SAP SE (SAP) Earnings Call Transcript & Summary

So I'll start off the next session. I'm very pleased to have SAP with us, Luka Mucic, the CFO of SAP. Luka, thank you very much for joining us. Feels like it's a little bit of a fair well, too. I was going to get T-shirts printed but maybe we'll get that done later. And in seriousness, thank you very much for the support of the conference over the years. It's much appreciated from our side. Thank you.

Absolutely. It was always a pleasure, especially with you. I think we have broadened both over the course of the last 8 years.

That might have happened, yes. Perfect. Well, let's kick off. I guess, one of the discussions I'm having a lot with investors is could this time be different? Because when we look at our CIO surveys, digital transformation plan...

Is safe harbor statement out of the way?

Well I, not a good year. Yes, that is just tradition as well. So yes, apologies. Yes, I think there's a big discussion around, could this time be different because of software being more central, companies having that as a big priority. But I know that investors are always very skeptical about any comments around macro environments being different from previous ones. Could you maybe just talk a little bit around, do you buy into that at all when you're having discussions with executives, that come across? What are you seeing in the markets? And how relevant are SAP to those discussions?

Well, I would say yes or no. Let me first perhaps cover why I believe that, indeed, the current environment is different from the past. What we see is that companies recognize that in particular, in the current environment, they need 3 very important capabilities. One to just be much faster and more agile in terms of reconstructing their end-to-end business process landscapes in the wake of business model transformation. That was actually already a trend for years before the pandemic, but then the pandemic has accelerated this greatly and given today's pressures, in particular, on the inflation front, cause the need for further automation is even more prevalent than ever in the past. Second, you have the supply chain disruptions. So accurate planning, agile planning capabilities, access to new suppliers where needed through business networks is a very critical area of demand. And then let's not fool ourselves. The biggest challenge of our lifetime is still a sustainable transformation of the economy. And for that, companies also need transparency on how they are doing, where their climate footprint is, where they can further improve from a circularity perspective. And also their software is very important and not up to the task today in most cases because the data models have not been set up in a way to track also these types of informations. And those are critical areas that stimulate and spur demand. And the nice thing in terms of SAP is we are sitting squarely in the center of this demand because, in particular, with our digital core ERP and supply chain management solutions, but also our business networks and procurement and we really address this straightly and directly. And that is the reason why we have been doing very well in the cloud. Now the focus is on the cloud because what we see is 2 impacts that clearly come from the current macro environment that are not different from the past. Significant CapEx investments are clearly deferred. So the on-premise deployment model is even more rapidly than we had always projected becoming deprioritized by customers, and that's what you see in our numbers as well. Would those numbers have looked a little bit better on the license front without the current circumstances, for example, without the war in the Ukraine? Certainly, yes, because Russia was always a strong on-premise market for us and probably also the on-premise declines in other theaters would not have been as strong without that macro environment. So that's not different. And what is also not different is that the scrutiny in companies around IT investments, be it in cloud or elsewhere is certainly heightened. So when you do a core to cloud transformation, this is not a departmental decision in the IT department. This is always going to the full Board of companies. That means you have to have your value case ready. You have to demonstrate how this is going to actually be accretive to company earnings, to company resilience, to the company topline and so on. But when you have that act together, then you can still be very successful. As I would argue, we have demonstrated so far.

You've been living with that environment now for 2, 3 quarters, it's not something that suddenly happened you've been delivering this year against that backdrop?

No. And actually against that backdrop, as you have seen, our forward-looking indicators in the cloud have actually accelerated our current cloud backlog. We started the year with 23% constant currency growth, went to 25% and now to 26% in Q3. And within that S/4HANA cloud is obviously tremendous growth engine, now 90% constant currency growth in Q3 against the backlog that is already reaching almost EUR 2.7 billion. That's arguably the past growing enterprise of the application in the cloud, at least as far as I'm aware. So this is, I would say, not impeding the growth, but you have to have your act together. You cannot take anything for granted.

That makes sense. That brings me on nice end to the next question. You talked about S/4HANA cloud, you have phenomenal success this year in terms of the revenue growth and backlog as you flagged. But we've really seen that acceleration, I would argue, over the last 12 months. Could you just talk a little bit about what's the driver behind the acceleration because the product has been available for some time, product maturity, how you're selling it, the value case, what is it that's driving that?

No, I would say it's a bit of both. First of all, the momentum is tremendous in 2 ways. One, we have now very significant momentum in migrating our installed base to the cloud. And there, I would say the RISE with SAP offering is the key reason why that is accelerating. We take more accountability for those migrations in the past. Customers would take their licenses and then would need to select a hyperscaler, would need to select some application management, provider would still work with SAP. So it could get quite convoluted with RISE who really offer a holistic business transformation service that is owned by SAP that they have an accountable partner where we provide transformation tooling around the business technology platform and SAP Signavio as a business process transformation suite, allowing them to benchmark their asset processes versus what they will get in the cloud with S/4. And that's, of course, helping to provide confidence and is creating significantly increased momentum in the installed base migrates, both to S/4 and also to the cloud. The second reason is that we have significant net new momentum. I would say, over the course of the last 2 years, we always had around 60% net new customers around our new S/4 customers. That's also getting a lot easier when you predominantly have a cloud-based model than an on-premise model for net new customers. And there, of course, we have mostly smaller nimbler companies, but also many very fast-growing ones like biotech companies, BioNTech and Moderna both bought into S/4HANA under a RISE notion, and that is the second reason. And there, of course, we have lots of S/4 public cloud's customers. There I would say the solution indeed has, of course, become much more rounded through significant R&D efforts. You have seen that we have stepped up our R&D investments quite a bit over the course of the last 2 years, but it pays off and in S/4 public cloud, we are meanwhile able to not only cover these smaller companies, but when they are really willing to be focused and really prioritizing simplification and standardization then we can even cover quite sophisticated companies we had in mid Q3, a significant win was a quite large French-based energy management company with a German name. So that, I think, tells you that this business solution is ripe also to cover quite sophisticated enterprises. So it's really a combination of more accountability from SAP, better tooling to provide the migration with a tool focused on transformation and better capabilities of S/4 public cloud.

And when you talk about the capabilities and the value case, I always like your concrete examples of what customers can do differently, they wouldn't have been able to do on [ ACC ]. Could you give a couple of things that resonate with customers that are like, "Oh, okay, that gives me the driver to move"?

Yes. First of all, much greater flexibility in terms of reconstructing, for example, segments of the company, reconstructing reporting due to the basically a single data based structure of S/4. That's for me, as a CFO, very important for the operational functions of the company, much broader proliferation of smart AI-based technologies across the suite in various use cases. Then you have obviously also particular, in the cloud now, the ability to much more rapidly implement. That's also the time to value is a very important consideration. We have right now roughly 21,000 S/4 customers out of which close to 16,000 are now live. But in the cloud, we have round about 6,700 customers and 6,100 are already live. So clearly see that time to value and to go live is shrinking in the cloud, and that's another strong factor that speaks in favor of it.

That makes sense. One of the questions I get quite a lot from investors. And again, this comes back to your point around faster rate of maintenance decline -- sorry, license decline this year and then the start of maintenance cannibalization seeming to happen. How much of the cloud growth is coming from that cannibalization effect versus the underlying growth of the business? And could you differentiate between where we are now and what we might expect next year?

So first of all, I think if we want to call this cannibalization, it's actually a very healthy cannibalization process because on the one part across both licenses and our cloud order entry, we have been actually consistently growing in double digits. So even with the 42% constant currency decline in Q3 our total order entry growth was in the double digits. So there you can see how strong actually the cloud growth is in the underlying bookings performance. Second, the conversion of installed base customers is happening at very healthy conversion ratios. We wanted to drive for more than 2x. But actually, at the moment, we rather at around about 3x. So we are losing, also in 2022, a really moderate, low triple-digit million EUR number of support revenues at a 3x conversion factor. Remember that those migrations to the cloud, oftentimes have a significant ramp. So you don't lose the support revenue right away. It happens over time as customers complete their migrations. And therefore, we expect on the maintenance revenue line, kind of a trend that gliding downward path probably by 2025, we will be at high single-digit negative declines, but we will not fall off a cliff by then. And so in aggregate, we are clearly gaining share in core ERP, which is the only area where we still have sizable license figures out there because we're growing in double-digits. We have a very healthy conversion ratios again, low triple-digit million figure. This will continue to trend up, of course. Perhaps next year, we will have a 2 in front of the 2 zeroes. This year, it's still one and we gain a multiple of that in terms of cloud. And more importantly, we extend beyond it. We can upsell and cross-sell and extend the use as part of the migration to the cloud. So this is actually a strong net positive for SAP.

That's very helpful. And when you talked about -- you talked about the total order entry growing double-digits. That's been one of the challenges for investors. I've got licenses declining, I've got cloud growing, I need to break out what's new cloud business. Would you say that order entry number is how we should think about -- is that a like-for-like kind of new business at SAP?

That's pure new cloud bookings on a TCV basis, total contract value basis. In your -- in the current cloud backlog, you see far less of that because you obviously have only an annualized figure and when you have a ramp in it, it's not even resembling the ACV bookings number, but it's even lower than that. But in the last 2 years, we have been consistently exceeding our ACV bookings growth in terms of TCV cloud bookings in the teens. So it's sizable additional amount. And the other positive factor of that is that it's giving us great visibility also not only into next year, but also into the years beyond. That's why we are so confident about our momentum.

And given that strength in the total order entry growth, even though it's a factor in licenses coming down a bit and then pro [rating] it into a cloud-like number and still be in double-digit new business growth?

Yes.

Because I think that's the key number that people want to get to and if you're growing double-digit, that's incredibly reassuring for people to see that new business coming in. Perfect. And then just to finish off, maybe on the maintenance side. That has been incredibly resilient. I think maybe investors have been a little bit surprised about that. How much of that is because the contracts are all-or-nothing? And so it takes a while to work through that. And investors fear there could be a more rapid acceleration as people move to cloud and customers start to negotiate on that, then you're comfortable we don't get that -- more rapid shift?

I'm extremely confident about the support revenues. And frankly, this was always the piece that I was really doing a lot to reassure investors over the years because we have close to zero churn outside of cloud conversions. I know that some others in the market are talking about taking business away from SAP. That's just -- I mean, you can see it in the numbers that cannot be the truth with this kind of resilience and support revenues. We are declining in software licenses in the high 30s, and we are essentially stable with minus 2% support revenue growth out of which 1% is alone the Russia impact of winding down our business there. So this is extremely resilient. It also has not necessarily to do with an all-or-nothing approach to maintenance because we are actually allowing our customers to partially terminate maintenance when they are moving to the cloud with us. That might be a factor why nobody is defecting away from SAP, that might be true, but it's certainly not the case that we are not seeing any terminations until the end of the cloud migration process. But again, in the cloud migrations, especially at the top end of the customers among the top complex customers. It takes a while to finalize those migrations. And in the interim, there's still paying for a portion of the maintenance for the solutions that are still on-premise and still due to be lifted to the cloud. And that's why we will have this gliding path. But of course, it will inevitably result in higher rates of declines over the next couple of years. For next year. We have a positive impact from inflation adjustments of our contract values. We have just rolled them out globally. So next year, we have basically up to 3.3% higher maintenance charges for our customers depending on the individual CPI developments inside the countries. In most countries, of course, we're hitting that ceiling, so that will be a help of around EUR 250 million to our support revenues going into next year and will further help, of course, to smoothen that gliding path. But the assumption of a sizable support business come 2025 is absolutely safe and further underpins the resilience of our business model transformation because by 2025, we will have definitely at least 85% of recurring revenues in our total revenue composition.

That makes sense. And on this conversion, so you initially -- when we started talking about transformation, you talked about a 2x conversion of maintenance into subscription. You've been running at 3x. Could you maybe just help investors with the building blocks of why customers are willing to pay that uplift? There's avoiding future licenses, that management's infrastructure, how do we build that value?

Yes. Why have we always believed that we can generate at least 2x because the customer is getting at least 2x the value in the old support model. We essentially were shifting updates. So shifting code and we were available to provide user support. Now we deliver the infrastructure, the software, the application management. So it's a much more holistic service. And allows customers, of course, also then to reduce expenses that they had in their own IT departments for the operation of the solutions accordingly. So that's the base factor, so to say. On top of that, you, of course, can place a premium on the greater agility when you move to the cloud, the faster time to deploy and therefore faster time to value and frankly, the greater accountability by SAP as well, that has a premium and has a value to customers. But beyond that, why is it 3x? Well, because we have significant cross and upsell potential. As our customers move to S/4 in the cloud, they recognize the value of all of the hard work around integration across the portfolio that we have built, they get this RISE with SAP, the business technology platform entitlements, with that the harmonized semantic [beta] model, harmonized user experiences across the portfolio. And so the argument for other parts, like success factors for HXM or for Ariba, Concur, [ few ] clouds and procurement is becoming stronger, and we have significant success. So we have more than 80% of our sold S/4 cloud contracts under RISE. Have other solutions attached and upsold to it, and that drives then ultimately the higher conversion value.

That's very helpful to understand the building blocks of that. The other discussion that I have a lot with investors is, we've gone back and forth on cloud revenues, cloud gross profits. There's been discussion around more of the businesses coming on private cloud versus full public. Could you maybe, first of all, give us some help on how much more revenue can SAP drive when it's a private cloud customer versus a public cloud customer? And what's the downside of margins? And then just a couple of follow-ups there.

Yes. First of all, you cannot generalize this, right? I mean we have -- as I said, we have significant public cloud customers now like that French company that I was talking about, that easily has a cloud commitment with us that resembles what many others have in private cloud. So it always depends on the scope of the customer deployment, not -- cannot be generalized. But of course, when you take a look at our S/4 customers, in terms of volume of customers, the ratio to the benefit of S/4 public cloud is much higher than on the revenue side because admittedly, most of the very complex, sophisticated large customers with multibillion -- multimillion ACV commitments, they tend to rather deploy in the private cloud. But it's also not a black or white situation. Most have an ambition to, over time, move more into public cloud. So they oftentimes acquire both solutions, deploy public cloud and some of their less differentiated and difficult businesses and on private cloud. They're working on cleanup exercises and business process, we designed to, over time, be able to consume more of the public cloud capabilities. In terms of the gross margins, actually, the spread actually narrows. We have seen in 2022, quite a significant surge in the profitability of RISE contracts versus the first ones that we contracted in 2021. There's, of course, also a learning curve involved for SAP. And as we have now more large-scale references, also the confidence of customers is increasing. Therefore, that tends to support healthy margins. At the moment, we have roughly a 15% differential between public and private cloud on those deployments. But frankly, that is coming along with a significantly better performance in the absolute volume of RISE with SAP private cloud deployments that we were able to drive. We were not sure as we were introducing this offering at the beginning of last year that we would have already within the same year the likes of a Siemens or a Daimler truck, fully buy into a cloud transformation for the core European estates or now in this year, Panasonic and other massive customers, but it's happening. And so essentially, while we have a margin differential there that could result in our 2025 cloud gross margin ambition at the company level being slightly dampened. But on the absolute profit side, would actually significantly overshoot if that remain the case. And that is essentially what you see happening right now. I mean we have had 25% revenue growth in Q3 and we had 30% cloud profit growth. And that even does not yet include the additional benefit from the cloud harmonization program that we're expecting when it runs out early next year then we will have massive further benefit this quarter. It was 1.8 percentage points headwinds without which the cloud margin or aggregate level would have been already at 73.5%. And when you then take out the Infrastructure as a Service business that we're consciously deemphasizing, actually, we are already now ending up with close to 76%, so I'm absolutely not afraid of a further increase of our private cloud business. It comes at increasing margins. It's extremely profit accretive and will further extend the product revenue mix versus the services revenue mix. And so this is absolutely a positive for SAP.

Do the margin profile change at all, whether it's delivered on hyperscaler infrastructure or your infrastructure?

Not too much actually because both for us are coming at a similar level of cost. It depends a little bit on the geography in some regions. One will be slightly less or more expensive versus in other regions. But as we are procuring massive volumes from the hyperscalers, we can actually get them at a discount that typically a single customer will not be able to obtain. So also on that piece, we are driving actually a margin uplift not only a passthrough.

Helpful. Maybe let's turn on to margins. So maybe then let's start off on the fourth quarter, which I guess is a big focus for a lot of people. And I imagine for you at this time of the year. We've got a full year guidance, which has a range. Obviously, that means the range for the fourth quarter and EBIT becomes quite a big range. And you've given a sense of where we should expect the license declines to come in. The licenses are probably the biggest risk factor because the cloud you have huge visibility into. Could you maybe just help us a little bit with the license declines you've guided to? What EBIT would that translate into? You've talked about maybe there's some lumpy deals in public sector in the fourth quarter. If they weren't to come in, what type of impact would that have? Can you just give us a little bit of a feel for the range of outcomes on Q4 between those 2 elements.

As I said on the Q3 earnings call, I would say I'm carefully optimistic that in Q4, we can return back to positive operating profit growth, certainly at the nominal level, that is without question. But at a constant currency level, I think we have a good shot at this as well. And yes, the main unknown variable here is software licenses if we had a similar performance in Q4 as in Q3. And as you will appreciate, there is some uncertainty into that given that in Q4, the volume is the highest. Then I would say, still the assumption on the Q4 profit can hold that I just mentioned. But then we would certainly end up rather at the lower end of our profit guidance range and the same would also apply to the combined cloud and software revenue guidance at constant currencies. Constant currency is still a big help and will have the nominal growth in a much higher territory. But that's -- that would be the likely outcome. And then the rest is really dependent on where the software goes and it's still significant in Q4. The good news is next year and the year after and the year after, it will be smaller and smaller and slowly become more of a rounding era in the future.

That's helpful. Also on the Q3 call, you reiterated the ambition for double-digit EBIT growth next year and clarify that, that's an organic number. I think a lot of people given the scale of uncertainty that's out, was surprised that you're continuing to be willing to do that. I mean first of all, the confidence to do it, and then secondly, could you help us with the building blocks of how we get to that double-digit EBIT growth next year?

No, I recognize, of course, that there is uncertainty in there, but we have been operating under this uncertainty now for quite some while and we remain firmly committed to the target. That's not only me, as an outgoing CFO. That's also our CEO, Christian Klein, and the Board. And you have all of us heard, I think, consistently talk about this. So we can turn to the building blocks. One of the big building blocks is obviously the cloud harmonization program that will kind of end in 2023. Just to give you an idea in 2022, we will spend more than EUR 400 million on this program, in 2023 will be less than half of that because in the first half year, we will still have some of those expenses as we wind down and decommission the system landscapes, legacy system landscapes. But it will already not be at the same run rate as we had seen in 2022. And then in the second half year when the project is over, you will see a significant surge in the cloud margin due to the expenses being outside. And then, of course, we expect continued efficiency gains across the cloud business and continued growth on the cloud gross profit side. So that's probably the most important lever. And by now, there was initially always some uncertainty. Are we really going to be able to finish the program? By now, we are certain that this will work out. And therefore, that increases the confidence. Second, of course, we need a certain topline contribution. That's clear. You can roughly assume that we need a mid-single-digit topline growth at the total revenue level, given that we are here already this year. And that for next year, we have always said we should start to see an acceleration, first on the bottom line, but also more pronounced on the topline. It will not yet be double-digit growth that will come a little bit later, but it will be already somewhat pronounced. So we feel confident that we can at least deliver this mid-single-digit topline growth that we need and then it's up to the cost ratio. So we have invested significantly into headcount, as you know, over the last 2 years, including this year, more than 5,000 heads. We're not planning for any increases in 2023. We have what we need in that respect. Of course, we are planning for a slightly higher salary round for 2023 than 2022 in the past because of the inflation increases, but we expect it to trail the increases on the topline. That means that both the R&D ratio as well as the sales and marketing ratio will come down. So those effects in combination should definitely help us to achieve the double-digit growth.

So to dig in, I guess, the thing that's not in your control there is the topline growth. As you say, you get a help because licenses are weaker this year than planned. So it becomes a much lesser impact next year. So it really come down to the cloud business. Could you help us at all with -- we know a lot of that is renewal. And so the weight of new business that moving up and down a bit moves it a little bit, but it's not going to change the world. How much visibility do you feel you have sitting here today into that cloud business next year to give you, again, that confidence as they know we really feel we can deliver that double digit, and that's the key building block?

I think we have significant visibility because it's not only that new cloud bookings during the year will have a relatively limited impact there. So we're talking on the growth side, a couple of percentage points in either direction but we have significant visibility due to the business that we have already contracted that is not kind of yet fully in the current cloud backlog. It will now be in Q4, of course, and that business actually has, as I said before, in some contracts, significant ramps in that are now going to show up and start to show up also more as we move into 2023. And that, of course, is the beauty of the cloud business model. And in support revenues, unless we see now a massive wave of insolvencies, I mean I have no reason to believe that the churn rates will develop in any different direction. We have actually adjusted our midterm planning for support revenues slightly upwards, not only because of the inflation increases that we did not have fully in our cards at the beginning of our planning cycle last year, but also because we had, frankly, planned for slightly higher churn, and we are seeing that it's not happening. And you need to understand that SAP -- virtually all of our support contracts have termination rights that expire end of September for the entire next year. So we have now a very, very good visibility also into the support revenues for next year.

I've got a lot more questions I want to get to, but maybe I'll give the audience a chance to see if there are any questions on the floor. If we take one at the front here, please, we get a microphone and to you.

My question is around the sensitivity of the cloud business to the economic cycle and not so much as you referred, the churn rate due to insolvencies. But how much actually is built into a cloud contract that if I reduce the number of headcount or if I reduce my -- my activity, actually, I can adjust also my cloud payment? On the other side, I mean, if you see a slowdown or a drop of cloud revenue, how much can you adjust your cost base?

Yes. It's a good question, and it depends on the business model. So for the majority of our cloud businesses who are on either a classic subscription or on a commit-to-consume scheme. So subscription is just a ratable payment over a number of years. The commit-to-consumer would mean that during the term of the contract based on the consumption, there might be fluctuations. But at the end of the day, there needs to be a true-up for the full amount and typically with an annual use it or lose it [indiscernible] so that also the actual business year is not affected, in those cases, there is no right to adjust. So to say this is a fixed amount. But of course, at the point of renewal, then there would be an opportunity to downscale the contract. So therefore, in those business models, we actually very well shielded from any kind of downturns in perhaps numbers of employees or users. That's different in our purely transaction-based businesses. You have seen during the pandemic that Concur, for example, suffered quite a bit because of the travel bans and the lockdowns. Now this transaction-based business interestingly is surging quite a bit despite the current macro uncertainties at actually very high double-digit growth in transaction-based revenues. But of course, there, it's -- there is not a guarantee that this will continue. But the good thing here is as well that meanwhile, outside of the Ariba business network, which is procurement based, and therefore, based on procurement volumes, the second highest transaction-based revenue stream is actually in the business technology platform. And there, it's really dependent on the amount of integration scenarios that our customers are realizing between particular S/4HANA and other cloud solutions. And as this business is surging so significantly, I think there in the short term, there is very limited, if any, risk that transaction revenues in the business technology platform would go down. But that's, I think, the way how to think about the different models and their exposure. Concur, I mean, it's actually growing pretty fast in around 15% at the moment. So by next year, we expect them to exceed the pre-pandemic levels. But of course, if there was another complete shutdown of travel which I don't think there will be, but of course, you can never rule it out, then Concur might be affected again. But at the moment, we are not seeing that.

[indiscernible] from the question here on the floor, please.

Would inflation be structural? What would be the impact on the ongoing contracts and all the contracts you have signed already particularly on the cloud because you also build the infrastructure through the cloud billing. So what would be the impact on your revenues and on your profitability?

If what would happen...

If inflation was more structural, wage inflation? [indiscernible] So infrastructure inflation.

Well on our cloud contracts, we have, for any new contracts as of this year, as of the second quarter, we have rolled out new clauses that allow us to annually increase the value of our cloud contracts by 3.3%. That's one thing that is providing a certain protection on the infrastructure cost, we have actually locked in a significant part of the value of those contracts. So it's mainly really the wage pressure that we could face. But again, we have that in most cases, in our hands. And of course, need to make sure that it's not a massive exposure. We have already made it clear that we will not be in a position at a global level to just equalize the inflation rates. That's just a part of the reality that we will try to be fair but also not completely go into the extremes of trying to match inflation rates.

On ongoing contracts, you will suffer from inflation. And on the new contracts, there is a cap at 3.3%?

No, we -- not a cap. There is an annual 3.3% increase in the contracts.

Is it a fixed increase?

Yes, it's a fixed increase.

So whatever the inflation rate will be in the future?

Yes.

So if it is lower, it will be a benefit for you? And if it is higher, it will be headwind?

Yes, that's correct. And -- but let's not forget, in addition to this increase over time because you were referring also to the existing contracts, there is always for both sides, the ability to renegotiate fees on renewal because the contracts are not indefinite from a time frame perspective. And that's actually what we have been practicing in the past as well. That was the question before. If a customer has a dramatic reduction in volumes. Yes, at the point of renewal, they will negotiate the contract values down. On the flip side, if they have more usage and if there has been significant inflation of course, we will look at negotiating the fees up that business as usual, I guess, under unusual circumstances, but there is always a possibility at the point of renewal.

Perfect. Well, I think we've bumped up against time there, Luka. That was a really interesting discussion. Thank you again very much for joining us. And everyone, enjoy the rest of the rest of the meetings. Thank you.

Thank you so much. Thank you.