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spk02: Hello, ladies and gentlemen. Thank you for standing by for the iClick Interactive Asia Group Limited's 2022 First Quarter Unaudited Financial Results Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be the question and answer session. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Lisa Lee, Investor Relations Director. Lisa, please go ahead.
spk05: Hello, everyone, and welcome to 2022 IQIC's first quarter on Audited Financial Results Conference Call. The company's results were issued earlier today and are posted online. You can download the earnings press release and sign up for our distribution list by visiting the IR section of our website at ir.i-coick.com. In addition, during the call, management will give their prepared remarks in English. During the Q&A session, we will take questions in both English and Mandarin, and the third-party translator will provide consecutive translations. All translations are for convenience purpose only. In case of any translation discrepancy, management's statement in the original language shall prevail. Jian Tang, TJ Chairman, Chief Executive Officer, and co-founder of iClick, will first provide a high-level review of the 2022 first quarter results and share his thoughts on our execution strategy going forward. Chief Financial Officer David Chung will follow and give us additional insights on the financial results as well as provide guidance for second quarter. in full year of 2022. He will then turn the call back over to TJ for closing remarks before the call is open for Q&A. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainty. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's 20-F, as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligations to update any forward-looking statements except as required under applicable law. Please also note that ICLEX earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. ICLEX press release contains a reconciliation of the unaudited non-GAAP measures to the most directly comparable unaudited GAAP measures. I will now turn the call over to our chairman, Chief Executive Officer and Co-Founder, Jian Tang. TJ, please go ahead.
spk01: Thank you, Lisa. And welcome to the call, everyone. The first quarter of 2022 for iClick was highlighted by the successful refinement of our product mix, which drove an increase in our growth margin despite challenging market conditions. On today's call, I will first discuss how we achieved this improvement, followed by how the macro uncertainties and other forces are affecting our implementations, and finally, how we will leverage current market conditions to build long-term shareholder value. The increase in our gross margin was achieved by our consistent focus on our higher margin enterprise solutions segment, while conjecturally unwinding lower margin, higher risk marketing solutions businesses. As a result, enterprise solutions revenue has continued its strong momentum growing by 34% year over year to 15.7 million, a record high among any historical first quarter for this segment. We are quite encouraged by this growth as it relates directly to what we expect to be the primary driver of our future revenue, our SAS plus X business model. This adjustment to our product mix will drive iClix's long-term success in the face of a complex, flawed landscape defined by COVID-19 involvement and shifting regulatory and macro influences. The contraction in the overall advertising industry has led to an adverse impact on our marketing solutions business. As we discussed in our last earnings conference call, we have undertaken concerted action to direct our continued investment in higher growth and higher margin enterprise solutions business. while selectively winding down our marketing solutions until such time as market conditions warranted resumption. The regulatory clamped down on certain industries we have served within our marketing solutions, as well as the strict COVID-19 measures to curtail the spread of the various have raised the challenges for us compared with the same period last year as we weathered these broad-based industry-wide phenomena. We believe our approach will help iClick better navigate these challenges, especially with the soft capital market landscape. narrowing the resources we can mobilize. Well, these market factors also continue to challenge our client implementations and onboardings of enterprise solutions business in the first quarter and beyond. We are optimistic that our strategic shifts will result in long-term value creation. Our SaaS Plus business model empowers brands in China amid these challenging market conditions and continuously involving business models as clients require a higher level of guidance and implementation from iClick regarding how they can enhance the consumers' loyalty and repurchase rates to drive continued revenue growth. As a result, we believe our growing footprint will uniquely position the company to continue to capitalize on the very much intact mega digital transformation trend in China. In view of this, we have relentless upgraded and improved our SaaS Plus product mix as we seek to meet the huge demands of our brand clients. For example, we launched the Douyin version of iFence, one of our data analytics products that helps brands identify the most appropriate KOL to conduct a promotion. This upgrade enlarges the coverage of iFence beyond its existing media platforms, Xiaohongshu and Bilibili. With this upgrade, we are also able to articulate the one-stop smart marketing strategy for the brand clients and can nimbly adjust the strategy with real-time data analytics feedback. Another strong case study is the value we have helped XTAP, a leading PLC-based professional sports brand, achieve in advertising the appropriate and customized content marketing strategies based on products' features to attract different groups of users and the various scenarios. In addition to the powerful data analytics features provided by iFence. We also have a dedicated operations team to facilitate the execution, ensuring the client's customization and involving improvement with our deep experience and trusted guidance, realizing the true value of the SaaS Plus business model, the key strategy of our enterprise solutions. In addition to our product, upgrades, we were honored to receive numerous awards, both domestically and internationally, which recognized our innovative efforts and outstanding products. Most notably, the Hong Kong Institute of Marketing awarded iClick as the winner of market leadership in digital technology of 2021. We were also recognized by the prestigious Asia Pacific Stevie Awards, International Business Awards competition, open to all organizations in the 29 nations of the Asia Pacific region, receiving four gold stripes and for achievement in product innovation, innovation in paid media planning and management, most innovative advertising or marketing team of the year, as well as the marketing campaign of the year for COVID-19 related information. Additionally, as part of 2024 Asia's Most Valuable Companies in Hong Kong Awards, iClick was recognized as Asia's most reliable marketing technology platform. And finally, at the Digital Media Awards in Great China, we were named the Digital Media Innovator of the Year. We are heartened by the strong industry recognition as it serves to validate our extraordinary efforts in delivering the most compelling and innovative solutions serving the digitalization of China. This concludes my opening remarks, and I would now like to turn the call over to our CFO, David Zhang, to discuss the first quarter of 2024 financial results. David, please go ahead.
spk07: Thank you, DJ. Hello, everyone. I'm pleased to share with you our financial performance for the first quarter of 2022. Despite our ongoing challenging microenvironment, we still reach a regular high in enterprise solutions in any of historical first quarters and improvement in our gross margin. I would like to begin my comments with a few key highlights from the first quarter of 2022 compared to the same period of 2021. Revenue for the first quarter of 2022 was $47.4 million, decreased by 29% year-over-year. Looking at each segment separately, revenue from enterprise solutions was $15.7 million, up 34% year-over-year, mainly driven by increasing needs. for consumer behavior, data integration, and digital transformation. Revenue from marketing solutions was $31.7 million, decreased 42%. Primary due to our strategic to go down of online advertising business in favor of resources allocation to enterprise solution business. Omicron upgrade at outbreak and lockdown in Hong Kong and Shanghai. Cross-profit margin was improved to 33.8% from 29.4% resulting from our resource allocation to the higher margin enterprise solutions business and online advertising clients. Cross-profit dollar amount decreased by 18% year-over-year to $15 million in the first quarter of 2022, mainly due to the decline in marketing solution segments. As of March 31, 2022, the company had cash and cash equivalents, time deposit, and restricted cash of $91 million, compared with 88.7 million US dollars as of December 31st, 2021. For the rest of my discussion, I will focus on our non-GAAP measures. You may find the cancellations of these non-GAAP results in the press release we posted earlier today and which can be accessed at our Investor Relations website. Adjusted EBITDA for the first quarter of 2022 was a loss of 3.3 million U.S. dollars compared with an income of 3.6 million U.S. dollars for the first quarter of 2021. Adjusted net loss for the first quarter of 2022 was 5.4 million U.S. dollars compared with adjusted net income of 0.6 million U.S. dollars in the first quarter of 2021. Cross-billing was 99.9 million U.S. dollars for the first quarter of 2022 compared with US$200 million for the first quarter of 2021. For further information, please see the detailed recap of other financial metrics in the press release we issued today. In December 2021, ICLIC announced a share repurchase program with an aggregate value of up to US$20 million in full year of 2022. As of March 31st, 2022, the aggregate value of repurchased shares was a promisely $4.2 million. In view of the resurgence of the COVID-19 pandemic and the various disease control measures implemented in China, including Shanghai and Beijing, Substantial uncertainties remain around the microeconomic conditions and the client demands, which will continue to significantly affect our client onboarding and the solution implementation. Therefore, at this stage, we withdraw 2022 revenue guidance of enterprise solutions until visibility improved. The company will closely monitor microenvironment and balance internal resources, focus on product innovation and sales pipeline to keep iClick creating more value to customers in enterprise solutions, which we believe has higher growth potential. With that, I now turn the call back over to TJ for close remarks. Thank you.
spk01: Thank you, David. We have been adapting to involving market conditions and the macro forces over the past year, which have led to iClick's strategic shift in focus to a concerted investment in enterprise solutions while strategically winding down the marketing solutions business. We are constantly evaluating our market position and the strategies to capture more market share in our high-growth, high-margin enterprise solutions business. While the enterprise solutions business may see some adverse impact on client implementations and onboarding due in part to the strict measures resulting from containing the spread of COVID-19 in China for the first quarter and now into the second quarter, we deeply believe that the megatrend driving digitization across China remains intact and we are well positioned to continue our growth in enterprise solutions. iClick remains at the forefront of serving this enormous market and we intend to remain a powerful and a dynamic force driving that change. Our clients realize the tremendous value of our solutions which are helping them to involve and capitalize on new capabilities. Our devotion to innovation and to the highest aspirations of service and execution guide us through these challenging times. We are confident our discipline and our devotion will be rewarded in the long term for both our shareholders and our company alike. As always, I wish to especially acknowledge and thank our clients, partners, and key stakeholders for the continued support, and all of our iClickers, without whom our success would not be possible. We will prevail and trump with sound management, keen focus, and prudent investment in the resources and the solutions that remain the drivers of our success. Thank you all for participating in today's conference call and for your continued support. This concludes our prepared remarks. Thank you for joining us on today's call. We will now open the call to questions. Operator, please go ahead.
spk02: Thank you, dear participants. We will now begin the question and answer session. If you wish to ask a question, please press star and one on your telephone keypad and your names will be announced. For the benefit of all participants of today's call, if you are a Mandarin speaker, please raise your questions in Mandarin and then immediately our translator will repeat your questions in English. Please limit your questions to one at one time. Thank you. The first question comes from the land of Colin Liu from China Renaissance. Please ask your question.
spk03: 管理層晚上好,感謝這個提問的機會。 我有兩個問題。 第一個問題實際上是關於我們ES方面的客戶需求, 因為當中管理層也提到了ES客戶的onboarding 還有一些implementation 實際上是受到了疫情很大的影響。 那我們刨除這種短期的影響, How do we evaluate the needs of our ES customers in this kind of red-light difficult situation, in this kind of unsightly situation? When the conditions allow, for example, when our maintenance and implementation can be carried out smoothly, does the management think that the growth of our ES will return to a faster position in the second half of this year? This is my first question. My second question is about this. marketing solution 这一方面的 因为我们看到其实在这个去年一系列的监管政策出台 然后今年一季度又受到了这个疫情还有宏观的一系列的影响 我不知道是不是一季度的我们比如说我们看到billions也好 还是说这个收入端也好 是不是已经开始到达了一个低谷 是不是把这个负面的已经全面的体现出来了 还是说 There is still a lot of uncertainty in the second quarter. It's hard to say if we have reached this point. Let me translate it first. Thanks, management, for the chance to raise your questions. I have two questions here. The first one is actually about the customer demand on enterprise solution. Well, we noticed that management mentioned about some delays of onboarding and implementation due to the COVID restrictions, a lot of measures and other limitations. So just wonder how resilient do you think actually the customer demand for our enterprise solution is. And once all the restrictions being lifted up in the near future, we will see a very fast rebound of the revenue growth of enterprise solution in the second half this year. And then my second question is about the marketing solution segment. We noticed that there were a lot of regulatory halvings in second half last year. And in the first quarter this year, we have seen very restrict a lot of measures and the micro witnesses in China. So has all the other negative factors being reflected on the first year's on the first quarter's numbers in management's views, or maybe in the second quarter, we will continue to encounter some difficulties. Is it fair to say that we reached the bottom in terms of the marketing solution growth, or is it too early to say? Thank you.
spk01: Thank you for your question. I'm TJ. Let me answer your two questions. The first question is about the needs of ES. The situation we see is like this. As we mentioned earlier, due to the impact of the pandemic, the pandemic started at the end of March of Q1. Actually, for iClick, our first impact started with the 5th wave of the pandemic in Hong Kong. Because we have a lot of business overseas in Hong Kong. And then the mainland, Shanghai, started at the end of March. Now the whole city has been locked down for two months. We all know this, including Beijing, which has been closed for almost a month. So, the impact of this epidemic prevention and control on ES is mainly reflected in the onboarding of new customers and the onboarding of some old customers who have some new needs. It will also affect some existing This will also have an impact on the implementation of the demand. So this will bring some problems to the growth of our ES and the future predictability. Because the current economic environment is not a normal one. This is not a normal situation. Therefore, it is difficult for us to make a prediction in this situation. What I heard is that you may be concerned about the state of the demand in the medium to long term. This is also a problem we are particularly concerned about. What we see is that most of our colleagues are locked up in Shanghai and Beijing during this period. During this period, we communicate with our clients very frequently online. So, most of the requirements in our pipeline are still in the normal delivery process. In other words, these needs have already been met, and they are already in the process of implementation. In fact, most of them can still be delivered normally. However, in some of the new needs, we see that the customer's decision period has obviously become longer due to this control, but the customer's needs are still there. There are many customers who have raised more demands. I think the reason is that our main customer groups are all some of the major customers of KA. These major customers, in this epidemic, and in such a harsh market environment, first of all, these major customers have no problem with their own survival. And then, they themselves, usually these major customers have a lot of original offline stores. They have very desperate needs. They want to find a good solution in such a difficult environment. So this is even more encouraging. Many customers still have very strong needs for our enterprise solution. So we have repeatedly confirmed these needs with many customers. These needs are still there. So our judgment is that in the second half of the year, Thank you for your question. This is TJ. I will take two questions from you. First question is about
spk04: Customer demand for our enterprise solutions. As I've mentioned, indeed, the COVID has produced a big impact on us. First is the impact from the fifth round of COVID resurgence in Hong Kong. And we have a lot of business in Hong Kong, and then followed by Shanghai lockdown starting from the late of March. Shanghai is now under lockdown for two months. And then followed by Beijing, which is under lockdown for nearly a month. Therefore, I think the COVID impact on our enterprise solutions business mainly lies with several fronts. First is the onboarding of new customers. Second is the onboarding of new needs from existing customers. And the third is the implementation of customer solutions. This means it's quite difficult to predict the future growth of enterprises' solutions because the current economic environment is far from normal. I believe you are quite concerned about the demand in the mid to long term, and this is our concern too. And, you know, recently most of our colleagues are under lockdown in Shanghai and Beijing, but we keep a very close communication with our clients. Those demands in pipeline, those demands that have already been briefed and under implementation are being delivered according to schedule. And what is problematic is those new demands. And we've observed that our clients' decision-making cycle becomes longer, but these other customers' demands are there. And there are even more new demands from them because most of the customers we serve are bigger ones. And in spite of the pandemic and the macro weaknesses, they have no problem of survival. And in addition, they have a lot of offline outlets. So there's an urgent need for them to find a digital solution. Therefore, there remains a strong demand for our enterprise solutions business. So we expect that in the second half of this year, If the pandemic is put under control, and if economic activities resume and become normal, we can expect a pretty good growth of enterprise solutions business and strong demand.
spk01: The second question about you is about marketing solution. What we see now is that Q1, and the previous few months, I think the first thing is that we have continued to influence the management policies of many industries since last year. The second thing is that the economic environment in the first half of this year has seriously deteriorated, especially because of the impact of the epidemic prevention and control. So we see a lot of our MS business advertisers, these customers, their typical concerns are because the express delivery, logistics, and supply chain have caused them a lot of impact. So, At this stage, some customers are still trying to advertise. But in the end, the customer's return is very serious. Because the quality of this service is very low. And this is completely out of control. So what we see later is that most of these advertisers actually choose to cut their budget at this stage. So we think that the advertising industry of Q2 will not be very good, because the impact of the epidemic is relatively serious. So this year to the second half of the year, we feel that if the industry's prevention and control policy does not recover well, if the economic environment does not recover well, then the advertising industry will also be greatly affected. But for us, because from the beginning of this year, our strategy is to scale down our MS business. So, relatively speaking, in this process, we actually made a prediction and layout in advance. We were consciously reducing some Okay, about your second question.
spk04: But our second question is regarding the marketing solutions. In the first few months of this year, we've continued to see the lingering effect of the tightening of regulations in the industries, and also we've seen the more macro headwinds, as well as the implication from the strict COVID measures. This actually has affected adversely our advertising clients in the marketing solutions business because most of them actually suffer a lot from the logistics and the supply chain and even delivery problems. And we see that some customers, although they tried to place advertisements during this period, yet the consumers actually in the end dropped the orders. because of the poor service quality. Therefore, we have seen that those large advertising clients have cut their budget drastically. And Q2, I don't think the things will turn better for the advertising industry because the impact from the COVID-19 is too severe for that. And in the second half of this year, if the economy doesn't rebound and if the strict COVID control policies are not lifted, there will continue to be serious impact on the advertising industry. But for us, we've already made a strategic move to scale back on marketing solutions business. We've intentionally cut those high-risk, low-margin businesses to channel more resources to enterprise solutions business. So for us, I think the impact is smaller.
spk02: Thank you. The next question comes from Land of... Oh, no, sorry. Please go ahead. I think we can move to the next question. Perfect. Thank you. The next question comes from Nelson Chung from Citi. Please ask your question.
spk00: Thank you, TJ, David, Lisa. This is my question. My first question is about the advertising industry. I would like to ask about e-sports. Probably most of the industry is affected. Maybe some offline verticals, their demand will decrease. 那我们有没有看到一些比较resilient的vertical 像是快消品啊 还有就是一些日常的用品的FMCG那种品类 在我们广告里面会比较resilient 然后我另外一个问题是关于ES的 我想问一下 我们对这个ES的业务未来margin的展望是如何 未来的话 So let me translate myself. So thanks management for taking my question. My first question is about your marketing solutions. Just wonder, given most of the verticals have been adversely impacted due to the pandemic, wondering if there's any resilient vertical that could support our business, for example, like FMCG. And my second question is related to enterprise solutions. Just wonder, management, to see if you have any long-term targets for gross margin of your enterprise solution business and how could we achieve that? Is that through cross-selling of your products and customers as well as potential up-selling capability? Thank you.
spk01: Thank you for your question. I'm TJ. Let me answer your first question first. Then the second question, I'd like to ask David to answer your second question. The first question is about MS. You asked about some related industries. Are they affected by MS? In iClick, in the QE operation process, because we are conscious of scaling down, scale down, our MS business. So we usually choose from our last year's business to choose those that are relatively low, and then the AR period is relatively long. For us, it's a relatively high risk industry. It's a typical game industry. and some are online, or from some other channels, domestic channels, some of these customers, in the process of our reduction, we have reduced quite a lot. And for the fast-selling products, or other consumer products, in this industry, In fact, in Q1, some of these industries have been affected, but they are not affected because of the industry itself, but because of these consumer goods. In Q1, it is mainly because of the Spring Festival, which is originally a season, similar to the Spring Festival, for a fairly long time, there is no e-commerce window. So, in addition, at the end of March, there began to be some epidemics, So these industries are also affected. But I think they are affected mainly because of the season. Because Q1 is also a season. So from Q2, I think the consumer products you mentioned, and the industries that are related to the economy, especially those related to the offline economy, will indeed be affected more. This is what we see as a basic situation. Thank you.
spk04: Thank you for your question. This is DJ. I will take your first question, and David will answer the second question. The first question is about resilient verticals in the marketing solutions business. In Q1, we have intentionally scaled back on marketing solutions business. Since last year, we have selectively cut those low-margin, high-risk businesses with very long collection period of accounts receivable such as gaming and some channels. And for FMCG and other consumables in Q1, they were affected to some extent, but it's not because of the industry problems. It's mainly because, you know, Q1 There is a spring festival, so usually Q1 is a low season for e-commerce. And so seasonal factors play a bigger role in the Q1 performance. But in Q2, I believe that consumables and those industries that are highly related to offline economies will be affected to a larger extent.
spk07: I'm David. Let me answer the second question. Regarding ES's profit margin, the company's expectation is that in a normal business environment, we hope that the ES profit margin is between 50% to 60%. This is a relatively healthy model based on our SaaS Plus Service model. How to achieve it? The first point, as mentioned earlier, for our digitalized product, the customer's demand is still Although the pandemic has had a short-term impact on control, we hope that it will quickly improve and return to normal business activities. The second point is, of course, the composition of our products. With our SaaS tools and the corresponding bottom-level service capabilities, The customers can buy from the whole station, or they can buy from a certain function or a certain product or service. It's very flexible. Then we will also, according to the customer's different needs, negotiate with the customer to deeply improve this year's performance to ensure our flow and growth. Mainly based on these two points, we feel that in the team,
spk04: This is David. I will take the second question about the gross profit margin of the enterprise solutions. Our expectation is under normal operating environment. enterprise solutions gross profit margin will be around 50 to 60 percent, which is healthy given our SAS Plus business model. How to achieve that? Well, first, the demand for our digital product is growing with a strong momentum. In spite of the short-term impact from the COVID-related control measures, we hope that the demand will rebound very soon. And the second is Our product makes it healthy. We have both the SaaS tools as well as the services. The customers can buy a full stack solution. They can also buy a particular product or function or services. And also we will carry out communication with our customers based on their needs so as to increase their loyalty and stickiness. And thanks to our continuous efforts, we now have a wider variety of products and services options for our customers. So I believe that we can achieve that goal. Thank you.
spk02: Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star and 1 on your telephone keypad. The next question comes from Thomas Chong from Jefferies. Please ask your question.
spk06: Good evening, Manager Chen. Thank you for accepting my question. I have two questions here. My first question is about the marketing solution. I just want to ask, I didn't mention that we are scaling down our marketing solution business with low profit and high risk. I want to ask how we are doing so far. How many percent of our business has already been scaled down? The second question I want to ask is because Manager Chen just mentioned our SaaS plus exit strategy. So I will transform myself. Thanks management for taking my questions. So I have two questions. My first question is about marketing solution. So as mentioned that we are scaling down our low margin and high risk marketing solution business. Just wondering how about the process and updates about right now and how much percent of those type of business have been scaled down? And my second question is about SaaS plus X strategy as we talked in the prepared remarks. Could the management share more color about the strategies and products? Thanks.
spk07: Thank you, Thomas, for the question. I'm David. I'll answer the first question. The second question is for TJ. From the beginning of the fourth quarter of last year, we have been aware of this, and we have been doing this for a long time. We have been doing this for a long time. We have been doing this for a long time. We have been doing this for a long time. We have been doing this for a long time. We have been doing this for a long time. The decline in revenue is about 42%. Advertising business. Of course, this also has some positive effects. I just mentioned this. That is to say, because of the impact of the epidemic and logistics, etc. There is still a general demand for some reduction in investment. But this hope is a short-term impact. Through this behavior, you can also see that our cash is actually still 910 million dollars. It's even more than last year. And we also paid a bank loan of $18.5 million, which also reduced some of the financial burden and leverage. This is in... And we have enough resources to put into the development of ES. There will be no danger and crisis for the company's survival, as well as the ES business that we want to develop. Thank you.
spk04: This is David. I'd like to take the first question, and TJ will take the second question. Since the fourth quarter of the last year, we have started to scale down on low-margin and high-risk marketing solutions business. And currently speaking, we have achieved our target. We've cut a third of that business. So you can see that the marketing solutions revenue has dropped by 42%. Of course, there are many other reasons at play here. For example, the macro headwinds and logistic, the problems caused by the COVID control measures. But we hope that these are just short-term variables that will go away very quickly. And currently, we have 91 million cash on hand, more than the end of last year and we've also paid back 18.5 million bank loans and we've also reduced operating leverages. Therefore we have enough resources to support the further development of enterprise solutions development and we are currently in a very good shape in terms of the business development and survival.
spk01: I'm TJ. I'd like to confirm that your second question is about Enterprise Solution Strategy, right?
spk06: Yes.
spk01: OK. Let me explain it a little bit. Now, the Enterprise Solution Strategy is mainly what we call SaaS plus X, which is a product plus service model. Our core logic is to There are a lot of domestic brands, including some international brands, and some domestic old brands, or some so-called new national brands. We create a digital solution for these brands online. The core logic of this solution is that we are currently surrounded by two ecosystems. One is the WeChat ecosystem, and the other is the KOL-based Internet celebrity ecosystem. In the WeChat ecosystem, we actually use small programs, backstage data systems, and social CRM systems to help these brands to connect the online and offline, to insert the offline store into the online small program. We have very typical customer cases here, such as Aurea. Several brands of Aurea will use our system this year. I can give you an example. In Aurea's case, we actually provide two systems very typically. One is called vSocial, which is a social CRM system. Another one is cloud power. Cloud power is a small-scale B2C mall. But this cloud power can be linked to a different store. So, different consumers can be linked to the store closest to them in a different location. So, this is a personalized small-scale mall. Of course, there are also some data systems in the background. The core logic of WeSocial is to connect thousands of shop owners in Olaiya with a large number of consumers and provide them with a social CRM online service system. In this way, even if the shop is closed due to the pandemic, they can still work online. This is the WeChat ecosystem. We also have a product and service solution solution for the Internet celebrity ecosystem. Our core logic is to solve a large number of brands, whether they are big international brands or new domestic brands. They are very active in using these KOL-based platforms in China, such as Douyin, Xiaohongshu, and Bilibili. to complete their planting on these platforms. So we have some systems to help them analyze millions of KOLs and find the ones that are suitable for the brand. For example, the hundreds of KOLs that are suitable for the brand. Then we help them uh, uh, uh, This is probably the main strategy of SaaS and AX. It's mainly about the WeChat ecosystem and the Internet celebrity ecosystem. At the same time, we provide products and services that brands need. The final result is to help brands deliver the final results in the WeChat ecosystem and the Internet celebrity ecosystem. This is why customers especially need us. Especially when the epidemic is very serious, they need our solution to help them continue to operate online. Cynthia, please go ahead.
spk04: Okay, this is TJ. The second question is about the SaaS Plus Strategy of Enterprise Solutions Business. Well, currently our SaaS Plus business models and actually provide both the products and the services to brands. Our logic is that now a lot of domestic international brands as well as some emerging China fashion brands, they are in desperate need of online digital solutions. So we want to meet their needs for that. And we mainly work on two ecosystems. One is WeChat, the other is KOL. And for WeChat, we provide like as a CRM and the mini programs as well as some back office digital operating platforms to connect their online stores with the offline stores. A case in study is Laurel. This year many brands of Laurel will use our system. We now provide Laurel with two systems. One is WeSocial which is a SCRM system. The other is CloudStore which is a B2C shopping mall based on the mini programs. it will actually link the consumers or inform the consumers of the inventories at the closest outlets of Laurel. And as to the WeSocial, we want to connect the over thousands of sales guides of offline stores of Laurel with their consumers so that in spite of the lockdown, these sales guides can still provide online services to their consumers. As to KOL ecosystem, we also have a specific product and services. Now more and more big brands including Chinese ones and international ones are using KOL platforms such as the Xiaohongshu, Bilibili and Douyin. And our systems will help brands to identify appropriate KOL. We also offer tools to create content strategies for brands so that they can deliver the right messages to their clients. So the goal of our South Plus strategy is to help brands to operate in the WeChat and KOL ecosystem so as to increase their sales.
spk02: Excuse me, have you finished with your question, Thomas? Thank you.
spk01: Yes, yes.
spk02: Thank you. As there are no further questions, I'd like to turn the call back over to the company for the closing remarks.
spk05: Thank you once again for joining us today. If you have further questions, please feel free to contact ICLIC's Investor Relations Department through the contact information provided on our website. Thank you. and see you next time. Bye-bye.
spk02: This concludes this conference call. You may now disconnect your line. Thank you.
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