitdas on December 31st two inches Wednesday.
<unk> in July of 2021 were settled earlier announced dividends for the year 2020 or shortly to be robust.
Therefore, our net debt and net debt to adjusted EBITDA ratio increased in July compared to the quarter for us.
And finally in July plants in 'twenty, one we established a new restricted stock units to provide the more competitive long term integration model or <unk>.
Prior to this our management incentive program Securities 2016 hearing at all from.
2018 year old social below our 2016 offshore plan focused mostly on our top management level. It is now fully granted and they all standards awards west from late 2023.
Part of the awards issued under the legacy 2018 offshore wells will be replaced with awards under our new <unk> plant.
The Mexico, a number of shares for what is out there. When you are a small player is 6% of the total shares issued and I'll spend a little time to plan. The awards are expected to be granted in tranches over the peer at the four years until August 2025 each.
Each individual grants will be subject to approval by our board of directors upon the recommendation of the management and the compensation Committee based on a certain selection criteria.
We're still periods Whorish Crossrail before years tell us around the globe.
When you ask you well, we'll be reasonably wide and its coverage and lower awards among others are key personnel and development product sales and marketing teams.
We believe that with the new RSV plan, we will be able to better attract bodyweight Albert.
Keith.
This concludes our presentation of the results of the second quarter of 2021, and we are now opening the floor for your questions. Thank you.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone.
To withdraw your question press over.
Husky placed on fiber will become part of the Q&A roster.
And the first question comes from the line of <unk>.
Duffy stuff from Goldman Sachs. Please ask your question. Your line is now open.
Yeah. Thank you very much for the presentation couple of questions. So firstly can.
Can you share your thoughts on the medium term monetization plans.
Looking to do any steps with regards to the monetization of this year or it's more for the next year and how would you qualitatively is tough.
How much of the upside from the April price increases as well as the lockdown with price increases were not yet reflected in the second quarter results and will be reflected in the coming quarters.
And my second question is more technical it looks like you increased the stake in ski line fill them are you considering the 400% ownership outcome. Okay. Thank you.
Yeah.
Uh huh.
Zero here I'll.
I'll try to answer your question.
The first one on the monetization.
We are.
<unk>.
As a result of the transition.
Because of the implementation of our new subscription musician model. So this year, we effectively moved all lines to new monetization models.
And yes, eventually kind of was executed smoothly without any churn spike et cetera.
At the same time it are as you can already see in the results and you will be absorbed this and next quarters.
And the impact on our revenue was quite quite significant.
Looking forward.
Of course, we are.
We believe that this video.
Mark community and a lot of.
Various areas that we can actually explored.
Our monetization ideas. So every every year, we plan to actually kind of move to our longer term target.
This year.
As we I mean grade clients to new monetization model, we'll try to get the actual realized price for the contact be closer to the target level.
Remind you we felt.
<unk> conduct a force of six roubles.
Contact our union Nowadays realized prices were 44 dual most of it will probably get closer to 16, and then kind of in play for that number.
We are at the moment is going to technologically.
We are very focused on getting the infrastructure in the state of structure in place by end of this year to kind of major pools theyre actual willingness to payroll clients to focus on who we call focusing on regional differentiation.
First of all differentiate multiple price from other regions because at the moment.
Uniformity and that.
We also.
Attention to kind of depreciation or what went wrong and what profession, we'll see that at this point of time throughout Europe and.
Flexible enough and we see significant upside from that.
In terms of April impact.
The growth was quite moderate right because our major initiatives.
Inflation, who are actually implemented.
Before COVID-19.
And then we also announced the new subscription model. So we we didn't actually planned to make because April was a major pricing events right.
I would say it's quite moderate this year already in the second quarter. You know of course, you will be seeing the impact throughout the year right because the study.
Dave changes they are not affected in any particular quarter.
And even the spread throughout the year.
But I wouldn't call the April some of them somewhat.
<unk> went up to them.
In terms of scale us.
Yes, it's a separate transaction from the acquisition of the original control and.
Standard was they're going to act.
Gesture towards the founder Who's been writing this business, where he successfully over the last five years. So again certain liquidity at the same time. He remained a significant stake in the company and 25% and he is fully motivated and longer and longer term success of this business. So we also.
Very much interested in him from being fully invested in bulk.
Sure.
Consolidation of 100% is possible, maybe it's too kind of ultimately <unk>, but we're not seeing it in our income shorter zone.
Sure.
Okay. Thank you very much.
Thank you and the next question comes from the line of Ivan Kim from <unk>. Please ask your question. Your line is now open.
Yes. Good afternoon two questions for me. Please firstly just on the longer term growth.
Regarding high demands.
That's a fairly high base for next year.
So I was just wondering.
How confident are you the company will be able to maintain this sort of 25, 7% growth.
2002.
And my second question is on.
First of Europe, and the marketing spend for the marketing spend.
Has been fairly.
Modest because of your revenue, but not in absolute terms, which is a very revenue definitely this quarter.
What would you expect for.
The second half.
<unk>.
On your marketing spend is it driven.
By competition, so basically is it more.
You're responding to.
The competitors or it's kind of normal.
Let's say of course of business.
Thank you very much.
Yeah.
Thanks, Good morning.
So the first one on the growth I think it's a little bit premature now discussing our growth for next year, you're right, we still have two quarters.
But at the same time our yep.
Part of this growth is definitely sustainable right and so the last year comps are quite favorable.
Have some acquisitions are affecting.
Your line, but at the same time.
Factors that we believe are there.
Definitely.
Table.
They will be heading significantly book next year for example, monetization and a new subscription model, we expect at least two times a bigger impact on revenue in next year than this year.
Just because of the full year effect.
So I think and then then.
There'll be new monetization initiatives there'll be significant customer growth and we expect.
And therefore.
Growth rates that you mentioned, where it's not our profit our guidance at the moment I had been on planning good now but.
It looks quite quite quite sensible and yeah.
We believe that we can sustain this level of growth next year as we see a big institution demand unfolding.
And I'll hand, it to you should comment on marketing spend.
Yeah. Thanks.
Hi, Juan this is Gregory so in love.
Perfect ability is as I said.
We kind of expected to trend down a little in the second powerful.
No.
Of course.
Okay.
So what's the revenue trajectory would be weather of the year.
Q2 high demand.
A high number of drove <unk> will continue into Q3 or into Q4 as well right.
Secondly on the cost side, we kind of.
Expect to increase in the west wells because of whatever.
Sure.
Somewhat conservative side in the first half of the year just being sure.
The full.
Full year revenue performance.
B.
When all she.
We're now heading into Automd rights, which will probably be quite heavy in terms of marketing spend for ensco assessors just typically.
If these issues are for <unk>.
Brexit went.
Also there's a plot that its keyless, which where you consolidate level.
Fully in our P&L, they do have to dilute your for input we estimated to be about 3%.
Full year results as well just as it was in the future.
So basically given all those factors will think.
Uh huh.
Kind of conservative revenue share or wherever it conducts about future herself.
EBITDA margin for the full year maybe.
Maybe more if revenue will be.
Performance.
But are a little.
Conservative.
Of course provide it's kind of no.
Severe COVID-19 related lockdowns for et cetera occur in the second half of the year.
And then I think on March 10.
As I said, we're looking.
Forward to increase in the second half.
Percentage wise.
You saw that it wasn't both land for sale in Q2, I think it will be a kind of closer.
Closed virtually.
Last year.
About 30, maybe 12.13, maybe 12% of phrasing your loss ratio in 2020, I think we will see.
Sounds like loyalty in 'twenty or 'twenty one.
As well might appear.
With less.
As for the <unk> I wouldn't say that it's kind of a full thoroughly.
The competition wise, we can.
Still see.
Kind of positive effect from a market for western World in both just brand awareness and performance based.
So we are kind of targeting.
Marketing level as a percentage of revenue for installs as well.
But if so.
<unk> says yes.
We are we are responding to competition.
Issue as well.
I think in the second course of the year it will be pretty much a.
Increase in net credit forever.
Marketing channel.
Including performance based.
<unk> brand awareness.
Hum flying as well.
Great. Thank you very much for the detailed answers.
Thank you and the next question comes from the line of Dmitry Zaslow from Baird. Please ask your question. Your line is now open.
Alright, Thank you very much for the opportunity to ask questions and congrats on the impressive results.
My first question would be on your revenue growth if you could breakdown your second quarter revenue growth like.
Like how much of that growth came from the base effect overall positive like labor market dynamics improve business performance and the consolidation of acquired assets that would be my first question and then my second question would be maybe if you could provide some comments on some color on the fly early August trends.
How you see the overall market is performing well they split it it's a labor market trend changing or even accelerate tennant.
Thank you.
Yeah. Thanks, Thanks inventory.
Drew here.
Okay.
Of course.
Second quarter.
Second quarter Arabian U worth decomposing in the.
Stable sectors in the less sustainable course.
Hours to meet its around 80%, 80% percentage 80 percentage points are actually attributed to just the rule based effects that must here.
And I'm.
So a good 20 percentage points are attributable to acquisitions, we made with.
Loving skew us so it's actually you can kind of take out this 100 <unk>.
That remains.
55, 6% that would be kind of cold.
Our guidance driven by underlying fundamentals.
It still question nominal growth.
The business so in scale like ours.
And that the 60% you can also kind of decompose into the three main three major factors that you've got children already mentioned.
25% of those 60% like one for us.
That kind of relates to monetization of existing business and.
Saturday, we see ample opportunities in the coming years here. So the sheath. The Humanization scheme was kind of exceptional event, but it opens up a lot of opportunity for further monetization. So we have a lot of money there.
And ideas to the name he can veto pricing sort of already answered this.
This part is quite robust and we don't expect any deterioration, Oregon, it's a diminishing impact from this.
And the other factor is the effects of the average consumption.
Their client so at the moment, we see that small and medium businesses consume a circle of 50% or more.
Then they did historically and key accounts consume almost 100% more so they doubled their consumption on leverage.
We believe this area, where we actually may have some kind of temporary effects that may actually fade away not entirely but to the extent as we see the original labor market stabilize why forget the normal people.
Moving again.
Do it generally improves.
So this is the part that should probably in comparison to the highest kind of unsustainable.
Fragment and they'd be major 50 bed explains half of that.
Growth, 60% is attributable to kind of intake of new customers and this is what we call digitization and no acceleration in digitization and more companies getting them working online transactions on the back of this got covered some consensus. So we believe this actually what drives the drives.
The fundamental trajectory.
And that accelerates our long term growth.
Last year, we also significantly improved our client Onboarding Expedia.
The experience that gave.
Pretty impressive immediate effect that could be hard to replicate.
Well, we don't know it always was to come up with such such a great interface improvements that gave us around 7% of total grow but the remaining is what actually losses accelerated digitalization.
In terms of trends they remain very strong I think that that's one of the reasons why we upgraded our guidance.
July in the quarter.
Order to date.
We see that our fundamental factors they don't want the ciliary and we see still couldn't even.
Accelerating impact from our monetization stable consumption.
The market. This deal are pretty tough if you look broadly at the market I think all our competitors face really.
Similar challenges.
<unk> got a shortage of supply.
Kindred at times and in this environment, we believe that we held up pretty well and we acquired 2 million Ucd's, we sustained candidate.
Delivery level, so that most likely resulted in a market share gain until the Kansas delivery. So the market remains to be tough we don't expect this.
Yeah.
Yeah.
Yeah.
Yeah.
Okay.
From <unk>. Please ask your question. Your line is now open.
Yes. Thank you very much channels congratulation with great numbers I have two.
First of all could you elaborate a bit on Europe.
Future Oh approach to pricing. So you mentioned in your speech that you are considering sometimes differentiation.
The region, that's my position.
So maybe you could tell a bit more.
What professions or are in the most demand now where do you see like the most potential to the average check now who want to like could you give us sort of in the things that are more or less I don't know performing or whoever their budgets that they have for such a pursuit and it just so the mom and well points of.
Growth, yes, and the second question would be on your yes.
And if you plan and the buyback. So you would tell us that their plan is equal to 6%, yes, so far.
The.
Your number of shares and that he will be.
<unk> funded by both by Beth can you share ratio and a lot of months. So could you provide more information how much of your plan will be backed by buyback and a bit more if it's possible on the buyback buyback program techniques. So do I understand correctly that you will be like.
From time to time are buying your shares from the market during the next 12 months.
Got it thank you.
Yeah.
Yeah, Thanks on the Michigan.
On the pricing.
Actually there are various angles, how you can differentiate and we believe that we should end up hitting a fully dynamic pricing that is not bound by sort of logic, but theyre just response to the actual labor supply balance in the market because some professionals when they actually look quite good.
Knowledge intensive and are attractive, but there there's oversupply of candidates and the circle of ethical right and so the price and our pricing should reflect the actual station not only gonna potential salary.
What we see is the kind of biggest part two and you'd see I think for US. It's so of course to differentiate are the kind of low skilled labor and blue color and this is the area, where we even actually may foresee certain price reduction rosters to win this market because it's really a huge and growing fast.
And for the other hand, we have a kind of high until the market a wide wide GOR professionals, where at the moment Oh pricing thing is not anyhow tied to actual the gabelli on this.
And the importance.
Such predictions for businesses. So I think that that's the angle would be probably important also professionals.
Professionals will see it in the highest and growing demand.
And the other ear because at the moment is whether it's equity or engineer you kind of for most products, you're just being the same price and I think that's not not really fair.
In terms of the impact.
There at the moment we are.
Entirely going to reengineering, our all capital work in the company and that's actually entrenched quite deeply into our service through by end of this year, we should have the full year.
Brand new professional catalog.
Which would be kind of a ground for this differentiation and starting from Q1 next year, we will start and launch our experiments will be kind of finding this a differentiation points.
And as we see opportunities to connect to.
Got it.
The implementation of tariffs.
That's the first question and second the I think we will just give it to revenue.
Mhm, yeah. Thanks Newmont.
Yeah.
So I just wanted to reiterate again that our this.
Europe RSV plan.
Sales of 6% is actually a quite.
Quite differed in time right we go into ground.
These awards.
Immediately but.
Over the over the.
Theory that the well once this program remains well it it's four years, so which expire in August 2025.
And we expect these.
The warrants will be granted or this for Europe.
Basically I think in this year.
Good ground to bulk sale or 15% of total program remaining.
Remaining.
In the next three years.
As for the buyback.
Yes. The primary purpose of the program is to front of the.
This.
Share based incentives.
Without a doubt.
Diluting existing shareholders.
Hum at this point credit swap rate to give you any indication alone.
Or specific on when and what Williams, we arent going to way back.
As you saw the program is kind of a framework it's a S. R.
Actual telco sales.
Sure.
To be a board Brexit kind of statutory limitation.
Well it for 12 months and.
The buyback price short shall not exceed the what the average a five day average by more than 5%.
So we'll kind of vacation.
Do they purchase from the market.
As you ask yourself.
Eldar will inform accordingly.
Accordingly.
As we decided to only in a specific oh kind of buyback tranche.
Just as an indication right. So we off the white box size, maybe it's useful.
We estimate with.
Next year, we'll issue. So we will have to be sure about 40 or 40 year, sorry, 400000 shares under our 2016 Ultra plan and when you are a few plan.
Hum.
Our oldest shares would probably be purchased from from the market.
Lengthy in some form at least here in the next year.
Thank you very much very clear thanks.
Thank you there are no further questions. Please continue.
Thanks, a lot for joining the call bye bye.
Thanks, Brian.
Alright.
Yeah.
Thank you. This concludes our conference for today. Thank you for participating you may all.
Now disconnect.
Yeah.
Yeah.
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Hello, everyone and welcome to head count for groups second quarter 2021 earnings call on the call today, we have vehicles Yougov, our chief Executive Officer, Gregory myself, our Chief Financial Officer, and Dmitry, So gang of our Chief strategy Officer.
Press release containing our second quarter 2021 results was issued earlier today and the Koch you may be obtained through our website.
Investor that titration Dottavio before.
Before we begin we would like to remind you that today's discussion will contain forward looking statements.
Actual results may differ materially from the results predicted or implied by such statements and forward looking statements made today speak only to our expectations as of today.
Undertakes no obligation to publicly update or revise these statements for a discussion of some of the risk factors that could cause actual results to differ please see the risk factor section of our annual report on form 20-F for the year ended December 31.2022.
During this call we will refer to some non I first financial measures. These non I first financial measures are not prepared in accordance with FRS a reconciliation of the non life on its financial matters to the most directly comparable <unk> measures is provided in the earnings release, we issued today and the slide presentation, each of which is available on our web.
At Investor Day that changed or are you now I would like to turn the call over to Mikael. Please go ahead.
Ah Thanks, Omar Hi, everyone.
Thanks for joining us today.
How can we through 2021 and I'm increasingly optimistic about the strength of our business driven by fundamental market trends. We are currently seeing dramatic corporate activity in the recruitment market. This is evidenced by historical high number of records on our platform and the record intake.
New customers as a result, our total paying customer base in the first half of 2021 exceeded 300000.
Along with customer base expansion, we have completed the migration of our users to the new pricing model for subscriptions, allowing us to improve monetization and set the ground for its future enhancement.
I'm also excited about our product development can be second quarter. For example, we released 2 million too far where users and in platform functionality of de risked and income communication between candidates and employers.
As messengers and becoming an increasingly important week people confuse their digital product.
So we're focusing here or integrating recruitment is a broadly used interfaces.
We launched course positive options for our clients to advertise their vacancies across Europe lots of platform, thereby extending their candidate outreach. All of these are crucial steps in order to help our clients to succeed in this challenging labor market situation now, let me turn it to Dmitry.
Walk us through the key highlights over second quarter. Thank you.
Thank you Michelle and good afternoon, and thank you for joining us on this call.
As we have said that we are very happy to report that our business continued to gain strong momentum and significantly accelerated in the second quarter delivering across all strategic priorities.
Again for comparison base last year, our Abd in Q2 was up 155% year on year, driven by average consumption growth accelerated our intake of new small and medium businesses and utilization are allowed and a full consolidation of newly assets acquired.
Despite some diluting effect from scale it up a lot of consolidation, we improved Albert stability with adjusted EBITDA margin gained about 57%. Our capex comprised just two 3% revenue is contributing to our strong cash flow generation over the quarter.
Turning now to our resolve the customer segment as a result of our organic growth and acquisition of the block that we have increased our customer base by circa 125000 customers and Ed over the first half of 'twenty to 'twenty, one we've already had more being clients than the entire pre COVID-19.2019.
During the second quarter, almost all client categories demonstrated triple digit revenue growth with small and medium business segment being more driven by customer base expansion, both organic and inorganic well get college segment.
<unk> also reported strong RPC grow.
Congress could be explained by target monetization initiatives.
Revenue in Moscow, and St. Petersburg increased by 145% year on year, while revenue from other regions of Russia went up by 178% year on year now, reaching nearly 36% share in total revenue.
It was a product dynamics, there, we're seeing tremendous growth and drop Boston categories sorting by circa 240% year on year and capitalizing on asbestos density high demand for labor and labor supply.
And small and medium segment the consumption girls explained circa 70% of total job Boston Grove, well on key account segments consumption growth and pricing where neither equal contributors.
Covid hit the base access and bundled subscriptions demonstrated 133% and 95% growth year on year I respectfully.
This quarter, we completed transition of our clients to a new subscription model and we see that circle at 75% of GDP revenue increase in key account segment is explained by the purchase of additional contact extra exceeding our original expectations.
So overall in terms of top line performance. It was arguably the best quarter in our recent history.
Having the strong historical numbers, coupled with a very robust leading indicators such as a long term subscription bookings and packaged vacancy purchases, we decided to significantly upgrade our official guidance on full year revenue growth basis with a range of 63, 68% year on year.
Of course, it assumes continued recovery trend in economy and no major sticking it matters in the second half.
Now his graduate talk about stability and our other financial metrics.
Yeah.
Thank you, Mike and Hello, everyone. Let me give you some detail on our expenses on March 1st as Kevin Just said, our adjusted EBITDA margin has increased to almost 58% in the second quarter of 2021 compared to 43, 4% in the second quarter was 2020.
This improvement was mostly due to the increase in our rabies.
Consolidation that was helpful. I think that's key less value to digest with EBITDA margins by circa three percentage points. Therefore, the inquiries that larger in our organic business segments was even steeper than on the consolidated basis.
Our operating costs and expenses increased by 93%.
Second quarter of 'twenty to 'twenty one.
There are three key factors still that girls at first we added to express ourselves that bought that scale us which explains about one third of the growth second there was a low base effect as our expenses in the second quarter of 'twenty Vantiv are quite low on the back of Korea.
With cost savings and.
And third we increased our head count in branches and marketing expenses in accordance to our 'twenty to 'twenty. One budget. Let me briefly discuss the key expense buckets, our personnel expenses increased by 95% compared to the second quarter of 2020 at the <unk>.
I just driver here was the additional support that scale is personnel expenses, which explains the one third of the total goals in this bucket.
The growth was also driven by the low cost base, our cost savings program in the second quarter of 2020 is saying that's about 60 million rubles or inflection in bonuses.
Also our performance based sales teams board will just increase by circa 65 billion rebels in the second quarter of 2021 on the back of all of the Formula and the internal sales team stargates, while in the second quarter of 2020 performance sales performance based bonuses are.
Quite low.
Finally, not ingredients like what that scale is consolidation, we increased our head count by circa 13% or 120 people over the last 12 months, but I'm not really in the customer support development and our sales teams and they also create wages by circa 10%.
Colorful 20, Atlanta and by circa 7% in the second quarter was 2021.
As a percentage of revenue personnel expenses, excluding share based compensation and other items have decreased from 31, 4% in the second quarter of 'twenty to 'twenty two.
23, 1% in the second quarter of 2021 or by eight percentage points, most danger to the increase in revenue.
Moving on to our next milestone they increased by 53, South Europe. The growth was driven mostly by expression of our luck. The next best across various channels for that core industrial power annual budgets, while approximately one third of the goal was just because our plot the customer in Asia.
There was also have moderate low way its effect for all cost savings last year as a percentage of trailing in Waikiki has also decreased quite sensibly a profit.
3% in the second quarter last year to land for the 2% in the second quarter was 2021 or by circa six percentage points again, mostly due to the increased lot revenue.
Our other general and administrative expenses increased by 141, 6% compared to the second quarter of 2020 key driver here again, unless the additional <unk>.
<unk> loss, which contributed.
So basically one third of the goal the blackout.
The other factor as far as Korea U S payroll related expenses <unk> 6 million troubleshoot in the second quarter of 'twenty to 'twenty, one the low base effect. It's all the COVID-19 related cost savings program in the second quarter last year.
The increase in cost of sales on the back of increasing revenue from other value added services. This year as a percentage of revenue other general and administrative expenses adjustments, whereas some operational items.
For the second quarter flat compared to 10% in the second quarter with legislature.
Largesse achieved during the second quarter were flat at 21 are explained by a significant revenue increase while our cost base being somewhat conservative level take Walter County unstable macro environment.
So we don't think these kind of more.
Is that sustainable in the short term and would expect them to trend down towards 50% plus later in the year.
Moving onto other key indicators, our capex in the second quarter a flanker. Thank you one was 88 million or almost compared to 41 SEC.
Quarter of 2020, and this increase was mainly due to our investment income show or the infrastructure on the back of increasing user traffic.
Stimulus have capex of about 3% of revenue in the second quarter, our net working capital as of June 32021 was negative $4.8 billion compared to negative $3 eight.
As of December 31st 2020, the change was primarily due to customer robustness.
The last six months.
Income tax expense during the second quarter of 'twenty or 'twenty, one was 414 million rebels compared to 75 million in the second quarter of 2020. This increase was driven by the increase in revenue and consecutive increase in the taxable profit.
Our effective tax rate in the second quarter was 24, 5% relatively flat compared to $23 nine in the second quarter of 2020.
Now I'll turn it into cash generation metrics in the second quarter of 2021, we generated $1.7 billion rebels from operating activities compared to one 5 million in the second quarter of plans for 'twenty.
The growth was primarily driven by the increase in sales.
We used 803 million rubles and investment activity as compared to 28 million used in the second quarter last year. The increase was mainly due until the casket duration.
Our acquisition of additional 40% ownership interest in <unk>.
We used 205 meeting around bolstering financial activity as compared to 572 million in Houston, the second quarter of 2020.
This decrease was mostly due to timing of a bank loan repayments last year due to Covid related Europe talked on working days.
Our net debt decreased from five <unk> as of December 20, 226 billion as of June 13th 2021, primarily due to the increase in cats.
Those ships are alterative acute chest.
On the back of the decrease in love with the increase in adjusted EBITDA leverage decreased to zero point.
Four times adjusted EBITDA as of June 32021.
Compared to one two times adjusted EBITDA as of December 31st two I just mentioned.
For spirit.
July of 'twenty to 'twenty, one without the Alterra, there announced dividends for the year of 2020 or shortly to be Ramos. Therefore, our net debt and net debt to adjusted EBITDA ratio increased in July.
Sure So the corridor Lazarus.
And finally in July 2021 we established in Europe restricted stock units to provide a more competitive long term maturation model or can you tell us.
Prior to this our management incentive programs, including the 2016 viewing industrial plan and the 2018 unique cultural Glenn our 2016 offshore plan focused mostly on our toll punishment level. It is now fully granted.
The outstanding warrants west from late 2023.
Part of the awards issued under the legacy 2018 Ultra will be replaced with awards under our new <unk> plant.
The Mexico number of shares provided under the new RSV plan is 6% of the total shares outstanding.
With that I'll spend a little time to plan. The awards are expected to be granted in tranches over the bare at the four years until August 20.
Each individual grants will be subject to approval by our board of directors upon recommendation of the management and the compensation Committee based on a certain selection great you're out.
We're still periods for a strong revenue for years to come as well and go out of date.
When you ask you well, we'll be reasonably wide and its coverage and will reward among others are key personnel and development product sales and marketing teams.
I believe that with the new RSV, Glenn will be able to better attract what awaits Albert.
Keith.
This concludes our presentation of the results of the second quarter of 2021, and we are now opening the floor for your questions. Thank you.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone.
<unk> Your question press the Husky, please standby, while we compile the <unk>.
<unk> roster.
And the first question comes from the line of Java Duffy Stauff from Goldman Sachs. Please ask your question. Your line is now open.
Yeah. Thank you very much for the presentation couple of questions. So firstly.
You say your thoughts on the medium term monetization plans are.
I'm looking to do any new steps with regards to the monetization of this year or it's more for the next year.
How would you qualitatively Fas.
How much of the upside from the April price increases as well as the lockdown with price increases were not yet reflected in the second quarter results and will be reflected in the coming quarters.
And my second question is more technical it looks like you increased that.
They can fill them up are you considering the full 100% ownership ultimately thank you.
Hum.
The Nemo here I'll try to answer your question.
The first one on the monetization.
We are.
Please.
With the result of the transition.
Because of implementation of our new subscription musician model. So this year effectively moved old glines, two new monetization models.
And I'm actually kind of was executed smoothly without any Jordan spieth et cetera.
At the same time it are as you can already see in the results and you'll be absorbing. This next quarter is that the result, and the impact on the gravity was quite quite significant.
Looking forward.
Of course, where we believe that there is really a huge opportunity and a.
A lot of our.
Various areas that we can actually explored and our monetization ideas. So every year, we plan to actually kind of move to our longer term target.
This year.
As we I mean grade clients to new monetization model, we'll try to get the actual realized price will be conduct a bit closer to the target level.
Mind, you we felt.
<unk> conducted a force of six rumbles contact or Union Nowadays realized prices were 44 durable. So we will probably get closer to 16, and then we will kind of in play for that number.
We are at the moment is going to technologically are we are very focused on getting the infrastructure in the data structure in place by end of this year to guidance MAGE grows their actual willingness to payroll clients. So we're focused on oh cool focusing on regional differentiation.
First of all differentiate multiple price from other region because at the moment.
And if a uniformity and that.
We also.
Attention to kind of depreciation or buy it we're all and what profession will succeed at it at this point of time throughout tariffs or not.
Flexible enough and we see significant upside from that.
In terms of April impact, our I'll say the growth was quiet moderate right because our major initiatives.
Physician, who are actually implemented.
Before COVID-19.
And and then we also announced the new subscription model. So we we didn't actually have a plan to make because April is that with major pricing event right.
I would say it is quite moderate this year already in the second quarter. You know of course, you will be seeing the impact throughout the year right because the kind of static data of changes they are not affected in any particular quarter. It is critical and evenly spread throughout the year.
But I wouldn't call the April as some somewhat one mono for them.
In terms of scale us.
Yeah, that's a separate transaction from the acquisition of the.
Additional control and.
Standard was there then if act.
A gesture towards the founder who would be in writing this business very successfully over the last five years, so again certain liquidity.
At the same time he remained a significant a stake in the company and 25% and he is fully motivated and longer and longer term are successful. This business, though we also very much interested in him kind of being fully invested in and will.
For kind of consolidation of 100%. These are possible, maybe it's you kind of ultimate M gain, but we're not seeing it in our income shorter term.
Okay. Thank you very much.
Thank you and the next question comes from the line of Ivan Kim from <unk>. Please ask your question. Your line is now open.
Yes. Good afternoon, two questions from me. Please firstly just on the longer term growth.
Regarding high demands.
That's a fairly high base for next year.
So I was just wondering.
How confident are you the company will be able to maintain this sort of 25, 3% growth.
<unk> as a tool.
And my second question is on.
First of Europe, and the marketing spend for the marketing spend.
<unk> has been fairly modest.
Modest because of your revenue, but not in absolute terms, but it was a very revenue definitely this quarter.
What would you expect for <unk>.
The second half.
It's on your marketing spend.
It driven.
By competition, so basically is it more.
You're responding to.
The competitors or it's kind of normal.
Let's say of course of business. Thank you very much.
Thanks, Good morning, I will answer the first one on the growth I think it's a little bit premature now discussing our growth for next to it you are right, we still have two quarters.
But at the same time our.
Part of today's growth is definitely aren't sustainable right and so the last year comps are quite favorable.
You'll have some acquisitions are affecting our revenue line, but.
At the same time, there a sore thumb are factors that we believe.
There are definitely sustainable.
And they will be heading significantly but next year for example, when he physician and a new subscription model. We expect a have a at least two times a bigger impact on the revenue you know next year than this year.
Because of the full year effect.
First think and then then there'll be new monetization initiatives there'll be significant customer growth and we expect.
And therefore.
Growth rates did you mention where it's not our profit our guidance at the moment has been our planning now, but it looks quite quite quite sensible and will.
We believe that we can sustain this this lower growth next year as we see a big institution demand unfolding.
And I'll hand, it to you should comment on marketing spend.
Yes.
Hi, Juan this is Gregory and so on.
Perfect ability as I said.
We kind of expected to trend trend down a little in the second powerful.
Yeah.
Of course.
So what's the revenue trajectory would be weather.
Q2 high demand.
Uh huh.
A high number of Jo <unk> will continue into Q3 or into Q4 as well right.
Secondly on the cost side, we kind of.
Expect to increase in west pellets, because what anywhere.
No.
Somewhat conservative side in the first half of the year just being sure what.
The full.
Full year revenue performance.
B.
We now see.
We're now heading into Automd rights, which will probably be quite saving in terms of marketing spend for installs fasteners. There's typically.
If these issues are for <unk>.
Brexit.
Also there's a lot that its keyless.
Or will you consolidate level.
All P&L they do have the anti dilutive impact we estimate it to be about 3%.
Full year results as well just this clause in the future.
So basically given all these factors will think.
Uh huh.
Kind of conservative revenue share or wherever you can ask about the future.
EBITDA margin for the full year.
Maybe more if revenue will be.
Our performance.
But are a little.
Conservative.
Of course provide it's kind of no.
Severe COVID-19 related lockdowns for etc occur in the second half of the year.
And then I think on March 10.
As I said, we're looking.
Forward to increase in the second half.
Percentage wise.
You saw that it wasn't both land for sale in Q2, I think it will be a kind.
Kind of closer.
Closer to the.
Last year.
About 30, maybe 12.13, maybe 12% of fragrance for sure in 2020, I think we will see.
Sounds like loyalty in 'twenty or 'twenty one.
As well might appear a little bit less.
As for the treatment of I wouldn't say that it's kind of all thoroughly.
Our competition wise, we still see the.
<unk> got a positive effect from a market the Westwood in both just brand awareness and performance based.
So we are kind of targeting a market level as a percent of the trough revenue French books as well.
But in.
Some links process.
Yeah. We are we are responding to.
The competition as well.
I think in the second cohort of the year it'll be pretty much a increase in that kind of a forever.
Market and channel, including performance based and.
Online and brand awareness.
Oh flight as well.
Great. Thank you very much for the detailed answers.
Thank you and the next question comes from the line of Dmitry Zaslow from Baird. Please ask your question. Your line is now open.
Alright, Thank you very much for the opportunity to ask questions and congrats on the impressive results. So my first question would be on your revenue growth. If you could break down your second quarter revenue growth.
How much of that growth came from the base effect overall positive like labor market dynamics improve business performance and the consolidation of acquired assets that would be my first question and then my second question would be maybe if you could provide some comments on some color on the fly.
August trends.
How do you see the overall market for me, whether they split it is a market trend changing or even accelerate tenant yes. Thank you.
Thanks for taking inventory.
Drew here.
Okay.
Of course, our minutes the second quarter.
Second quarter Arabian U worth commenting on boarding in the.
Stable sectors in the like the less sustainable cost.
Spare hours to meet its around 80%, 80% percentage 80 percentage points are actually attributed to just the low base effect from last year.
And.
So a good 20 percentage points are attributable to acquisitions, we've made.
A lot of Skus. So the factory you can kind of take out this a sensible one.
And that remained.
55, 6% that would be kind of a cold.
Our guidance driven by underlying fundamentals.
It's still quite some nominal growth.
On the business so in scale like ours.
And that the 60% you can also kind of decompose into the three main three major factors that you've got shipping already mentioned.
25% of those 60% like one for us.
It kind of relates to monetization of existing business and as I said already we see ample opportunities in the coming years here. So the <unk>. The new monetization scheme was kind of exceptional then too but it opens up a lot of opportunity for further monetization.
We have a lot of.
When you get an idea as to the name you can reveal pricing center with your answer this.
So this this part is quite robust and we don't expect any deceleration Oregon.
Finishing impact from this.
And the other factor is thanks for the average consumption.
Their client so at the moment, we see that our small and medium businesses consume a circle of 50% or more.
And then they did historically and key accounts consume almost 100% more so they doubled their consumption on leverage.
We believe this area, where we actually may have some kind of a temporary effect that may actually will fade away not entirely but to the extent as we see the restaurant labor market stabilize why forget the normal people.
Moving again people don't agree with the general improves.
So this is the part that should probably income passes to the highest kind of unsustainable.
And fragment and they'd be major 50 bed explains half of that growth 60% is.
<unk> attributable to kind of intake of new customers and this is what we call digitalization and no acceleration in digitalization.
More companies get them opened online transactions are on the back of this carpet. Some consensus. So we believe this actually what drives the noise out there from the mantle trajectory.
And that accelerates our long term growth. So why last year, we also significantly improved our client on boarding.
And that gave us.
Pretty impressive immediate effect that could be hard to replicate.
Well, we don't know it always was to come up with the such that you agreed.
Interface improvements that gave us around 7% of total grow but the remaining is what actually losses accelerated digitization.
So the trends they remain very strong I think that that's one of the reasons why we upgraded our guidance in July and we're just quarter to date.
We see that our fundamental factors did not the ciliary.
We see steel couldn't even.
Accelerating impact from our monetization stable consumption.
The market is still pretty tough if you look broadly at the market I think all our competitors face really.
Similar challengers, there's a shortage of supply.
Kindred at times and in this environment, we believe that we held up a bit to work well and we acquired 2 million you see these two we sustained candidate.
Delivery level, so that most likely resulted in a market share gain until the Kansas delivery. So the market remains to be tough. We don't expect this situation as we said as I said last call because it's driven by a democratic but don't expect it to significantly change so the market there will be question.
<unk>. The next day next years, maybe five years some more.
But yeah, but some some factors may actually disappear with them.
Thank you.
Thank you very much for the details on so.
Thank you and before we take our next answer.
Question May I, just remind you if you wish to ask a question. Please press star one on your telephone keypad.
And the next question comes from.
Cooper tough from <unk> Bank. Please ask your question. Your line is now open.
Yes, thank you very much channels congratulation with great numbers.
I have two questions first of all could you elaborate a bit on your future Oh approach to pricing. So you mentioned in your speech that you are considering some price differentiation.
By region by profession.
So.
Maybe you could tell a bit more what professions R. E N. The most demand now where do you see the light like the malls, but they're on shelf today, but let's check now what's like could you give us sort of in the sort of more or less I don't know performing or whoever their budgets.
I don't know if such a pursuit niches, so the mom and well points of growth, yes, and the second question will be on Europe.
And if you plan and the buyback so you tell us that their plan is equal to 6% so far.
The number of shares and that he will be funded.
Funded by both buyback can you share ratio and a lot of them. So could you provide more information how much of a rescue plan will be backed by buyback.
And so a bit more if it's possible on the buyback buyback program techniques or.
Do I understand correctly that you will be like from time to time are buying your shares from the market. During the next 12 months did it. Thank you.
Okay.
Yeah, Thanks on the Michigan.
On the pricing well actually there are various angles, how you can differentiate and we believe that we should end up hitting a fully dynamic pricing that is not bound by sort of logic, but theyre just a response to the actual labor supply balance in the market because some prefer.
And then when they actually look quite kind of knowledge intensive fend are attractive, but there there's oversupply of candidates and the circle guards to go right and so the price and our pricing should reflect the actual station.
Only a leak in a potential salary.
What we see is the kind of biggest opportunity I think for US is of course to differentiate are the kind of low skilled labor and blue color and these would be areas, where we even actually made for certain price reduction rosters to win this market because it's just huge and growing fast.
And for the other hand, we have a kind of high until the market a wide wide GOR professionals, where at the moment, Oh pricing things not anyhow tied to actual the gabelli.
And the importance.
Of the such professions for businesses. So I think that that's the angle would be probably important also.
Professionals will see it in the highest and growing demand there's another ear because at the moment is whether it's equity or engineer you kind of for most products, you're just being the same price and I think that's not not really deferred.
In terms of the impact.
We are at the moment we are.
Entirely going to reengineering, our all capital work in the company and that's actually inflation quite deeply into our service through by end of this year, we should have that fully and a brand new professional catalog.
Which would be kind of a ground for cordis differentiation and starting from Q1 next year, we will start and launch our experiments will be kind of finding this a differentiation points.
And as we see opportunities who can get it.
The implementation of tariffs.
That's the first question and second the Yeah, I think we will just give it to revenue right.
Mhm, yeah. Thanks Nemo.
Yeah.
So I just wanted to reiterate again that our base.
<unk> RSV plan.
Size of 6% is actually quite.
Quite differed in time right, where we're at.
Go into ground.
These awards.
Immediately but.
Over the over the.
Europe.
This program remains well it it's four years, so what's expiring in August 2025.
We expect these.
The warrants will be granted or this for Europe.
Basically I think in this year for.
Both granted to bulk sale or 15% of total program and Romania.
In the next three years.
As for the buyback.
Yes. The primary purpose of the program is to front of the Oh.
Our share based incentives are without dilution.
Diluting existing shareholders.
Hum at this point kind of a small operator to give you any indication alone.
Or specific or in what.
What Williams, we are going to way back.
As you saw as the program is kind of a framework. It's a selection to held for sale of equities.
To me you are both Brexit.
For statutory limitation.
Well it for 12 months.
The buyback price short shall not exceed what they average a five day average by one 5%.
So we'll kind of vacation.
Oh, they purchase from the market.
S U S yourself.
And will it affordable.
Accordingly, our Sos, we decided to delay any specific kind.
Kind of a buyback tranche.
Just as an indication right.
If the white box size, maybe it's useful.
We estimate with in the next year, we will issue out.
We will have to be sure about 40, or 40 year, sorry, 400000 shares under our 2016 option plan and when you are a few players.
Uh huh.
Oh, all the shares will probably be purchased from the market.
Some for at least here in the next year.
Thank you very much very clear thanks.
Thank you there are no further questions. Please continue.
Thanks, a lot for joining the call bye bye.
Thanks, Mike.
Thank you. This concludes our conference for today. Thank you for participating you may now disconnect.