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spk01: Hello, ladies and gentlemen. Thank you for standing by, and welcome to 36KR Holdings, Inc. First Quarter 2022 Earnings Conference Call. At this time, all participants are on a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. I will now turn the call over to your host, Yang Li, IR Manager of the company. Please go ahead, Yang.
spk04: Thank you very much. Hello, everyone, and welcome to 66KR Holding's First Quarter 2022 Earnings Conference Call. The company's financial and operational results were released earlier today and have been made available online. You can also view the earnings press release by visiting the IR section of our website at ir.66kr.com. Participants on today's call will include our co-chairman and CEO, Mr. Jia Gangfeng, and our Chief Financial Officer, Ms. Ling Wei. Mr. Feng will start the call by providing an overview of the company and performance highlights of the quarter in Chinese, followed by an English interpretation. Ms. Wei will then provide details on the company's financial results before opening the call for your questions. 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 uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's post-practice and other public filings, as well as the U.S. SEC. The company does not assume any obligation to update any forward-looking statements drafted as required in the applicable law. Please note that 66 pairs earning press release in this conference call include discussion of unaudited GAAP financial measures, as well as unaudited non-GAAP financial measures. 66K's earning price release contains reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures. And please note that all amount members are in RMB. I will now send a call over to our co-chairman and CEO, Mr. Da Gangfeng. Paul, please go ahead.
spk07: Thank you. Hello, everyone. Thank you for attending our first quarter of the 2022 business call meeting.
spk04: Thank you. Hello, everyone. Thank you for joining our fiscal year 2022 earnings conference call.
spk07: Thank you for joining our fiscal year 2022 earnings conference call.
spk04: Despite the recent resurgence of the COVID-19 pandemic and ongoing micro-harvest, we achieved solid top-line performance in the first quarter with double-digit revenue growth and a record high quarterly net income since our IPO. Notably, our advertising business and enterprise value-added services both reported robust results in year-over-year growth. As a prominent brand and a pioneering platform dedicated to serving new economy participants We remain committed to establishing a high-quality service system to build a flywheel of growth with diversified business offerings.
spk07: I'd like to begin with an overview of our content initiatives.
spk04: In the first quarter, we continue to upgrade our content offerings and create new programs and formats to expand our service boundaries. For example, we launched several official content accounts during the first quarter, KR Carbon, Waves, and Creebonus, for more service coverage from the perspectives of China's geocarbon policy, investment institutions, and Cree development audiences, respectively. These programs quickly engage users and help all enjoy high popularity thus far. Our content team also explores new content formats and strengthens our collaboration with WeChat video accounts on live streaming projects. The live streaming audiences attract by our new programs, Wising Digital and CEO Tips. Going forward, we will roll out additional live streaming series focused on hot niche markets. This new video and live streaming project fully mobilizes 56KR's content creation and editing capabilities as well as industry resources to deliver We deliver high quality content, industry updates, and expert opinions to our users. We are also meeting the content needs of more diversified user groups, which substantially broadens our user base.
spk07: We are also meeting the content needs of more diversified user groups, which substantially broadens our user base. We are also meeting the content needs of more diversified user groups, which substantially broadens our user base. Furthermore, for our public active market content site, our Warren Buffett shareholder meeting series that we jointly created with Tiger Securities also gain traction.
spk04: Building on our content production capability, we conducted an in-depth analysis of the investment sales, target assets, and investment trends discussed at meetings, winning acclaim among institution users with our high-quality content and innovative formats. After the meeting series, the Omaha Value Investment Education and Research Center reached out to 66KR to explore future potential collaboration opportunities. Finally, alongside our efforts in short video and live streaming, we also continue to make strides in audio content during the quarter. For example, we established a collaboration with Steam Alaya to showcase KR Finances' rich content in the audio scenarios, which effectively elevate our user experience.
spk07: Our content quality has always maintained a leading position. Maintaining the strategy of PCC and UDC, we continue to include more high-quality content into the 36K ecosystem. I don't believe that the number of PV 100,000 plus and 200,000 plus continues to rise. The topic we raised the other day, Ultraman Card, has aroused the enthusiasm of netizens to post on Weibo. After the increase in PV in the 15 consecutive seasons, in order to better reflect the content influence and user coverage of 36g, we started from this season. We started to use the number of fans on the whole network to replace PV and to verify the performance of 36g on the whole network with a more comprehensive perspective for investors. In fact, this season,
spk04: Content quality is always a top priority for 66KR. As we remain committed to executing our content platform strategy, we still focus on PGC and UGC. We have consistently incorporated more high-quality content into 66KR's ecosystem. The number of content pieces on our Vita official account with page views above 100,000 to 100,000 continuously increased during the quarter. Not only the topic Ultraman cars stream primary school students of pocket money we initiated recently has sparked animated discussion online, catapulting the topic to Weibo's hot searches list. Our focus on premium engaging content is paying off, leading to a remarkable 15 consecutive quarter of page view growth. To better reflect CC6K's content influence and user coverage, Starting from this quarter, we will report the total number of our followers inside of our page views. This new matrix will provide investors with a more comprehensive perspective from which to access to assess 56KR's performance across the entire network. As of the fourth quarter of 2022, the number of our followers exceeded 24 million, a year-over-year increase of 25%.
spk07: This year, after the Bilibili fans broke 1 million, The number of fans of short video content is constantly increasing. The number of fans of fast-forwarding Douyin and other platforms is also growing rapidly. As of the first quarter of 2022, the number of fans of short video has reached nearly 7 million. The number of fast-forwarding fans has reached 180,000 single-day fans. The number of fans of fast-forwarding Douyin and other platforms has reached nearly 70,000 single-day fans.
spk04: As the number of our followers on Bilibili swelled beyond 1 million in the beginning of 2022, 66K of short videos also gained traction on other platforms, such as Kuaishou and Douyin, demonstrated by the surging number of our followers. As of the end of the first quarter of 2022, our short videos have attracted nearly 7 million followers in all. Not only, we gained over 180,000 new followers of our official corporate accounts on Kuaishou in just one day. Riding on the popularity of Bing Zhendun, the mascot of the Beijing Winter Olympics, we created a short video which was reviewed more than 30 million times, rising to number two on Kuaishou's chart of top Winter Olympics-related searches.
spk07: We have not only experienced innovation, but also persistence. We never forget our mission, which is to always remember the mission of the new economy, and to keep up with the ideas of the startup companies to serve more successful enterprises and develop them. This is what we have been persisting on. The incremental building of premium brands requires not only innovation in content and formats, but also an unvarying commitment to our mission of empowering new economy participants to achieve more.
spk04: We have consistently adhered to our philosophy of working closely with startups and helping them grow bigger and stronger. We applaud them for their progress and lend a helping hand in times of difficulty. As a companion and enabler of the industry, we hope to truly assist entrepreneurs during this exceptionally challenging time. To that end, in early May, we officially launched the Seeking the Light program to help business, particularly small and media-sized enterprises, to maintain their brand's share of voice, Despite the market downturn, this program again facilitated the seamless integration of information, capital, talent, and technology.
spk07: Even with the repeated impact of the pandemic, we still have not taken a slow step in the urban and overseas layout. The second headquarters in Huanan for the first time realized virtual live service, and opened a product launch conference under the pandemic to provide new ideas. The 36G Global layout of the Chuhai Corridor is also actively providing efficient link services to members of the Let's Chuhai Club. to connect with overseas government agencies and investment agencies to explore the possibility of developing business in the overseas market.
spk04: Moving now to our ongoing business expansion efforts. Despite the recent COVID-19 resurgence, we did not slow down our expansion in the Greater Bay Area and overseas markets. We conducted a virtual live streaming session in our dual headquarters in South China for the first time during the quarter, generating new ideas for product launches against the backdrop of recurrent COVID-19 outbreaks. On the international front, 56-year global, which specialize in overseas markets, continue to provide efficient connection services, helping various Chinese brands operating overseas networks, agencies, and investment institutions to explore business development opportunities in those markets.
spk07: Next, I would like to introduce the main business performance line.
spk04: New products and models have helped us build a closed-loop service framework and a diversified three-dimensional ecosystem. Staying true to our vision of empowering new economy participants to achieve more, we consistently strive to broaden our needed service boundaries and refine our business model, which are also reflected in our commercialization performance. Next, let's look at our achievements on that front.
spk07: As our cash call business, advertising business performed well in the first quarter, achieving an increase of 13% year-over-year.
spk04: Even against the backdrop of COVID-19 resurgences and microeconomic challenges, our advertising revenue derived mainly from brand marketing has experienced growth far above industry average. Thanks to our readily efforts to create innovative service formats and improve customer satisfaction levels. Thanks to our advertising revenue derived mainly from brand marketing, our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing.
spk07: Thanks to our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing. Thanks to our advertising revenue derived mainly from brand marketing. Thanks Thank you very much.
spk04: Leveraging our short video format, we achieved a new high in terms of contract size for our advertising services during the quarter. Not only Intel continued to promote its new products through our short video formats, with its contract size continuing to rise. Moreover, we launched an original program, ARTest, to promote Samsung SafeWorks series, resulting in a contract far larger than those of the traditional text and image-based marketing solutions. We also helped various well-known companies including Panasonic, Chang'e Auto, Toyota, BYD, Dali Education, and iFlytech, promote their brand concepts and create products from videos. The continuous stream of new customers and repeat orders of existing customers are a testament to the effectiveness of our short video format in brand marketing, targeting free and cost consumers, while also further raising our average revenue per customer.
spk07: We have always been innovative in terms of design and design, and we have also performed well in this quarter. For example, the Hulang Research Institute, through the investigation of the trend of young people's consumption, and the form of interesting and interesting performance, has gained the attention of more young people. For many customers, including Dingding, Huawei, Hainan's Home, Pinduoduo, Ziru, Zhihu, iQiyi, etc., many customers have achieved a unique way of promotion and received good reviews. In this quarter, the price of Hulang Research Institute has significantly increased, exceeding the same public number. I believe that in the future,
spk04: Our consistent innovation in text and graphics content also contributed to excellent commercialization performance. For example, our use attracted increased attention from young user groups with surveys on young people's consumption trends featuring well-founded reasonings and sense formats. And Garnard widespread acclaim by creating unique promotion methods for customers including DeanTalk, Huawei, HLA, Pinduoduo, Ziru, Zhihu, and ITE. Given OU's advantages, in the first quarter, we were able to raise its record to a level considerably higher than that of similar official accounts. Going forward, we believe this program will propel the expansion of our service presence and raise our advertising revenue ceiling. turning now to our enterprise value ID services, which grew 35% year-over-year in the first quarter, despite COVID-19 impact, thanks to our strategy adjustments and new service format. On the corporate service side, 66KR jointly hosted the Spring of Enterprise Service Forum with ThinkTalk and collaborated with them to plan events, agenda, and content. Leveraging our knowledge of and presence in enterprise services, we not only helped the participating teams, Enterprise service platforms better understand the latest industry updates and future development opportunities, but also assist Bintoc in finding potential partners along the value chain.
spk07: At Bintoc, we are working with Bintoc to create a new market for new materials, new technologies, new models, and new markets. We are working with Bintoc to create a new market for new materials, new technologies, new models, and new markets.
spk04: In terms of institutional collaboration, 66KR partnered with O-Rent Securities to organize the GeoCarbon Star Sustainable Innovation Contest aimed at discovering innovative companies with potential in four major sectors, new energy, new materials, new technology, and new business models. We hope to help companies gain a deeper understanding of the GeoCarbon policy, better guard market demands, and connect with industrial capital.
spk07: We have achieved good results in the domestic service map expansion process and in this quarter. We have cooperated with many government institutions, such as the Nanjing District Government, the Ministry of Industry, the Xintong Institute, and the Overseas Human Resources Association, the Hiku Business Institute, etc., to integrate resources in innovative areas such as the round-the-world industrial network and the Internet. We will closely connect industrial chain companies with the government to promote industrial upgrade. In addition, we are also continuing to expand the customer resources at the enterprise level to improve the diversification of customer sources. As of the first quarter, the proportion of enterprise customers has increased significantly. Our regional expansion also achieved good results during the quarter.
spk04: We entered into partnership with additional government agencies, including Jianye District Government in Nanjing, the China Academy of Information and Communications Technology affiliated with the Ministry of Industrial Information Technology, and the HICFOR, Business School of Beijing Overseas Talent Association, through integrated resources in innovative fields, such as the metaverse and industrial internet, functions those connections between local governments and enterprises in both the upstream and downstream of the industry chain to empower industry upgrades. In addition, we are also working to expand our enterprise line base at the New York Avenue. In the first quarter, the proportion of our enterprise line grew substantially. Notably, both the number of enterprise Clients and the value of contract execution increased significantly year over year. Moving forward, we will also focus on serving high-quality, innovative local enterprises who are becoming new catalysts to our regional business growth. Moving on to our subscription services, we continue to test the waters with new variations in the subscription services, including launching innovations in business school training programs and other forms of institutional interactions. For our continuous upgrades and premium services, in the fourth quarter, revenue from institutional corporate clients increased 57% year-over-year. The number of contracts signed by investment institutions nearly double compared with the same period in 2021, among which the repeat orders from existing customers accounted for up to 70%.
spk07: More than 2.1 million copies, 27% of the total sales. At the same time, in our gradually building platform service system and expanding platform visibility, the platform has imported a total of 6,000 mainstream software, covering 16 major industries in the market, and 200 main software in the segment industry. The income ratio is 80% of the total market size, covering the front, core, and back of the large software familiar to the market. Since the top-down function was launched in September 2019, the number of new customers has reached 700. Compared to last quarter a few months ago,
spk04: I'd like to share with you the latest updates on our enterprise service review platform. In terms of operating data, major metrics all improved substantially year-over-year. Our monthly active users rose more than 25 times year-over-year to nearly 900,000, up 49% sequentially. And the number of authentic reviews surged almost 50 times to over 21,000, up 27%. Meanwhile, as we continue to establish our platform service system and boost its reputation, we showcase nearly 6,000 pieces of mainstream software on the platform, following the main enterprise service software of 16 industry and 200 industry segments, accounting for 80% of the entire market. 66K's enterprise service review platform now boasts complete coverage of leading brands as well as coverage of many mid-range brands and other widely known SaaS apps available in the market. Since merchant-oriented features were launched in September 2021, a total of nearly 700 merchants have set up presence on our platform compared with approximately 400 merchants a few months ago, nearly doubling our coverage of mainstream SaaS providers in just a short period of time.
spk07: The main point of the paper is that through our online and offline operations, we have increased the platform's popularity and traffic as a result of the joint efforts and the new features of the online and offline operations. The number of clues has increased significantly since the same period last year. The clue transfer rate has reached more than 30% steadily. The increase in the number of clues and transfer rate is an important measure that we can effectively reduce the cost of goods and services of high-performance SaaS manufacturers and effectively reduce the cost of goods and services of manufacturers.
spk04: I'd like to highlight that through the joint efforts of our online and offline events, as well as our newly launched feature, the 66-year Enterprise Service Review Platform Automatic Report, we have effectively enhanced the platform's visibility and traffic. The number of leads has grown significantly compared with the same period of last year, with a steady conversion rate of 30%. The significant improvement in the number of leads and year conversion rates are key indicators of our capability to efficiently empower staff provider to acquire customers rapidly while lowering their customer acquisition costs.
spk07: In the first quarter,
spk04: Our enterprise service for your platform performs well in terms of commercialization. Up to now, we have signed contracts with Indy, Basin, PolyV, Hap Vision, and ECSCRM, and will empower these clients in customer acquisition, brand management, and marketing services.
spk07: At this year's conference, we will emphasize the strategic layout of digitalization, and we will continue to improve the service system of the platform so that more companies and government agencies can contribute to the transformation of digitalization. This year, we will continue to enhance the platform's influence, to create a standard system under the evaluation of the industry, to create a model of China, and to continue to break through in the software data warehouse, user evaluation warehouse, key human resources data warehouse, and knowledge map warehouse. At the same time, we are also gradually accumulating and establishing typical business cooperation cases to establish a foundation for industrialization, and to achieve strategic cooperation in industrial chain industrial oil. I believe that under the continued efforts of our platform construction, the future of industrialization is very promising.
spk04: At the two sessions this year, the government stressed the strategic importance of digitalization. We will continue to improve our enterprise service review platform service system to contribute to the digital transformation of more enterprises and performance agencies. To be more innovative this year, we will remain focused on growing our platform's influence using a set of innovative evaluation standards and creating our own magic wandra for China's enterprise service industry. seeking consistent breakthroughs in the areas of software product libraries, user review libraries, key person databases, and knowledge graph libraries. Meanwhile, we are also accumulating typical collaborative cases to lay a solid foundation for commercialization and establish strategic partnership in the upstream and downstream of the industry chain. We believe that with our relentless efforts, our enterprise service review platform will have a promising future in commercialization. 回首2022年第一季度
spk07: Despite facing repeated COVID-19 and other economic challenges, we have achieved satisfactory results in this quarter. New Year's Eve, 36 start-up rating platforms continue to develop at a high speed. All major operation data are growing at the same rate. This quarter's initial success in water and sandification marked the start-up rating platform and is becoming the company's second rising trend. We will seize the huge opportunity in the development of new economy, open the next development chapter, and climb to the new peak. In 2022, we will continue to be a living hand in the new economy, and further expand the user group,
spk04: In conclusion, I'm pleased to say that despite the COVID-19 resurgence and complicated internal and external economic conditions, we still achieved solid first quarter results. Notably, our new business initiative, Statistics Care Enterprise Service Review Platform, continues its strong growth trajectory, with major metrics improving substantially year-over-year. More excitingly, its commercialization success during the quarter clearly demonstrates that the enterprise service review platform is becoming a 66-per-second growth engine. We will capitalize on the growth prospects in the new economy to scale new heights as we start the next chapter of our development. Going forward, we will continue to be a torchbearer for the new economy sector. We're expanding our user base and cultivating our diverse content and service ecosystem while also shouldering our corporate social responsibilities and empowering more industry participants to achieve greater success.
spk07: Next, I will hand over the floor to our CFO, Wei Lin. She will introduce us to the main performance of the financial sector.
spk04: With that, I will now turn the call over to our CFO, Ms. Lin Wei, who will discuss our key financial results. Please go ahead, Lin.
spk00: Thank you, Paul, and hello, everyone. Our first quarter results kicked off the year with a solid start, despite multiple headwinds, including COVID-19 resurgences and microeconomic challenges. We achieved growth of 14% year-over-year in our total revenues and a record high quarterly net income since our IPO of RMB $33 million, marking our second consecutive quarter of profitability. Notably, not only did our advertising business maintain its strong growth trajectory with a year-over-year increase of 13%, our enterprise value-added services also recorded remarkable growth of 35% year-over-year. In addition, thanks to our disciplined cost control measures, strengthened efforts in accounts receivable collection, as well as our strategic refocus on core business and disposal of certain lingering assets, our profitability improved significantly during the quarter. Looking ahead, we will continue to solidify our industry presence in China's new economy space, cultivating our diverse ecosystem of business communities along with our user base to empower more enterprises while also expanding our monetization approaches to deliver sustainable growth. Now I'd like to walk you through more details of our first quarter 2022 financial results. Total revenues were RMB 49.6 million in the first quarter of 2022, an increase of 14% compared to RMB 43.5 million in the same period of last year. Online advertising services revenue increased 13% year-over-year to RMB 37.6 million in the first quarter of 2022. The increase was primarily attributable to more innovative marketing solutions we provided to our customers. The number of advertising customers and the average revenue per advertising customer both increased in the first quarter of 2022. Enterprise value-added services revenue increased 35% to RMB 9.3 million in the first quarter of 2022, compared to RMB 6.9 million in the same period of last year. Subscription services revenue were RMB 2.7 million in the first quarter of 2022, compared to RMB 3.4 million in the same period of last year. The decrease was primarily attributable to the decrease in revenues from individual subscriptions, as some of our offline training programs were canceled or delayed due to the resurgence of COVID-19. However, on the institution side, our institutional subscription revenues increased by 57% year over year, mainly driven by the growth in the number of institutional subscribers. Cost of revenues was RMB 23.9 million in the first quarter of 2020, compared to RMB 20.2 million in the same period of last year. This increase was generally in line with the company's revenue growth. Gross profit increased 10% year-over-year to RMB 25.7 million in the first quarter of 2022, compared to RMB 23.4 million in the same period of last year. Gross profit margin was 51.8% in the first quarter of 2022, compared to 53.7% in the same period of last year. The slight fluctuation of GP margin was because enterprise value-added services accounted for a higher mix of total revenues this quarter than a year ago. while its margin was a bit lower than that of our advertising business. Operating expenses were RMB 33.4 million in the first quarter of 2022, compared to RMB 64.8 million in the same period of last year. Sales and marketing expenses were RMB 29.7 million in the first quarter of 2022, compared to RMB 35.7 million in the same period of last year. The decrease was primarily attributable to the decrease in payroll-related expenses and marketing expenses. G&A expenses were negative RMB 10 million in the first quarter of 2022 compared to RMB 20.2 million in the same period of last year. The fluctuation was primarily attributable to the release of the allowance for credit losses of RMB 32.9 million, partially offset by the increase in the payroll-related expenses. The release of allowance for credit losses was mainly due to the collection of RMB 36.6 million of long-aged accounts receivable during the quarter as we continuously increase our efforts in accounts receivable collection. Research and development expenses were RMB 13.8 million in the first quarter of 2022 compared to RMB 9 million in the same period of last year. The increase was primarily attributable to the increase in payroll expenses as we bolstered our research and development capabilities especially for our enterprise review platform. Share-based compensation expenses recognized in cost of revenues, sales and marketing expenses, research and development expenses, as well as G&A expenses, totaled RMB 4.1 million in the first quarter of 2022, compared to RMB 2.7 million in the same period of last year. The increase was primarily due to the growth of new share options. Other income was RMB 40.3 million in the first quarter of 2022, compared to RMB 1 million in the same period of last year. As we previously announced through our 6K filing, in March 2022, the company, as one of the investors in the round B financing of Hangzhou Jialin Information Technology Co., Ltd., acquired its 7.3% equity interest by transferring the 100% equity interest the company held in Beijing Bianqiar Creative Interactive Media Culture Co., Ltd. to Hangzhou Jialin, which is a fresh-produced supply chain solution provider in China. The subscription price is the same for the company and other independent investors in this financing round. The fair value of equity interest the company acquired is RMB 40 million. The company recognized approximately RMB 38 million of gain arising from such investment and disposal in the first quarter of 2022. Net income was RMB 32.6 million in the first quarter of 2022 compared to net loss of RMB 40.5 million in the same period of last year. Non-GAAP adjustment net income was RMB 36.7 million in the first quarter of 2022 compared to net loss of RMB 37.8 million in the same period of last year. Net income attributable to 36KR Holdings' ordinary shareholders was RMB 33 million in the first quarter of 2022, compared to net loss of RMB 39.5 million in the same period of last year. Basic and diluted net income per ADS were both RMB 0.8 in the first quarter of 2022, compared to basic and diluted net loss per ADS of RMB 0.9 in the same period of last year. As of March 31st, 2022, the company had cash, cash equivalents and short-term investments of RMB 171.1 million compared to RMB 216.1 million as of December 31st, 2021. This was mainly attributable to payment of year-end employee bonuses and benefits as well as small-sized long-term investments were made in several new economy startup companies during the first quarter of 2022. This concludes all of our prepared remarks today. We will now open the call for questions. Operator, please go ahead.
spk01: Thank you. Ladies and gentlemen, if you'd like to ask a question at this time, you will need to press the star, then the one key on your touch-tone telephone. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Please stand by while we compile the Q&A roster. And our first question coming from the line of Jing Cheng from CICC. Your line is open.
spk03: Hello, Ms. Dai. I have two questions. First, I would like to know about the situation of the second wave of COVID-19, which has an impact on the company's advertising and promotion of various businesses, and whether the company has some corresponding adjustment measures. And then the second one is that this year we also saw that the downfall is an important trend in the entire industry. And then we can see that the company's profit level is also continuing to rise. Can you share with us some of the company's considerations on the downfall and how we can look forward to the future? Let me translate it for you. Congratulations on the first quarter financial performance. I have two questions. The first is how is the impact of COVID-19 on the company's business in the second quarter? Are there any corresponding adjustments to mitigate the negative impact? And my second question is cost and expense control has become a key trend this year and the company's net profit is also increasing. Can you provide some guidance in terms of cost reduction in the year? And how should we look ahead to the profitability of the company? Thank you.
spk07: Thank you. We can feel the change in the market from March. From April, the Shanghai epidemic began. From May, Beijing was strictly controlled. It has a certain impact on the end of Q1 and Q2. We have seen this change since March in this year, and from April when the pandemic started in Shanghai to May, when Beijing also implemented free control measures,
spk04: COVID-19 has impacted us in both Q1 and Q2. The delivery of our enterprise value ID services, especially offline, and activities was impended, resulting in project suspensions or delays. It also affected our advertising business. Pandemic reality control measures posed challenges to the macroeconomics, reducing customer willingness to play advertisement.
spk07: We have maintained a positive attitude toward addressing these challenges. In case we are offline delivery is impossible, we provide the other options
spk04: such as online solutions like live streaming and short videos. In addition, for our Tasman business, we launched a one-winter initiative to provide favorable price for customer integrity to help Tasman over the pandemic period.
spk07: Next, we can see the peak of Shanghai and Beijing. I believe our business will gradually return to normal to ensure the smooth development and delivery of various businesses. We have positive expectations for the next half of the year and the entire business market. In terms of advertising, we hope to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue to be able to continue
spk04: As the lockdowns in Shanghai and Beijing gradually lift, we believe our business will slowly return to normal, and we will take steps to ensure a smooth business operation and delivery. We have great and positive expectations for the second half of the year. For the advertising business, we hope to continue the upward momentum and make breakthroughs in the form of advertising, output, and the number of customers. As an important component of enterprise value-added services, We hope our enterprise service review platform to make a big breakthrough in its commercialization this year. Repolished subscription products, such as business school, will also be gradually launched in the second half of the year, injecting new vitality into the company's business.
spk07: The second question is about cost-effectiveness and subsequent profitability. We have noticed that since 2022, the news of human resources optimization in various big companies has not stopped. However, there are still 36 projects that have not been funded yet. Since the beginning of 2022, there has been a stream of news about employee optimizations in other companies.
spk04: So far, 66KR does not have any plans to cut high costs. Our cost reductions and efficiency enhancements focus more on the three control of business costs, which already reflect in the first Q financial statements. For example, while maintaining double-digit revenue growth, we have achieved a steady growth profit margin, benefiting from the year-over-year decline in sales and marketing expenses, and improved account receivables collections. We think 66KR's business fundamentals remain positive.
spk07: As the pandemic is, our business will return to normal.
spk04: we will work hard to increase revenue and improve operating efficiency. From our perspective, good performance plus free cost and enhanced control are the right ways to cause reductions and efficiency improvements.
spk07: 关于盈利方面,因为我们在上个Q预计过2022年整体的盈利, 目前来看,可以说我们已经实现了盈利。 Q2受到疫情的影响,我们持审慎的态度, 但我们预计在上半年总体实现盈 利是可以预期的。 到了下半年, Regarding profitability, we talked about the full year profitability in last quarter, and we see profitability in this quarter, given the impact of COVID-19
spk04: The second quarter, we are cautious but still anticipate the overall profitability in the first half of the year. Looking to the second half of the year, we are positive about the recovery of China. Microdynamic and destroying driving our business. Meanwhile, as the third quarter and fourth quarter is the big season for us, profitability in the second half of the year should also be achieved. So in general, as long as the pandemic does not recur on a large scale, we maintain our outlook on full-year profitability cautiously optimistic. Okay, so do you have any other questions?
spk01: Our next question coming from the line of Peipei Cube Industrial Security, C-Line is open.
spk02: Hello, Mr. Bang, Mr. Wei. Congratulations on your very good performance in the first quarter. I would like to ask a few questions about the starting point. We have always said that starting point is our second growth curve, maybe in the future. Under the influence of the epidemic this year, the overall economic environment is relatively weak. How do we consider the rhythm of commercialization? I will translate my question. So, given the difficult macroeconomic environment, how do you consider the commercialization pace of your enterprise service review, the Dianping business? Thank you.
spk07: Thank you, Peipei. Actually, in our internal analysis, we think that as the epidemic occurs, the customers of SaaS manufacturers will become more and more difficult. So, we think that uh, uh, uh, Thank you, Peipei. So under the circumstance of the
spk04: appendix, so we think the SaaS provider will have more difficulty in acquiring the customer from online. So the 66K enterprise service review platform will benefit from this situation. So our KPI's for the enterprise service review platform are still focused on developing the platform and refining our product, primarily covering operating matrix such as the number of authentic reviews on MAUs as well as products and functions on the platform. I'd like to share with you some operating data. So at the end of March 2022, DA use on our enterprise service review platform rose 25 times year-over-year to 900,000, and the number of reviews surged almost 50 times to over 21,000. Up to now, our enterprise service review platform has showcased nearly 6,000 pieces of mainstream software on the platform. So, the number of leads on our enterprise services review platform has increased dramatically on the database. So, with a steady conversion rate of over 30%, this matrix will continue to improve.
spk07: As we predicted in our previous report, we will start to improve our commercialization this year. Our commercialization will mainly focus on sales clues, product promotion and report, and other three directions. In Q1, we have gradually started the commercialization of market action. From brand promotion, clue-related products all began to be launched at the same time. At present, we have achieved a certain effect. We have reached a service agreement with multiple companies, including Jindie, Honghe, ECS, CRM, Besson, and other famous companies. We have completed the signing. In the future, we will continue to provide services in customer and brand management and marketing services.
spk04: So last week we said we will start our commercialization this quarter, and our enterprise service review platform commercialization will focus on generating sales leads, product promotion, and research reports. So this year we launched our commercialization palace featuring the simultaneously brand marketing and leads-related products, and we already see some results. We have reached service agreements with several enterprises, including signing contracts with Kindi, Hyacinth, ECICI App, and Basin. We will continue to provide them with service regarding customer acquisition, brand management, and marketing services.
spk07: We believe as we refine our product and advance commercialization smoothly,
spk04: the enterprise service review platform role in boosting 66KR's overall fundamentals will be more significant, and it will become the second growth of the company, and we want that to become as early as possible and to materially change the market perception of 66KR evaluation logic. So maybe in the future quarters, the portions from 66KR enterprise service review platform revenue and will be increased significantly. Okay, thank you. Thank you, Director Guan.
spk00: Thank you, Pei-pei.
spk01: Our next question coming from the line of Lingyi Sha with SWS Research. Your line is open.
spk05: Thank you for accepting my question. The question I am concerned about is similar to the previous ones. The first question I am concerned about is that we see that Shanghai is gradually opening up, including the national epidemic relief. So our various business lines, now our latest recovery situation, especially the second quarter, now we see what the recovery situation of May and June is like. What kind of business can be restored in the second half of the year? 那第二个是,我们看到其实当前经济下行压力还是比较大的。 那公司会通过哪些手段保持尤其是我们广告业务的韧性? 那我的第三个问题就是说,我们现在起步点评平台的商业化进度,包括如何拓展用户心智。 那我先自我翻译一下。 Compact with the solid results. And my first question is, how is the recovery effort in each business? progressing with the gradual easing of COVID in Shanghai and around the country. Which business segment can recoup lost scales in the following six months? Is the firm's full-year break-even goal being revised? And my second question is, with the current downward pressure on the economy, what steps will the firm take to maintain the resilience of the advertising business segment? And my third question is, is what is the progress of the enterprise service review platform commercialization, and how does the company expand the user base and cultivate consumer mindset? That's my question. Thank you.
spk00: Thank you, Lin Ye, for your questions. This is Lin. I will answer your first question regarding the pandemic impact on the business, and I'll look for this year's profitability, and Mr. Feng will answer the other two questions for you. Yes, just as Mr. Feng just mentioned, the COVID-19 and the micro challenges did have some impact on our later Q1 and first half of Q2 business, especially on some of our enterprise value-added services. There are some offline events involved where we could see some impact. However, we have taken several measures to mitigate that impact. For example, we hold online plus offline forums. And we utilize the online live streaming forum as well as the short video format to host the forums and the conference for our customers. That's for our enterprise value added services. Actually, that revenue segment grew 35% year over year in Q1. even outgrow the total revenue. That's a very significant growth during Q1. And regarding the advertising business, obviously that's a major component of our total revenue. That, again, also increased 13% yield. And if you look at the industry average, if you look at those companies who already reported their Q1 results, and if you look into their online advertising, I would say it's easy to say that most of them have booked a negative year-on-year growth. Well, we have a double-digit year-on-year growth. And I think that's thanks to our CCCKR's content strengths and brand image that the SMEs as well as big companies, the Fortune 500 companies, all come to us to pursue brand image as well as performance-based ads. With that said, our advertising business lacks you know, reliant on the macroeconomic and more resilient to the cycles. So that's why we think we, you know, have a very good result in Q1. And looking into the Q2 and the rest of the year, first of all, with the, you know, pandemic, the control is lifted. Our offline events, our enterprise vital access services will come back, and with the microeconomy gradually recover, the advertising spending will also come back, and we have a lot of initiatives. For example, the adjustment to a rate card and some more innovative marketing solutions, especially our short-form video is picking up. really, really, very quickly. So that gives us confidence that in the second half or in the remaining of the year, we can catch up what's left in the first half, especially in Q2. So we are still, as Mr. Feng mentioned, we are still very cautiously optimistic about the full year, and we would maintain our forecast for the full year basis profitability. Hope that answers the question, Lingyi.
spk07: So for the resilience of the online advertising services, we think meeting our
spk04: Influential and maintain the quality is the most important thing for 56KR. And we will continue to reach content offerings and consistently provide high-quality content. Also, we will continue to diversify our distribution channels so that you strengthen the influence of 56KR.
spk07: The next step is to improve the quality of our products. So next, we will talk delivery quality and advertising effects.
spk04: We will continue to optimize our product and provide customers with more options from text images to show from video and live streaming. So this strategy will strengthen customers' thickness to 66KR.
spk07: So for this peer rate measure, we launched a warm winter initiative to provide bearable price for customers in difficulty to help tie them over during the pandemic period.
spk04: So when the COVID-19 is under control, we will adjust our pricing strategy flexible according to the demand.
spk07: So we think the accountability is our advantage for 66Tera Enterprise Service review platform.
spk04: And for user tool expansion, we will remain focused on growing our platform's influence, building a set of industry evaluation standards, and creating our own magic counter for China's enterprise service industry. So seeking assistance breakthroughs in the areas of software product libraries, user review libraries, key person databases, and knowledge graph libraries to build 66K enterprise service review platform become China's largest, most authoritative, and most convenient enterprise service software selection platform.
spk07: So for the commercialization process, as we said in last quarter,
spk04: We will start the commercialization this quarter, but we still will improve our operating data and efficiencies. So for the commercialization part, we will be positive, and we have already collaborated with Basin, Kindi, and some famous brands. So in the future, we think this will become the second a growth engine for the company and will have much more potential regarding to the commercialization. Thank you.
spk01: And our next question coming from the line of Don Teng with TH Capital. Your line is open.
spk06: The evening management, congratulations on the strong results. Thank you very much for taking my question. My question is regarding advertising business. As mentioned, along with the impact on the ongoing COVID-19 in China in the first and second quarter and with macro environment recently, we still achieve a strong growth year-over-year in advertising business that outplaces ad industry. So can management share what the driver for this performance? Thank you.
spk00: Thank you, Don, for your question. This is Lin. I will answer your question. Yes, our advertising performed quite well in Q1. I think it's mostly driven by both the number of advertising customers as well as the ARPU. Our number of advertising customers increased 2% compared to the same period of last year, while our ARPU increased 11% compared to the same period of last year. And talking about the advertising ARPU, I think there are several factors. First of all, at every beginning of the year, we will adjust our rate card based on, you know, the supply and demand. Because our resources, our advertising inventory is really very highly sought after, so we, you know, adjusted upward our rate card. That's number one. And number two is we have, you know, launched several initiatives, including our short-form video content, as well as a lot of content columns that specifically targeting at the end users. For example, you know, the OUs in Chinese, and some KR tests, and those columns are really expanding the customer base as well as increasing the contract size, which translate into the higher approval for us. And that's number one from the technical point, the number wise, how we calculate the increase of our advertising revenue. And secondly, in terms of, you know, qualitative analysis, our advertising is mostly brand advertising. Thus, it's less vulnerable to economy cycles because, you know, either in up times and down times, companies always need to build their brand image. That's why our brand advertising is less reliant on macro economy and more resilient to the cycles. That's number two. And I think, given that side, our advertising is a major component, but remember that the 36KR enterprise review platform is picking up as well. That commercialization of that product will be much more performance-based, which is a very good and perfect supplemental flavor to add into overall product offerings. Because 36KR's enterprise review platform, that commercialization will be based on sales leads, that's mostly performance-based, as well as some research reports and some marketing resources. That's a very good combination in the future. So I think that's a good balance between brand and a performance-based business. That's very good for the future growth for the company. Hope this answers your question, Dawn. Thank you.
spk01: Thank you. As there are no further questions, I would now like to turn the call back over to the company for closing remarks.
spk04: Thank you once again for joining us today. If you have further questions, please feel free to contact 66Sales Investor Relations through the contact information provided on our website in our office. Thank you.
spk01: Ladies and gentlemen, this concludes this conference call. Thank you for your participation.
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