Ladies and gentlemen, Welcome To The Bang & Olufsen A/S Interim Report Q1 2022/2023. For the first part of this call, all participants are in a listen-only mode. Afterwards, there'll be a question and answer session. To ask a question, please press five star on your telephone keypad. This call is being recorded. Today, I am pleased to present CEO Kristian Teär. Speakers, please begin. Hello, everyone, and thank you for joining the call. With me today is our CFO, Nikolaj Wendelboe. I will begin by going through the financial highlights for our first quarter, followed by an update on how we are progressing on our strategy and how we are focusing our efforts under the current macroeconomic environment. Nikolaj will take us through the financials, and I will conclude the presentation part before opening up for questions. The challenging macroeconomic environment we experienced in Q4 of last year continued into Q1. Regional lockdowns and the economic climate in China had a direct impact on our sales. Rising interest rates, the war in Ukraine, and higher inflation have also affected consumer confidence across Europe. We did, however, continue to see robust demand for our products in Q1, except for China. Compared to Q1 of last year, we could see a normalization of seasonality as consumers have been traveling again. For B&O, this led to a shift in demand towards our travel and outdoor related on-the-go products. Despite seeing a robust sell out in Q1, reported revenue declined by 8.2% or 10% in local currencies. In addition to the impact from lockdowns in China, we saw retail partners in EMEA reducing their inventories, and they were more cautious on replenishing. This was driven by the challenging macroeconomic environment. These developments led to revenue from product sales declining by 16% in local currencies compared to Q1 of last year. Our brand partnering activities, on the other hand, grew by 44% in local currencies. This growth was driven by our own new partnerships, and especially our Cisco partnership contributed significantly to this growth. Our gross profit was impacted by several factors in Q1, like cost for components purchased last, late last financial year, and Nikolaj will explain this in greater detail, but we delivered a lower gross margin than last year, which led to decline in EBIT margin and free cash flow. We maintain our outlook, but the uncertainty remains high, as was the case when we published our annual report in July. Given the unusually high uncertainty that we're facing, we're adjusting to the macro environment and lower consumer confidence, and I will elaborate more on this in a minute. Please move to the next slide. Sell out declined by 9%, which was mainly driven by Asia and the lockdowns in China, specifically. Sell out in China declined by 42% compared to Q1 of last year. In the other regions in Asia, we saw positive sell out growth. For instance, our second core market in Asia, South Korea, sell out grew by 16%. In EMEA, sell out declined by 2%, and we saw a shift in product mix towards travel and outdoor related on-the-go products. This was more in line with normal seasonality and reflected that consumers in general have been traveling again this summer, unlike last year. This also had an impact on channel composition, where we have seen e-tailers and multi-brand stores perform much better than last year. The mono-brand network experienced a small decline, except for our company-owned stores, which delivered a solid sell out growth. Americas continued its strong performance, and like for like sell out grew 14% compared to last year. This was driven by both the states and on-the-go categories. It was a broad-based improvement across most channels. Sell out in the different product categories all declined, which was mainly driven by the decline in China. However, we see the biggest decline in sell out in our flexible living category, and we experience it across all three regions. In addition to the other effects, sell out in our flexible living category was adversely impacted by our decision to stop production of Beosound Emerge and prioritize core components for other products, which has narrowed our product offering in that category compared to last year. Please move to the next slide. Strengthening our brand awareness, especially among customers in our target audience globally, has been a critical lever for us since we launched our new strategy in 2020. We continue to expand and improve in this area. It's a key for us to be able to continuously grow our registered customer base by attracting new customers to B&O while also seeing existing customers expand their portfolio of products with us. During Q1, our registered customer base grew by 6.3%, and we saw the number of customers owning two or more products growing 5.1%. In Q1, we had two product collaborations. It's a great way for us to reach new customers. The first was a limited edition of our Beosound Explore portable speaker together with the luxury brand Supreme. Supreme has a strong adoption among younger customers in our target audience. The second collaboration was with Balenciaga, which is a very successful luxury fashion house. We have worked for quite some time on this collaboration as we, together with Balenciaga, designed a fully functioning speaker bag. It's designed to look like the form of a Balenciaga handbag. We have crafted it in aluminum with leather from Balenciaga inside, and it has been crafted in our Factory 5. A total of 20 speaker bags were created for the show and sold out overnight with demand for more. The speaker bag was unveiled at Balenciaga's 51st couture show in Paris. The speaker bag was carried by the models along the catwalk, and the speaker delivered music to the audience. The Balenciaga collaboration has been one of the best-performing collaborations to date, and it created significant awareness for Bang & Olufsen. So far, we have reached nearly 30 million people. Through our own social media channels, we reached more than 1 million people. We're also driving awareness through our collaborations with Williams Racing, brand ambassadors, celebrities, and influencers. Together with Williams Racing, we have several activations in connection with the Formula One race at Silverstone in the UK. Seven of our stores ran Formula One events which were attended by more than 1,200 people. During the activation, we saw a rise in in-store traffic and higher sell-out in all stores and on our e-commerce channel. We estimate that during Q1, we reached more than 7 million people via influencers, celebrities alone, and we can see on Google search data that we drove organic reach, achieving more than 17 million organic impressions. We can measure the effects of our different activities on our e-commerce site. Compared to Q1 of last year, the traffic on our website increased by more than 25%. The quality of traffic also improved, with visitors staying on our website for longer. However, overall revenue on our e-commerce platform declined in Q1. This was due to price inconsistencies driving purchase transactions to other channels. We have seen a very good performance from our newly launched e-commerce sites in Asia, showing better-than-expected conversion rates. Please turn to the next page. Longevity is a core part of our strategy, and we aim at getting 10 products Cradle to Cradle certified by 2024, 2025. On August 31st, we launched Beosound Theatre at IFA in Berlin. It's the fourth product built on the modularity that we introduced with Beosound Level. We will now work on getting Beosound Theatre Cradle to Cradle certified as well. For our customers, the modularity holds two valuable propositions. The soundbar is designed to fit almost any TV, making it very versatile depending on customers' preferences. It's also possible to get the complete Bang & Olufsen experience with an LG screen, where we have the full integration between the screen and the soundbar. Secondly, the soundbar is designed to outlast traditional product cycles due to the upgradeability as technology advances. In the first reactions we have seen, the longevity and modularity of the product has been highly praised. This on top of the praise for its impressive sound performance and design. Beosound Theatre is the most powerful soundbar in the world. Since we launched our strategy in 2020, we have continuously invested in product development and in our technical platforms. We now have our own ecosystem where we can connect across products spanning several decades, which is a key differentiator for us. We have added new capabilities as we're gradually taking ownership of product development. In Q1, we opened an office in Sofia, Bulgaria, which will complement our software team in Denmark. Please turn to the next page. Due to the current uncertainty and with lower consumer confidence, war in Ukraine, rising interest rates, and inflation coupled with lockdowns in China, we are adjusting to the headwinds we are facing. The adjustments are twofold. Firstly, we're adjusting our operational operations, and secondly, we're prioritizing harder on our strategic initiatives. On the operational side, we have implemented a broad hiring freeze with a few exceptions. For instance, on software capabilities, as this is key to unlock our growth potential. We're also phasing our investments over a longer period to manage our capital resources, as well as lowering our production forecast to ensure a more efficient inventory development. Finally, we are prioritizing our strategic efforts towards our activities towards key segments. Please turn to the next page, and I will elaborate on the last point. Our strategy is unchanged. We are prioritizing our efforts harder. First is our Win City strategy. In previous quarters, we have been reporting on our Win London project in detail. London has continued to see a solid performance in Q1, like for like sell-out from our company-owned stores grew by 71%. Win London was from the beginning designed to drive brand awareness and sales, as well as work as a pilot to provide us with key learnings that we could conceptualize and scale to other cities. We believe that now is the time to begin to scale it. Based on thorough analysis of external factors such as cultural and economic indicators, personal luxury spend, and density of our target audiences, we had identified to expand our city strategy to New York and Paris. By looking at target audience demographics, consumption patterns, and urban development, we'll build a stronger presence and activity where our customers live, work, shop, and socialize. Secondly, we're adding the US to the list of core markets, so we now have nine core markets, EMEA, Asia, and Americas. Over the past two years, we have built a stronger presence in the US with stronger infrastructure and more partnerships. Recently, we announced our new expanded partnership with Origin Acoustics to strengthen the custom integration channel as well. Long-term, we see immense potential in the US due to a strong presence of our target audiences, and we will scale that with partners through a city-focused strategy. Including the US as a core market will also reduce our reliance on Europe and China, which are impacted by war and COVID-related lockdowns. Thirdly, we are focusing more on enterprise. Last year, we announced our collaboration with Cisco, developing a dedicated hybrid work headset designed for Cisco Webex platform. We started to deliver the first headset to Cisco in Q4 of last year, the Bang & Olufsen Cisco 980. We have seen good development in deliveries in Q1, where we also launched a headset in a black anthracite version. We see a lot of potential in this space. We have a unique offering with multifunctional products, and we have just announced our first dedicated product, the Beocom Portal, which is a headphone certified for Zoom. We will continue to expand our portfolio and add certifications for Microsoft Teams and Google Meet. Finally, we will focus our targeting of high-net-worth individuals and Gen Z, both in terms of product and marketing and sales. We know that some of our customer segments are less impacted by the current economic headwinds than others, and we will therefore refocus part of our efforts towards them. We will do that through more targeted events and campaigns. We will also continue to work on expanding our digital and service offerings, especially towards these segments. We believe that we see an untapped potential here in terms of offering unique B&O hardware and digital experiences that will drive both revenue, brand awareness and loyalty. Individualization is a key trend across high-net-worth individuals and Gen Z, and few other industry players, if any, can offer the same opportunities to individualize products and experiences as we can. We will this year expand our offerings in this space and make more options available for our customers. With that, I would like to hand over to you, Nikolaj. Thank you, Kristian. Now please turn to page 12. Reported revenue declined by 8% or 10% in local currencies to DKK 612 million. Despite the decline compared to last year, it is still substantially higher than in 2020 and 2021. The decline was driven by regional product sales, which declined by 16% in local currencies to DKK 520 million. The decline was mainly due to the lockdowns in China and more caution from our retail partners, who have reduced their inventories during the quarter. Brand partnering and other activities grew by 51% or 44% in local currencies. The increase was mainly driven by product sales from our partnership with Cisco, but we also saw license income grow 16% compared to Q1 of last year. Please turn to the next page. EMEA posted the biggest decline compared to last year. The decline was seen across all channels, with the biggest impact coming from the staged and flexible living categories. We have seen retail partners reducing their inventories during Q1. We see this as a reaction to the general uncertainty in the market and decline in consumer confidence. The mono-brand network is the main channel in EMEA, and the caution on inventory replenishment had a relatively larger impact on our staged category. Our company-owned stores delivered solid double-digit growth in Q1 compared to last year. Reported revenue in Americas grew by 4.5%, but adjusting for the currency tailwind, Americas declined by 6% in local currencies. We saw solid performance across most channels, with the staged category delivering the highest growth rates. The development in Asia reflected the lockdowns and lack of sell-out in China. Revenue was therefore 12% lower than last year, with all product categories declining. Overall, the decline was mainly seen in the staged and flexible living categories, which both saw high growth rates in Q1 of last year. As Kristian talked to earlier, people have been traveling again this summer, and that was reflected in our reported numbers, with the on-the-go category being least affected. Please turn to the next page. Gross margin declined by 7.8 percentage points, which was mainly driven by supply chain cost and the sale of a large quantity of earphones in the US I will elaborate more on the different elements in a minute. The decline in gross margin and gross profit compared to last year, in combination with higher capacity cost to revenue ratio adversely impacted the EBIT margin, which declined to -14.1%. Please turn to the next page. We had several factors impacting our gross margin in Q1 compared to last year. Product mix had a negative effect of 1.2 percentage points. We saw a shift towards the on-the-go category, which has lower margins than the staged and flexible living categories. Compared to last year, the margin has benefited from price increases completed, which has compensated for the general cost inflation we have experienced. We sold a large quantity of earphones to a US partner. The products were originally intended for the Chinese markets, but due to the lockdowns, we decided to clear the most of this inventory. The sale was done at lower prices, which had a negative impact on the margin in Q1 of 1.6 percentage points. The biggest impact was due to components and logistics. We bought components at spot price during last year. Due to lockdowns in China, we ended last year with a higher inventory of components acquired at higher prices. These components are expensed as we sell the products, and we have a negative impact on our margin this year. Generally, we are currently spending less on spot price, and compared to Q4, we have reduced component spot price by around 50%. We have not been able to eliminate it altogether, as there are still some components in short supply, but the development is positive. Finally, we had a negative effect from fixed cost allocations and currency developments. With declining revenue compared to last year, we were adversely impacted by the operational leverage effect from fixed cost allocation. Currency development had a minor positive effect in absolute terms, but a negative effect on margin. Please turn to the next page. Total capacity cost increased 6%. This was mainly driven by sales and marketing activities and the full year effect of the competencies and resources we have added since Q1 of last year. Development cost declined by 12%. The decline was driven by higher capitalization, whereas incurred development costs grew by DKK 6 million. The incurred cost related to platform upgrades and investments in Beosound Theatre. Distribution and marketing cost increased by 12% compared to last year. This was equivalent to a ratio of 33.5%, of which 9.8 percentage points was related to marketing activities. In addition to increased marketing costs, we have also invested more in our sales organization. Administrative cost reflected resources we have added since Q1 of last year, but was in general at a stable level compared to the previous quarters. Please turn to the next page. Free cash flow was -DKK 81 million. Compared to Q1 of last year, free cash flow was adversely impacted by the decline in revenue and profitability in combination with higher capital expenditures. As shown on this page, Q1 is normally our weakest quarter for cash generation. Net working capital declined DKK 10 million, but remained at the elevated level we saw in Q4 of last year. We have adjusted our production forecast, but it takes some time before we see the effects on our inventory and payables. Our inventory therefore only declined by DKK 5 million in Q1. Trade payables increased by DKK 51 million. This increase were mainly related to timing of payments. Our capital expenditures were DKK 32 million higher than Q1 of last year, and mainly driven by intangible investments in new products and platforms. The increase also reflects that we are gradually taking more of the product development activities in-house. Finally, our capital resources consisting of available liquidity and available drawing right on our revolving credit facility stood at DKK 337 million. The decline in the quarter was mainly due to the negative free cash flow. The credit facility is DKK 150 million, of which we have used around DKK 20 million for guarantees, while the remaining DKK 130 million is undrawn. With that, I would like to hand the word back to Kristian. Thank you, Nikolaj. Please turn to page 19. As I said in the beginning, we maintain our outlook for the year. Our main assumptions are listed here and also in our financial report, and they are unchanged compared to when we published outlook in July. The visibility remains low, and we continue to face an unusually high uncertainty. Please turn to the next page. To recap, overall, we saw a robust demand for our products, with the exception of China, which was impacted by the lockdowns. Our customer base continued to grow, and we also saw higher repeat purchases. Our financial performance was impacted by lockdowns and the effects of our partners reducing their inventories. Higher costs also impacted our financial performance. We are adjusting to the challenging macroeconomics and focusing our strategy to where we see the highest returns short term. This includes our successful Win City strategy, which we are now expanding to new cities. The first ones are New York and Paris, which we will do in this financial year. The US has been included as a core market, which is also driven by our wish to reduce our dependency on Europe, which is currently impacted by the war in Ukraine and Asia, where the lockdowns in China have impacted us hard. We are expanding our offerings to hybrid work and the enterprise segment. In addition to the partnership with Cisco, we now have Beocom Portal with Zoom certification ready for customers. Our marketing activities will be prioritized for customer segments that are expected to be more resilient in the current environment. Finally, as I just said, we maintain our outlook for the financial year. With that, we are opening up for questions. Ladies and gentlemen, to ask a question, please press five star on your telephone keypad. To withdraw your question, please press five star again. We will have a brief pause while questions are being registered. The first question is from the line of Benjamin Silverstone from ABG. Please go ahead. Your line will now be unmuted. Thank you. Hi, Kristian and Nikolaj. Hope you're well. My first question is regarding the performance in Asia. We are obviously looking at China being down 42%. South Korea on the other side is up 16%. Could you just give us an update on what is driving these two markets? How much visibility do you have to the impact of the lockdowns in China? Is the decline exclusively related to the lockdowns? Are there any other factors that might cause this decline? In South Korea, what is driving the 16% increase here? Are you doing more marketing? Is it product launches? If you could give us an update on that would be great. My second question is in terms of the Win City strategy with the Win London being rolled out to Paris and New York. Currently you do have, correct me if I'm wrong, five monobrand stores that you own in London. In Paris, there are three, in New York, there are currently two. Could you just give us an update on how much investments will be needed to roll this out in Paris and New York? Will there be a need for more stores? I mean, obviously, looking at the number of high net worth individuals in, for example, New York, they are more than in London. Should we then assume you would need to open more stores, or how would you go about that? The last question is in terms of your decision to include the US as a new core market. Obviously, I understand that now you are launching the Win City strategy in New York, then it will make sense to focus more on the US Going from a non-core to a core market, how should we expect the needed investments to establish a core market? This is obviously quite new for you with the US being a core market now, but would that need a material amount of marketing to establish it as a core market or any other factors we should be focusing on here? Thank you. Hi, Benjamin. Kristian here. Yeah, that was a long question or many questions. I'll start, and I will pass on to Nikolaj as well after I give probably more general answer to your question. If you go back to the previous quarters in China, we had complete lockdowns where our warehouses were severely affected because we couldn't even access them. The COVID zero policy is remaining in China, and there is a lot of cities under lockdown, and that will continue to be partially under lockdown and when they have outbreaks, they shut things down. This is expected to continue for quite some time, even after the elections that is taking place this month. The market is transacting right now, so people are shopping, and we're seeing shopping online. Because it has been closed and because there has been complete closures, people are now converting inventory to cash and selling out products on the digital platforms. In that sense, the market is moving, if you use that expression. Of course, we don't know how much will be locked down when and where. It's hard to predict how that will continue. We don't expect it to become worse than it is currently in our assessments. When it comes to Korea, we have updated our stores there. We have a great partner. They have 10 stores. They are driving marketing activities together with us. The stores have been upgraded. Many of them are placed in good malls, and there is a demand for B&O and for the products and the designs that we represent. I would attribute that growth to obviously the product portfolio and the local marketing activities that we have. When it comes to our Win City strategy, we have three stores in London. We have two concession stores, one in Harrods, one in Selfridges, and then we have one in Bicester Village. We have one corner store, to my knowledge, in Paris, and we have two in New York, just to get those numbers right. We have been looking at this as well in terms of, like I said, where do we have our target audiences? Where are they present? Where are we present? Where is luxury present? Where are high-net-worth individuals and UHNWI present? We actually did quite a lot of analysis around this and mapping and filtering to come to these three cities. They seem quite obvious when you look at them. When you look at the luxury industry, it's London, Paris and New York. That's what most speak about. But we have mapped this out quite thoroughly. We have done a lot of work with what we call the playbook on how we will win in the other cities and how we are winning in London so that we can replicate that. We have put a task force together as well with people from the London project that will help us to roll this out also in New York and then later on in Paris. We feel good about the methodology and the people and the selection of these places. From an investment point of view, it's not significant investments that has gone into this. It's more investment in marketing for sure, and we have been able to refocus, repurpose marketing out of the normal marketing budget in order to cater for this. Moving funds into these places because we get more return on investment. I don't know if I missed. You asked about the US, why we added the US to the list. Like I said, it is for a few reasons. First of all, we have been building up the US marketplace with new partners. We have recently announced Origin Acoustics as a system integrator partner, and we're doing events with them. They have great access to high net worth individuals and are building automated homes across the US We have taken the biggest ones and the best ones that suit our purpose. We had a good event with them where we introduced Beosound Theatre, and they're all enthusiastic about this product. We have also, of course, continued the partnerships with Amazon and with Verizon and with Cisco to get access to the enterprise market. Our mono-brand partners, as you could see, are doing well, and there was an interest to expand now. I think we have moved the needle quite significantly in the US versus where we were previously. We have a good team in place. Maybe a little bit earlier than we intended, but it's a good activity to do now since we are focusing on the cities and New York came up and also because we need to offset China and a possible decline in Europe. I'll pass on to Nikolaj to see if he wants to add anything that I may have forgotten on your very good question and long question, Benjamin. Yeah. I think you covered a really good question. I have one thing to add around China. It's correct that the decline is mainly related to lockdowns, but we are also doing a number of things on the distribution side in China right now. We are actually changing our multi-brand partners out, which is also sort of in a transition in Q1 from one partner to others. We are also taking over the operation of JD.com, we are going more direct, and that has also happened in Q1. There are a few things in our go-to-market operations in China where we have done some changes in Q1, which have had some impacts on the numbers. Thank you very much, and apologies for a long question. Kristian Teär, just to quickly follow up on the entrance to the US I mean, it definitely makes sense that this is the market that's likely going to be least impacted by a potential recession now looking forward. But you do mention a lot of things that you guys have already done to sort of prune the US market. You have a very good partnership, that you have well-performing mono-brand stores. You're opening new stores, but that has already been done. My question is more like what will happen now that it goes from a non-core to a core? Should we expect to see an acceleration in marketing expenses over there, or will you keep on doing what you've been doing in the past year, which has obviously worked out? Yeah, sorry if I missed that. In core markets, we have a higher proportion of marketing budget allocated to core markets, so that's obviously going to happen. They will get more marketing spend. We know in the city strategy when we're taking that one out there, that is of course also working. Which I also said, I think, alluded to at least, we are generally trying to, when we look at our marketing, to make that more effective by focusing it towards high-net-worth individuals and UHNWI. We have found quite some good marketing platforms that is going to be available for us in the US that will help us to reach the high-net-worth individuals, which is available in a high proportion in the US, of course, in certain places, in certain areas. We're going to continue to do that, but there will be more marketing investments and more partners added into the mix to have a better reach. That is, well received. Thank you so much, Kristian Teär and Nikolaj Wendelboe. Thanks. The next question will be from the line of Niels Granholm-Leth from Carnegie. Please go ahead. Your line will be unmuted. Good morning. First question on your order backlog, which you have referred to as being unusually high in the past few quarters. Could you talk about how you view your order backlog at this point in time? A second question on the ASP effects on your revenue in the quarter. Could you also talk about what effect it has had on your gross margin? You did talk about your gross margin development on slide 15 in your presentation. I guess it must have had positive effect. On that note, on slide 15, could you talk about when we should expect the negative effect from the extraordinary high component and logistics cost to finally disappear? Thank you. Yeah. Thanks, Niels. First on the order backlog. Yep. The order backlog is also normalizing compared to what we saw under the COVID pandemic and the supply chain crisis in the last year. So we are seeing a more normalized backlog with shorter lead times again, definitely. On average selling price, it's correct that we have been doing these price increases over the past year, and actually it did have an impact on the gross margin, which was positive. It is around 10%. It has actually had an impact. But we also had an opposite impact from general inflation in our production cost of the same magnitude. That's actually why we simplified the graph here a little bit, 'cause these two impacts are netting each other out. You can say in reality, the price increases that we have done are covering the general inflation that we are seeing in production right now. Around components and when will they disappear. We expect that from a P&L perspective. This year will not be materially different from last year in terms of component cost. There are sort of two effects on that. First of all, the positive thing is that the actual components we are buying right now at higher prices in the spot buy market is lower than what we saw last year. It's actually down to around half of what we saw last year in the first quarter here. That's positive. That has also a positive impact, all else being equal, on the cash flow because we typically pay for components faster. Since we have quite a lot of components on our own inventory already, which we came into Q1 with, as I also said, these are still at an elevated level, so that will have a negative impact on the P&L in the rest of the year. We shouldn't expect components in the P&L to be a positive in this financial year, but the composition is a bit different, and the market is becoming easier. You mentioned that the ASP effect on your gross margin was plus 10 percentage point, which was then offset by a similar negative effect from inflation. Yes. How about the ASP effect on revenue? Yeah. That's approximately at the same level on revenue. That's also around 10%? On average. It's higher on States and Flexible Living and lower on To Go, where we have done less price increases. That's roughly the effect. Okay. Thank you. As a reminder, please press five star on your telephone keypad to ask a question. The next question will be from the line of Poul Jessen from Danske Bank. Please go ahead. Your line will now be unmuted. Thank you. I have a few questions as well, starting by the guidance. If you look through the assumptions that you put up the guidance, you don't mention the current recession. You mention COVID and components and lockdowns and so on, but not the recession. As energy prices, both power and heating and inflation in general is quite different today than it was early July, how should we see the risk on your guidance right now? Yeah. Maybe I start. That's the first question. Did you have more questions, Poul, or shall we take all the questions? Okay. Yeah, the second question that you mention in the report that you have reduced your purchase orders to reflect the recession. Now, I'm thinking you reduce your purchase orders looking forward, but you don't change your guidance. Does that mean you move from the high end to the low end or whatever? Then second, or the final one is on cash flow. Given that you are potentially having some tough quarters ahead from price increases in general in the economies, how confident are you with your cash flow and your net cash position entering that period? Yeah. Maybe I'll start here as well and then pass the baton over to Nikolaj. When it comes to the guidance, it's obviously like we already did in last quarter, it's difficult environment to make guidance in. But we have really assessed what our sellout has been and what the footfall is and looking at the product portfolio obviously as well and the target segments that we have. We see the further away from the war we're kind of moving, there seems to be less worries and concerns around recession. Even though if the inflation is high in many places in the world, there seems to be still shopping going on. Obviously, when we are looking at our own forecasting and have discussions with our own country managers and regional managers, we believe that it's the right thing to keep the guidance as we have had it. Again, we are focusing on doing a few different things, like we mentioned, but we're also confident that the strategies we put in place is actually the right one. We are taking measures, as you know, on the cost side, so we're trying to build buffers in, of course, as well, should there be a worsening of the situation, and we have done that in our scenario planning as well. We feel good about the guidance currently based on the revenue side and on the cost side and the planning that we have done and the precautionary measures that we also have created or been reviewing. When it comes to the second two questions, I think I'll pass on to Nikolaj on those ones. Just to mention cash flow maybe before that, we believe in the same way that the planning that we have done and the demand that we have for our product and with the kind of current environment that we have enough cash to manage through our execute on our plans and take us through this. We have the high season coming up now in Q2, which is, of course, a very important quarter for us because it's high season and it's holiday season, and we have the Theatre product out in the market that we have been building for a while as well. That's a very important quarter for us and the signs that the Theatre has been well received are really positive across the globe. We have some positive expectations for the holiday seasons, but it's also again surrounded with a lot of uncertainty. I'll pass on to Nikolaj. Yep. On cash flow and available liquidity, of course, it's an area that we are paying close attention to. We've done a number of simulations and we believe in those simulations that we have what we need in available liquidity also adding in, of course, our revolving credit facility. That's all we can say right now is that we think that in the scenarios we're doing, we are good on that. Of course, it's an area that we are paying attention to, just as you are. I think I understand your question, but I think it's also a little bit a matter of semantics. Okay, maybe we don't mention it under assumptions, but we do mention it as a risk to guidance that the severity and impact of recession and where in the world it will hit the most can of course impact our outlook. As Kristian said, based on the demand that we saw in Q1 in the different countries we are in, we maintain our guidance right now. If you include the September to. Does that support the view that people are getting less focused on Ukraine and war risk? No, I think. I must assume that when you reiterate your guidance. Of course, we know where we are in September and that doesn't really cause us to change our view. Okay. About the channel clearance that you have, especially in Europe, when do you expect that to come to an end so that inventories are normalized? Yeah. You're thinking about channel inventories? Yeah. Channel inventories have been lowered in Q1 in all channels. We do expect that we will see some gradual build up of inventory in Q2, as we always do in Q2, because we're building up for the high season, and the high season is of course also the end of Q2, but in sellout terms is also very much in December. I would expect channel inventory to increase in Q2. That's the normal pattern we see. To a level where you see them as normal when you get out of the Q2 or season sales so that you don't have to adjust. I mean. Assuming that markets are normal. Assuming that markets are normal and we're having a second quarter that follows sort of to a large extent normal logic, we would also see inventories at retailers sort of normalizing again. I think, I mean, we're not doing anything to push inventory into them. On the other hand, we are focused on making sure they have what they need to have in order to meet demand in the high season. Okay. Thank you. As there are no more questions, I will now hand it back to the speakers for any closing remarks. Thank you very, all very much for joining today and for your questions. If you have any additional questions, don't hesitate to reach out to Martin in our IR department. I wish you all a really good day. Thank you.