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spk09: 36KR Holdings, Inc.' 's second quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. After management's 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.
spk01: Thank you very much.
spk03: Hello, everyone, and welcome to 66-Pair Holding's Second 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 earlier press release by visiting the IR section of our website at ir.66pair.com. Participants on today's call will include our co-chairman, CEO, Mr. Da Gong Feng, 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 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 Legislation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's result may be materially different from the views expressed today. For the information regarding this and other risks and uncertainties, it's included in the company's prospectus and other public feelings as well with the USFDC. The company does not assume any obligation to update any forward looking statements except as required in the applicable law. Please note that 66KR's earnings class relief and this company's call included discussion of un-audited gap financial measures as well as un-audited non-gap financial measures. 66KR's Earnings Press Release campaigns reconciliation of the un-audited non-gap measures to the un-audited gap measures. And please note that all among members are EMB. I will now turn the call over to our Co-Chairman, CEO, Mr. Da Gongfeng. Hal, please go ahead.
spk00: Thank you. Hello, everyone. Thank you for attending our second quarter of 2022.
spk03: Thank you. Hello, everyone. Thank you for joining our Second Quarter 2022 Earnings Conference Call.
spk00: In the second quarter of 2022, we went through the same situation as the COVID-19 pandemic. Despite the pandemic's control and the pressure from the macroeconomic economy, we still achieved good performance. Our total revenue increased by two-thirds, and our net profit continued to rise, and we gained profit for three consecutive quarters. This proved our strong brand influence and our strong willpower and vitality in our business model.
spk03: In the second quarter of 2022, we received a backdrop of 2019 results and 10 financial measures, as well as recurring numbers. We delivered robust financial performance with double-digit growth in terms of revenue and continued increase in growth margin. We are also achieving profitability for the third consecutive quarter, a testament to our powerful brand influence and our business' strong resilience and vitality.
spk00: The content of this presentation has always been an outstanding advantage for us, as well as a lesson for business development. High quality content has always been our most prominent advantage and the bedrock of our business development.
spk03: In the second quarter, we continue to optimize our content ecosystem and innovate our content columns and formats. Bolstered by our content platform strategy, we still focus on PGC and UGC. We're expanding our content to more industries with diverse perspectives, calculating an even richer content ecosystem, helping us expand our reach to a wider high-quality user base.
spk00: First of all, it is the continuous polishing of content that allows our 100,000 articles to continue to remain at the level of the industry. Let's take a closer look at some of our accomplishments in content during the quarter. First, our constant content refinements have contributed to more than 150 articles with over 100,000 views.
spk03: placing us at the forefront of the industry. In the second quarter, our hit articles gathered readership over 100,000 views each due to their trendy content following the latest dynamic of the popular industry. What's more, all youths warned the topic on Weibo, which deeply resonates with users, attracting nearly 300 million views and sparking animated discussion across the Internet.
spk00: The second is the introduction of innovative plans and channels, and the other is to increase the scope of content coverage. Since May of this year, we have launched the Long China 50 series, and selected 50 most representative new economic sector key companies to shout for them, hoping to become a force to pull the economy out of the dark. In this year, we have continuously launched more than 36 sub-media, digital moments, market bonuses, and so on, focusing on sub-media respectively, with unique options and perspectives, improving the breadth and depth of content, and fulfilling the demands of more user groups on content. In addition, we have recently launched a special report on the area of specialization, to help specialization enterprises better understand the field.
spk03: Second, we launched a series of innovative sub-media in China, which significantly improved the reach of our content coverage while meeting the needs of more diverse areas of users and customers. For example, we launched the Long China 50 series. In May, we reflected and showcased 50 of the new economy's most representative companies all of which are important players, applauding their noteworthy accomplishments in an effort to empower them to become a force in propelling the economy's recovery. We also launched a host of programs as our submedia, targeting different workflows, including KR Carbon, Waves, Digital KR, and CreateBonus to improve the breadth and depth of our content with unique topic selections and perspectives, satisfying the content needs of more diversified user groups. Finally, we recently launched a new channel, targeting specialized, refined, differentiated, and innovative companies, keeping them informed of the latest industry trends.
spk00: What is worth mentioning is our second-tier market products. This quarter, we continue to rely on high-quality content to break through the circle, and through customer-to-customer, etc., to dig into unique selection perspectives, to deeply analyze and simply interpret listed companies and the capital market, to survey the company's performance and trading trend, Our relating notes, I'd like to highlight that by honing our premium campaign, we continue to enhance our secondary market product influence among the wider public through our various niche columns such as KR Gold and Care Intelligence.
spk03: We explored and mixed topics from various fresh perspectives, conducted in-depth professional analysis and felt provoking interpretation of LACI company and capital markets, and provided insight into the company's performance and trading trends, attracting massive new followers through PR finance. For example, our analytics reports on Lianhua Qingwen Capsule, Locking Coffee, Me Fresh, and Tourism during the May Day holiday received recognition from many users and professionals. laying a solid foundation for our commercialization efforts.
spk00: In addition, our short videos and live broadcasts are becoming more and more mature in terms of content. In terms of short videos, we have accumulated more than 7 million fans in the second quarter, and we have achieved more than 1 million views on multiple videos. For example, the number of live broadcasts in China has reached more than 2.64 million, and the number of likes has exceeded nearly 1.5 million. In June, Bilibili successfully won the fifth place in the organization list based on its excellent content, becoming the only non-partisan and non-political organization.
spk03: Meanwhile, our rich media formats, including our short video and live streaming products, are growing more mature. In the second quarter, our short video attracts over 7 million followers cumulatively, including multiple standout videos produced by 66KR, which rank in over 1 million views each on Bilibili. For example, data posts of vocational schools in China attract a total of 2.46 million 64 million streams, and 150,000 likes across internet platforms. Thanks to our high quality content, we ranked number five on BilliBilly's pop video charts in June. We are also becoming the only organization on the list that is not affiliated with the Chinese government authorities. Regarding live streaming, we actively integrated our existing resources and leveraged the influence of our WeChat video account to create a new IP entitled KR Planning Live Stream Room with YouthWatch and CEO Tips as its core program. We held a total of 16 live streaming sessions in this quarter. covering hot topics including enterprises' region options and how companies can pull through the winter in the capital markets. These events activate 66K or so of video resources to help you reach your content scenarios and service models. As we unceasingly strive to build and refine our content ecosystem, we have achieved consistent growth in our page view, with the number of our total followers exceeding 25 million, an increase of 20% year-over-year, and a robust endorsement of our premium content and brand influence. Meanwhile, we have been exploring our... community comes up to better aggregate our users and improve our user engagement while optimizing our closed-loop ecosystem.
spk00: The continuous deepening and polishing of the content, the innovation and new operation of product service, made us achieve an excellent performance this quarter. Not only did the total income reach a double-digit growth, but the net profit continued to rise. We also achieved the third quarter profit in a row in this quarter. Next, I will share with you the progress of each business.
spk03: In short, our rentless honing and refinement of content and our development of innovative nails to product and service led to another quarter of excellent performance. Not only did we post solid double-digit year-over-year growth in total revenues and ongoing improvements in gross margin, but we also achieved profitability for the third consecutive quarter. Next, I'd like to share the progress we have made in commercialization across our business segments.
spk00: Our advertising business continues to thrive, up 12% year-over-year in the second quarter. Despite COVID-19 resurgence and macroeconomic challenges,
spk03: We achieved year-on-year growth above industry average, a clear indication that 56KR remains an indispensable partner for advertisers' brand marketing.
spk00: In this quarter, we continue to expand our customer base and increase our number of customers by 13%. No matter if it's a traditional industry or a new business, we can carry out brand transmission and innovation and upgrade in 36K. Traditional industry customers, such as the car and real estate industry, will be able to make a difference During this quarter, we capitalized on 56K's Omni China presence and multi-dimensional services to continue expanding our customer base.
spk03: increasing our number of advertisers by 13% year-over-year. We are able to empower customers from both traditional industry and the new economy to creatively innovate and operate in the brand marketing. Among traditional industry customers, many in the auto, mobile, and real estate industry continue to promote their brands and content in the 66-karat platform despite hiding from the pandemic, including Beijing Hyundai Motor Company and Jamzell, Not only our market motion of the renowned automotive manufacturer, Hyundai makes a new high in contract size among our advertisers from the automotive industry since 2021.
spk00: Through the collaboration of the new economy and the previous track, we have been able to spread the idea of a brand to more customers, especially those with C-level users as their target group. The Houlan Research Institute has started a system-based commercialization journey since the beginning of this year, and has made a breakthrough in this quarter. With respect to our collaborations with the new economy and voluntary industry, we leveraged all use to provide brand philosophy promotions for more customers, especially those starting C and consumers.
spk03: Following our kickoff of its systematic commercialization in the beginning of this year, all youths experienced explosive growth in the second quarter, achieving 270% sequential growth in contract size. During the second quarter, we collaborated with an array of well-known companies, including Intel, JoyWheel, Q1 Group, ICON, and Cashel, covering a wide variety of popular industries, such as science and technology, healthcare, new consumption, and internet, among others. for 18 marketing solutions for more brands to promote customer acquisition.
spk00: Under the double impact of the pandemic and the pandemic, all industries are facing various challenges and changes. In May this year, we launched a comprehensive travel plan to carry out corporate responsibility, to help small and medium-sized enterprises maintain brand reputation in the market. Through optimizing our product combination and monitoring, the plan has achieved a significant increase in the number of customers under the condition of maintaining the up value.
spk03: During the second quarter, against the backdrop of COVID-19 and complicated macroeconomic happenings, large and small companies across all industries faced various challenges and changes. In May, we initiated the Seeking the Light program to fulfill our social responsibilities and help businesses, particularly small and medium-sized enterprises, to maintain their brand's share of voice. This set the market downturn. By optimizing our product portfolio and records, we achieve a marked increase in the number of customers, while maintaining our average revenue per user at a relatively stable level.
spk00: From short videos to flagship products, the combination of over-the-top reviews, post-credits research institutes, and other non-conventional content has greatly contributed to the progress of our commercialization. In this quarter, Samsung will continue to promote its products through short videos. Deploying short video as our flagship product alongside our free and content program matrix, such as Super Review and OU, has also significantly increased our commercialization progress and what's included.
spk03: In the second quarter, in order to promote its product in the traditional commercial bank, Bank of China, promoted its app to 66 pairs per review. Should reviews' growing popularity among customers have changed, it's a useful format for us to effectively attract more advertisers and improve our monetization efficiency.
spk00: Thank you, Zeng Zhifu. Under the influence of the pandemic, we still maintain the same income as before. In terms of current activities, Turning to value-added enterprise, we were able to maintain our enterprise value-added service revenues at a stable level compared with the same period of last year.
spk03: In terms of offline activities, we proactively transferred sorting services to offline and online combined scenarios during the quarter, which partially mitigated overall impact from the pandemic and related control measures. In addition, our consulting services and integrity marketing services performed remarkably well during the quarter.
spk00: This June, we held an online super-event, X36M36. As industry companions and observers, In June, we held an online grant event at 66th and 36th.
spk03: As a companion observer of PenterPrize's press articles, we invited numerous entrepreneurs and investor representatives from various industries to share their brilliant success stories and convey the most authentic voice of China's new generation of entrepreneurs. Given the current uncertainty environment, 66 can be our opportunity to grant online ceremonies for entrepreneurs to boost the venture capital community's confidence and help forge connections among all parties. In addition, we also partnered with Kuaishou and Douyin to promote the ceremony and gain great traction among users, achieving total user exposure of 350 million.
spk00: In terms of the regional expansion, in the case of the strong control of the epidemic in Beijing, Shanghai, and other core first-tier cities, our local stations such as Chanyu, Guangdong, etc. have done a good job of supporting business development. For example, Sichuan Station and Chongqing Station have created exclusive IP in this quarter, This summit invites government representatives from more than 100 new consumer companies and investment institutions to gather together to build a communication platform for Zhengqi, to connect the needs of both parties, and to assist in the rapid development of the new consumer industry. This is also the first time that the 36G IP is on the ground. It strongly testifies that the brand influence and service system of 36G have gradually spread and grown to local cities. This event has prepared more than 200 companies and customer resources, and formed tens of millions of re-painting projects and non-commercial projects.
spk03: In terms of regional business expansion, wealthier cities including Beijing and Shanghai were under strict control due to the pandemic. Our regional offices in Sichuan and Chongqing and Guangdong were a great form to our business. For instance, our regional offices in Sichuan and Chongqing jointly created a preparatory IP event entitled The Marvelous Taste of Baxu, a summit which brought together local governments and over 100 new construction enterprises and investment institutions building a bridge of communication between supply and demand to accelerate the development of the new construction industry in the Basho area. The debut of 66K's Marvelous IP series in Sichuan and Chongqing was a triumph, clearly demonstrating that 66K's brand influence and service system have taken root in these regions. We have gained over 200 enterprise client leads from this event, creating projections in progress towards R&D 10 of millions as well as potential forward orders.
spk00: In addition, through industrial survey and data analysis, the Research and Research Institute continues to follow the hot track of high-frequency output quality research reports. Currently, the service of the Research and Research Institute covers not only many local government customers, but also many companies such as 2188, Baidu, Tencent, Zijie Jump, Zhiyun Medical, Kaojian, Baojie, Silan Robotics, and other well-known companies.
spk03: Furthermore, through an approach combining industry insights and data analysis, 66KR Research Institutes track the latest developments of popular industries and produce frequent high-quality research reports, achieving content dominance and improving customer loyalty. As present, in addition to a large number of local government clients, on the corporate side, 66KR Research Institute is also providing consulting services to a wide range of renowned companies, including Alibaba, Baidu, Tencent, ByteDance, Zhiyun Medical, CalMaster, P&G, and SlimeTax.
spk00: In addition, in terms of the overall sales, we have had new progress and breakthroughs in the services such as credit union services this quarter. We have recently reached a cooperation with Huatai Securities to provide financial support and credit union services for ZHANGLE, Taifutong, and AVP. This cooperation is a trial of credit union services in another financial sector, such as Zhaoshan Bank, Buhua Bank, and other financial institutions. because in the future, we will use more full-time customers as our base.
spk03: Moving on to our integrated marketing services, during the quarter, we continue to make positive progress in our content operation agency service. For instance, through our recent partnership with Huatech Securities, 36KR will provide content support and agency operations for Huatech's Zhangle Fortune app, while in our partnership with China Merchants Bank and Shanghai Pudong Development Bank. Our cooperation with Sparta Securities represents another exploration of our financial agency operation capabilities, which will lay the groundwork for us to replicate the operation model with additional securities companies in the future.
spk00: On the subscription service, this quarter, we have innovated and deepened our service system for institutional subscriptions to achieve 58% of the income growth of subscription services. For example, in institutional subscription services, We implemented innovative upgrades to our subscription service system in this program.
spk03: which increase our revenue from subscription service by 58% year-over-year. Take our institutional subscription service as an example. 36KR conducts quality capital with the Wuxi Municipal Government for industry collaborations and integration, demonstrating the value of the customized membership service we provided for our institutional clients. Furthermore, despite the postponed of starting forces into our individual subscription due to the pandemic. We made breakthrough progress in multiple-star subscription products such as the business plan building camp and the funding acceleration camp since July.
spk00: Last but not least, I'd like to share the latest progress of our enterprise service review platform.
spk03: Lunar Quarter will not only continue to rapidly improve our major operating matrix, but also achieve fruitful commercialization progress.
spk00: According to the data, the number of active points has increased nearly 18 times, up to nearly 900,000. The number of real points has increased more than 17 times, up to more than 32,000, and has increased by 56%. At the same time, we have improved our business coordination, functional layout, user experience, and other aspects of this season. The number of active users of the platform compared to the number of users of the second season, In terms of operating data, our monthly active user rose more than 18 times year-over-year to nearly 900,000, and the number of authentic reviews climbed 17 times to over 32,000.
spk03: up 56% sequentially. Meanwhile, we optimized the platform's business coordination, function layout, and user experience. And as a result, the number of customers willing to leave their information on the platform more than doubled compared with the beginning of the second quarter. We showcased over 6,600 pieces of mainstream software on the platform, up 84% year-over-year and nearly 20% quarter-award-seeker. These merchant-oriented features were launched in September 2021. A total of over 860 merchants have set up presence on our platform, raising almost 30% quarter-over-quarter.
spk00: In terms of commercialization, this quarter, Q5.0 has achieved strategic cooperation with Houshan Engine. Around Houshan Engine's cloud computing, big data, and SaaS applications, and other multi-product systems, we have built product formation on the Q5.0 platform, and reached a precise customer group. At the same time, in terms of training customer awareness and brand influence,
spk03: Regarding commercialization, 36KR Enterprise Service Review Platform reached a strategic collaboration with Volcano Engine Explorer, focusing on the functions and features of a diverse effect portfolio of Volcano Engine's products, including cloud computing, deep data, and staff applications. Meanwhile, we built a product library on our Enterprise Service Review Platform for VolcanoEngine, providing private and targeted access to specific customer groups. Furthermore, the 36KR Enterprise Service Review Platform will collaborate with VolcanoEngine to produce and disseminate various formats of content, such as live broadcasts and in-depth interviews. Taken together, these strategies will cultivate customer awareness as well as shape Volcano Engines spread influence and unique positioning in the SaaS market.
spk00: Under the external environment of repeated challenges such as the pandemic, Sinovac has achieved a double-digit total income growth in this quarter and achieved profit in the third quarter in a row. Good financial performance once again proved the resilience and vitality of our business model, and once again established the foundation of the company's development and demonstrated the value of the company. At the same time, Sinovac has not stopped as the second growth curve of the company. Each indicator continues to grow strongly, and commercialization is progressing rapidly. is continuously expanding the service boundary of the company to unlock more potential value. As a comprehensive service group in the new economy industry, 36G always never forgets to start new, insisting on creating brand models with high-quality content, using innovation as driving force, and setting up content and service ecology. To improve the business efficiency of Chinese companies as a vision, the future will continue to be the identity of the companion and the beneficiary, assisting the rapid development of more industries, and grasping the opportunity of digital transformation to create long-term and sustainable value for more users, customers, and investors.
spk03: Despite the challenging external environment, including pandemic with 13 million in macroeconomic downturn, we achieved double-digit growth in total revenue and profitability for the third consecutive quarter. Our robust financial results, again, demonstrated our business model's resilience, as well as massive development potential. Borders start defying our business foundations while handling the inflection point of company value. Meanwhile, as our second growth engine, our enterprise service review platform has achieved strong growth in all major operating metrics, together with the steady development of its commercialization, expanding our service boundaries and unlocking more business potentials. As the new economy service group, 36KR remains committed to its original aspirations and will continue to empower its partners with high-quality content. flying an innovation-driven content ecosystem with dedicated and effective services while hoping to enhance orderly business efficiency in Chinese enterprises. Moving forward as a companion and enabler of the new economy, 36KR will continue to empower more industry participants to achieve high-speed development Capitalizing on the wave of digital transformation, we are confident that we can create a sustainable value for more users, customers, and investors.
spk00: Thank you, Pao, and hello, everyone.
spk04: Against the backdrop of the pandemic and microeconomic uncertainties, we achieved solid top-line growth in the second quarter, with a 13% year-over-year increase in total revenues and a third consecutive quarter of profitability, a strong testament to our business's resilience and vitality. Notably, our advertising revenues continue to grow up 12% year-over-year to RMB 57.8 million, outpacing the overall market. In addition, through our multiple efforts to navigate the impact of stringent COVID-19 prevention measures, we were able to maintain our enterprise value-added services revenues at a stable level, while our subscription services revenue recorded remarkable growth of 58% year-over-year, as we proactively executed certain services through online and virtual scenarios. In addition, as we continually optimized our cost structure and operating efficiency, we further improved our gross profit margin to 62% in the second quarter, up 5 percentage points year-over-year. On the cash position front, we once again generated positive operating cash flow in the second quarter. Our cash, cash equivalents, and short-term advancements increased by over 20 million RMB quarter over quarter and over 40 million RMB year over year, respectively. Looking ahead, we will continue to hone our core capabilities and explore diversified growth avenues to drive monetization. while also strengthening our longstanding commitment to cultivating a compelling value proposition for more customers, users, and investors. Now I'd like to walk you through more details of our second quarter 2022 financial results. Total revenues were RMB 81.7 million in the second quarter of 2022, an increase of 13% compared to RMB 72.1 million in the same period of last year. Online advertising services revenues increased by 12% year over year to RMB 57.8 million in the second quarter of 2022. The increase was primarily attributable to more innovative marketing solutions we provided to our customers, as well as the proactive sales strategies we adopted to navigate the challenging environment during the quarter. The number of advertising customers increased by 13% year-over-year, while the approval remained largely stable during the quarter. Enterprise value-added services revenue will unbeat $14.3 million in the second quarter of 2022, largely flat compared with the same period of last year. We were able to maintain our enterprise value-added services at a steady level despite the resurgence of pandemic during the quarter. This is mainly because we proactively executed certain services through online and virtual scenarios. Subscription services revenue to RMB 9.5 million in the second quarter of 2022 compared to RMB 6 million in the same period of last year. The increase was primarily attributable to our continuous efforts to offer high-quality subscription products to our subscribers. Cost of revenue for RMB 30.8 million in the second quarter of 2022 compared to RMB 30.7 million in the same period of last year. Gross profit increased by 23% year-over-year to RMB 50.9 million in the second quarter of 2022 compared to RMB 41.4 million in the same period of last year. The gross profit margin was 62% in the second quarter of 2022 compared to 57% in the same period of last year. The increase was mainly attributable to the economy of scale achieved by our revenue growth as well as the optimized cost structure driven by more services delivered online during the quarter. Operating expenses were RMB 64.6 million in the second quarter of 2022 compared to RMB 75.3 million in the same period of last year. Sales and marketing expenses were RMB 27.4 million in the second quarter of 2022 compared to RMB 33.4 million in the same period of last year. The decrease was primarily attributable to the decrease in payroll-related expenses, share-based compensation expenses, marketing expenses, and business travel-related expenses. G&A expenses were RMB 23.8 million in the second quarter of 2022, compared to RMB 29.9 million in the same period of last year. The decrease was primarily attributable to the decrease in allowance for credit losses and professional fees, partially offset by the increase in payroll-related expenses. research and development expenses were rmb 13.4 million in the second quarter of 2022 compared to rmb 12 million in the same period of last year the increase was primarily attributable to the increase in payroll related expenses as we bolstered our research and development capabilities especially for our 36kr 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 2.6 million in the second quarter of 2022 compared to RMB 3.3 million in the same period of last year. Other income was RMB 22.7 million in the second quarter of 2022 compared to other expenses of RMB 0.4 million in the same period of last year. The fluctuation was primarily applicable to investment income arising from fell value changes of long-term investments and more government grants received in the second quarter of 2022. Net income was RMB 9 million in the second quarter of 2022 compared to net loss of RMB 34.3 million in the same period of last year. Non-GAAP adjusted net income was RMB 11.6 million in the second quarter of 2022. compared to non-GAAP adjusted net loss of RMB 31 million in the same period of last year. Net income attributable to 36KR Holdings' ordinary shareholders was RMB 8 million in the second quarter of 2022, compared to net loss of RMB 34.1 million in the same period of last year. Basic and diluted net income per ADS were both RMBs 19.5 cents in the second quarter of 2022. compared to basic and diluted net loss per ADS of RMB 83.4 cents in the same period of last year. As of June 30, 2022, the company had cash, cash equivalents, and short-term advancements of RMB 194.3 million, increased by RMB 23.2 million compared to the previous quarter, and by RMB 44.7 million compared to a year ago. The increase was primarily attributable to cash inflow from operating activities. This concludes our prepared remarks today. We will now open the call for questions. Operator, please go ahead.
spk09: Thank you. To ask a question, please press star then 1 on your touch-tone phone. If you are using a speaker phone, we ask that you please pick up your handset before pressing the key. To withdraw your question, please press star then 2. And 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. We'll pause momentarily to assemble our roster. And today's first question comes from Ling Yi with SWS Research. Please go ahead.
spk08: Hello, everyone. Thank you to the management team for this exchange meeting. Congratulations to the company for achieving a very good over-the-counter performance. I have three questions for the management team. First, we can see that the impact of the epidemic in the first-tier cities has gradually weakened since the third quarter. How is the recovery of the company's various businesses in the third quarter? The second question is that we have observed that 36 customers have held many offline meetings recently, and we have seen many future arrangements of meetings. What is the growth expectation for offline business and meetings in the second half of this year? Let me translate my questions in English. The first one is, since the third quarter, the impact of COVID in 30 cities has gradually eased. How about the recovery of the company's various business? The second question is, recently, Century Local has held several offline summits, and we have noticed that more summits have been scheduled. What are all the expectations and arrangements for offline activities in the second half of the year? My third question is, Enterprise Service Review Platform officially announced a one-step marketing service cooperation with ByteDance. Could you give us more color on this cooperation progress? Thank you.
spk00: Okay, thank you. The first question is about the recovery of the company's various business. First of all, we observed that the advertising business in the third quarter of this year should have a certain warm-up compared to the same period last year. Compared to last year, we have made the following efforts to improve the activity of advertising business this year. First of all, we widened the coverage track of content, such as double carbon, digitalization, workplace energy, etc. These are expected to bring new business opportunities in the third quarter and the next half of the year. Second, short videos and 2C channels have been flooded for more than a year, attracting more and more advertisers. At the same time, we have further expanded more and more C-end users to target customer groups. Third, we continue our relevant business plan, continuously optimize our product combination and open market price, and grow with the advertisers in Guangda for learning time. In general, Shandong Tech's focus is on quality and unity advertising.
spk03: We are currently seeing some improvement in advertising business in the third quarter compared to the same period of last year. Compared with last year, we have been following several efforts to improve the vitality of advertising business this year. First, we have expanded the coverage industries of content this year, such as June Carbon. digital transformation, career, and so on, which will bring new business opportunities in this quarter and the second half of the year. Second, after more than one year of precipitation, short video and 2C columns have attracted more and more advertisers, at the same time further expanding more brands talking to end users. Finally, we will continue to optimize our product portfolio at Wakeheart so we can go through the hard times together with our advertising clients and grow our advertising revenues. Our advertising is more of a combination of branding and effects, but therefore, even under economic pressures, advertisers' demands for brand advertising still exist.
spk00: For me, In the first half of the year, many of our offline activities have been postponed or transferred online, which has had a partial impact on income. However, we still have confidence in the overall prevention and control of the epidemic in the second half of the year. In the second half of the year, we have already planned or launched a series of main activities, such as cross-border out-of-sea summit, ultra-autonomous summit, medical new trend summit, and our Unexpected series, and the large-scale WISE conference at the end of the year. Even if the epidemic has repeatedly had a certain impact on offline activities, we also have mature online forum preparation capabilities. So for offline business, in the first half of this year, due to the impact of the pandemic, many of our offline events were delayed or transferred to online form, which did have some impact on revenue.
spk03: However, we are confident in the pandemic controlling the second half of the year. We have planned many themed conferences in our pipeline, for example, going global forum, super automation forum, new media transfer forum, and the end of year grant event-wise conference. Even if the resurgence of the pandemic has a certain impact on offline events, we still have the capability to prepare online forums. For example, the flagship IP 36th and 36th series we held in June was a pure online event with great performance in terms of both influence and commercialization. Therefore, we remain cautiously optimistic on the revenue forum. So for subscription services, we have making a certain proportion of growth in the institutional subscriptions, mainly because we continue to innovate in the membership system and have more potential collaboration connections between investment institutions and enterprises customers. In terms of individual subscriptions, Many courses were postponed in the first half of the year due to the impact of the epidemic. However, since July, the business school has successfully delivered several offline courses with relatively high revenue for our users. So we expect a certain increase in the third quarter and the second half of the year. This is the end of the first question.
spk00: Then the second question is about our next year's activities. What are the expectations and plans? So now is the second question regarding the offline events.
spk03: So we believe the pandemic will be manageable in the second half of the year, and most offline summits will take place at Glantz. So we will launch a series of events related to our key IPs, such as the series targeting CN users, the end-of-year Glantz event-wide conference, going global forum, fund partner summit, light of enterprise services, and many customized industry forums.
spk00: In the second half of the year, if there are repeated cases and the prevention and control measures are strengthened, we have two options. First of all, we already have the ability to operate on-site very maturely. We will transfer some of the summit to the on-site. On the other hand, our local station will do a good job of expanding and transferring. The regional expansion business has achieved a lot of IP speed in this quarter. For example, the regionalization of the Q2 series in the area of Sichuan, using regional features to extend our IP activities.
spk03: So even if the pandemic resorted in the second half of the year, leading to reinforced control measures, as we already have mature capabilities of operating online summaries, we will organize some of them online-side. On the other hand, our regional offices will expand business to pro-Pel growth. Our regional business expansion helped us reshape many IPs, such as the reconstruction of the Mobler series, expanding our IP activities with regional characteristics. So this is the end of the second question.
spk00: Okay.
spk03: So regarding collaboration with VolcanoEngine, they will focus on the functions and features of a diversified portfolio of VolcanoEngine's products, including cloud computing, big data, and SaaS applications. Meanwhile, we'll build a product library on our enterprise service review platform for VolcanoEngine, providing price precious and targeted access to specific customer groups. Furthermore, to enhance customer awareness and brand influence, we will collaborate with Volcano Engine to produce and disseminate various forms of content, such as live streaming and in-depth interviews. Volcano Engine has set up its presence on the enterprise service review platform as a merchant, and we are helping them with overall operations on the platform and content production. as well as handling certain sales leads and customer information.
spk00: In fact, in the recent period, we have reached a consensus with many well-known SaaS manufacturers. In the future, we will provide services to these manufacturers in the form of accurate sales clues and so on. We will work on two aspects for the planning of the突然厂商. First, we will help more SaaS products and invite more manufacturers to join the platform through the form of industrialists and subcontractors. On the one hand, we have improved the completeness of the platform, On the other hand, we are also operating and maintaining more potential customers on our business end. Second, we focus on improving the efficiency of operation, optimizing the flow of capital flow, and other forms of improvement. Increase the rate of lead transfer to attract more manufacturers to cooperate with 36K. At the same time, we use 36K's past cooperation with Qifu customer service. First, through forums, live broadcasts, information reports, and other forms, we convert Qifu manufacturers into platform customers, and thus carry out more accurate lead acquisition and deep service.
spk03: Recently, we have operated on cooperation with several well-known SaaS suppliers, and we will provide service to them going forward, including offering a SaaS lease. Regarding our plan to expand cooperation to more SaaS providers, we will approach it from two perspectives, first through industrial park and business in larger markets. We will cover more SaaS products and invite more providers to join our platform to make our platform more complicated while accumulating more potential customers through the operation and maintenance of the merchant-oriented features. Second, by enhancing operational efficiency and optimizing the process for customers to leave their information or sales list. We will improve the conversion rate and attract more providers to work with 36KR enterprise service review platform and leveraging our customer bank of enterprise service industries, we will start with co-working enterprise service providers to our customers through forums, live streaming, and consulting, then moving on to in-depth sources such as acquisition of more precious leads. So this is the end of the third question, and thank you.
spk09: Thank you. Our next question comes from Pei Pei Kuo with Industrial Securities. Please go ahead.
spk06: Thank you, Mr. Kuo. Congratulations on your performance. I have two questions. The first one is related to advertising. We know that it is expected that the economy will be more stable for a longer time. In this context, I would like to know the number of ads in Q2. The growth of the number of customers and the situation of the app. And in the second half of the year, how do we look at it? The advertiser may continue to say that it is expected to be in this background. Maybe it's a little bit longer than before. To get growth in these two dimensions. This is the first question. The second question is about the operation situation on this video and live broadcast platform. I would translate my question. The first question is about advertisement. We can expect the economy is going to be in low level for a relatively longer time as expected. Could you give us more color of the growth of advertisement client in that pool? And what we can expect for the coming two quarters? And second question is, could management explain more about your plan of growth and monetization in short video platforms? Thank you.
spk04: Hi, Peipei. Thank you for your question. Yes, you can see that in Q2, we delivered another very strong quarter of advertising revenue growth. And compared to others, I think this is a very remarkable success. The reason being, actually, if you look at our pool and the number of advertisers in our earnings release, actually our number of advertisers grew by 13%. And the pool, actually, for the first time in many quarters, I think, declined slightly 1%. That's because, as the CEO mentioned in our prepared remarks, that we launched Seeking the Light program, which means in Chinese, Xiangguang Erxing Jihua. That means we actually adjusted our product portfolio and the rate card in the second quarter, meaning that we actually provide some favorable pricing for customers, especially SME advertising customers. That's why you can see that by that program we expanded effectively the number of advertisers. That number grew strongly. Well, we can see that our pool remained at a very stable level. It actually only slightly declined by 1%. And if you look at our industry-wise, actually the top industries in our advertisers, namely Number one, we call it hardcore technologies. And number two, still Internet services. And number three is enterprise services. And also there's intelligent manufacturing and new consumer businesses. So that's very diversified, and especially the hardcore technology sector emerged as a very top-ranked advertising industry for us. I think that's partially, you know, driven by our proactive sales strategy that I just described for Q2. And for your second question regarding short form video as well as some new product columns That's very successful. I think that's another very strong driver for the advertising revenue growth in Q2. And we said the short form video is more and more welcomed by many advertisers. They previously mainly advertised with some articles or retried account disclosure, but now they are more and more using short-form video and our new columns. We created, for example, the OU's Hou Lang Yanzhi Suo and super review Chao Ren Che Ping, and some other columns are very, very popular among audiences as well as customers. As we mentioned in the previous remarks, this quarter we entered into advertising cooperation with Intel, and Icon Guobing, and Kuaishou, and even IT, and Zhihu, a lot of Internet brands advertising with us. So that's another success. And to give you some ballpark idea of the contribution from short form video, actually if you remember by the end of last year I said the proportion of short form videos revenue contribution for advertising dollars is less than 10%. But by the end of the second quarter, actually, the contribution from short-form video has already rose to around 15%. You can gauge how quickly that short-form video has been developing for the company. Hope this answers the question, Peipei. Thank you.
spk09: And our next question today comes from Jing Ting with CICC. Please go ahead.
spk05: I will translate myself. Congratulations on the strong financial performance and the challenging environment The company has strong content capability. Is there any consideration for improving the monetization capability on the user side? Thank you.
spk00: Okay, thank you. Our current CDN transformation should mainly be reflected in the products of Sinovac. Sinovac has already set up many products. For example, the recently completed BP打造營,融資加速營, are all based on high-value offline courses. The main target customers are entrepreneurs and founders. On the other hand, we have also opened So at present, our CN monetization is mainly reflected in our individual subscription business, especially 36KR Business School.
spk03: So the 36KR Business School has set up a number of products, such as the recently we completed Business Plan Building Camp and Financing Acceleration Camp, which have been completed recently. So those courses are mainly high-value offline courses, and the main target customers is the founders of the startup. On the other hand, we also have low-cost online training courses, KR class, which focuses on course content such as skill improvement. So moving forward, we will spread the course content in the form of open class and small class to build corresponding membership service systems and provide courses on career improvement, business administration, investment and management courses to entry-level employees and professional elites and high net worth individuals. Thank you.
spk09: Thank you. And showing no further questions, I'd like to turn the conference back over to the company for closing remarks.
spk01: Thank you once again for joining us today.
spk03: If you have further questions, please feel free to contact us. 36K are semester relations for the contact information provided on our website.
spk09: Thank you. This concludes this conference call. You may now disconnect your lines. Thank you. Thank you. you music Thank you.
spk10: Thank you.
spk09: Hello, ladies and gentlemen. Thank you for standing by for 36KR Holdings, Inc.' 's second quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. After management's 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.
spk03: Thank you very much. Hello, everyone, and welcome to 66-Pair Holding's Second 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 earlier press release by visiting the IR section of our website at ir.66pair.com. Participants on today's call will include our co-chairman, CEO, Mr. Zhigong Feng, 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 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 Legislation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's result may be materially different from the views expressed today. For the information regarding this and other risks and uncertainties, it's included in the company's prospectus and other public feelings as well with the USFDC. The company does not assume any obligation to update any forward looking statements except as required in the applicable law. Please note that 66KR earnings plus relief and this conference call included discussion of un-audited gap financial measures as well as un-audited non-gap financial measures. 66KR's early press release contains a reconciliation of the un-audited non-gap measures to the un-audited gap measures. And please note, they're all among members of RENB. I will now turn the call over to our co-chairman CEO, Mr. Da Gongfeng. Hal, please go ahead.
spk00: Thank you. Hello, everyone. Thank you for attending our 2nd quarter of 2022.
spk03: Thank you. Hello, everyone. Thank you for joining our Second Quarter 2022 Earnings Conference Call.
spk00: In the second quarter of 2022, we went through a series of difficult times due to the COVID-19 pandemic. Despite the pandemic's control and the pressure from the macroeconomic economy, we still achieved good results. Our total revenue increased by two-thirds, and our net profit continued to rise for three consecutive quarters. This has proven our strong brand influence and our toughness and vitality in our business model.
spk03: In the second quarter of 2022, we're hearing the backdrop of 2019 major changes and changing financial measures as well as tackling non-mainstream. We delivered robust financial performance with double-digit growth in terms of revenue and continued increase in growth margin. We're also achieving profitability for the third consecutive quarter, a testament to our powerful brand influence and our business' strong resilience and vitality.
spk00: The content of this presentation has always been an outstanding advantage for us, and it is also a good example In this quarter, we will continue to optimize the content ecosystem and continue to innovate the content field and form. Under PGC and UGC's dual-lens strategy, our content will continue to expand to more channels, expand to multiple perspectives, help 36 guests to improve the rich content ecosystem, and reach a wider range of high-quality users.
spk03: High-quality content has always been our most prominent advantage and the bedrock of our business development. In the second quarter, we continue to optimize our content ecosystem and innovate our content columns and formats. Bolstered by our content platform strategy, we still focus on PGC and UGC. We're extending our content to more industries with diverse perspectives, cultivating an even richer content ecosystem, helping us expand our reach to a wider high-quality user base.
spk00: First of all, the content is continuously polished, allowing our 100,000 articles to continue to remain at the top of the industry. Let's take a closer look at some of our accomplishments in content during the quarter. First, our constant content refinements have contributed to more than 150 articles with over 100,000 views.
spk03: placing us at the forefront of the industry. In the second quarter, our hit articles gathered readership over 100,000 views each due to their trendy content following the latest dynamic of the popular industry. What's more, all users warned the topic on Weibo, which deeply resonated with users, attracting nearly 300 million views and sparking animated discussion across the Internet.
spk00: The next step is the launch of innovative Lanmeng and Pinnao, which greatly improved the scope of content coverage. Since May of this year, we have launched the Long China 50 series, and selected 50 leading and representative new economic sector key companies to shout out for them, hoping to become a force to pull the economy out of the dark. We are focusing on vertical media such as 36TAN,暗涌, digital moment, market bonus, etc., which are continuously launched this year, focusing on the vertical field separately, using unique options and perspectives to improve the breadth and depth of content, and meet the demands of more user groups on the content. In addition, we have recently launched a special report on the special specialization field to help special specialization companies better understand the industry.
spk03: Second, we launched a series of innovative sub-media in China, which significantly improved the reach of our content coverage while meeting the needs of a more diverse array of users and customers. For example, we launched the Long China 50 series. In May, we are re-selected and showcased 50 of the new Exxon's most representative companies all of which are important players. Uploading their noteworthy accomplishments in an effort to empower them to become a force in propelling the economy's recovery. We also launched a host of programs as our submedia targeting different workflows, including KR Carbon, Waves, Digital KR, and Career Bonus to improve the breadth and depth of our content with unique topic selections and perspectives, satisfying the content needs of more diversified user groups. Finally, we recently launched a new channel, targeting specialized free finds, differentiated and innovative companies, keeping them informed of the latest industry trends.
spk00: What is worth mentioning is our second-tier market products. This quarter, we continue to rely on high-quality content to break through the circle. Through many panels, such as customer-to-customer, we dig into unique selection perspectives, deeply explore and simply interpret the listed companies and the capital market, survey the company's performance and trading trend, Our relating note, I'd like to highlight that by honing our premium content, we continue to enhance our secondary market product influence among the wider public through our various niche columns such as KR Gold and Care Intelligence.
spk03: We explored and mixed topics from various fresh perspectives, conducted in-depth professional analysis and felt provoking interpretation of listed companies and capital markets, and provided insight into the company's performance and trading trends, attracting massive new followers through KR Finance. For example, our analytics reports on Lianhua Qinglong Capsule, Locking Coffee, Me Fresh, and Tourism during the May Day holiday received recognition from many users and professionals. laying a solid foundation for our commercialization efforts.
spk00: In addition, in the form of paid media content, our short videos and live broadcast products are becoming more and more mature. In terms of short videos, we have accumulated more than 7 million fans in the second quarter. We have achieved more than 1 million views on multiple videos. For example, the number of live broadcasts in China has reached more than 2.64 million, and the number of likes has exceeded nearly 1.5 million. In June, we successfully occupied the 5th place on the list of institutions with 36 excellent content. We have become the only non-partisan organization.
spk03: Meanwhile, our rich media formats, including our short video and live streaming products, are growing more mature. In the second quarter, our short video attracts over 7 million followers cumulatively, including multiple standout videos produced by 66KR, which rank in over 1 million views each on Bilibili. For example, data posts of vocational schools in China attract a total of 2.46 64 million streams, and 150,000 likes across Internet platforms. Thanks to our high-quality content, we ranked number five on Billabili's pop video charts in June. We are also becoming the only organization on the list that is not affiliated with the Chinese government authorities.
spk00: In terms of live streaming, we actively integrate online resources, fully utilize WeChat video accounts, and create a live streaming IP. We use the two columns of the Hualang Observation Room and the CEO's bag as the core. This quarter, we will conduct 16 live streams. Regarding live streaming, we actively integrate our existing resources and leverage the influence of our WeChat video account to create a new IP entitled KR Planning Live Stream Room.
spk03: with YouthWatch and CEO Tips as its core program. We held a total of 16 live streaming sessions in this quarter, covering hot topics including enterprises' managing options and how companies can pull through the winter in the capital markets. These events activate 66 pairs of color video resources that help you reach your content scenarios and service models.
spk00: With the ongoing efforts to build and complete the content ecosystem, our PV continues to grow. As we unceasingly strive to build and refine our content ecosystem, we have achieved consistent growth in our page view, with the number of our total followers exceeding 25 million,
spk03: an increase of 20% year-over-year, and a robust endorsement of our premium content and brand influence. Meanwhile, we have been exploring our community concept to better aggregate our users and improve our user engagement while optimizing our closed-loop ecosystem.
spk00: The continuous improvement and refinement of the content, the innovation and detailed operation of the product service, made us achieve an excellent performance this quarter. Not only did the total revenue reach a double-digit growth, but the profit margin continued to rise,
spk03: In short, our RedList honing and refinement of content and our development of innovative now to product and service led to another quarter of excellent performance. Not only did we post solid double-digit year-over-year growth in total revenues and ongoing improvements in gross margin, but we also achieved profitability for the third consecutive quarter. Next, I'd like to share the progress we have made in commercialization across our business segments.
spk00: Our advertising business continues to thrive, up 12% year-over-year in the second quarter,
spk03: Despite COVID-19 resurgence and macroeconomic challenges, we achieved year-over-year growth above industry average, a clear indication that 56KR remains an indispensable partner for advertisers' brand marketing.
spk00: During this quarter, we capitalized on 56 carats Omni China presence and multi-dimensional services to continue expanding our customer base.
spk03: increasing our number of advertisers by 13% year-over-year. We are able to empower customers from both traditional industry and the new economy to creatively innovate and operate in our brand marketing. Among traditional industry customers, many in the auto mobile and real estate industry continue to promote their brands and content in the 66K platform despite hiding from the pandemic, including Beijing Hyundai Motor Company and Jamzell, Not only our market's notion of the renowned automotive manufacturing brand, they mark a new high in contract size among our advertisers from the automotive industry since 2021.
spk00: Through the collaboration of the new economy and the pre-pandemic, we have been able to spread the idea of a new brand to more customers, especially companies with the same target audience as the C-level users. The Houlan Research Institute has started a system-based commercialization journey since the beginning of this year, and has achieved a breakthrough in this quarter. With respect to our collaborations with the new economy and frontier industry, we leveraged all use to provide brand philosophy promotions for more customers, especially those starting C and consumers.
spk03: Following our kickoff of a systematic commercialization in the beginning of this year, all youths experienced explosive growth in the second quarter, achieving 270% differential growth in contract size. During the second quarter, we collaborated with an array of well-known companies, including Intel, 3Wheel, Q1 Group, ICOM, and Cashel, covering a wide variety of popular industries, such as science and technology, healthcare, new consumption, and internet, among others. creating marketing solutions for more brands to promote customer acquisition.
spk00: Under the double impact of the pandemic and the pandemic, various industries are facing various challenges and changes. In May this year, we launched a comprehensive second-hand plan to carry out corporate social responsibility, to help support companies, especially small and medium-sized enterprises, to maintain brand volume in the market. Through the optimization of our product combination and supervision, this plan has achieved a significant increase in customer numbers under the condition of maintaining a stable up value.
spk03: During the second quarter, against the backdrop of COVID-19 and complicated macroeconomic happenings, large and small companies across all industries faced various challenges and changes. In May, we initiated the Seeking the Light program to fulfill our social responsibilities and help businesses, particularly small and medium-sized enterprises, to maintain their brand's share of voice, despite the market downturn. By optimizing our product portfolio and records, we achieve a marked increase in the number of customers, while maintaining our average revenue per user at a relatively stable level.
spk00: From short videos to flagship products, the combination of over-the-top reviews, post-pandemic research institutes, and other high-end content is a great help in the progress of our commercialization. In this quarter, Samsung will continue to promote its products through short videos. Deploying short video as our flagship product alongside our free and content program matrix, such as Super Review and OU, has also changed our commercialization progress and what's included.
spk03: In the second quarter of late, an order to promote its product in the traditional commercial bank, Bank of China, promoted its app to 66 pairs super radio. Short radio's growing popularity among customers has made it a useful format for us to effectively attract more advertisers and improve our monetization efficiency.
spk00: Turning to value-added enterprise, we were able to maintain our enterprise value-added service revenues at a stable level compared with the same period of last year.
spk03: In terms of offline activities, we proactively transferred sorting services to offline and online combined scenarios during the quarter, which partially mitigated the overall impact from the pandemic and related control measures. In addition, our consulting services and integrity marketing services performed remarkably well during the quarter.
spk00: This June, we held an online super event, X36 and 36. As industry companions and observers, In June, we held an online grant event at 66th and 36th.
spk03: As a companion observer of PentaPrize's press articles, we invited numerous entrepreneurs and investor representatives from various industries to share their brilliant success stories and convey the most authentic voice of China's new generation of entrepreneurs. Given the current uncertainty environment, 66 can be ran online ceremony for entrepreneurs to boost the venture capital community's confidence and help forge connections among all parties. In addition, we also partnered with Kuaishou and Douyin to promote the ceremony and gain great traction among users, achieving total user exposure of 350 million.
spk00: In terms of regional expansion, under the strong control of the epidemic in the core first-tier cities such as Beijing and Shanghai, our Chuanyu, Guangdong, and other local stations have done a very good job of opening up businesses. For example, Sichuan Station and Chongqing Station have created exclusive IP in this quarter, This summit invites government representatives from more than 100 new consumer enterprises and investment institutions to gather together to build a exchange platform for Zhengqi, to connect the needs of both parties, and to assist in the rapid development of the new consumer industry. This is also the first time that the 36G IP is on the ground. Strongly verifying the brand influence and service system of 36G, it has gradually spread and grown to local cities. This event prepares more than 200 companies and customer resources to form tens of millions of re-publishing projects and supply chains.
spk03: In terms of regional business expansion, wealthier cities including Beijing and Shanghai were under strict control due to the pandemic. Our regional offices in Sichuan and Chongqing and Guangdong were a great boon to our business. For instance, our regional offices in Sichuan and Chongqing jointly created a preparatory IP event entitled The Marvelous Taste of Baxu, a summit which brought together local governments and over 100 new consumption enterprises and investment institutions building a bridge of communication between supply and demand to accelerate the development of the new construction industry in the Basho area. The debut of 66K's Marvelous IP series in Sichuan and Chongqing was a triumph, clearly demonstrating that 66K's brand influence and service system has taken root in these regions. We have gained over 200 enterprise client leads from this event, creating projections in progress worth R&D tens of millions as well as potential forward-looking orders.
spk00: In addition, through industrial survey and data analysis, the Research and Research Institute continues to follow the hot track of high-frequency output quality research reports. Currently, the services of the Research and Research Institute not only cover many local government customers, but also cover companies such as 2188, Baidu, Tengxun, Zijie Jump, Zhiyun Medical, Kaojian, Baojie, Silan Robotics, and other well-known companies.
spk03: Furthermore, through an approach combining industry insights and data analysis, 66KR Research Institutes track the latest developments of popular industries and produce frequent high-quality research reports, achieving content dominance and improving customer loyalty. As present, in addition to a large number of local government clients, on the corporate side, 66KR Research Institute is also providing consulting services to a wide range of renowned companies, including Alibaba, Baidu, Tencent, ByteDance, Zhiyun Medical, CalMaster, P&G, and SlamTax.
spk00: In addition, in terms of the overall sales, we have made new progress and breakthroughs in the services such as credit union services. Recently, we have reached a cooperation with Huatai Securities, which will provide content support and credit union services for Zhangle, Taifutong, and HP. This cooperation is an attempt of credit union services in other financial fields, such as credit unions such as Zhaoshan Bank and Bufa Bank. because we will use more full-time customers in the future.
spk03: Moving on to our integrated marketing services, during the quarter, we continue to make positive progress in our content operation agency service. For instance, through our recent partnership with Huatai Securities, 36KR will provide content support and agency operations for Huatai's Zhangle Fortune app, following our partnership with China Merchants Bank and Shanghai Pudong Development Bank. Our cooperation with Flathead Securities represents another exploration of our financial agency operation capabilities, which will lay the groundwork for us to replicate the operation model with additional securities companies in the future.
spk00: On the subscription service, this quarter, we have innovated and deepened our service system for institutional subscriptions, achieving 58% of the income growth of subscription services. For example, in institutional subscription services, With respect to subscription services, we implemented innovative upgrades to our subscription service system in
spk03: which increased our revenue from subscription service by 58% year-over-year. Take our institutional subscription service as an example. 36-year commercial quality capital with the Wuxi Municipal Government for industry collaborations and integration, demonstrating the value of the customized membership service we provided for our institutional clients. Furthermore, despite the postponed of starting courses into our individual subscription due to the pandemic. We made breakthrough progress in multiple-star subscription products such as the business plan building camp and the funding acceleration camp since July.
spk00: Last but not least, I'd like to share the latest progress of our enterprise service review platform.
spk03: During the quarter, we not only continue to rapidly improve our major operating matrix, but also achieve fruitful commercialization progress.
spk00: According to the operating data, the number of active points has increased nearly 18 times compared to the number of active points, to nearly 900,000. The number of real points has increased 17 times compared to the number of active points, to more than 32,000, and the number of active points has increased by 56%. At the same time, in this quarter, we have improved our business coordination, functional layout, user experience, and other aspects. The number of active users in the platform is smaller than in the second quarter, In terms of operating data, our monthly active user rose more than 18 times year-over-year to nearly 900,000, and the number of authentic reviews climbed 17 times to over 32,000.
spk03: up 56% sequentially. Meanwhile, we optimized the platform's business coordination, function layout, and user experience. And as a result, the number of customers willing to leave their information on the platform more than doubled compared with the beginning of the second quarter. We showcased over 6,600 pieces of mainstream software on the platform, up 84% year-over-year and nearly 20% quarter-award-taker. These merchant-oriented features were launched in September 2021. A total of over 860 merchants have set up presence on our platform, raising almost 30% quarter-over-quarter.
spk00: In terms of commercialization, this quarter, Qiwu Dianping and Huoshan Engine have achieved strategic cooperation. In terms of Huoshan Engine's cloud computing, big data, and SaaS applications, and other multi-product systems, Qiwu Dianping has built a product base and reached a precise customer base. At the same time, in terms of training customer awareness and brand influence,
spk03: Regarding commercialization, 36KR Enterprise Service Review Platform reached a strategic collaboration with Volcano Engine Explorer, focusing on the functions and features of a diverse effect portfolio of Volcano Engine's products, including cloud computing, deep data, and SaaS applications. Meanwhile, we built a product library on our enterprise service review platform for VolcanoEngine, providing price and targeted access to specific customer groups. Furthermore, the 36KR enterprise service review platform will collaborate with VolcanoEngine to produce and disseminate various formats of content, such as live broadcasts and in-depth interviews. Taken together, these strategies will cultivate customer awareness as well as shape Volcano engines spread influence and unique positioning in the SaaS market.
spk00: Under the external environment of repeated challenges such as the pandemic, Sinovac has achieved a double-digit total income growth in this quarter and achieved profit in the third quarter in a row. Good financial performance once again proved the resilience and vitality of our business model, and once again established the foundation of the company's development and confirmed the arrival of company values. At the same time, Sinovac's starting point as the company's second growth curve, each indicator continues to grow strongly, and commercialization is progressing rapidly. are constantly expanding the service boundary of the company to unlock more potential value. As a comprehensive service group in the new economy industry, 36K has always been unwavering, insisting on creating brand aircrafts with high-quality content, with innovation as driving force, layout content and service ecology, and improving the business efficiency of Chinese companies as a vision. In the future, we will continue to assist more industries in high-speed development and grasp the opportunity of digital transformation to create long-term and sustainable value for more users, customers, and investors.
spk03: Despite the challenging external environment, including pandemic with certain macroeconomic downturn, we achieved double-digit growth in total revenue and profitability for the third consecutive quarter. Our robust financial results again demonstrated our business model's resilience, as well as massive development potential. Borders started defying our business foundations while handling the inflection point of company value. Meanwhile, as our second growth engine, our enterprise service review platform has achieved strong growth in all major operating metrics, together with the steady development of its commercialization, expanding our service boundaries and unlocking more business potentials. As the new economy service group, 36KR remains committed to its original aspirations and will continue to empower its partners with high-quality content, flying an innovation-driven content ecosystem with dedicated and effective services while hoping to enhance orderly business efficiency in Chinese enterprises. Moving forward as a companion and enabler of the new economy, 36KR will continue to empower more industry participants to achieve high-speed development Capitalizing on the wave of digital transformation, we are confident that we can create a sustainable value for more users, customers, and investors.
spk00: Next, I will pass the floor to our CFO, Wei Lin. She will introduce the main performance of the financial side. Please go ahead, Wei Lin.
spk04: Thank you, Paul, and hello, everyone. Against the backdrop of the pandemic and macroeconomic uncertainties, we achieved solid top-line growth in the second quarter, with a 13% year-over-year increase in total revenues and a third consecutive quarter of profitability, a strong testament to our business's resilience and vitality. Notably, our advertising revenues continue to grow up 12% year-over-year to RMB 57.8 million, outpacing the overall market. In addition, through our multiple efforts to navigate the impact of stringent COVID-19 prevention measures, we were able to maintain our enterprise value-added services revenues at stable level, while our subscription services revenue recorded remarkable growth of 58% year-over-year, as we proactively executed certain services through online and virtual scenarios. In addition, as we continually optimized our cost structure and operating efficiency, we further improved our gross profit margin to 62% in the second quarter, up 5 percentage points year-over-year. On the cash position front, we once again generated positive operating cash flow in the second quarter. Our cash, cash equivalents, and short-term advancements increased by over 20 million RMB quarter over quarter and over 40 million RMB year over year, respectively. Looking ahead, we will continue to hone our core capabilities and explore diversified growth avenues to drive monetization. while also strengthening our longstanding commitment to cultivating a compelling value proposition for more customers, users, and investors. Now I'd like to walk you through more details of our second quarter 2022 financial results. Total revenues were RMB 81.7 million in the second quarter of 2022, an increase of 13% compared to RMB 72.1 million in the same period of last year. Online advertising services revenues increased by 12% year-over-year to RMB 57.8 million in the second quarter of 2022. The increase was primarily attributable to more innovative marketing solutions we provided to our customers, as well as the proactive sales strategies we adopted to navigate the challenging environment during the quarter. The number of advertising customers increased by 13% year-over-year, while the approval remained largely stable during the quarter. Enterprise Value Added Services revenue will unbeat $14.3 million in the second quarter of 2022, largely flat compared with the same period of last year. We were able to maintain our Enterprise Value Added Services at a steady level despite the resurgence of pandemic during the quarter. This is mainly because we proactively executed certain services through online and virtual scenarios. Subscription services revenue to RMB 9.5 million in the second quarter of 2022 compared to RMB 6 million in the same period of last year. The increase was primarily attributable to our continuous efforts to offer high-quality subscription products to our subscribers. Cost of revenue for RMB 30.8 million in the second quarter of 2022 compared to RMB 30.7 million in the same period of last year. Gross profit increased by 23% year-over-year to RMB 50.9 million in the second quarter of 2022 compared to RMB 41.4 million in the same period of last year. The gross profit margin was 62% in the second quarter of 2022, compared to 57% in the same period of last year. The increase was mainly attributable to the economy of scale achieved by our revenue growth, as well as the optimized cost structure driven by more services delivered online during the quarter. Operating expenses were RMB 64.6 million in the second quarter of 2022, compared to RMB 75.3 million in the same period of last year. Sales and marketing expenses were RMB 27.4 million in the second quarter of 2022, compared to RMB 33.4 million in the same period of last year. The decrease was primarily attributable to the decrease in payroll-related expenses, share-based compensation expenses, marketing expenses, and business travel-related expenses. G&A expenses were RMB 23.8 million in the second quarter of 2022, compared to RMB 29.9 million in the same period of last year. The decrease was primarily attributable to the decrease in allowance for credit losses and professional fees, partially offset by the increase in payroll-related expenses. Research and development expenses were RMB 13.4 million in the second quarter of 2022, compared to RMB 12 million in the same period of last year. The increase was primarily attributable to the increase in payroll related expenses as we bolstered our research and development capabilities, especially for our 36KR 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 2.6 million in the second quarter of 2022 compared to RMB 3.3 million in the same period of last year. Other income was RMB 22.7 million in the second quarter of 2022 compared to other expenses of RMB 0.4 million in the same period of last year. The fluctuation was primarily attributable to investment income arising from failed value changes of long-term investments and more government grants received in the second quarter of 2022. Net income was RMB 9 million in the second quarter of 2022 compared to net loss of RMB 34.3 million in the same period of last year. Non-GAAP adjusted net income was RMB 11.6 million in the second quarter of 2022. compared to non-GAAP adjusted net loss of RMB 31 million in the same period of last year. Net income attributable to 36KR Holdings' ordinary shareholders was RMB 80 million in the second quarter of 2022, compared to net loss of RMB 34.1 billion in the same period of last year. Basic and diluted net income per ADS were both RMBs 19.5 cents in the second quarter of 2022. compared to basic and diluted net loss per ADS of RMB 83.4 cents in the same period of last year. As of June 30, 2022, the company had cash, cash equivalents, and short-term advancements of RMB 194.3 million, increased by RMB 23.2 million compared to the previous quarter, and by RMB 44.7 million compared to a year ago. The increase was primarily attributable to cash inflow from operating activities. This concludes our prepared remarks today. We will now open the call for questions. Operator, please go ahead.
spk09: Thank you. To ask a question, please press star then 1 on your touch-tone phone. If you are using a speaker phone, we ask that you please pick up your handset before pressing the key. To withdraw your question, please press star then 2. And 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. We'll pause momentarily to assemble our roster. And today's first question comes from Ling Yi with SWS Research. Please go ahead.
spk08: Hello, everyone. Thank you to the management team for this exchange meeting. Congratulations to the company for achieving a very good over-the-counter performance. I have three questions for the management team. First, we can see that the impact of the epidemic in the first-tier cities has gradually weakened since the third quarter. How is the recovery of the business in the third quarter? The second question is, we have observed that 36G recently held many offline meetings, and we have seen many future arrangements of meetings. What is the growth expectation for offline business in the second half of this year, including meetings? Let me translate my questions in English. The first one is, since the third quarter, the impact of COVID in third-tier cities has gradually eased. How about the recovery of the company's various businesses? The second question is, recently, Century Local has held several offline summits, and we have noticed that more summits have been scheduled. What are all the expectations and arrangements for offline activities in the second half of the year? My third question is, Enterprise Service Review Platform officially announced a one-step marketing service cooperation with ByteDance. Could you give us more color on this cooperation progress? Thank you. Okay, thank you.
spk00: The first question is about the recovery of the company's various businesses. First of all, we observed that the advertising business in the third quarter of this year should have a certain warm-up compared to the same period last year. Compared to last year, we have made the following efforts to improve the activity of the advertising business this year. First of all, we widened the coverage of the content, such as double-digitization, digitalization, and long-term management. These are expected to bring new business opportunities in the third quarter and the second half of the year. Second, short videos and 2C channels have attracted more and more advertisers over the past year. At the same time, we have further expanded the number of C-level users to target customers and groups. Third, we continue to optimize our product combination and open price of our products, and grow with the advertisers in Guangda. Generally speaking, Shandongke is focused on a kind of commercial-unified advertising.
spk03: we are currently seeing some improvement in advertising business in the third quarter compared to the same period of last year. Compared with last year, we have been following several efforts to improve the vitality of advertising business this year. First, we have expanded the coverage industries of this year, such as June Carbon, digital transformation, career, and so on. So REACH will bring new business opportunities in this quarter and the second half of the year. Second, after more than one year of free dictation, short video and 2C columns have attracted more and more advertisers, at the same time further expanding more brands talking to end users. Finally, we will continue to optimize our product portfolio at Wakeheart so we can go through the hard times together with our advertising clients and grow our advertising revenues. Our advertising is more of a combination of branding and effects, but therefore, even under economic pressures, advertisers' demands for brand advertising still exist.
spk00: For me, In the first half of the year, many of our offline activities have been postponed or transferred to online form, which has had some impact on income. But we still have some confidence in the overall prevention and control of the epidemic in the second half of the year. In the second half of the year, we have planned or carried out a series of main activities, such as cross-border overseas summit, ultra-autonomous summit, medical new direction summit, as well as our unexpected series, annual and year-on-year large-scale conference, etc. Even if the epidemic has repeatedly had a certain impact on offline activities, we also have mature online forum preparation ability. So for offline business, in the first half of this year, due to the impact of the pandemic, many of our offline events were delayed or transferred to online form, which did have some impact on revenue.
spk03: However, we are confident in the pandemic controlling the second half of the year. We have planned many themed conferences in our pipeline, for example, going global forum, super automation forum, new media transfer forum, and the end of year grant event-wise conference. Even if the resurgence of the pandemic has a certain impact on offline events, we still have the capability to prepare online forums. For example, the flagship IP 36th and 36th series we held in June was a pure online event with great performance in terms of both influence and commercialization. Therefore, we remain cautiously optimistic on the revenue forum.
spk00: For the subscription service, we have maintained a good increase in the subscription service. The main benefit is that we continue to innovate on the member system, discover investment institutions, and create more potential cooperation links for customers. On the personal subscription, the above year was affected by the epidemic. Many courses were delayed.
spk03: So for subscription services, we have making a certain proportion of growth in the institutional subscriptions, mainly because we continue to innovate in the membership system and have more potential collaboration connections between investment institutions and enterprises customers. In terms of individual subscriptions, Many courses were postponed in the first half of the year due to the impact of the epidemic. However, since July, 36 KERA business schools have successfully delivered several offline courses with relatively high revenue for users. So we expect a certain increase in the third quarter and the second half of the year. This is the end of the first question.
spk00: The second question is about our next year's activities. What are the expectations and plans? So now is the second question regarding the offline events.
spk03: So we believe the pandemic will be manageable in the second half of the year, and most offline summits will take place as planned. So we will launch a series of events related to our key IPs, such as the series, the end-of-year grant event-wise conference, going global forum, fund partner summit, light of enterprise services, and many customized industry forums.
spk00: In the next half of the year, if there are repeated cases and the prevention and control measures are strengthened, we have two options. First, we already have the ability to operate the summit on the spot. We will transfer some of the summit to the site. On the other hand, our local station will do a good job of expanding and transferring the amount. In this quarter, the regional expansion business has achieved a lot of IP speed-up. For example, the regionalization of the Q2 series in Chanyu District has extended our IP activities using regional features.
spk03: So even if the pandemic resorted in the second half of the year leading to reinforced control measures, as we already have mature capabilities of operating online summaries, we will organize some of them online-side. On the other hand, our regional offices will expand business to pro-Pelgrove. Our regional business expansion helped us reshape many IPs, such as the reconstruction of the Moblo series, expanding our IP activities with regional characteristics. So this is the end of the second question.
spk00: Okay, the third question is about our cooperation with Rocket Engine and other SaaS companies. First of all, for this cooperation with Rocket Engine, we mainly rely on Rocket Engine's cloud computing, big data, and SaaS applications, as well as many other product systems. We build product locations on the 36G server, and provide accurate customer search. At the same time, we cultivate customer awareness and brand influence, and carry out a variety of content production and transmission, such as live broadcasts, in-depth interviews, and so on. Rocket Engine has already entered the top of the server,
spk03: So regarding collaboration with VolcanoEngine, they will focus on the functions and features of a diversified portfolio of VolcanoEngine's products, including cloud computing, big data, and SaaS applications. Meanwhile, we'll build a product library on our enterprise service review platform for VolcanoEngine, providing price precious and targeted access to specific customer groups. Furthermore, to enhance customer awareness and brand influence, we will collaborate with Volcano Engine to produce and disseminate various forms of content, such as live streaming and in-depth interviews. Volcano Engine has set up its presence on the enterprise service review platform as a merchant, and we are helping them with overall operations on the platform and content production. as well as handling certain sales leads and customer information.
spk00: In fact, in the recent period, we have reached a consensus with many well-known SaaS manufacturers. In the future, we will provide services to these manufacturers in the form of accurate sales clues and so on. We will work on two aspects for the planning of突然廠商. First, we will help more SaaS products and invite more manufacturers to join the platform through the form of industrialists and subcontractors. On the one hand, we have improved the completeness of the platform, On the other hand, we are also operating and maintaining more potential customers on our business end. Second, we focus on improving the efficiency of operation, optimizing the flow of capital flow, etc., and increasing the rate of clue transfer to attract more manufacturers to cooperate with 36K. At the same time, we use 36K's past cooperation with Qifu customer service. First, through forums, live broadcasts, information reports, etc., we convert Qifu manufacturers into platform customers, and thus carry out more accurate clue acquisition and deep service.
spk03: Recently, we have an upgrade on cooperation with several well-known SaaS suppliers, and we will provide service to them going forward, including offering a SaaS lease. Regarding our plan to expand cooperation to more SaaS providers, we will approach it from two perspectives, first through industrial park and business in larger markets. We will cover more SaaS products and invite more providers to join our platform to make our platform more complicated while accumulating more potential customers through the operation and maintenance of the merchant-oriented features. Second, by enhancing operational efficiency and optimizing the process for customers to leave their information or sales list. We will improve the conversion rate and attract more providers to work with 36KR enterprise service review platform and leveraging our customer bank of enterprise service industries, we will start with co-working enterprise service providers to our customers through forums, live streaming, and consulting, then moving on to in-depth sources such as acquisition of more precious leads. So this is the end of the third question, and thank you.
spk09: Thank you. Our next question comes from Peipei Kuo with Industrial Securities. Please go ahead.
spk06: Thank you, Mr. Kuo. Congratulations on achieving a strong performance. I have two questions. The first one is related to advertising. We know that it is expected that the time for economic growth will be longer. In the background, I want to know the number of ads for Q2. In the second half of the next two seasons, how do we look at the growth of commercial numbers in the next two seasons? How do we look at the growth of commercial numbers in the next two seasons? How do we look at the growth of commercial numbers in the next two seasons? I would translate my question. The first question is about advertisement. We can expect the economy is going to be in low level for a relatively longer time as expected. Could you give us more color of the growth of advertisement clients in that pool? And what we can expect for the coming two quarters? And second question is, could management explain more about your plan of growth and monetization in short video platforms? Thank you.
spk04: Hi, Peipei. Thank you for your question. Yes, you can see that in Q2, we delivered another very strong quarter of advertising revenue growth. And compared to others, I think this is a very remarkable success. The reason being actually if you look at our pool and the number of advertisers in our earnings release, actually our number of advertisers grew by 13%. And the pool actually for the first time in many quarters, I think, declined slightly 1%. That's because, as the CEO mentioned in our prepared remarks, that we launched Seeking the Light program, which means in Chinese , that means we actually adjusted our product portfolio and the rate card in the second quarter, meaning that we actually provide some favorable pricing for customers, especially SME advertising customers. That's why you can see that by that program we expanded effectively the number of advertisers. That number grew strongly. Well, we can see that our pool remained at a very stable level. It actually only slightly declined by 1%. And if you look at our industry-wise, actually the top industries in our advertisers, namely Number one, we call it hardcore technologies. And number two, still Internet services. And number three is enterprise services. And also there's intelligent manufacturing and new consumer businesses. So that's very diversified, and especially the hardcore technology sector emerged as a very top-ranked advertising industry for us. I think that's partially true. driven by our proactive field strategy that I just described for Q2. And for your second question regarding short form video as well as some new product columns That's very successful. I think that's another very strong driver for the advertising revenue growth in Q2. And we said the short form video is more and more welcomed by many advertisers. They previously mainly advertised with some articles or retried account disclosure, but now they are more and more using short-form video and our new columns. We created, for example, the OU's Houlang Yanyusuo and super review Chaoren Ceping, and some other columns are very, very popular among audiences as well as customers. As we mentioned in the previous remarks, this quarter we entered into advertising cooperation with Intel, and Icon Guobing, and Kuaishou, and even IT, and Zhihu, a lot of Internet brands advertised with us. So that's another success. And to give you some ballpark idea of the contribution from short-form video, actually, if you remember, by the end of last year, I said the proportion of short-form views revenue contribution for advertising dollars is less than 10%. But by the end of the second quarter, actually, the contribution from short-form video has already rose to around 15%. You can gauge how quickly that short-form video has been developing for the company. I hope this answers the question, Pei-Pei. Thank you. Thank you, Wei-Zhong.
spk09: And our next question today comes from Jing Ting with CICC. Please go ahead.
spk05: I will translate myself. Congratulations on the strong financial performance under the challenging environment The company has strong content capability. Is there any consideration for improving the monetization capability on the user side? Thank you.
spk00: Okay, thank you. Our current CDN transformation should mainly be implemented in the products such as 3.6 and Business Academy. Business Academy has currently set up multiple products. For example, the recently completed BP打造營,融資加速營, are all based on high-value offline courses, mainly targeted courses for startup companies and founders. On the other hand, we also have open courses So at present, our CN monetization is mainly reflected in our individual subscription business, especially 36KR Business School.
spk03: So the 36KR Business School has set up a number of products, such as the recently we completed Business Plan Building Camp and Financing Acceleration Camp, which have been completed recently. So those courses are mainly high-value offline courses, and the main target customers is the founders of the startup. On the other hand, we also have low-cost online training courses, KR class, which focuses on course content such as skill improvement. So moving forward, we will spread the course content in the form of open class and small class to build corresponding membership service systems and provide courses on career improvement, business administration, investment and management courses to entry-level employees and professional elites and high net worth individuals. Thank you.
spk02: Thank you.
spk09: And showing no further questions, I'd like to turn the conference back over to the company for closing remarks.
spk01: Thank you once again for joining us today.
spk03: If you have further questions, please feel free to contact 36KR's Investor Relations for the contact information provided on our website.
spk09: Thank you this concludes this conference call. You may now disconnect your lines. Thank you.
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