Barco N.V.

Good morning, ladies and gentlemen. I am Carl Vanden Bussche, Head of Investor Relations for Barco.

Pleased to welcome you this morning to the conference call on results of the first half 2019. And indeed, today with me our CEO, Jan De Witte; and our CFO, Mrs.

Ann Desender. Both Jan and Ann will present and provide some extra insights and color on the half year results.

And to do so in a structured manner, we will be using the half year earnings presentation. And presentation is available on our investors’ portal since earlier this morning.

And we assume you have found the deliverable in order to follow the sequence of the meeting. Following the presentation, we foresee time for Q&A.

I'll just highlight one preliminary topic before we really kickoff in order to work with comparable data 2018 versus 2019, the first half data for orders, sales and order book have been restated as if the deconsolidation of the BarcoCFG joint venture had taken place on January 1, 2018. Mind, however, gross profit, EBITDA, EBIT and related margins have not been restated as the impact was not considered immaterial.

That's it for the introduction, let's kick it off here. Jan, the floor is yours.

Thank you, Carl for the intro, and good morning to all participants in the conference. Look like the title on the document stated that we just closed, I would say, very solid first half with healthy growth and further profit and profitability improvement in which KPIs pretty much playing out the way we had planned them and inked them to be.

And so, with that, let's move to the specifics on Page 3 of the document. We're going to skip Page 2 with the customary preliminary notes that Carl covered.

So, on Page 3, executive summary for the first half results. Top line, we delivered 8.3% growth, there was a part of FX currency in that.

We are further building up the order book quite significantly, and we see this growth across all divisions with Cinema, ClickShare, control rooms and surgery as the one that in the first half stand out. On EBITDA – EBITDA margin, yes, here we further delivered the solid 3.3 points improvement of the EBITDA margin rates, driven by, on the one hand, gross margin accretion across the board as well as operating leverage.

We're growing our top line faster than our OpEx costs. And then one other important factor in the EBITDA upstream was the turnaround of control rooms, and I'll come back to that later.

In terms of net income, we landed also with a significant step up result of the good operating profit and the absence of any impairments in this first half. But we're also very pleased about the fact that the good operating results also translated into good positive free cash flow for the first half.

Result of the progress we're making in working capital management and something we've worked on for more than 2 years now, but Ann will then take us deeper into that. If you flip to the next page, Page 4, it will give you high-level view on the full P&L.

Like I said, orders and sales up respectively 7.5% and 8.3%. Order book increasing EUR 40 million versus the start of the year.

And again, we did get some help from the currency specifically that the U.S. dollar which plays for about 3.5 points out of the 8 points of growth.

This top line dynamic then further translates into strong EBITDA margin step up. Like I said, gross margin improvements played an important role in there, while we kept the indirect spend under control as we intended with the fit to lead program that we launched end of last year.

And also, indirect cost year-over-year for the first half were down about 2%. An additional key driver to the EBITDA was the control rooms’ turnaround, with not just strong year-over-year growth turnarounds and which we already started to see in the second half of last year, but now also with profitability upswing in the first half of '19 as compared to the first half of '18.

All of this then further translates into solid improvement of net income and free cash flow and in a couple of minutes, Ann will take us deeper into the free cash flow. On Page 5, we're providing some more color to the growth from a regional dimension.

The shorter that we see growth momentum in orders and/or sales across the 3 regions, if I start with Americas, solid growth in sales, yes, though in part driven by strong U.S. dollar at least in the first half year-over-year comparison.

Main drivers in the Americas is Cinema, where the renewal wave model now clearly has started and Barco is taking strong position and translating that strong position into good win performance at this point. On PROAV & Events we're working new product launches in the second half that should position us for an acceleration in the second half, specifically in the events market.

Control Rooms and ClickShare within enterprise both delivered well, I would say, both in terms of the strength of the product, the strength of the proposition, as well as the channel performance. Healthcare delivered good sales growth, though orders showed negative, but that is mainly driven by year-over-year comparison with a number of big bulk orders in the first half of last year.

And these are bulk orders linked to OEM business that have a 2-year – typically a 2-year cycle. In – EMEA, showed very solid momentum in orders as well as sales.

Same good dynamic in Cinema, including good dynamic in the Middle East with Cinema, Venues & Hospitality's segment stable. We see good sales of new LED product and solutions offerings, offsetting also here a weaker cycle in the events market.

On EMEA, also Control Rooms and ClickShare same strong growth dynamic that we saw in the Americas. And then good Healthcare growth in EMEA led by strong surgical continued growth.

Then on APAC, good growth and clear order pickup also here. You will remember that over the past 2 years reflect a negative growth in the China cinema business.

We do see that bottom out this year as expected. Control Rooms and ClickShare, again, also in APAC, good growth momentum for both.

While we're starting to reap the growth benefits from the – in China for China strategy, which we invested in for Healthcare and so that – if you want to call that way that we took is playing out as we intended it with the strong global presence taking on an attractive market opportunity. So, until here the high level financials, I'm going to hand it over to Ann Desender now to break out these financials in a bit more detail.

Good morning to everyone. Going to the next slide, Slide 6, you will see the usual walk on EBITDA.

EBITDA picking up from first semester last year EUR 51 million to EUR 67.6 million in the first half of '19 is looking to de-margin on sales. This is an uptake of 3.3 percentage points compared to the first semester the last year.

Excluding the currency impact, which had an impact on top line but also on EBITDA. Here on EBITDA, the impact 4.7%, this time positive on our results and then the main drivers of the uptake in the EBITDA and EBITDA margin being the additional sales, which we have been able to realize across the 3 divisions, across the 3 regions.

This adds in gross profit margin, which is also slightly up and good as actually compared to the year before. And on OpEx, which we have indicated last year when we did – we announced the fit to lead program, we have done in the first reset here.

So OpEx down year-over-year, but this is a net down of EUR 1.5 million, this is net after redeployment in several areas. If we look to R&D cost, net up EUR 1 million is primarily extra investments which we did on road map developments in particular on ClickShare business.

Sales and marketing, it's about in marketing blueprint exercise, which we have worked out with the more focused OpEx spending on marketing budgets, on segment marketing across the globe actually. So, the marketing cost in total still reach 14% on the top line.

So, it's not about feet on the street which we have taken out. And with that, concluding the uptake and EBITDA and EBITDA margin delivering what we were aiming at a profitable growth.

Moving over to the next slide where we show the – from EBITDA to net earnings. Yes, in one go actually, the extra-nominal EBITDA, which we were able to realize EUR 60 million is actually dropping to the bottom of our P&L.

And as you see, the extra increase of the net income shows an unalike result. Taking a little bit to the more details between EBIT and EBITDA, you see an increase in our depreciations and amortizations of about EUR 2.8 million, this is mainly the impact of the new standards on leasing, which is playing here and causing the increase.

Interest and line income taxes, the effective tax rate 1 percentage point lower, so reaching 17% and with that then landing at a net income of EUR 43 million or an earnings per share increase year-over-year of 56%. Moving over to the cash and balance sheet.

Happy to be able to report on the first semester already and this solid amount of free cash flow across all of the 3 divisions actually and this – which is primarily the impact, of course, of an increased EBITDA and gross operating cash flow, but – and more, what we call, linearity or a solid working – on the working capital across the 3 divisions. Return on capital employed, we got to 23%, which is compared with year-over-year with the first half last year is an uptake of 5 percentage points.

We're taking in some more numbers. So in the free cash flow and so on EBITDA or gross operating cash flow, mind that this is net after the payout of about EUR 10 million of lay-off costs related to the fit to lead program, which we announced last year and for which we took the provision into our P&L last year that's flowing through the cash flow this year.

Net working capital staying strong, very strong at 1.6% of sales. DSO is the primary – actually as the KPI 52 days, so an improvement of 12 days year-over-year in line with last year – end of last year.

Inventory turns landing at 3 and a little lower as compared to year-over-year and year-end, but not primarily building up inventories what I then call a good buildup of inventory that's related to the launch of the cinema Series 4 and ready for uptake in the turnovers in the second half of the year. With that, we land at the direct available cash of EUR 217.6 million, this is down year over – first up, of course, the positive up included is the free cash flow, then we have paid out the dividends, the very investment in caresyntax and then the new standards on the leasing had a negative impact in that respect on the reported cash and net cash available to the chewing off about EUR 37 million.

And with that, I give the word back to Jan, give some more color on the divisional performance.

Thank you, Ann. And we're going to Page 10 in the document and some more insights on division-by-division levels and starting with Entertainment.

Where we saw solid growth on the sizable uptakes for cinema, both in North America as well as in EMEA and that's we're with Cinionic and with the Series 4 new laser projector. We're very well positioned at this start of the year renewal wave, definitely shipping now lot more laser projectors as compared to lamp projectors.

Like indicated before, Venues and Hospitalities turned out softer versus strong comparison base in the first half '18. The driver there is primarily the Events business, which is cyclical, it goes with new product introduction that drive a renewal of the stock of equipment for rental companies.

So yes, we saw a down in that cycle in the first half of this year and that spending expansion of product portfolio in the second half with some new launches that are coming up for that segments. On the other hand, simulation insights that Venues & Hospitality is on track and expanding its customer base quite well.

Altogether, those 2 movements leading to strong orders growth and order book that is feeding the growth, not just in the first half, but the second half and beyond. On EBITDA margin, we saw a mix positive driven by the growth in Cinema offsetting some negative leverage in the V&H where we saw, again, lower growth in the first half.

If I go to Enterprise, here we're really reaping the fruits of the Control Rooms turnarounds with growth in all regions driven in part by the UniSee new products. We saw our factory do well, further ramping up the volume, but also ramping up the manufacturing yields for the UniSee products, which is also a big help on the gross margin for the product.

ClickShare continued on a steady double-digit growth. We now have more than 600,000 ClickShares in the market, and we continue further significant investment in the product road map.

We're not pretty much into a rhythm, but ClickShare where every 6 months, we have product renewals and upgrades into the market, and that is the right innovation rhythm for this type of market. So, both the Control Room and ClickShare are contributing to the strong growth for Entertainment.

While we saw EBITDA, margin jump up with strong 6.8 points, and like I said before that the main driver is the upswing in Control Rooms, which I think you will remember that Control Rooms for several years has been declining in top line and loss making. Last year, we turned the growth around and clearly with that growth is also coming the profits turnaround for Control Rooms.

On Healthcare, solid sales and orders growth in surgical. Low to mid-single-digit growth in the diagnostics, but both pointing in the right direction.

And over the first half, we fully finished and operationalized our new R&D and manufacturing center in Suzhou, that's R&D manufacturing, and go-to-market investment in China is yielding very solid growth, of course, on a relatively small base, but the right momentum that we were aiming for in China. Again, all of this leading to solid sales growth.

Like I said, the negative orders growth is mainly a year-over-year comparison with bulk orders that we took in the first half of 2018 in the modality part of this business. EBITDA margin up with 1.4 points that is driven by the enhanced operating leverage, top line growing faster than OpEx, while in the OpEx, we're still further stepping up investments in incubators and in our China play for Healthcare.

So, in short, if you look across divisions, all of them are now on a path of profitable growth. If you then flip further and go to the outlook on Page 13 that is, as I stated before, we're happy with how the first half played out with all KPIs delivering as we intended or better in some cases.

As projected, we saw the healthy growth return with the portfolio that we shaped over the past couple of years. We continue to build business focus and efficiencies that translated into the profitability performance across different divisions, while investing new products and innovation and in go-to-markets.

And over the first half, we further built up our order book, which puts us in a solid position to sustain the growth rhythm that we have captured here. So, puts us in a solid position to deliver on the outlook that we communicated early in the year, outlook of aiming for mid- to high single digit growth on the top line for the full year, while we see the EBITDA margin in the second half in line with EBITDA margin that we delivered in the first half.

On Page, I think, 13, in conclusion, what this first half means is that we're going to stay the course for the second half in 2019, and we intend to continue delivering on the business KPIs, of course, while also continue to build our growth and performance foundation, both in technology as well as organization and culture in that organization. Key focus on building out capabilities and performance focus.

Focus to perform is something that we are embedding, not just in our approach but also in our operating mechanisms, our processes and the way we make decisions. We're in the midst of executing fit to lead as we planned it and launched it, 9 months ago, focusing on resource redeployments and capability building in software, in product management, marketing and services, while sharpening the agility in the organization.

In terms of markets, over the past years, we've strengthened our footprint in our channel capabilities, that's a muscle that we're further leveraging and strengthen and powering our regional leaders to go after share. We're leveraging China in country for country for Healthcare and broadening that to other parts of the portfolio.

And then, of course, second half focused on new launches across the portfolio in ClickShare, in projection platforms for Cinema and ProAV/Events, in surgery with caresyntax and of course, several of our incubators. And at the same time, staying focused on driving innovation, innovation for the mid-to-longer term, focusing on our foundational technologies to build depth and breadth and stay ahead of the market in our capabilities with piloting digital platforms that enable SaaS and OpEx type offering in the market, while building out our value stack, the strategical action that we shared with you at our Capital Markets Day.

And so, with that, we're at the end of the presentation part. I'm going to hand it back to Carl now to orchestrate the Q&A.

Thank you, Jan and Ann. Within half an hour, it's not too bad.

And I think we can now move to a good Q&A session. The operator will also explain you how it works.

I'll just take my usual end of service announcements here. [Operator Instructions].

Yes. Thank you for taking the question.

Actually, I think very, very good performance in all divisions, except for maybe for Venues & Hospitality, so sorry to put some focus on that one. But I was wondering how you are planning to repair that performance?

Is it – be it on the market, you just have to wait until that turns around? Or are you going to take actions yourself to drive that turn around?

Yes. Okay.

Well, thanks, Marc, to remain on that topic. Jan will be happy to answer.

First Marc, it's not in our DNA to wait for something to happen. So, there's 2 important actions there, the first one is in the Events market and that's where the cyclicality is.

Where the events companies – whenever there is new technology in the market that's when they stock up, that's where they refresh their installed base or their inventory. We launched at Infocom end June a new projector, it's a sister product of our UDX projector, which over the past 2 years has done very well.

That will go out of the factories in the fourth quarter of this year. So, we're seeing the orders start to come in, but that's going to show in revenues into the end of the year.

The second element in the Venues and Hospitality market is the different verticals there. We have opportunity to take our great technology in more segments than we have done in the past.

And both in Europe and in the Americas, we're building out our channel presence, our commercial presence to broaden the number of segments in a focused way, but broaden the number of segments that we go after.

Okay. That's clear.

But there's no – so it's really focused on new products getting to the market and not really on something like cost that you want to take out yourself, like may be to compare with what you did in Control Rooms about 1 year ago.

No. No, no, nothing compared to that.

In this part of the business, we – if you want to talk turnaround, we focused on that in 2017 that's where...

And also, there was some impact, if I may add on this, on the margin positively, so of the move of the production from Fredrikstad to Belgium. So that has been a cost measure taken actually last year and which is then also having its impact already in the results this year.

Okay. Clear.

Maybe to give the magnitude, how big is the impact? Is there, like, negative EBITDA in the first half of the year or...

Yes. We don't disclose EBITDA or EBITDA margins to segment.

And so, it's not in the same line as it was last year or in line with Cinema, but not negative.

Okay. It’s clear.

Thanks.

I will just close here, right. It's not a turnaround case.

Right? The turnaround that was a focus of 2017.

This is really understanding the different ways in the market and being there at a right time with the right projects.

Okay. Thank you.

Stefaan Genoe with Petercam. A question on also on Entertainment and digital Cinema, where you indicate volume should evolve positively, you also – and you also indicated the average selling price has been increasing in the first half of this year.

With the launch of the 4K, do you expect the selling price to continue to rise as just this is being sold into the market in second half of the year? And related to debt, should we see further continued margin improvements in Digital Cinema in the second half of this year?

I'll kick off the answer on this one. So indeed, the good 2 dynamics on Cinema came together in the first half of the year.

First off, also volume up compared to a year ago. But also, ASP is going up as we move towards laser-based solution from more – over the rate of film lamp-based solutions last year.

And indeed, that the trend that we expect to see further strengthening in the coming year something that will happen step by step and gradually. As we talk today more laser-based and film lamp-based projectors, please note this is still very much smart laser, so there's phosphor-based users in the first half, and we are now ramping up production of the Series 4 laser projector as you have witnessed it during the Capital Markets Day in – during the factory tour.

Okay. And so, despite the lower ASP of the 4 – the Series 4, you should continue to have positive gross margin evolution and average selling price evolution in this segment?

Let's say, we remain a bit cautious on this one. On the one hand, the product is indeed strongly value engineered to bring in healthy margins, yes.

On the other hand, you also know that we do expect more volumes and more larger contracts to kick in and this may come along with somewhat of a volume discount effects as well. So, these are the dynamics that might play a role and okay it's – there's an open question how that will play out in the overall return for the Cinema segment.

Okay. Thank you.

Yes, good morning. Matthias Maenhaut, Kepler Cheuvreux.

And question on Control Rooms, so indeed, you've continued the nice turnaround you initiated in the second half 2018, could you give us a little bit more color on how much room there is still to grow that business? How is capacity utilization at this point in stage, and is there still room to improve the yields on the UniSee?

Yes. In terms of capacity utilization or capacity build up, we have a flexibility to build more capacity.

Although, with the capacity we have installed today, I would say, we're at 70% or below in terms of utilization of that capacity. And then we further increase yields, so the – how well we use that capacity.

So, there's 2 factors that still allow us to fully grow, and I do not consider capacity anytime soon as the bottleneck to grow.

Perhaps one additional comment here. You can read through the numbers of enterprise, it's not just ClickShare, it's also Controls, we've seen a very good growth and first semester compared to first semester last year.

It's also because there is a volume, we were still scoring quite low in the first half of '18. So, the second half of '18 was already at better level, so let's say, the bigger jump is not to be expected now for the second half of the year, but there is room to further upscale a bit the volume.

Okay. Thank you.

Yeah, thanks. Second question is on the free cash flow.

Indeed, very strong performance in the first half of the year. Can you dive in maybe a little bit deeper on two things?

One is the increase in payables partly driving that beak, is that coming from – is that linked to the increase in inventories that you still have those to pay? And second then there's the line – other changes in net working capital, which is also pretty big, could you explain what that is?

And maybe also to put everything – normally, you have more of a capital inflow in second half of the year, also in the first half of the year. What is to expect to be expected for this second half of the year?

Okay. Ann will be happy to take your question, Marc.

Thank you, Marc. The first question you gave the answer to yourself, so the increase in payables is indeed linked to the increase in inventories and the increase in inventories in the first half of the year compared to the beginning, of course, is primarily linked to, as I indicated, the launch of the drama Series 4, and which we in Cinema – in the Cinema projectors, which we are ramping up production for the increased output in the second semester.

With respect to the other part in net working capital and primarily to last year, actually last year, that was quite a bit down in that part of orders primarily related to lower advances on customer contract, which primarily play not only but have quite an impact in Cinema. And then last year, BarcoCFG there also played its impact actually.

So, in that sense, that's now more stable. To your third question, do we foresee an as high free cash flow in the second semester as last year?

No in the sense that we foresee that and that's what we worked on and it's not balanced between the quarters and the semesters actually. We worked hard on that, understand that we only work through your KPIs on net working capital towards the end of the year instead of more in a structured way than you have too much, I will call it shock effect into your organization, which is from an efficiency point of view not optimal.

And that's really what we've worked on. So, in that sense, we kind of more foresee a continuation of the performance of the first semester and see this repeated in the second semester, not the big upswing or call it, the imbalance, which we more had in the previous years.

Does that answer your question, Marc?

Yes, it does. Thank you.

Yes. Another question on fit to lead actually.

And I recall when you announced the program that you saw net savings of about EUR 20 million. Now looking at the bridge you gave on Slide 6 to say that OpEx was overall down EUR 1.5 million, do I see EUR 1.5 million in relation to the EUR 20 million?

And if not, can you maybe give us a little bit of an idea how much of the EUR 20 million of OpEx savings have already been realized?

Yes. Ann will be happy to take your questions.

Matthias. The EUR 20 million is – the base is 2017 actually to 2020.

So last year in the second semester, we also worked already on an OpEx, yes, of course, reset and reduction and avoidance actually. So, in part total already included last years.

And then if you look to the different income statement clients, it is indeed part of, so the EUR 1.5 million, which you have seen on the walk is included as parts of the costs are also which we – which are also indirect costs or included in the gross margin. So – and that we do not detail, so in that sense.

Now – and primarily, we want to go so we – as we look to the figures where we are now and on the execution of the fit to lead, we are now at about half of the EUR 20 million, so to speak. And in that sense, yes, further continue and as long as it's effecting the second semester and then actually to be completed by mid of next year.

Okay. Thank you.

It’s clear.

Another question on the EBITDA margin, which you guide to be at around the same level second half 13.6% versus the first half. I think for Healthcare; you're probably assuming more or less stable margins in Digital Cinema and further in Control Rooms I think I see no indication why would this – the margin shouldn't further improve.

And also, in Venues and Hospitality, it should likely further improve. So, in your stable guidance, does it imply an implicit margin reduction for ClickShare in the second half or is it just prudent or am I missing something else?

Okay. I'll take that Stefaan.

You can call it prudence. If you look at the first half, we do not count in the second half on the tailwind from currency, in the margin, that's one and then second, we'd be happy and we have been cautious on price pressure, happy to see in the first half that frankly we could withstand that and protect our gross margin.

At the same time, I read the same newspapers as you do, right? There's uncertainty.

And so, on that sense, we remain cautious to however the economic situation would turn.

If I add to that, perhaps how we translate that into the divisional breakdown. We believe there is perhaps a bit of upside possible on the Entertainment division, and we talked about V&H and the opportunity to improve a bit in the second half of the year that should also reflect in the Entertainment division for the full year EBITDA performance.

On Enterprise, we're not relying on the further improvement beyond the 20% EBITDA margin. We believe that with some of the things as Jan indicated that that, that 20% is a good performance, if you can keep that level for the full year.

And as you said yourself, Healthcare at 13%, this is what we have in mind for the full year as a good structural EBITDA margin.

Okay. That’s clear.

Thank you.

Most of my questions are already answered. But I've one additional question on Entertainment.

Is it a good guess to estimate that we are now in the phase where replacement units are higher than the new build units on the quarter-by-quarter basis and as we are now on this crossover points?

Yes. Good question.

And, let's say, we'll take it on the full year expectation. We believe that in detail '19, we will see more replacement units kicking in as compared to, let's say, expansion weight units towards China, Southeast Asia and so on.

So, this is, I bet, the year where we will see the crossover point. Yes.

But not detailing it down now quarter-by-quarter, but yes.

Okay. Thank you.

Just a quick question, seems to me you're building a team of – at least you got a head of M&A. Can you give more color on what you're currently working on, what about the type and what's probably to be able to succeed further small M&A after the one you made in the One Campus as well, that is quite attracting, maybe if you can also update on this one about the first type of integration and the way we can see them – whether we can see the first benefit?

This is definitely a question for Jan.

We're – like I said, we have started small M&A team, again focus at this point is to develop our M&A radar. To your question, what are the type of opportunities that it goes back to the value stack we presented at Capital Markets Day, and either it's opportunity that can strengthen our footprint – operate our footprint in the segments, the market where we are or it's adjacent software type opportunities like the one with caresyntax.

But we're looking for the same types of opportunities, whether it's in Control Rooms, whether it's in Entertainment space.

And what about the type? Well, do you see that growing the opportunity that could be crystalized before the end of the year?

And then what are the first pressure sequence as you get in and acquire medical company and where can – when can we see the first benefit because, I guess, you will have to codevelop product together and how long you will take and how long you will be able to generate good...

Yes. I won't get in detail.

In terms of time, let's say, we're not in a hurry. For me, objective is that, that we take the remainder of the year to really develop clear radar to then potentially execute next year if we find the right opportunities.

Thank you for taking my question. I actually also have a question regarding Entertainment, can you remind us actually what you target as a margin for Entertainment division by the end of the year?

And I suppose your negotiations regarding new replacement contracts with bigger transfer changes. Do you see they still approach if consider it as a CapEx investment or they more twisting changing to more OpEx investment approach?

Okay. I'll take the first part of your question.

Just taking the note here. So, in terms of EBITDA margin expectation for Entertainment, it hasn't been a change, so the guidance that we have articulated in the beginning of the year to move from an 8% full year in 2018, closer to the 10% is still our ambition for this year.

And well, in terms of improvements that we already indicated that it will be essentially on the level of the Venues & Hospitality space that we want to see improvement in the second half of the year to get that it closer to, let's say, 9, 9-plus-percent EBITDA margin. Jan, you're okay to take the second part of the question?

Yes. So, in terms of the question, if we look at the customers and the negotiation today then customers, they more than ever understand total cost of ownership.

So, they definitely look at the cost and the cash flows into the 10-year future, when negotiating about projector contracts. In terms of how the deal is structured, they are still very much CapEx-type deals.

And so, you could say, people are thinking and talking OpEx, but they buy at this point still CapEx. And I've seen that in other industries, it's something that may change bit by bit over time and I think the availability of capital, of course, plays a role in our customers deciding to still grow CapEx, while they very much understand the TCO picture of the purchase.

Okay. Thank you.

And just one last question regarding ClickShare. Do you already see replacement orders in ClickShare units with that Enterprise you worked together for a longer time?

Okay. I'll kick off on your question.

So, so far, not and for sure not in the material level. So essentially 99% of what we realized in ClickShare is new deals, and we do prepare for kind of that trading programs and replacement and upgrades as well.

But something more for future next year is to come, where we do indeed to see that more impactful than today. But so today, we play in the numbers, it's really new deals and expansion of the ClickShare installed base.

Yes.

Okay. Thank you.

Yes. I think we can indeed conclude this analyst call and question-and-answer session.

I'd like to thank you all who are participating in the call and should you have any more questions coming up in the course of today or in the course of the next dates, you can always reach out to us. We're still at work and fully operational for the next couple of days and before we then really leave for a couple of days or weeks for a well-deserved holiday.

And thank you all again and have a great day. Bye.