Edited Transcript of ZO1.DE earnings conference call or presentation 16-May-19 8:00am GMT

We see that also when we look into the next chart. As always, we can see that our business is really built on revenue retention. And we also see that, for the first time for quite some time, we probably look more at a linear growth rate than a super linear growth rate in the year of 2019. But that is also, I would say, disguising the fact that we are adding a cool another EUR 200 million, give and take, to the top line in this year alone. This looks like a very, very predictable and attractive business model to us.

We also see that new customer acquisition is, in its direct impact to the year itself, not that important. But then if you look into a multiple-year analysis, you see that it’s very valuable to add as many new customers as possible because they continue to bring in sales over years and years. You’re aware of that effect, I just wanted to highlight one more time how important it is to see the revenue retention and the recurring revenue type of business model that we operate.

Now let’s look into the sales performance in the first quarter. We see that we are up by 13%. One thing that somewhat impacted this quarter-by-quarter comparison is the strong quarter the year before, but then also we’ve seen, in the course of the year 2018, to be precise, in May 2018, we’ve seen new rules for direct marketing when it comes to acquiring the opt-in of a customer for direct marketing e-mails, and that did not really help in turning customers into regular customers and keeping the regular customers always, let’s say, within the universe of zooplus because simply, every now and then, they need to be reminded that we still exist, that we usually do via e-mail. GDPR is setting stricter rules. The number of customers that we can acquire — that we can contact through e-mail has shrunk, and that is part of the reason why the sales is a little bit slower this year until now. The full effect — and this is exactly the quarter-by-quarter effect, is now visible and because we have almost 1 year since GDPR.

Now we’re responding with a broader set of communications activities, and again, we will get into that later.

Private label, we already commented on, and accessories, which is an important part of the business when it comes to margin but not that much important for the long-term prospects of sales is flat over the year before. We think that we can improve there and make it grow again, but the focus continues to be improved.

When it comes to regional profile of our sales, you would see that the 13% basically is a benchmark that’s give-and-take we achieve in all corners of Europe. There’s a special situation in the U.K. You’re probably fully aware that the first quarter was full of discussions around whether Brexit will happen or not. We spent quite some energy in making our U.K. business semi-independent as a preparation to looming Brexit, and that meant enlarging the output of our facility in the U.K., the FC based in Coventry, but at the same time, it also meant cutting back the assortment that we use — or that we ship from Continental European fulfillment centers, mainly our [Tibault] location. As one side effect of this one, we had a bit of a deceleration of sales in the U.K. So there it’s just 4%, which is unusually low in zooplus standards.

Again we also see that markets like the German market, which is a market in which we are active for about 20 years, is still, in year 20 of the story, it’s a plus, good for growth rates 12%, which are — they’re almost perfectly in line with the growth that we have all across Europe. We see that as a strong reminder that we should not worry too much about whether we can continue growing the company, the challenge now is to work more on offline to online conversion, where previously online advertising formats offered plenty of opportunity to catch new customers.

So when we look at the sales retention, we’ve seen a slight dent to our sales retention rate, and that is also linked towards GDPR. In our analysis, we go deeper into this one. How much is, market-by-market, a different — the impact of GDPR and where we need to fix the retention rate when it comes to product categories. But overall, we are comfortably sitting at a retention rate well above 90%, and that is something many other peers can never achieve because this — basically, their category is not good for retention rates of that level. We see that as a confirmation that we picked the right market 20 years ago.

New customer acquisition, again touched already, this is just the performance as it has been achieved by using standard instruments — or for classic instruments of customer acquisition. It starts with word of mouth, and it continues with search engine optimization, and it is complemented by search engine advertising and that is 90% Google and 10% everything else. And this is now also in the (inaudible) Europe usage at zooplus. I’m quite happy to say that even in — after 18 years of using Google, we are still able to scale, probably not as fast as we want to. And we see the opportunity of turning offliners online and using a broader set of new tools.

Now we go to a bit of information when we look into the Q1 2019 is that we continue to improve the gross margin. People that have been following this company for quite some time know that we went through a period of kind of steadily declining gross margins. Quite often we’re asked, is that an event in process. It is an in process, as you can see, we’ve been stabilizing margins roughly 18 months in the past, and now what we see here is that we have given an uptick of 1% over the year before. Part of that is driven by private label, which increases its share. Our private label margin is roughly 10% above the margin that we have across other assortments, and that really helped. When it comes to shipping charges, we now charge, in some situations like extremely bulky orders or extremely small orders, a bit more in the shipping charges, also you have to boost the gross margin.

But these are probably the most prominent 2 effects. The third one is that we have been clearing out a couple of, let’s say, odd combinations of customer discounts, very low prices and oddly-shaped basket mix, and these nonprofitable orders now take up much lower share of total.

If it comes at the expense of a bit of sales, we think we do the right thing for the long-term healthiness of the business. And that also leads to the display of the cost ratio. To be honest, the improvements in logistics look a little bit better than they should because here we have the clear impact of logistics costs being reclassified, some of what has been in the year 2018 and the first quarter and, within the operating expense, is now part of D&A. If you take this effect out, you would benchmark the 18.7% that we now have in logistics against something like 19.3% the year before. So what we can see is that, even if we have adverse, let’s say, factor price developments in logistics, that means a higher per parcel cost for the distribution and then also added surcharges for fuel and then also discussions around minimal — minimum wages in the fulfillment centers, we’re able to effectively reduce the logistics costs because we have built the extremely, I’d say, flexible and versatile network, and we have the resources sitting exactly at the right location. So we’re able to shift parts of the commissioning work into lower wages countries, and we’ve been able to reduce the average distance we travel in (inaudible), and we’ve worked on making the utilization rate of our assets as good as possible.

So this is one thing where we’ve improved. We used the give-and-take 0.5% that we gained there to spend more on advertising. And I think we do the right thing there. Pre-marketing, we now look at the cost ratio of 25.5%, and post-marketing, or including advertising and marketing, I mean, we look at a cost ratio of 28%, and that is a figure that lets us easily outcompete any other rival retail format in our sector. And this is what we continue to present these numbers because we think they are relevant for the business and also we are proud of having them achieved.

So where does it take us when we look into the bottom line. Overall, EBITDA positive to the tune of EUR 2.2 million, that is the black 0. And then we have a red 0, when we look into EBT, so we include D&A, we’re slightly negative, but that is 1.2% of sales — or of revenue and we come from 1.7% negative the year before. So we also see that there is an overall positive impact of having a better margin structure, having a better cost structure. And part of these effects we keep to ourselves and part of these effects we invest into customer acquisition, that is the story cut short.

This is one bit of technical information in order to make fully transparent what has been going on and why it is sometimes difficult to compare Q1 2018 to Q1 2019. As there are new rules for IFRS 16, we have contracts that have different durations and different structure. And year-by-year, we have slightly changing effects of how much of our operating costs, previous operating costs, now migrate into depreciation.

And in the first quarter 2019 compared to the first quarter 2018, we had EUR 3 million of logistics costs that migrated and we had EUR 800,000 of administration costs and overhead that migrated into depreciation because it was linked to long-term leases and before it was linked to assets utilized here in logistics and in other expenses.

Overall, the effect is roughly EUR 4 million. The net improvement in EBITDA is then remaining EUR 2 million over the first quarter of 2018. I’m sure you can verify these numbers if you add them up in detail. But again what is more important for the company is to keep the growth and the sustainability of the top line performance as good as possible to work on long-term and attractive for our cost structure and the mid- and long term, improve the margin structure.

In order to do so, we need to grow the company and this is for the third very important economic indicator, and we’re now consistently able to combine fast growth of the company with positive cash flow. So we are not only getting more cost efficient but we’re also getting more capital efficient, and we are continuously producing cash-positive cash flows and that has continued in the first quarter of 2019. And the free cash flow generated in this quarter is around EUR 10 million and that benchmarks against EUR 8 million that we had in the previous year. So we are not only continuously improving cash but we’re also during that with the consistently high rate quarter-by-quarter, year-by-year.

So these are the numbers and now I think it’s very important to see this maybe as the backdrop of the strategic plan. Maybe 3 things to address here. The one thing is how does it stack up against the efforts of Amazon in our category as the leading online competitor that we have, we’ll look into this one.

The second important thing is what to look at when it comes to the long-term prospects of this company is how long are you able to grow the business at such a fast rate and adding EUR 200 million or even more to the business each year. And that is directly linked to the challenge of customer acquisition and offline to online conversion, we’ll look into this one.

And the third aspect we are looking into is what is the long-term cost and margin picture or the long-term business model that we operate that we’re going to build over the next couple of years.

So let’s look into the aspect of zooplus versus Amazon. And here it is very important to see that Amazon is doing excellent job as a general retailer, but now we have to look into how good are they in our category, and we offer a couple of benchmarks. And one thing is that the assortment within the pet category for the — probably into 3 categories, the one, accessories, where Amazon is using the simple fact that they can offer as many items they want. So here, they are quite good, but accessories then is probably not as good for producing a recurring revenue business model than food. And when you look into food, there’s clearly the grocery brands or brands that are available for a multitude of channels, this is where Amazon is also, as many others, including us. And also around, many people sell these items but no channel is really dominating the sale of something like the brand Felix for cat food.

The top end of the market and the mainstay of the specialty — the retailer is premium brands in food, and this is exactly what we have to outcompete an Amazon by having full access to all relevant premium brands. And this is something that Amazon, if at all, and only if kind of halfway compensates through the marketplace. But the direct access on 2 premium brands is it due to the nature of the sales strategies and the branding strategies from — of premium in pet severely limited and we have, let’s say, numbers that is at the bottom of this list. Amazon offers direct, only 20% to 50% market-by-market, and of the top-selling 1,000 items that the [plus] is selling only 20% to 50%. That means that the larger part of our business is not overlapping with Amazon direct.

If you count in marketplace, you have a larger overlap of SKUs, but then marketplace is by no means as efficient as a fully integrated operation like zooplus. One is logistics inefficiencies and then also from a marketplace participant and their charges, which go way beyond the level that we have for customer acquisition and traffic acquisition using Google. So we see marketplace as a competitor that has relevance in numbers but not a competitor that you can’t beat, quite the opposite.

To finish that list there’s that Amazon, as a generalist, is focusing their private-label efforts on the categories in which they are most successful. And maybe the simple fact that private label at Amazon in our category accounts for less than 1% of their sales also gives you a clear indication of how relevant and strategically relevant they see the pet category for their business. If it would be of some significance, they would probably do more. I think it’s clear that they take an opportunistic approach looking into the categories where it’s the easiest for them to march in and then they have categories where it’s probably more difficult to march in. And we have successfully make it as difficult as possible for them to march into our category.

And then to round it off, you could simply say pricing is something where we don’t allow Amazon to outcompete us. And when it comes to, I’d say, building a relationship with the customer, we not only see ourselves as box movers but also as content provider and provider of relevant information. Combined, we think this is a compelling set for people to say, for that category, for my pet, for this product, I would like to cater through a specialist, and this is why zooplus continues to grow.

Now the second bit of the challenge when it comes to top-end performance really lies in the question of how do you acquire at the same or at equal levels of efficiency ever-growing new cohorts of business with also the same quality when it comes to, I mean, the revenue per user, I mean, when it comes to loyalty and when it comes to margin profile of the products that they buy. And here, as explained also previously, we’ve been probably too much focusing on just using Google because it’s so supremely efficient. But what we now are doing and since Monday we went live a bit is that we use 20 years of zooplus as the perfect opportunity to really engage broadly with many other tools of customer acquisition online and offline that will not supplant or substitute existing activities in Google, but they come on top and we have, let’s say, first indications that they work in synergy. So put differently, we’re not only adding new communications channels but we’re also using these channels in order to boost and scale with the impact of Google.

If you look at it, you would say, why didn’t you do it any sooner? But then it’s a little bit, I’d say, more complicated that it looks at first sight. First, if you go into advertising using something else like Google, you also have to take a completely fresh approach to the creative material as the advertisers would call it.

The second thing is, you need to develop a skill of working with these different media tools online and offline, and that clearly we did not have in the relevant extent in-house.

And lastly, you have to deploy advertising strategies, which are non-Google-based a lot more carefully market-by-market with relevant adoptions and modifications. And since this trickle of challenges was there, we’ve been probably a little bit too shy to try it out at early stages. And if you look into the past 20 years, the focus on Google didn’t do us bad, it worked, it worked for a very long time, it worked — it’s extremely, I’d say, efficient, but now the scalability and the needs of boost, and this is what we are practicing.

Let’s go into the — briefly into the details. And Google now is complemented by retargeting, which is important for first-timers to turn them into regulars. It also boosts the efficiency of ad spend because you can — focuses on people that have previously seen the website. We will Facebook and Instagram for building, let’s say, not a transactional focus and advertising channel but to give something that is more mid- and long term putting us into the relevant set, I mean, of consumers or of pet owners and pet lovers. And that clearly is also, then, the motivation we are using on influencers and behind our effort to increase the size and the relevance of pet-related content that the website will offer. It’s quite often also user generated.

When we look into offline, probably it’s 3 main things. One is TV, but that is in the form of direct response TV, that means highly targeted toward the audience. Basically, we know that we have one extremely clear feature in our target audience. We have more than 70% female consumers. And if you go into specialized or, I mean, TV channels, you can select the audiences which are much more female oriented. We will also have a lot lower, I mean, price per 1,000 contacts and other media metrics. We will use as a sidekick for direct response TV also radio.

The other 2 strands of activities offline will be promotions which are visible out of home, and that would also include public transport because we’re particularly strong in selling into the people that sit in the commuter belt of larger cities.

And then the third pillar of activity is anything which would be called events PR and, I’d say, unusual formats of communication around unusual events.

Here we are and that is 20 years of zooplus in the German market. And you can see, as an example, the key visuals and the PR tools — or some of the PR tools that we use in order to celebrate 2 things, that we’re here for 20 years but we also have a clear dedication to a highly emotional consumer category, and that is catering for the four-legged family members of, by now, more than 7 million costumers all across Europe.

We’ve probably been a little bit too shy to see that human nature of our business, the one thing is to be, I’d say, a reliable retailer and provider of goods. But then there’s also so much more that we can do for the customers to bond with and be happy with their pets.

So now back to more sober topics, and the sober topic is how does it translate into a compelling economic business model. Let’s briefly go through these 2 pages and then we will open for Q&A.

The one focus is what will happen to the gross margin, and the other focus is what will happen to cost efficiency. When it comes to gross margin, I mean, clearly, we have 4 drivers that work almost, I would say, in synergy with different timing and also probably with a slightly different impact. But all of them work towards gross margin stabilization, most prominently because it’s relevant across all parts of our assortment is improvements in pricing and the terms and conditions of delivery, before I mentioned shipping fee, which is also helping to increase basket — improve basket structure and to generate additional income and adds to the effective margin that we realize. But then it’s also about product pricing, in which we’re getting increasingly savvy, where to invest into good prices and where probably to stabilize the pricing level and, at times, even increasing the pricing level.

The second thing is, again, chasing us all across the assortment and that is the purchasing power that clearly we benefit from keep on growing the company as fast as possible and, for the midterm, also claiming global market leadership in Europe, global in a sense like across all channels and across all categories, that is accessories, grocery brands and specialty brands combined. That will help to increase our purchasing power. Even more prominent as a long-term effect on the profitability of the business is the growing private label share. If you look at the numbers, we now stand at a bit over 15% private label share. Last year, we were looking at 13% — a bit over 13% private label share, and we have the momentum to consistently outgrow our standard business with the private label business, and now we see, first time, probably some noticeable impact to the overall margin because we’re not talking about, in fact, 2 effects, one thing the private label share in total is now sitting at relevant size but also the margin differential over what we have in standard business versus private label has been increased over the last couple of years. And now the double whammy of it is we notice it in the overall margin structure.

And lastly, and that is probably the most difficult to judge when it comes to timing, we see mid- and long-term market consolidation. And this is why we are so, I’d say, committed not only to promote the online to — offline to online migration but also we are so committed to growing faster than anybody else of relevant size in our category in the online channel. We have explained in detail how we do it and how we are preparing for winning added momentum.

When it comes to cost efficiency, we, again, have 3 things to look at, but most prominently, we see some improvements in logistics costs. We’ve proven over the last couple of quarters that even if you have headwinds when it comes to factory costs, you can lower the cost of parcels, you can increase the efficiency, you can reduce the percentage of logistics costs as part of the — of total sales, and that is mainly also a job of basket management and individually singling out the type of transactions and the regions that need improvement in cost optimization or in value per order taken in. And then, the other 2 effects is the scaling effects that you have most noticeably in IT but also in personnel. And we see that we have now not only a pan-European, I mean, sales and marketing organization, we also have strong central functions and that most prominently also includes IT, and we’re also having rebuilt our internal resources for software development. We now stand at a roughly 250-strong team of IT specialists. They gain productivity by the day and this is also what we see scaling effect there in IT expenses but also in personnel expenses because we have a great team, and we will jointly build that great team and continue to grow the size of the business.

When you look into numbers, it translates into a structural margin range that we foresee as mid-term achievable between 5% to 7%.

Just to give you a bit of guidance for the Q&A, we won’t quantify exactly when this is going to happen because we have clear, I’d say, to dos when it comes to improving the speed of growth at the top line performance is job #1. As we produce cash flow while we grow the company, we see it, also from a financial perspective, as extremely compelling to grow as fast as possible. And the long-term effects on gross margin and logistics costs, overhead will basically be very much appreciated by product following that competitive and market strategy which aims for market leadership, which aims for customer happiness and which aims for a great, let’s say, ratio between the performance delivered to the customer and price paid by the customer. And — but then, this is not a conflict, this converges.

When it comes to marketing or when it comes to cost for traffic acquisition, we would simply assume that it is very healthy for the business to allow ourselves and to maintain the current state of traffic acquisition, of marketing communications, advertising budgets, which sits around 3% of our revenue that makes a long-term — I’d say, a long-term growth play, and at the same time, we will be a long-term nicely profitable business with a structured EBITDA margin of 5% to 7%. Again gross margin improvements come from private label, they come from premium, the come from managing the order mix and the country mix. The logistics costs will go down because we have specific efficiency improvements, we’ll reduced the share of (inaudible), and we will improve the basket-size structure, country-by-country and shop-by-shop. And so we have for everything that we promise here a clear plan, but we also have a clear priority in the way we do things.

So on that note, I would finish with the presentation and open for 20 minutes of Q&A.

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Questions and Answers

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Operator [1]

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The first question comes from Alvira Rao of Barclays.

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Alvira Hamid Rao, Barclays Bank PLC, Research Division – Research Analyst [2]

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I’ve got 3 questions on gross margins. First, you’ve mentioned that a lower share of unprofitable orders and higher private label share have helped in Q1. Can you provide some more color on the broader pricing environment through the quarter? Second, gross margins were higher through the second half of last year than we saw in this quarter. If I understand correctly, your businesses isn’t very seasonal, right? So can you help explain this? And third, looking into Q2, do you expect gross margins around a similar level to Q1 or edging higher with more private label and less unprofitable orders?

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Cornelius Patt, zooplus AG – Chairman of the Management Board & CEO [3]

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Okay. I’m not exactly sure whether the second question I heard right. So we are up with the gross margin over the quarter 1 year before but was slightly down over the fourth quarter in 2018, so the directly preceding quarter. And you mentioned we’re not very cyclical in our business, that’s right, but we are somewhat cyclical. And the fourth quarter is the quarter that offers the best opportunity to sell accessories, and accessories are a welcome boost for the margin. And that explains the slight dip that we’ve seen between Q1 and Q4. We see — and that is the first aspect of your question, we see overall pricing being a little bit more driven than it used to be by efforts and some, and I’d say, fruitful efforts of some premium brands to reposition them at times with the higher product qualities, sometimes I’ll suggest we have the good relaunches of the brand at higher price points. And that sometimes takes a bit of time till you have a higher price point and also established in retail markets. So overall, what we see is that we have — the premium sector is not only very successful at zooplus but it’s also a very active sector when it comes to the branded goods companies’ activities. So cut short, we see that, overall, the margin improve — margin situation really improves because the premium sector is revitalized successfully by the branded goods companies. When we look into the margin for the second quarter of the year, we would probably see a continuation of what you have seen there. Overall, quarter-by-quarter, if it goes up by 0.5% — down or up over a preceding quarter, it’s something that also has to do a little bit with the influence of how IFRS takes into account the numerous deals that you can strike with suppliers when it comes to marketing support, annual growth kickbacks and stuff like that. Don’t over interpret what you can see there is that we have a continuous — or I’d say, consistent picture in which we are able to stabilize the margins. And that is, let’s say, consistent for as long as 6 quarters easily, and we can also see — or make sure it’s apparent for you and how the private label share is growing. And we confirmed again that private label is — it’s easily 10% above the margin that we do with our standard business. That should give you confidence mid-term and long term.

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Operator [4]

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The next question is from Andreas Riemann, Commerzbank.

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Andreas Riemann, Commerzbank AG, Research Division – Analyst [5]

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Two questions, one on private label. Are you actually selling your private label products also via other retailers? And if not, would this be an option for the future? And second one on market reconsolidation, you referred to that, are you saying that peers could go out of business? Or do you expect that the producers are buying online pure plays? Any comment on this would be appreciated.

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Cornelius Patt, zooplus AG – Chairman of the Management Board & CEO [6]

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Yes. Two relevant questions. About the first one, we can give you much clearer information. For the second one, we can speculate a bit with you. The private label offerings that we developed are brands that not only come across but also are, I’d say, powerful by itself. So they’re not directly linked to zooplus. And yet we decide to make them available in the online sphere only through zooplus and bitiba. And that is for the simple reason that we think that we are offering, for other brands, the best entry into and the best path into the online sphere, but it’s also true for our on private label offerings. If at all, we would consider that private label might have some role for the offline-to-online conversion. But right now, we see such a momentum in private label, and that the best is to stick to your guns and use them using the powerful platforms of zooplus and bitiba. For some brands, most noticeably the Wolf of Wilderness, which recently won an award as one of the best brands developed for the super-premium sector, and the competition was out on all brands available in this sector. Our private label effort is so convincing that we give it a dedicated website that there’s a bit of consumer direct business just in order to find out. But that is the general strategy for private label cut short.

When it comes to market consolidation, we would rather expect that it’s — we won’t see high-profile exits from the market. But what we will see with the smaller competitors is that they single out niches and survival strategies, but they will lose momentum when it comes compete full head on against zooplus. We see very little sense in brand operators to buy kind of sideways-moving retail business. We don’t really do such integration, if at all. We see some branded good companies looking a little bit into, I would say, buying specialized outfits that do something in the service sector and that do something in content provision for the pet sector. So they use specific topics to build the business model around like dog walking or specialized access to breeder services. And this one sometimes falls under the, I would say, the wing of a branded goods company, but that is not that much relevant. I think it’s more a proof that the industry more and more understands how important online is not only as a sales tool but also as a communications tool and experimenting field.

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Andreas Riemann, Commerzbank AG, Research Division – Analyst [7]

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Maybe just a quick one. The EBITDA margin guidance, 5% to 7%, does it imply EBT margin of 3% to 5% roughly because sometimes I’m still in the old world?

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Cornelius Patt, zooplus AG – Chairman of the Management Board & CEO [8]

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Yes. That’s right. That’s also the transformation we see, 5% to 7% EBITDA, 3% to 5% EBT. That I think is a meaningful, yes, conversion of these 2 figures.

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Operator [9]

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There are no currently further questions. (Operator Instructions) And we have a follow-up question from Alvira Rao, Barclays.

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Alvira Hamid Rao, Barclays Bank PLC, Research Division – Research Analyst [10]

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I’ve got some questions on mobile. Can you provide any updated data points on our fast mobile is growing as a share of total orders? And you’ve told us before that conversion on mobile is lower than desktop. But could you give a sense of whether conversion is improving within the mobile channel, both for mobile web and mobile app?

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Cornelius Patt, zooplus AG – Chairman of the Management Board & CEO [11]

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Yes. Okay. Probably one should say is the conversion rate might be lower, but this is not because we have a lack of conversions on mobile, there’s just a lot more traffic out there on mobile. Mobile devices are used, I’d say, for a dual-purpose not just for getting a job done as you would probably use the desktop. But they’re also there for entertainment and for gathering information and for just killing time in various occasions throughout the day. So we should not that much complain about relatively low conversion rates, we should see the traffic opportunity that we have in mobile, and we’re quite good at capturing it. Mobile, if you cut it into slices, as a plus, we would say there is mobile with the smartphone and away from home. And many companies also put the desktop — not the desktop but the tablet used at home that they allocate the numbers that they have there to their mobile channel. We now also would follow this common practice when it comes to external communication. But internally, we see the tablet as a different use case because the tablet is more transactional than the mobile phone, the tablet is a different usage situation and a different, also, device when it comes to usability. And lastly, the most transactional format that we have is the app, and I’ll give you now 2 data points. The app is already doing something like a 12% of all transactions, and it’s growing at a rate of 60%. And the other data point I can give you is that, when it comes to traffic acquisition, mobile already accounts for significantly more than 60% of all traffic acquisition cost, and it brings in more than 50% of all transactions. So that gives you some information of how good we’ve been at migrating from desktop to mobile and it came absolutely natural. And as customers — they bond with zooplus, they’re increasingly happy to use the app, and the app is, then, logically a lot more transactional. But basically we see opportunities in all 3 subdivisions of mobile. And we will not forget that the desktop, which still brings in nicely reliable and also very loyal customers and transactions. It’s not a battle against the — between the channels, it’s use all channels to promote offline to online.

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Operator [12]

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There are currently no questions (Operator Instructions)

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Cornelius Patt, zooplus AG – Chairman of the Management Board & CEO [13]

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So the proposal would be to keep it compact within the hour, so we were 5 minutes ahead of time. If there are no further questions, as it seems to be, I’m very happy that you’ve been with us for the last hour and heard the news on zooplus for the first quarter of 2019 and also our perspective on the business when it comes to the future developments. Thank you very much.