This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk04: Ladies and gentlemen, thank you for standing by and welcome to Fang Duo Duo Network Group Limited's first quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will have a question and answer session. Please note that this event is being recorded. Now I'd like to hand the conference over to your speaker host today, Ms. Linda Lee. the company's director of capital markets. Thank you. Please go ahead, Linda.
spk02: Thank you, operator. Hello, everyone, and thank you for all joining us on today's call. The company has announced its first quarter 2021 financial result today. An earning release is now available on the company's IR website. Today, you will hear from our co-CEO, Mr. Zheng Xi, who will start a call with an overview of the current industry dynamics and the details of our development strategies in the quarter. Afterwards, our CFO, Mr. Pan Jiaorong, will go over the financials before we open up to call for questions. Our management team will deliver their remarks in Chinese, and I will provide English translations. Before we continue, we would like to refer you to our safe harbor statement. in our earnings call release, earnings press release, please apply this call as we will be making forward-looking statements. Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under the generally accepted accounting principles in our earnings release and the filing with the SEC. With that, I will now turn the call over to our co-CEO, Mr. Zheng Xi. Please go ahead, sir.
spk01: Hello, everyone. I'm Zheng Xi. Welcome to the phone call of the first quarter of 2021. First of all, let's talk about the changes in the industry in the first quarter of 2021. First of all, The scale of the new housing market is huge and has maintained a certain growth. However, the three red lines drive developers to pursue high-speed transition, which is more important to the ability of marketing to devise. The data of the National Bureau of Statistics shows that in 2020, the sales scale of Chinese commercial housing reached 17.4 trillion yuan, which increased by 8.7%. The scale of the new housing market continues to maintain growth. As of 2021, The growth rate of 44 developers' sales targets is 11.85%. People maintain a relatively high growth level. Developers' demand for scale is not small. Therefore, under the background of the three red lines policy, developers will pay more attention to the construction of marketing blockchain capabilities, and further accelerate the speed of circulation. On the second hand, The policy between the three lines leads to a rapid decline in the profit rate of developers. The cost of marketing is reduced, and the price of retail has become its core pain point. According to the data of WEND, the overall profit rate of the real estate industry in 2020 is 9.85%, with a decline of 1.19%. The net profit rate of the industry continues to decline, reaching the lowest level since 2015. and the two central policies of the Ministry of National Security and Security in the first quarter further promoted the rise in land prices. According to the KOL data, in October 2021, the interest rate of land transactions in key monitoring cities skyrocketed to more than 25%. The profit-making rate of investors continues to decline, land costs continue to rise, and the addition of new housing channels In the context of the constant growth of the rate, the demand for developers to reduce their costs is very strong. Thirdly, developers are also actively striving to transform. Through the construction of digitalization capabilities, they strive to transform from development to service, and pay great attention to digitalized industry coordination and extension of business. As the real estate industry slowly enters the storage era, the use of real estate from the development gradually turned to asset operation and service. This requires real estate companies to switch from the development model of the past to the sophisticated operation and service model. And the core of the sophisticated operation depends on digital ability. Typical houses, such as Biguiyuan, Xingcheng Konggu, Longhu Group, etc., have set up a digital development center to create their own digital ecology. Fourth, in the core of the first and second-tier cities, the capital of the second-hand market and the credit period for city renewal businesses are gradually coming. As the Chinese real estate market continues to mature, more and more cities are entering the second-hand market era. Shanghai, as a super-large city with a long triangle, the second-hand market exchange rate reached 120 million yuan in 2020. It accounts for 16.5% of the country's volume. The second-hand housing flow rate reached 2.7%, which is 1.1% higher than the national average level. The market volume and activity level are among the top in the country. We are concerned that in the long triangle area of 2020, in addition to Shanghai, Nanjing, Hangzhou, Ningbo, and other second-hand housing transactions have entered the top 10 in the country. In Shanghai, which is the corner of the Yangtze River, its second-hand market shows a huge cash and city renewal space. In the first quarter of 2021, VendorDuo continues to surround a platform with a strategic layout of three core businesses, relying on the business platform. The new house business uses the service of developers as a guide to make model upgrades. The second-hand business Using the new technology alliance and innovative asset operation model to quickly advance offline layout First of all, let me introduce the business platform Business platform stable development Fondot economic business platform It persists in the nature of open and independent technology rich people Continuous through the economic business of SaaS products Job standardization, process optimization Continuous improvement of product usage connectivity First quarter The platform's active agents are 22.1 million. The growth rate is 1.2% compared to the first quarter of 2020. From the three business aspects, the first business, the new housing distribution business, continues to take effect with the new model, focusing on the construction of profit and loss. The current market competitors are mainly through electricity, to avoid the return of single units. Banzoduo does not use free capital electricity, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a certain impact on platform businesses, which has a On the one hand, we are actively exploring the path of supply chain finance, and at the same time, we have strengthened the service and operation efficiency of platform marketing, focusing on supporting service-oriented projects, and pursuing effective growth of marketing businesses. In the first quarter, we served a total of 1,941 new projects, and achieved a sales revenue of 2.7 billion yuan. The second aspect is the cloud defense SaaS business. In line with the demand of digital marketing for developers, our cloud defense business completed the product online, and started the cooperation of NVP with dozens of developers. In the first quarter, on the one hand, we continued to polish and upgrade products, and on the other hand, we promoted the four-point cooperation of key developers. The anti-cloud SaaS business will begin to generate revenue in the second quarter. In the first quarter, anti-cloud SaaS has launched the door-to-door smart recommendation, merchant dynamic, sales network, and new features such as high-idea visitor reminder, to help on-site sales to quickly launch economic merchants at the B-end. At the same time, the anti-cloud app has also been released through a private marketing tool. Supporting developers to launch live broadcasts, short video guests, building, one-shot VR, 11-page user online viewing, etc. Fangyun continues to promote 4-point cooperation with the platform's key developer group. Since the first quarter, Fangyun has signed a partnership with 42 hundred developers, including Bigoyen, Wanke, Rongchang, LiDi, Fuli, and other 22 top 30 companies. Third, In terms of second-hand business, VendorDuo is based on innovative business, focusing on the core market and rapid development. In the first quarter, the company's second-hand business must pay JNV 135.6 billion yuan, which is 81.8% higher than in the first quarter of 2020. YuanCui has opened up a new technology model that is leading the industry. TingHaoZhu Business has opened up a new technology model The city has updated its business model and achieved rapid development. In the first quarter, the income of the second-hand business is 1880.8 million yuan, which is 183.6%. It is expected that the income of the second quarter will show a fast growth. In the first quarter, the original business is centered in Shanghai. National cooperation and collaboration In the first quarter, The asset yield rate of the three sets reached 15% to 20%. The sales period of the house is 22 days on the platform. The asset growth rate and transaction efficiency are significantly higher than the current level of the industry. With the advance of the business layout, we also actively strengthen the upgrade of the talent structure. In the first quarter, in terms of team upgrade, In our second-hand housing business, Mr. Liu Tianyang, the chairman of China's top-notch industry, is joining the company as a senior vice president. On the basis of the original business, he is fully responsible for the second-hand housing and offline innovation business. The internal integration and external expansion accelerate the development of second-hand housing. In the new housing business, The company has newly appointed six excellent young city general managers in the post-90s. Under the background of rapid digitalization of the new housing market, it has strengthened the adaptability of talent withdrawal. Finally, I would like to share with you the expectations and expectations for the future of Fang Duoduo. In the second quarter, Fang Duoduo's new housing distribution business will continue to pass product We expect that in the period of business development, we expect that in the period of business development, we expect that in the period of business development, we expect that in the period of business development, More than 50 developers are on-line operating the SaaS operating service system, promoting cooperation with key developers, and carrying out business cooperation in 18 offline cities. In the second quarter, it is expected that SaaS business will begin to generate revenue. In terms of second-hand housing, second-hand housing business will enter a growth period. The size of the store and the turnover of the GMV will grow. The second quarter of the second-hand business income is expected to rise from 40 million to 50 million. In the second quarter of 2021, we expect the overall income of the company to be between RMB 3.8 billion and RMB 4.2 billion. This prediction also reflects our market and operations. Let me translate this part. Hello everyone and welcome to our first quarter 2021 earnings call. I would like to start off the call with a review of the real estate market in the quarter.
spk02: we observed a series of changes and opportunities. First, the scale of the new construction properties is massive and has maintained its growth. Under the guidelines of the Three Red Lines Policy, real estate developers are increasingly focused on improving their turnover rates and utilizing various channels to reduce their inventories. According to the National Bureau of Statistics, The scale of China's commercial housing sales reached 17.4 trillion RMB in 2020, up by 8.7% year-over-year. Meanwhile, scale of the new construction property market continues to grow. Looking ahead, the target growth rate for average sales in 2021 is 11.85%, according to a group of 44 developers, which is still quite a high level. Under the guidelines of the three lines policy, developers will focus more on enhancing their ability to leverage various marketing channels in order to reduce their inventories and further accelerate their turnover rates. Second, the regulations implemented loan restrictions, purchase restrictions, and sales restrictions as well as centralized line sales, which had led to a rapid decline developers' profit margins. As a result, developers' home demands now include lowering their market expenses and reducing their reliance on distribution channels. According to the WIN data, the real estate industry's overall net profit margin in 2020 was 9.85%, down by 1.49%, a point to the prior year's Meanwhile, the industry's net profit margin continued to decline in 2020 to reach its lowest level since 2015. Introduced in the first quarter, the Ministry of Neutral Resources centralized land sale online supply has continued to drive up land price, according to county data. It monitored city The premium rate of the land transaction jumped to over 25% in April 2021. Against the backdrop of declining net profit margins, increasing land costs, and the rising rates in the DELS channels for new construction properties, developers increasingly need to improve their efficiencies while reducing their costs. Developers are actively trying to transform their business models from real estate development to real estate services. Now accomplish this. Developers are focused on strengthening their digitalization capabilities while cultivating more synergies and derivative within their digital services. As the nature of the real estate industry centers, around the property inventories. The profit drives of real estate companies are shifting from property development and sales to asset operations and services. This transition requires real estate companies to transform their traditional development businesses into a more refined service-oriented model and does significantly depend on their company's digitization capabilities Typical real estate companies such as Country Garden, Season Holding, and Longfall Properties have all set up a digital development center to build their own digital ecosystem. Fourth, in the resale property markets of the first and second tier cities, commission-based and city renovation businesses are starting to mature and generate consistent profits. As China's real estate market continues to mature, resale property transactions will become the main growth driver for real estate marketing in an increasing number of cities. For example, as the only megacity in Yangtze River Delta, Shanghai's real resale property transaction volume was 1.2 trillion RMB in 2020, accounting for 16.5% of the country's total resale property transaction volume. Shanghai's resale property circulation rate was 2.7%, which was also much higher than the national average of 1.1%. In fact, Shanghai ranked first in the country in terms of the market volume and transaction activity in 2020. Also in the Yangtze River Delta region, Nanjing, Hangzhou, and Ningbo were among China's top 10 cities in terms of resale property transactions in 2020. With Shanghai as its leader, the Yangtze River Delta region's resale property market has shown immense potential for the future growth of commission-based and China renovation businesses. In the first quarter of 2021, we remained committed to our growth strategies and thus continued to focus on the development of our platform and the three corn businesses. By leveraging our platform, we successfully upgraded our new construction property business to provide its developers with superior services. Meanwhile, by utilizing our technology-enabled franchise system, we also accelerated the offline expansion of our resale property business. We remain focused on providing an open, independent, and technology-enabled platform to our partner agencies while offering them a complete process of standardization solution to enhance their thickness. In the first quarter, we had 221,000 active agents on our platform, up by 1.2% from the first quarter of 2020 during the pandemic. First, for our new transaction property self-based business, we remain focused on utilizing our asset-light model to improve efficiencies and profitability. Currently, our competitors are boosting their based closed-loop transaction volume mainly through the use of advanced commission payments. However, we have chosen not to use our own fund for advanced commission payments. This decision impacts the number of active agents on our platform as well as our closed-loop new transaction property transactions volume. leading to a direct decline in our new transaction property revenue growth in turn. Nevertheless, we believe that our decision to forego the advanced commission payments will allow us to avoid the bad debit and the low IRR from advanced commission payments in the long term, which is more conducive to the healthy development of our company going forward. In the first quarter, we actively researched the financial supply chain for a new path to advanced commission payments. Meanwhile, we strengthened the service and operational efficiency of our platform distribution, allocated our resources to key projects, and pursued the effective growth of our growth profit. In the first quarter, the number of new construction property projects on our platform was 1,941, and distribution revenue was 270 million RMB. Second, we launched our property cloud SaaS solution to address developers' increasing needs for digital marketing solutions. In the first quarter, we continued to refine and upgrade our SaaS solution as we launched pilot partnerships with thousands of key developers. We expect this partnership will start generating revenues in the second quarter of 2021. In the first quarter, we introduced a series of new features to enable developers to offline sales teams to quickly access agent services. These features include smart agency recommendations, agency information, and agent online stores. Meanwhile, we still rolled out multiple new features on our property cloud app. including private network marketing tools to help support developers in their generation of leading streaming and short-form video continents for custom acquisitions, as well as their creation of online and VR property viewings. As a result, we continue to expand our cooperation with several key developers in pilot project viewings. As a result, through our property cloud solution by the end of the first quarter. We have adopted partnerships through our property cloud solution with 24 of the top 100 real estate developers in China, including 22 of the top 30 domestic real estate companies, Shetland Country Garden, China Vancouver, Scenic China Holding, and China Poly Group, Greenline Holding, and R&F Properties. Third, our resale property business initiative has been spent rapidly. In the first quarter, our closed-loop resale property GMV reached 13.56 billion R&D, representing an increase of 81.8% from the first quarter of 2020. In addition, Yuan Shui pioneered an industry-leading technology-enabled franchise system, while we established an innovation service model in the resale property transaction service space through our product. Both of these initiatives achieved rapid business expansions in the period. During the first quarter, revenue from our resale property segment reached 18.8 million RMB and increased by 183.6% on the increase your basis looking ahead. We expand this segment to retain its rapid growth trend in the second quarter of 2021. In the first quarter, YuanQi expanded its Shanghai-centered network to cover 565 cooperative and franchise agencies nationwide, as well as 5,086 agents. Meanwhile, there are 41 resale property transaction service centers, which provide post-transaction service for 1,441 partner agencies. In the first quarter, our team how-to product began to gradually expand its service scale with its single month revenue exceeding 5 million RMB for the first time ever, and its property asset premium rate reaching 15 to 20%. Meanwhile, our platform average turnover period of the property listing was 22 days, while our property appreciation rate and the transaction efficiency was also significantly higher than the industry average level. As we continue expanding our businesses, we also recognize the importance of corporate governance. Now, please allow me to provide a few updates for everyone on this mission's critical front. During the first quarter, we further optimized our management team, which was in line with our business development. In our self-proclaimed business, we appointed Mr. Liu Tianyang to the position of senior vice president. As a young industry leader and chairman of China's real estate agent union, Mr. Liu will take charge of our self-proclaimed business. our new business initiatives and the rent-free business. In this role, Mr. Liu plans to focus on integrating both internal and external resources to accelerate our business expansion. For our new construction property business, we have appointed six outstanding talent from Generation Z to serve as general managers at our operations in different cities. This appointment will further enhance our ability to adopt to a rapid digital evolution of the new construction property market. Lastly, please allow me to share an update on our current outlook and expectation. For the second quarter of 2021, we will optimize our product and services to maintain the stable development of our new construction property business as well as improve our transaction efficiency and growth margins. Therefore, we expect our new construction property business revenue go between 340 million and 370 million RMB in the next quarter. As we continue to establish more collaborations with real estate developers through our property cloud SaaS solutions, we expect to 50 developers further strengthened their service capabilities and launched more offline partnerships with key developers in 18 cities. As such, we expect our SaaS solution to start generating revenues in the second quarter of 2021. As our resale property business is entering a period of growth and development, we believe that this business's store scale and Close to GMV will achieve positive growth in the second quarter. Meanwhile, we expect that our resale property business will generate revenues in the range of 14 million to 15 million RMB in the second quarter. Based on these expectations, we are currently forecasting our total revenue to be between 380 million to 420 million RMB in the second quarter of 2021. This is based on our current review of the market environment, which are subject to change. With that, I will turn the call over to our CFO, Mr. Pan Jiaozong, to reveal this quarter's financial results.
spk06: Okay, thank you. Next, I will explain the financial performance of the first quarter. In 2021, the first quarter's income was RMB 2.91 billion. To the same period in 2020, the 2.721 billion yuan increased by 6.9%. In the first quarter of 2021, the company continues to optimize its income structure and focus on developing innovative business and increasing service income, such as the SaaS solution provided for company market customers. The company is determined to develop and realize the diversification of future income sources. At the same time, in order to respond to the market competition, the company is actively expanding its foreign supply chain financial products to make breakthroughs in electricity. In 2021, the first quarter's revenue cost was RMB2.577 billion. In 2020, the same period, RMB2.227 billion increased by 15.7%, The main reason for the increase is the increase in transaction fees, which leads to an increase in service fees paid to managers. At the same time, in order to realize the diversification of future income sources, the company provides various SaaS solutions to various users in the company market in the first quarter, which leads to an increase in relevant costs. In the first quarter of 2021, the net profit dropped from RMB 49.4 million in the same period to RMB 3.3 million. The net profit of the first quarter of 2021 is 11.4%. The net profit of the first quarter of 2021 is the same as that of last year. The ratio of the fourth quarter has increased by 3%. The company will continue to increase the product efficiency through the large-scale development of SaaS business to promote the increase in net profit of the platform. The operating cost of the first quarter of 2021 including RMB1,190,000,000, including stock revenue, decreased by 25.9% to RMB1.403,000,000, including stock revenue. In 2020, the same period, the stock revenue was RMB2,640,000,000. In 2021, the first quarter's sales and market sales cost increased by RMB1,400,000,000, including stock revenue, to RMB3,790,000,000. The increase in sales and marketing fees is mainly due to the increase in sales and marketing activities provided by the first group of companies in 2021 for the promotion of the SaaS solution program provided by the platform participants. In 2021, the first group of product development fees were RMB 37.3 million, and the same period in 2020 was RMB 95 million. The reduction in product development fees is mainly due to the reduction in stock growth fees, and due to the company's expansion of the development team's scale to optimize the efficiency of the product development team and more focused on the development of the SaaS solution, the cost of relevant personnel was reduced. In 2021, the first quarter's management cost was RMB65.2 million, and the same period last year was RMB93.1 million. The reduction in management costs is mainly due to the reduction in stock growth costs and the company's increased control over management costs. In 2021, the first quarter's net loss was RMB 1.048 billion. In 2020, the same period was RMB 1.364 billion. In 2021, the first quarter's non-GAAP net loss was RMB 9,300 million. In 2020, the same period was RMB 1.1 billion. In 2021, the first quarter's basic and collateral net loss per share was RMB 1.27 billion. Compared to the same period in 2020, the basic and collateral losses of the U.S. stock ADS were 1.75 yuan. As of March 31, 2021, the company had cash and cash-related expenses, limited cash and short-term investment of 8.723 trillion yuan, short-term bank loan of 3.745 trillion yuan, and 4.955 trillion yuan of unused bank receivables. In the first quarter of 2021,
spk02: Thank you. I will provide a close look into our first quarter financial results. Before I begin, please note that all numbers are in RMB terms unless otherwise stated. Revenue in the first quarter of 2021 increased by 6.9% to $291 million from $272.1 million in the same period of 2020. During the quarter, we continue to optimize our revenue mix and prioritize the generation of revenue from value-added services and new business initiatives, such as our SaaS solution for various platform participants. At the same time, In response to market competition, we are actively exploring digital supply chain financing products to fulfill the market demand for advanced commission payments. Cost of running in the first quarter of 2021 increased by 15.7% to $257.7 million from $222.7 million in the same period of 2020. This increase was due to highly commission fee payable to agents from the services they rented. Resulting from the increase in commissions from transactions, in addition, we also recorded increased costs related to the various sub-solutions that we offered to marketplace participants in the first quarter of 2021 to further diversify our future revenue streams. Gross profit in the first quarter of 2021 decreased by 32.6% to $33.3 million from 49.4 million in the same period of 2020. Growth margin in the first quarter of 2021 decreased to 11.4% from 18.2% in the same period of 2020. On a sequential basis, growth margin in the first quarter of 2021 increased by 3 percentage points. Going forward, we will continue to focus on developing such solutions and improving our efficiencies to expand our growth margin. Operating expenses in the first quarter of 2021 decreased by 25.9% to $140.3 million, which included share-based compensation expenses of $11.9 million from 189.4 million in the same period of 2020, which included sale-based compensation expenses of 26.4 million. Sales and marketing expenses in the first quarter of 2021 increased to 37.9 million from 1.4 million in the same period of 2020. This increase was merely due to our increased spending on brand promotion and marketing activities related to our new SaaS solutions that we offer to various platform participants during the period. Product development expenses in the first quarter of 2021 was $37.3 million compared to $95 million in the same period of 2020. This decrease was due to the decreases in share-based compensation expenses and the personal related expenses following our decision to shift our focus from expanding our product development team to optimizing our product development team's operating efficiency and prioritizing the development of our SaaS solutions. General and administrative expenses in the first quarter of 2021 was $65.2 million, compared to $93.1 million in the same period of 2020. This decrease was due to the decrease in the INSEAD-based compensation expenses and our implementation of cost control initiatives. Net loss in the first quarter of 2021 was 104.8 million compared to 136.4 million in the same period of 2020. Non-GAAP net loss in the first quarter of 2021 was 93 million compared to 110 million in the same period of 2020. Basic and diluted net loss per ADS in the first quarter of 2021 was both 1.27. In comparison, our basic and diluted net loss attributable to ordinary shareholders per ADS in the same period of 2020 were both 1.75. Each ADS represents 25 of our Class A ordinary shares. As of March 31, 2021, We had cash and cash equivalents, restricted cash, and short-term investments of $872.3 million, short-term bank borrowings of $374.5 million, and real and utilized bank facilities of $495.5 million. For the first quarter of 2021, net cash used in operating activities was $4.8 million. This concludes our prepared remarks for today. Operator, we are now ready to take questions.
spk04: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Once again, a style one for questions. Your first question comes from the line of Lisa Thompson from Zaks Investment. Please go ahead.
spk03: Hello. Congratulations on a good quarter. Thank you, Lisa. I'd like to ask a little bit of, I would like to ask about, you talked about getting supply chain financing. How far off would that be to put that in place and how much of an improvement do you think that would make to your current business?
spk02: Okay, let us introduce your questions to our managers.
spk05: Our devil will give you the answer to your questions. Thank you, Lisa.
spk06: OK, we started cooperating with major banks in the last year. There are now nearly seven banks and financial institutions cooperating with us. The estimated amount of our funds is nearly RMB2 billion. We are currently in the process of payment.
spk02: Last year, cooperation with the banks of supply chain financial, we have cooperated with about seven banks, and it's about $2 billion. And we will go... Sorry?
spk03: Go ahead.
spk02: Yeah, that's the answer from our CFO. Is that clear for you?
spk03: So you have it in place now and you're already using it with 7Bank? Or is that something new?
spk02: 更新的发展目前还在拓展 其他的金融机构的合作 包括拓展这个供应链金融的形式 比如说我们的应收账款的这个ABS的 It is also expanding your cooperative in institutions and the form of cooperation including the ABS form. So we still try to find some new ways to do this supply chain financial.
spk03: And how much do you think that will help business? Will it have a big impact or not so much?
spk06: uh uh ah ah In the short term, the interests of these large companies have forced the market to expand the coverage of advanced commission payments, increase commission rates, and
spk02: stimulated the price war will return agents and agencies. For the long-term use, the company's own funds for advanced commission payments will boost its closed transaction of new transactions, new construction properties. However, considering the bad debit from commission repayments and the low IR of the payments, The company will focus on this supply chain financial project. This product is a combination of the risk control and development. These are all high-quality brand developers, and a high-quality project will use this product. I think this will give a better impact to our business, but we have to do a great job on the risk control.
spk03: Okay, thank you. About the second quarter, I expect we should expect increasing gross margins, but are you also going to be spending, or will the net loss decrease from Q1?
spk02: Lisa, I want to ask about the change in our second quarter's gross margin, including what kind of changes will be made in the future. What kind of changes will be made in the future?
spk05: He asked if the loss of the second quarter will be added.
spk01: No. In the second quarter, we will adjust the yield of our business structure. The first is that we will start to generate income on SaaS business. The overall profit of SaaS business is relatively high. Secondly, we will also gain quick income on second-hand housing business. At the same time, we are also pursuing business quality and efficiency in the distribution business of Xinfang. The interest rate will also rise. We predict that in the second quarter, the overall interest rate level of our company will rise. The company's profitability will develop well.
spk02: In the second quarter, we will adjust the proportion of the revenue in our business structure. Like SARS, we began to generate revenue. For the resale property construction business, we also grew rapidly. For the new construction business, we are also pursuing efficiencies, like we mentioned in the ER, in the script, growth profit will be raised. The company's profitability will go up.
spk03: Okay. That's good to know. Given what you know now, what do you think the revenue level for the quarter would have to be to be at break even? And what gross margin does that assume?
spk02: Hi, Lisa, sorry, we didn't quite follow your question. Could you ask that again, please? Thank you. Okay.
spk03: Given what you know now, what quarterly revenues would you need to break even, and what gross margin assumption is that?
spk01: Um, It's not quite convenient to answer this specific forecast now. The proportion of the SaaS solution and the resale property construction of that business
spk02: their gross profit is relatively high. So we can announce that in the future, our gross margin will be increased and the revenue will go better.
spk01: Increasing investment in the staff business and the high margin investment in the resale construction business.
spk02: I think this is a big market and that is the window of the digitalization. So we're thinking in the future after we're more investing in this to rapidly increase business, we will enjoy a better earning and future in the future.
spk03: Okay. As far as the SAS business, Do you feel already that it's going to be successful or is there still some risk that customers won't be interested?
spk01: Now the entire market has entered into a competition and the scale of the entire market will also enter into a growth bottleneck after the ability of the developers to build and sell will be improved. Therefore, in the new house distribution business, we will insist on operating in the center of profit and efficiency. In the new house business, we are very optimistic about the SaaS service business of the developers. So we will make a lot of investment in this business and the sales of marketized products. But for a innovative product, there is a certain uncertainty. In addition, in the second-hand house business, our uncertainty today has China China China We believe that in the new construction business, the market has entered a fierce competition, and the market scale will enter a bottleneck period, and the developer built his own
spk02: a digitalized channel, but we will insist to our growth margin and distribution efficiencies. And we invest more in the SaaS solution. We invest in this field of R&D and market-oriented production. But innovation is still uncertain, but we still have confidence about this field. a construction business from the cultivation period to the growth has stayed from the cultivated period to the growth period. The urban renovation, the city renovation has also into a state of both income and profit growth. So we think that is the answer for your questions.
spk03: Great. Thank you. That's all my questions. Thank you so much.
spk02: Thank you, Lisa.
spk04: Thank you. As a reminder, ladies and gentlemen, to ask a question, please press star 1 on your telephone keypad. All right. As there are no further questions, so with that, ladies and gentlemen, We will conclude our conference for today. Thank you for participating. You may all disconnect.
Disclaimer