PayPal Holdings, Inc. (PYPL) Earnings Call Transcript & Summary

Thanks, everyone, for joining. My name is Tien-Tsin Huang. I cover the payments and IT services sector at JPMorgan and super excited to have John Rainey back with us from PayPal. If you guys already know, John Rainey is the CFO and EVP of Global Customer Operations and also an alumnus of the National Champion Division I Men's Basketball team Baylor Bears. So congrats on that. I was going to ask you just forget it, what was bigger deal for you, winning the National Championship or the great first quarter results at PayPal?

Well given...

You don't have to answer that.

Well, my identity is probably wrapped up more in the National Championship, but the first quarter was fantastic. So thanks for having me here today, Tien-Tsin. It's a real pleasure.

No. It's always fun to have you. And congrats again on the title. That was good stuff. So yes, we're going to do a fireside chat, John, and you know the drill. We've done this a few times. We'll take some questions from the portal. For those that are tuning in, I'll be watching that along the way.

But I thought just kick it off, like I always do, with the quarter and the most recent results, John, and it was a big revenue beat, the biggest we've seen in a while, I know coming out of the pandemic. What stood out to you as being better than expected or a surprise for you enough to actually take up your full year guidance, which I know you don't take that decision lightly?

Yes. Well, to start with, the first quarter was just a great quarter in all respects. It did come in better than what we anticipated. But to be fair, like every company, we faced easier comps. And certainly, March of last year was kind of the peak up where we saw certain verticals completely just dry up like travel advance, and we can all remember how that unfolded. And so we benefited from lapping a weaker March last year. But I think fundamentally, the thing that stood out the most is just the continuing growth around e-commerce and importantly, digital payments. And a couple of things happened in the quarter. One is we saw the holiday season towards the tail end of 2020, sort of expand into the first week -- first couple of weeks actually of 2021. So that was much, much stronger than what we've historically seen. There's typically kind of a sequential decline between what we see in the fourth quarter and the first quarter. And actually, that didn't happen this year. And so that started us out of the gate really strong. And then as we noted on our call, the travel events started coming back a little bit. And we probably all recognize that in our own behaviors a little bit as we're exercising some of that pent-up demand to go take a little trip here or there. But look, we're really pleased. And when you consider the backdrop of sort of what's happening with eBay, and importantly, they're moving to -- or they're transitioning to managed payments at a much more accelerated pace than what we had anticipated. And you think about our revenue guide, well, the incremental impact from eBay for us just on the transition was 2 points of revenue. So that really means that our revenue increase was 3 points overall. So again, it just points to the strength that we see in the business and the relevance of digital payments and importantly, PayPal.

Now you did overcome, like you just said that eBay headwind, John. So what surprised you there? Is it just a faster transition to managed payments? Or are you seeing some change in your checkout share with eBay during the transition?

We're still maintaining the share of checkout that we have been experiencing north of 50%. So really, really pleased about that. And that was something that we said early on that we expected. What we had anticipated is that long tail of SMBs would take longer for eBay to transition over. And they're doing it at a more accelerated pace. And so the impact that we noted related to eBay, specifically, is only related to this transitioning of managed payments. To the extent that they see some differences in their business year-over-year, that's not included in that number that we provided. So this is only related to the transition of managed payments, and we expect that to be effectively complete by the end of the year. I mean, largely complete actually by the end of the third quarter.

Yes. Well, it's probably a good thing, right, you just ripping off the mandate, and we can move on from talking about it?

I agree. And that's the way that we view it internally. EBay is still a large customer. But what we've been doing over the last several years is really increasing our reach, increasing our distribution off of eBay. So that's to not be so dependent upon 1 supplier or 1 customer. And we've done that while expanding our margins and really tying our balloon to some of these larger and faster-growing tech platforms.

Yes. No, for sure. Let's talk about users. I get a lot of questions on users, John. I'm learning to appreciate the net new actives. I think it was up, what, 14.5 million, up 21% is what I wrote down. And then you have a goal of 750 million out in 5-plus years. Who are these new users? What can you tell us about where they're coming from? What's the typical profile of some of the newer users that you're bringing on?

Sure. Well, to start with, we're seeing increases in net new actives across all parts of our business. And they skew heavily towards our core markets, U.S., Canada, U.K., Australia, Germany, markets like that. But also in a lot of emerging regions as well. The footprint of new users is relatively similar to what our existing footprint is. And Venmo continues to be a very large contributor to that. And certainly, as you see, the displacement of cash through enhanced P2P experiences, that's one of the best acquisition channels that we have for a new customer. But we did put out a pretty grand target of 0.75 billion at our Investor Day. And I think that's going to come through a number of different ways, but I think very importantly is reducing churn. And very much tied to that is the increase in engagement that we expect to see from these new cohorts that are coming on. And irrespective of what cohort we're talking about, post pandemic, we see much elevated levels of engagement, whether we look at like 10-day adoption rates or 90-day adoption rates. And this is exciting for us. And I think it's in part because of this push to e-commerce or digital payments that happened in part by necessity when people did not have mobility. But as we've said, we're not just going to sit back and wait on these secular trends that happen to us. We want to help shape them. And that's why we're adding so many new experiences as we look forward through the digital wallet, and I'm sure we'll talk about some of those things to increase those levels of engagement and reduce that churn over time.

When you think about customer acquisition cost, I know bringing on experience is a part of that, but everyone is trying to bank their users, John. That's a big theme, right? I mean, across all of fintech is a rush to spend to acquire customers. How do you measure your customer acquisition cost? CAC to LTV is a ratio that we -- I mean it's a metric we usually don't use them in payments, but increasingly doing so with more software content. So what's your response to that?

Yes. So our customer acquisition cost, historically, has been very low. And that's in part because so many of our new customers come to us through the person-to-person type of experience. And as we noted in the first quarter, that was still our single largest contributor to customer acquisition. What we've done over the last, call it, 18 months is put much more rigor into the CLV component of that rather than chasing a low-value, net new active that maybe pumps up numbers and the optics look good, really looking at how they're going to contribute to the PayPal platform over time. And so overall, our CAC, or customer acquisition costs still remains very low. But we've been more targeting in some of the sales and marketing efforts around that. And so we noted in the back half of last year that we had intended to spend $300 million investing into PayPal, a lot of that through sales and marketing, and you likely saw that through some of the year-over-year increases. And some of that is targeted efforts around in-store QR code, things like that, but a lot of it is still around customer acquisition. And I'm always happy to spend money like this when I know what the return is going to be, and I've got a high degree of confidence in that. And so we're doing a better job there in our sales and marketing teams is really going out and acquiring those customers. And knowing what that return -- what that profile of customer is going to be over the next several years.

Right. No, yes, your P2P is such a customer acquisition advantage, it's all organic, so viral, which is why I asked the question. So I wanted -- you mentioned this -- your -- the big app refresh and the super app has become a common term around PayPal stock. So catch us up on the timetable with this next-gen wallet. When will it roll out? When do you think we'll start to see some of the impact to the P&L here once it rolls out?

Sure. I know these terms like super app and things like that are throwing around a lot. But we really want to be -- I would characterize it as a destination app for financial services. And provide all of the experiences and amenities that customers desire through one place, and that'd be PayPal. And that starts with the brand that we have around trust and security. I think that those are cable stakes in this business. But to answer your question, Tien-Tsin, we'll begin seeing some of these experiences roll out in the third quarter. And that includes additional experiences, but also an improvement in the way that one sort of navigates around the app, and including things like machine learning to provide customized experience as to what's important to you. And I've used this example before. But if you go to the PayPal app today, maybe 1/3 of the landing page is devoted to like donating money to some charitable cause to which you may have no interest in. Well, after the umpteenth time of looking over that and not clicking that box, we ought to stop showing it to you and so having something that's more relevant to you as a customer and tailor towards the way that you use the wallet is a much better experience. And look, the best apps in the world do that today. And so a lot of this is about the way that one sort of navigates the fit and form of the wallet as much as it is about experiences. And with experiences, this is not going to be like a big bang where, okay, we're done in the third quarter and we move on. This will be a process that takes place over the next several years. We continue to build out things that are most relevant to the consumer value proposition and what their needs and desires are.

Right. So to be clear, and look, being able to surface the right products and services, so, so important. But just to make sure I heard that correctly, this is not a one change, and we're done. This is an iterative process. It's not a huge step function change that we should expect in the third quarter?

Yes. You're exactly right. And I want to underscore that the way that you characterize that because it's -- I mean, it's a really important point. This is a journey that we're on. And this journey is really grounded in this belief and the primacy of the digital wallet years from now. And look, I don't think any of us can suggest that we know when that is exactly going to happen. But I think we certainly recognize the journey that we're on. And you see this in other markets where you've got the ubiquity around a digital wallet and it's use cases for everything. And I just think fundamentally, when you think about the value proposition around that, that's where we're going. And I don't think we're turning back. And people look at things like, okay, using a mobile phone to pay in store, it's hard to change consumer behavior. It sure is. Dot on right. But it's going to happen. I think it's just -- it's one of these things where you've got to have acceptance of that from merchants around the world. You've got to have changes in consumer behavior. And then you probably have a bit of a sort of a hockey stick inflection point where you reach that saturation to where now you can use your mobile phone everywhere. And I'm just citing the off-line or the in-store experience as an example, but I think this relates to all things digital wallet to where 5 years, maybe we look up and something as simple as like a driver's license is now issued digital. And no better place for that. And -- as in the incarnation of what your fiscal wallet is, is a PayPal digital wall. And so that's where we want to be and what we're looking to in the future to provide a lot of utility to these experiences for our customers.

Yes. No, it's going to be fun to watch. I'm definitely excited to see what it looks like over time. Getting a lot of questions here on crypto. So I'll weave in a crypto question, if you don't mind, John, just, I know you bought Curv and on the storage side, security side, you guys have launched pay with crypto, trading in Venmo, a lot of fun stuff. What's the plan here with crypto? What's the revenue model? Is this more about engagement? Or is there a real revenue earnings power story around crypto in your mind?

Well, I'll start with our investment at crypto is not tied to any sort of speculation on the value of the asset itself or an asset. And a lot of people look to bitcoin, but there are others out there. What we want to do is really provide experiences for our customers to use this in the ways that they want. That can be buying it and holding it or going to the app daily and checking how much their net worth has increased because of their crypto holdings. If they want to use it to shop with our network of 30 million merchants around the world, we can seamlessly provide them that capability. And so the revenue model for us is really one that's tied around more engagement. And that's why we cite the statistics that we do around the people that have purchased crypto coming to the app twice as much or 50% of users coming daily, things like that. Because that's what we want. Those are the experiences that we want to drive so that PayPal is not just an option for somebody to buy something when they get to an online website, but it's an experience that they're availing themselves up every single day. It may be crypto, it could be savings, it could be buying and selling stocks, maybe using Buy Now, Pay Later, a number of different things that we really want to try to drive engagement. Now to the extent that using crypto as a currency to shop at our merchants really takes off, that's -- that could be impactful. And so far as the funding costs related to that is very low to us, but it's the standard take rate that we charge merchants because they're accepting basically fiat currency. We do that conversion prior to the merchant actually receiving the money. So I think it's too early on to say if that's really going to take hold in today's environment. That's the same as like saying, I'm going to buy a pair of tennis shoes with Nike's stock. That's not the way I transact. But the key takeaway for all of you here is that what we're doing is basically, we want to be on the forefront of the thinking here. And the opportunities for consumers to use us in the market. And so if cryptocurrency like a bitcoin or Ethereum or something really become more of a store of value and people are using them as true currencies to shop every day, we've got a head start on everyone right now.

And a quick follow-up to that is things like calculating tax and capital gains, there's so much complexity and it's changing with regulation. Do you feel like you have the investment budget to do the right thing here to satisfy those things down the road? Or -- just trying to understand how it fits within your broader investment framework.

Yes, you're right. There's complexity to this because of the reporting and the treatment of this as an asset -- financial treatment of this as an asset. And so again, we're early on, but like one of the things that we've done is our corporate venture fund invested in a company called TaxBit. And they help -- you're familiar with them. They help consumers calculate the cost of taxes in cryptocurrency holdings and things like that. And so that's -- we're going to continue to do things like that, that help provide better consumer experiences where needed, where there's complexity around some of these transactions.

Perfect. I think after crypto, the most popular question from our polling was around Buy Now, Pay Later. And you guys have done a great job. You got $1 billion in 6 months, not charging anything. And I think it's pretty safe to say you guys are protecting your checkout share from Buy Now, Pay Later. What's next? What's the vision here with Buy Now, Pay Later? And any surprises on the risk side, John?

Well, it's interesting to talk about this, particularly with people that have been falling in this space for decades more than I have. And installment pay has been out there for a long, long time, right? And it just seems like now it really sort of caters or plays to some of the tendencies or preferences of the younger demographics. And I saw just this morning, there was a survey that came out that Worldpay did, their global payment survey that suggested, I think it was in 2024, they expect that installment pay will be 13% or 14% of global e-commerce. I think it was global, it could have been the U.S. But point being is that the belief is that this is here to stay. And you see it in Australia today where they've got, I think, a head start over the rest of the world, and I think they're 8% of e-commerce there. And so for us, this is something that we think -- you've heard me say this many times, but we have such a tremendous value proposition in this space considering that we don't charge merchants that there's low risk for us getting to the part of your question, Tien-Tsin around, we're underwriting many of these customers that we've known for a decade or more. And so I think maybe there was this notion originally that this would be just another form of credit. What we're actually seeing -- and again, we're a couple of quarters into this, but it's not so much thought of as credit, it's more sort of deferred debit. And so something north of 80%, 82%, I think, in the last quarter of the Buy Now, Pay Later funding instrument was debit. And so this is really getting into kind of a cash flow issue versus someone needing to go out and borrow money to make that transaction. And look, what we love around this is, again, the engagement play that we see. And we see roughly 2x the amount of -- the average order value, the average ticket price of what someone's purchasing. And so you complement that with 15% increases in engagement and TPV and customers coming back multiple times to use this product. I think this has a lot of potential. And look, I'd be very disappointed if we're not thought of in the future as the leading company providing the service because I think our capabilities are better than anyone. It's very easy to underwrite with low risk. It's an easy integration with merchants. And for consumers, like you've got a network of 30 million merchants around the world that you can use this with. And for merchants, you've got almost 400 million customers that have instant access to this. And so we're really excited about what the future holds here.

Yes. And you said it's been around for a while. I remember, PayPal buying -- Bill Me Later. That was a pretty good deal right back in the day. Again, here we are again. So it's something we're going to be tracking very closely here. I did want to ask about in-store, you mentioned it -- 2 questions there around in store, John. Is the next wallet release going to enhance some of the in-store or at least feature some of the in-store capability? And then the second part is just iZettle coming to the U.S. What are your broader expectations for that?

Sure. Well, we'll certainly build on the experiences that we've had already around QR code and in-store. But those are actually going to kind of merge a little bit with some of our experiences. And so let me give you an example with Pay with Venmo. And so we don't -- we've not had historically, at least the last few years, a desktop experience with Venmo. But part of the desktop experience in the future using Venmo with certain of our merchants will be actually taking your phone and scanning a QR code that's presented on the screen. If you authenticate yourself that way and pay through that. And so it's an example of where mobile experiences are sort of converging with some of the desktop ones and the QR code being sort of an in-store experience, actually being more of a mobile experience or online experience. And so the new wallet will bring some of these new experiences and use cases and build on what we have today. With iZettle, look, I should start with saying we had to hit pause last year with iZettle, given that they are oriented towards SMBs in-store, and that was the -- I think the part of the economy that was hit, obviously, the hardest. But we're very excited to be bringing iZettle to the U.S. this year. We'll roll that out probably in the back half of the year. But this is a great opportunity for us, particularly given iZettle's unique capabilities in the way that they seamlessly integrate into things that SMBs use all the time, QuickBooks, things like that. And so it's a reason that iZettle has been able to scale so well across the many markets that it's in. But I think importantly, for us, we think of our -- the majority of our business sort of being SMBs. But something like 50%, I think 47% is the exact number of SMBs in the U.S. don't have an online presence. And that's a lot of white space for us to go out with the iZettle offering. And really target some of these customers, bring them the best capabilities that combine the sort of omni experience around QR code and things like that and help bring them into the online world. We very much think of ourselves as much more of a -- than just a payments button, but more of a commerce enabler. And this is a great example of where we can do that with iZettle. So I'll be interested to hear yours and everyone else's feedback as you begin to see some of these experiences in-store and compare that to where some of the incumbents are today.

Yes. No, definitely, I think. And on the iZettle side, right, with new business formations starting to pick up with reopenings, I think the timing is good.

Exactly. Exactly.

So we'll definitely be tracking that. So we've talked about a lot of different products, John, I can't not ask you a take rate question, forgive me, take rate monetization rate. What does this all mean if we're going to blend it all together, thinking about the take rate? And I got to move here. So I get the light back on in the office.

You bet. The things we have to deal with it. Yes. So let me start with addressing what I think everyone's sort of main concern is when they see declines in take rate is, are you seeing declines in same-store sales type pricing. And the very clear answer around that is no. Nor have we for several years. We tend to see a real stickiness through our pricing. Our take rate decline is really more a function of the diversification of our platform, getting into new businesses, Paymentus, as an example, or growth in P2P, things like that. If you look at our medium-term guidance, we guided to an average 25% TPV growth and 20% revenue growth. That implies, obviously, a take rate decline. But if you look since 2016, our transaction take rate has declined about 50 basis points, maybe mid- 50s, 54, 55 basis points. And over that period of time, our operating margin has expanded 500 basis points. And so that's very clearly, like we are willing to accept a take rate decline that is the result of a mix change in our business, if we can add dollars to the bottom line and that's what we've seen. And you can look to the most recent quarter, in the first quarter, our incremental operating margin was almost 40%, 38% in the quarter, which shows that we're being very successful doing that in the face of take rate declines. So you take like the first quarter, about 1/3 of the decline was related to the transition away from eBay. And we're going to experience more of that going through the year. We had some -- maybe some kind of noise, if you call it that, related to a hedge loss versus a gain the prior year. But these things are transitory and change from 1 quarter to the next. The key message is like, look, same-store sales or same merchants year-over-year, and we're not seeing any meaningful decline at all in that area.

Very clear. What about looking at ARPU as a KPI? I know take rate historically, as a payments analyst, that's where we focus, but I'm learning to look at things differently, including looking at ARPU, which has been pretty consistent to up for you. And I think, John, in your longer term, 5-year out forecast, you are expecting an uptick in average revenue per user. Is this an important KPI that we should maybe look at a little bit more? How important is it for you as you're benchmarking the company?

It is. It's up there with engagement as one of the top metrics that I'm looking at, particularly engagement tied to some of the new experiences that we're rolling out. But historically, our average revenue per user has been in the mid-50s and not really bounced around a whole lot from that range. It is -- it's something that we're very focused on improving over the next several years. We talked at Investor Day, if we can get that mid- or medium-gauged consumer or customer to get to the high gauge, that's a 2x opportunity for us on ARPU. And so this very much dovetails into like rolling out these new experiences to get people more engaged with us so that we can have more opportunities for them to use us in a way that we can benefit and monetize. On Venmo, the opportunity is even greater. It's a 10x opportunity there. And we've talked about a lot of that with things like Pay with Venmo and business profiles and QR code, crypto, other things that we're rolling out with Venmo experience. And so this is absolutely something that you should all gauge our success in this area because it's important to achieving the kind of profitable growth that we want over the next several years.

Okay. No, good. Good. I guess, thinking about that -- and you mentioned Venmo with the 10x, Venmo, I think $900 million is the target for revenue in '21. And a lot of folks have asked me to ask you about Cash App as a competitor. I think their run rate is at, what, $2 billion annualized. So how does that -- I know the demographics are different and the monetization strategies are different. But how does that delta inform your strategy on monetizing Venmo?

Well, it informs a lot. And we do a fair amount of benchmarking ourselves versus competitors. And look, we're not so proud as to not take a lesson from what others are doing in this space as well. But I think if you step back and you think about what Venmo represents today, we have 70 million, 72 million customers as of the end of the last quarter. And you compare that to PayPal. When we separated from eBay, we had just slightly more customers in the U.S. than that. Of course, Venmo is all U.S., but we had 80 million or 81 million customers in the U.S. when we separated. And so tremendous opportunity. You think about its TPV is approaching the level that PayPal was when we spun off of eBay. And you've got, call it, $900 million to $1 billion run rate of revenue right now. I'm not increasing guidance there. I'm rounding it just for simplicity, just to be clear. But like that's such a tremendous opportunity particularly when you're considering that the use cases they're somewhat limited today. And so if you compare to what others are doing, I don't know the exact composition of the revenue streams. But we think that P2P will continue to be an important aspect of this. But complementing that with the ability to use Venmo to check out the merchants. And to be real clear, Tien-Tsin, like this is -- there's a push here from the PayPal side. We want to get this on merchants' websites, but there's a pull also. Merchants are coming to us, saying "We want to have Pay with Venmo. Our demographic of users, that's what they use." And so I think all of this is sort of to say that this is a tremendous opportunity. And I think we're finally at a point, which some of you would argue has been a long time coming, where we're going to start to put the foot on the accelerator here and really see how this is monetized. And look, we just talked this year being transaction margin breakeven. We expect to be operating margin breakeven next year and continue to see the great growth that we've seen here already.

Yes. No, I appreciate that. I know you've also been very careful to not change too much about a thing with Venmo and how viral it is. So -- but it's a big population. And if we're focusing on ARPU, I'm trying to understand how we better benchmark it. So good to get your perspective on that, John. So a couple of final questions. I'm looking at the list of people are sending in. I know you've mentioned this a few times around margin and transaction expense, John, with debit being a huge lift, maybe stimulus is helping with the debit funding. We had Visa right before you, by the way, in talking about debit doing so, so, so well. Does that concern you at all? How sustainable is this transaction margin lift given the debit mix being such a help to you as merchant of every models?

Yes. Well, certainly, we benefited from stimulus. But that wouldn't be the main thing that I would point to because, obviously, that's going to go away. It's really, I think when you consider the composition of transactions on PayPal, and importantly, like the increase that we've seen around the core PayPal experience, the branded checkout button, those tend to skew more towards lower funding cost. And so I think that, that's going to continue. We've seen, you could describe it as a seismic acceleration in the digitization of cash. And I joked about this on one of the earlier call or late -- calls last year. But among the main things that I look forward to doing post pandemic returning to an ATM that's not one. And this -- we got a lot of new users that came to us through P2P type of experiences. And so I think that's going to continue to put downward pressure on transaction experience as this is really becoming an alternative to cash. Now on the flip side of that, where we could see some inflation is things like travel and as that tends to be more unbranded card processing for us. As that revenue vertical comes back, we're going to see a little bit of pressure there on the TE side. But the net of all of that is I expect transaction expense to stay lower than it was prior to the pandemic. Tough for me to say exactly, but the bookends of kind of low to mid-80s sort of feels appropriate based upon what we see today and importantly, the trends that we expect in the future. And so I think transaction margin is still going to stay strong. And again, some of that is mix based as well. I mentioned the impact that Paymentus has on take rate, will have a similar impact around transaction expense. And so I think the margin profile is going to continue to remain really attractive for us.

Okay. No, that's good to hear. You've done a great job, obviously, on the transaction expense for sure. We got less than a minute left, John. I did want to ask on M&A. I have to ask you on that. I know there's a lot. You've been focusing on organic investments, but there's been a lot of industry consolidation, a lot of well-funded private companies as well as you know. What's the latest thinking here relative to organic investments?

So on inorganic investments?

Yes, inorganic versus organic.

Yes. Yes. We'll continue to be opportunistic. This is a fast-growing space, and there's a lot of different ancillary products that customers, particularly merchants are wanting to complement the platform. And I think we've done a pretty good job of going out and finding capabilities that seamlessly fit into the PayPal platform. And so we'll continue to do things like that. Importantly, for us, like there are a few companies that have our growth profile, but also our free cash flow margins. And so that gives us a huge opportunity to go out and use that cash to create shareholder value and in some cases, that's acquiring companies. And look, the range there can be pretty big, and which is why we kind of backed off of giving any sort of annual guidance. But I think over the next several years, you could expect the usual sort of tack-on acquisitions that really build out some capabilities in our platform.

Okay. No, that's great. I think we're out of time, John. Really thankful to have you. As always, I think we covered a lot of stuff. It's a fun name to cover. Like I said, I'm thankful to cover the name as well, always learning, especially learn a ton through the pandemic and you become being available is a big part of the learning process. So thank you for that, John. I'll let you go with one quick on-the-spot question. Have you gotten NBA finals? Any views on who's going to take it off?

Gosh, that's a tough one. I mean I want to go with the Jazz, but I think Brooklyn is looking pretty tough.

We've got the big 3. We'll be watching.

We'll see. We'll see. All right. Tien-Tsin, I always appreciate it. You have a good one, and thanks to your audience as well.

Thanks for the time, John.

Okay.