Partners Group Private Equity Limited (PEY) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the PGPE Limited Half Yearly 2026 Results Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Andreea Mateescu. Please go ahead.

Good morning, and thank you for joining us today. I'm Andreea Mateescu, Investor Relations responsible for PGPE Limited, and I'm delighted to be here with my colleagues, Christopher Mauss, Managing Direct and Co-Head Portfolio Solutions and Federica Cazzaniga, our Portfolio Manager responsible for PGPE Limited. Today, we'll be sharing an update on the portfolio and performance during the first half of 2026. But before we get started, just a quick note on housekeeping. If you have any questions during the webcast, please use the Q&A tool available on your screen. We will address questions at the end of the presentation and to ensure we cover as much as possible with similar questions and respond to them in one go. And if we run out of time or if you have additional questions afterwards, please feel free to reach out to us via e-mail or through the contact form on our website. Let me begin with a high-level overview of our first half 2026 results before Federica and Chris cover the portfolio in more detail over the next few slides. The first half of the year was marked by heightened geopolitical uncertainty, intermittent market volatility and evolving economic policy expectations. Events in the Middle East, shifting interest rate expectations and ongoing concerns around growth and inflation contributed to a softer trading environment and selective pressures on valuation. Against this backdrop, PGPE NAV declined by 8.6% on a total return basis. This was primarily driven by portfolio development, although favorable currency movement provided a partial offset. From a portfolio perspective, performance was impacted by a limited number of investments. In particular, USIC, Emeria, and Pharmathen were the largest detractors during the period. Importantly, around 1/3 of a 12-month portfolio decline can be abated to the 4 assets. and Federica will cover this in more detail later in the presentation. Importantly, the broader portfolio showed signs of recovery, particularly among several inflections. Our younger vintages continue to deliver attractive early performance. Investments from 2024 to 2025, such as ROSEN, Velvet CARE and MPM performed well and supported portfolio development during the period. Chris will return to these things later in the presentation. Despite the challenging backdrop, PGPE Limited continues to generate strong liquidity, receiving approximately EUR 111 million in distribution which is equivalent to around 14% of net assets, while selectively deploying EUR 13 million into new investments during the period. The substantial level of realization further strengthened our balance sheet and supported capital returns to shareholders. Our liquidity position remained strong with EUR 51 million in cash and cash equivalents alongside a fully undrawn revolving credit facility of EUR 150 million. Now turning to shareholder returns. We remain committed to return capital through both dividends and share buybacks. Almost EUR 36 million was returned to shareholders during the first half of 2026. And that was from EUR 22 million with the first interim dividend, which was paid in June and just over EUR 13 million for the share buyback. Now since then, a further EUR 5 million has been deployed under the share buyback program, and those shares are once again being held in treasury. Now overall, while results were affected by a handful of assets, the portfolio continues to demonstrate resilience through strong liquidity generation, a diversified investment base and encouraging momentum in newer vintages. Looking ahead, we believe the environment supports a gradual recovery in transaction activity and exits, and we remain focused on selective deployment into opportunities so we see the strongest long-term value creation potential. With that, I'll hand over to Federica to discuss the portfolio in more detail.

Thank you, Andreea, and good morning, everyone, from my side, too. I'm going to walk you through the portfolio composition and the latest performance development before handing it over to Chris for a deeper dive in some of the key portfolio positions and latest trends. As usual, we start by looking at our portfolio as the case here on this slide. And no surprise this year as we continue to implement our strategy and invest in objectives to offer investors access to a diversified portfolio of private equity direct assets here on screen. Our top 10 company represents approximately 40% of the portfolio NAV guided for -- really able to highlight the overall portfolio composition and any trends that we are observing. And it is worth spending a moment highlighting 2 new companies that are entering our top 10 over the last 6 months, and I'm talking Breitling and Version 1, which you can see in positions 9 and 10 a year. Breitling is a company that most of you will be familiar with is our Swiss luxury watchmaker, which is growing its NAV share in the portfolio, having seen some market headwinds abating most recently. The business is performing better over the past 6 months with monthly growth in retail sales in each of the 6 months in H1 with leading recording the Americas business and gradual signs of recovery also in the European part of the business. Version 1, as #10 here, this is our leading digital transformation service provider in the U.K. and Ireland. A company delivering with both public and private companies across complex business transformations and technology transformation and which we are increasingly focusing on AI strategy and implementation. Not only that Version 1 works with technology providers such as Amazon Web Services, Microsoft and Oracle. But the company is increasingly growing as a value-add engines across our very own portfolio of companies. And it has, for example, partnerer with ISP, International Schools Partnership under a partner portfolio content to allow us an AI toolkit across 25 countries. And also we'll see shortly how Version 1 has partnered with our another top 10 position in PGPE Limited Foundation Risk Partners on a broader AI rollout across the platform leading to notable operational value creation across the board. Before moving on, maybe one note on the company that has left our top 10. It is Clario, a U.S.-based health care technology company. that works with pharmaceutical and biology corporates to radical trial. We have fully executed our sale to Thermo Fisher Scientific in H1 at an enterprise value of over USD 9 billion, realizing significant cash flow distributions for PGPE Limited as we can see on the following slide. Clario was indeed our largest driver when it comes to distribution during the first half of 2026, realizing approximately EUR 23 million for PGPE Limited, but it was not the only driver. As you can see, we realized over EUR 110 million in total. But importantly, there was an even contribution across various companies. So Clario was the largest driver, but definitely not the only one. So this slide really highlights the benefit of portfolio construction and diversification at the debt and then driving liquidity diversification but further down the line. This also highlights the ability to realize successful outcomes in a rather volatile environment as Andreea mentioned, and in fact, they realized multiple on money on last 12 months exit has being close to invested money. This is very much in line with our historical results achieved for this portfolio. Beyond Clario, maybe a quick mention to Galderma and Vishal here, 2 of the other largest drivers and both listed positions in the portfolio. Maybe Galderma first, our Swiss side dermatology company was fully realized during the first half of 2026 where we executed a full sell-down of the listed position, realizing money multiple in excess of 3.5x. And we also continue to further reduce our position in Vishal, the Indian value retailer. This time, we continue obviously to retain exposure to the company, but monetize over EUR 15 million. Vishal has experienced a period of sheer price volatility, especially in Q1 2026, however recovered since and continued to deliver strong operating performance supported by revenue growth and continued sales growth across -- so we -- you can see that the company is currently marked above 8.5x money multiple, but it's important to stress that the DPI for the company is already close to 5x. So significantly realized outcomes across the portfolio. And both Galderma and Vishal are part of what we consider our more mature portfolio that continues to sort of decline in size within our NAV or generating proceeds that are then redeployed into more recent vintages, and that's what we're going to look at in the next slide. On the back of these realizations, we see indeed continued progress in repositioning the portfolio towards younger vintages and also inflection vintages that maybe we start from the mature ones. As I mentioned, Galderma and Vishal were some of the largest and Vishal remains one of the largest components of this vintage cohort. Needless to say that this means more mature assets, approximately 80% of the amount we had in pre-2021 have been fully realized. So what we retain is only a portion of our investments in these vintages. And there, we have already realized a 2.7x multiple of capital for the entities in pre-2021. The remaining assets are now marked just below 2x on a blended basis, and many of them not only continue to support our liquidity in the portfolio, but also retain upside as they approach the sort of the end of their holding period. Inflection vintages show the vintages between 2021 and 2023 now comprise approximately half of the NAV of the portfolio. And despite some vintage related headwinds, most investments in this cohort to remain marketable across but also positioned to deliver stronger EBITDA growth momentum going forward, and we'll see some examples of this in a moment. Well, some investments are continuing to face some company-specific challenges, we'll mention companies like DiversiTech, Forterro, Foundation Risk Partners that are amongst our top 10 and continue to perform well and grew EBITDA with solid momentum. Our younger companies now representing just over 20% of the NAV of the portfolio continue to compound value in line or even above our underwriting expectations and blended IRR that grows 20% and many of them recording double-digit LTM EBITDA growth. That's very important as we continue to grow this cohort in the portfolio. And Chris will take us through some examples again in a moment, but before we move there, let's take a look at the overall portfolio performance when it comes to the last 12 months. So first of all, when we look at the portfolio metrics for our top 20 companies, we can see that we continue to record last month's EBITDA growth in the single digit. And this very much reflects an environment that's characterized by high geopolitical uncertainty and the more intermittent market volatilities but also more evolving policy expectations that are impacting some segments and businesses. Last 12 months valuation multiples have adjusted down as the margin, again, in line with the broader market environment. And the blended leverage metric has remained mostly stable across the business ticked up on a weighted average basis, primarily driven by PCI Pharma where we are from this quarter, reflecting higher debt levels under the new ownership after we grew our minority position in Q4 2025. Looking now at the last 12-month portfolio performance breakdown. We've broken this out in the chart at the bottom of the slide to highlight the integer dynamics I touched on just earlier that remained visible here, but also to highlight the impact of a limited number of the structures that continue to shape performance as we discussed in previous quarters. These detractors offset muted returns elsewhere and resulted in a minus 8.3% performance at the portfolio level over the last 12 months during 2026. On the one we see younger assets that are contributing strongly on the back of solid performance, this by representing only 20-or-so percent of the NAV. And also inflection vintages, excluding, obviously, the 4 assets that we're singling out here continue to positively contribute to return a week at a slower pace. One word on the mature vintages. This is, as I mentioned, a more concentrated cohort that was largely impacted by market-driven dynamics specifically in our listed holdings, for example, we saw in KinderCare, we saw higher share price volatility and pressure during the first half of the year, and which is why we see a negative commitment this year. Given the relevance and the relative waiveoff of the 4 assets highlighted here, farmers in USIC, Emeria and AMMEGA, we saw it also providing a little bit more context on the challenges faced by these core assets and also an asset plan for these portfolio companies as we go forward. If we can look at that on the next slide. I'll go quickly clockwise here to start with USIC, the largest structure to performance in the first half of the year. This is a company -- a U.S.-based provider of underground utility locating services and a company where we first invested in 2018 realizing then a money multiple of over 3x in 2022, where we brought in a new partner and expanded our ownership to continue growing the company. Since then, USIC was negatively impacted by growing trends towards customer in-sourcing initiatives, but also some operational headwinds over the working period H1 2026 that resulted in a reduction in our evaluation. Despite the short-term challenges, Partners Group will continue to work closely with the company and the Board as well on the stabilization measures, we focus on production and technician productivity and as well on a more strategic repositioning towards our growth segment and increasing digital and NI enabled operations forward. As for Emeria, our European real estate service provider, similar story here, where we invested in the company 10 years ago in 2016, realizing a 3x money multiple in 2022. We then reiterated our conviction in the business and extended again our ownership. Just after the reunderwriting the softer real estate market trends started weighting on transaction volume, impacting Emeria's brokerage business and at the same time, increasing interest rates, financing costs, limiting more of the M&A activity and the platform portion strategy that we had set out for Emeria. Importantly, despite these market-driven challenges, Emeria continues to focus on organic growth acceleration, but also on executing on an ATM TKI program, most recently, and this is really across whole division, customer service, property management, accounting, legal and also administration. So really working towards a strategic objective of becoming an AIF residential real estate operating platform for the European market. I'll go to AMMEGA, Here, we have a rather different story, a global leader in conveyor and power transmission belting, which Partners Group created in 2018 by merging 2 segment leaders, Ammeraal Beltech and Megadyne. Here, the company has really been navigating a broader market softness with performance coming under pressure due to the extended industrial downturn that commenced in 2023 combined with cost inflation and there are competitive pressures. Despite that, we've seen the company maintaining a steady EBITDA and also margin. So really justifying the quality of the business here, but we have decreased our valuation for the company in Q2 2026, reflecting broader purity rating across the industry and generally more muted market sentiment during the period. Here, we continue to work with management to refocus on commercial acceleration, operational efficiency and early customer focus not only to maintain earnings growth and margins but also to expand them as we continue to navigate a more challenging backdrop. And then finally, Pharmathen, which was in any case the third largest detractor. Here, we touched on the company before as we've had some regulatory discussion, especially on the U.S. side with the FDA that culminated in an import alert in Q1 2026, restricting access to the company for the U.S. market that eventually ordered the company outlook and really business strategy. Partners Group has worked on leadership renewal and initially owned remediation actions, however, in light of continued operational challenges and regulatory challenges, Partners Group has written down in full the equity investment in Pharmathen in April 2026. So you'll see that this now touches 0% of portfolio NAV. And Partners Group has also ceased any further funding to the company, currently working with Pharmathen and the lenders to stabilize the business, devise the remediation plan and then support an orderly change of ownership from there. So clearly, with the exception of Pharmathen, the other 3 companies here, USIC, Emeria and AMMEGA remains fundamentally strong businesses, well positioned to overcome temporary pressures that I've highlighted by strengthening client focus and as well as leveraging their leading market positioning, but also unlocking technology-driven upside across the board. I'll pass it over now to Chris, who will zoom out and share a little bit more perspective on the overall portfolio contextualizing these challenges in the broader dynamics.

Yes. I think it is essential to put this a little bit into perspective and look at the broader portfolio, right? So I'm here on Slide #11. And we shouldn't lose sight of the fact that if you look at this portfolio, which is quite diversified, there's about 2/3, 64% of it, which is actually performing on plan or is outperforming. And you have a number of portfolio companies in there where based on our latest budgeting and business plans, we expect them to grow double-digit earnings in the next 18 months. . So the issues that I think Federica went through into details, they are really concentrated in 2 buckets. That's the ones you see on the right-hand side. First of all, you've got challenged assets. These are the likes of the Pharmathen and USIC that Federica described, experiencing really structural issues operationally or financially based on their capital structure that we are working on, but with really structural nature. You also have a series of investments that are more delayed in their value creation plan. Think about this as being investments that have really experienced a severe change in the macro environment that they've been trading in and where all our growth initiatives have been so far a little bit masked by some of the challenges they had to face, right? So with Emeria, the fact that the transaction property services in France has been going down, Breitling, the fact that also the Swiss factory luxury watch market has been trending down after 2023. But what we do expect and the visibility that we have on is that part of that delayed uplift is progressively going to move to the left, and we actually have sight on the earnings of some of those portfolio companies growing double digit next year. If you flip to Slide #12, this has actually been validated recently in the trading performance of some of those investments, some of those sectors that are a bit early indicators. The Swiss luxury watch industry has been recovering and Breitling has seen very consistent growth, if I take the U.S. market in the first part of this year, growing above 10% year-on-year for a few months in a row. On the pharmaceutical side, we have Wedgewood Pharmacy, which specializes in compounding medication for animals in the U.S. That's a company that troughed in terms of earnings, they troughed in 2025 in the fourth quarter. And since then, we have seen a very consistent recovery in earnings by north of 20%. Same story with VelocityEHS, and there is a longer list of companies that are seeing this recovery, right? So clearly, we want to be remain prudent. But we are seeing signs across those challenged and delayed assets in the first half of this year of a tangible pickup in trading and which we expect will support performance of those investments in the next 12 months. On the following slide, Slide 13, we are also making progress turning around and improving some of the assets that we invested in the 2021, 2023 vintages. These are the inflection vintages that Federica mentioned earlier in one of the pie charts that she referred to. We've got 2 companies at the top here that operate in the heating, ventilation and air conditioning space. I think you've all witnessed a very hot summer. This is a market that has seen very strong tailwinds. Both those investments, PremiStar on the left, which is one of the largest commercial HVAC service provider in the U.S., but also DiversiTech on the right, which manufactures and distributes parts for that sector. Both of them at some point, had fallen below cost. And with active turnarounds of both companies and the markets picking up, we have now seen structural progress and both of them are currently marked above 1.5x the initial capital. A story that is similar also at the bottom of that, if you look at Forefront Dermatology, you might remember, we have a number of companies in the portfolio, which are U.S. health care services companies. And that is part of the portfolio that really suffered post-COVID when you think about some of the wage increases, inflationary trends and the limited ability to pass through price increases rapidly to insurance carriers and Medicare and Medicaid. But Forefront and some others have now seen tangible progress. We've seen earnings at Forefront growing quite significantly, double digit in the last 12 months. And then finally, we've got some like Forterro, which is one in the software space, which continues growing really healthily, double-digit earnings growth, business that has really improved its kind of recurring nature of its sales and one which would be a good exit candidate if I look at the pipeline in the next 6 to 18 months. Across the portfolio on Slide #14, across the portfolio, we've also really started seeing meaningful impact from all the artificial intelligence initiatives that we have started rolling out a few years ago. Those things take time. It doesn't happen overnight. But as we might have described to you in the past, we have our technology team internally at Partners Group that has rolled out a very systematic approach across all portfolio companies to roll out artificial intelligence use cases. We have an adoption rate across our portfolio at about 90%. And today, that team and our portfolio companies in private equity are working on about USD 170 million of EBITDA opportunities that are visible for 2027. And this is all being supported also by 2 portfolio companies of ours at the bottom left, which are specialists in AI and digital services. One of them is Cloudflight, which is based in Germany and the other one is Version 1 based in Ireland and the United Kingdom. Tangibly, if we look at an example on the following page, what does that mean? One of the portfolio companies where we've seen the strongest progress and one of the early adopters in the portfolio was Foundation Risk Partners. That's a business that we own in the U.S. They're a specialist insurance brokerage business. And together with the help of Version 1, they've embarked into the development and rollout of a few AI use cases in the organization and 2 of them have now yielded already some strong results, impacting positively EBITDA by $10 million, improving margins by 120 bps. One of those solutions is a solution that allows the business to improve its policy processing cycle for new clients by about 94%. That has led to a doubling in close rates. And the second one was more of an efficiency gain. We had a lot of people that were focused on a human review of all policies being checked, and this is now automated by that agent. So that's something you'll continue seeing more and more momentum, and we will see more and more results coming from this across the portfolio in the coming years. Again, clearly, we do recognize the fact that the performance, especially in the first half across the portfolio has been disappointing. But these initiatives, they do take time to pay off, and we will continue seeing them translating into earnings gains in the next half of the year and in 2027. Where the performance has been strong even in the first half is on the following page. It's all those kind of portfolios, so Slide #16. It's all those portfolio companies that we've been investing in, those new investments we made since 2024. These are strong vintage years for private equity. We already have some winners that are emerging very early on. You've got 2 companies at the top that I mentioned, ROSEN, which specializes in critical infrastructure inspection services in Europe. And you've got Velvet CARE, which is a leader in hygiene paper products also in Europe. Now both of those companies, we've been owning them for less than 2.5 years. Both of them are on track today and are close to about 2x return on capital. And in the case of ROSEN, we've already been able, thanks to the strong earnings growth and cash generation, we've been able to pay and recap the business twice and pay 2 dividends. We also have some early outperformance that are a bit younger in the portfolio, 2025 investments, for example, like MPM, premium cat food business, which is very successfully penetrating the U.S. market and is also off to a very strong start. And then we also have companies like Pest Control Partnership, which is a ground up that we started from scratch in the pest control industry in the U.K., France and Germany and which is seeing very strong early performance and growth. Now, if you look at the next slide, we are clearly -- and as those investments just suggested, we are at an attractive point in the cycle for new private equity investments. That's why those new vintage investments are so essential and so interesting. Now clearly, in the first half of the year, the investment activity has been a bit softer for the reasons that Andreea mentioned. Macro environment was very volatile, difficult to transact. But the pipeline remains really healthy. You've got a few thematics on that slide that are high conviction that we've been actively developing for years. On the left-hand side, we are in the final stages as we speak now in the process of a U.K. electricity grid service provider, high conviction thematic there for us on the back of all the growth in power demand you have from data centers, but also the aging nature of the electricity grid in the U.K. We have signed and we'll be able to be a bit more -- share more details later on. We signed in the middle of the page a small first new piece for a sports agency in Europe that we intend to use as a platform to buy and build. It's an exciting space. And then on the very far right-hand side, after years of looking at the clean beauty segment, which is growing at about twice the pace of the broader beauty and wellness industry, we have finally announced an exclusivity on a transaction in France, which we can see on Slide #18, which is the acquisition of Aroma-Zone on the next page, a company based in France, very well-known brand of beauty and wellness products in France, high-quality products, natural ingredients at accessible prices. And this is a company that since 2021 has tripled its revenues, increased its number of stores sevenfold. They've got about 5 million customers, and we're now looking forward to really accelerating the international expansion that they started. So this transaction is still subject to regulatory approvals, but we target to close it by the end of the year. With that, let me hand back to Andreea to wrap this up.

Thank you, Chris. So before we move through to the questions, let me briefly summarize the key messages you heard today and also our priorities going forward. First, our focus remains on driving performance momentum across the portfolio. While a small number of investments weighed on results during the first half, we continue to see encouraging progress across a broader group of portfolio companies. We are focused on compounding our emerging winners while at the same time, supporting value recovery initiatives in assets that have experienced temporary headwinds. And importantly, a growing cohort of newer investments is performing well and provides an additional source of future value creation. Second, we remain focused on maintaining strong realization momentum. During the first half of 2026, the portfolio generated almost 14% of NAV in distributions, demonstrating our ability to create liquidity even in a more challenging environment. We continue to see opportunities to realize value through the ongoing monetization of listed holdings as well as active exit preparation across a number of maturing investments. Now while transaction and exit markets are gradually improving, opportunities are becoming increasingly differentiated across sectors and business models. And so we believe that selectivity remains critical. Now finally, also, while deployment was relatively contained during the first half and against a more volatile market backdrop, our near-term pipeline, as you also just heard, remains robust and diversified across our core thematic sectors. And combined with a more supportive private equity environment, this positions PGPE Limited to selectively deploy capital into high-quality assets at attractive entry levels, supporting the portfolio long-term growth potential. And now just a few more words on this slide. The company has been listed on the London Stock Exchange since 2007 and over multiple market cycles has maintained a disciplined focus on long-term value creation. Today, PGPE Limited provides immediate access to a diversified private equity portfolio of more than 70 companies, and that's across industries, geographies and vintages. This portfolio benefits from a balanced mix of mature investments approaching realizations and newer ones that are beginning to demonstrate encouraging operational momentum. From a balance sheet perspective, we remain well positioned with EUR 51 million in cash and cash equivalents and a fully undrawn credit facility. During the first half of the year, we also returned almost EUR 36 million to shareholders through dividends and share buybacks. And in addition, our 5% dividend policy continues to be a defining feature of the investment proposition, translating into a prospective dividend yield well above 8% at today's market share price. Looking ahead, the company enters the second half of 2026 with a diversified portfolio, solid liquidity, a meaningful pipeline of investment opportunities and continued realization potential within mature holdings. And while company-specific headwinds within parts of the 2021 to 2023 vintage cohort have impacted recent performance, the early momentum demonstrated by newer investments is encouraging. And finally, while geopolitical uncertainty and market volatility are likely to persist, with improving private equity market conditions, a gradually normalizing exit environment and the portfolio's exposure to long-term structural growth themes, which provide conditions for future value creation. With that, I thank you for your attention, and I would now like to open the floor for questions.

Now looking at the webcast, I see a number of questions more or less around the same themes. Maybe Federica, the first one for you. What level of distributions do you expect to see from the portfolio in the next maybe 6 to 12 months?

Yes. Thanks, Andreea. Obviously, difficult to put a number, but we've seen very strong momentum beginning in 2025, where over the year, we realized over 20% of the NAV. The momentum has continued in the first half of the year with over 14% of NAV distributed in proceeds. And I would expect the trend to continue at the margin towards the high teens when it comes to the performance and the proceeds realized in the portfolio over the next 6 to 12 months.

Thank you, Federica. Now also, I see a number of questions around the upcoming -- well, the dual share class right proposal, which was announced earlier in June. Now here, what I can say, and this was also mentioned with today's RNS, right? So a circular and the prospectus, those will provide additional details on the share class proposal, and they will be sent to shareholders in early September for approval and election. So what I also want to emphasize here is that the time lines will be shorter than for a regular AGM. So please, I recommend you to review the information and elect and cast your vote as early as possible once this becomes available. Also, please note that various of your questions regarding the organization, those will be answered within the circular that will be made available. Now also another question for you, Federica. What is the percentage of the NAV in listed stocks? And maybe do you expect this to remain stable going forward?

I guess this also ties back to the comments I just made on the expected level of realizations, given that listed holdings have been a more natural source of liquidity over the past 12 months, and I very much expect them to remain the same source of liquidity. The proportion of listed assets has gradually been ticking down as we've realized these holdings trended down from the mid-teens. We currently stand at 9% of listed holdings in the portfolio overall. Now this might be -- the sell-down might be compensated by the new exits done via the IPO route. But again, we will remain very much focused on monetizing such listed shares. Therefore, we would expect the overall percentage of shares in the portfolio to remain in the 5% to 10%, very much in line with historical average and also contributing to the ongoing monetization.