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spk01: Thank you for standing by for 36 KR Holdings, Inc.' 's second quarter 2023 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 is being recorded. I will now turn the call over to your host, John Ending, IR Manager of the company. Please go ahead, Jynan.
spk06: Thank you very much. Hello, everyone, and welcome to 36KR Holdings' second quarter 2020 earnings conference call. The company's financial and operational results were released earlier today and have been made available online. You can also view the earnings press release by visiting the IR section of our website at ir.36kr.com. Participants on today's call will include our co-chairman and CEO, Mr. Da Gangfeng, and our chief financial officer, Ms. Ying Wei. Mr. Feng will start the call by providing an overview of the company and performance highlights of the quarter in Chinese, followed by an English interpretation. Ms. Wei will then provide details on the company's financial results before opening the call for your questions. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the U.S. SEC. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please note that 36KR's earnings press release and this conference call include discussions of unaudited gap financial measures as well as un-audited non-GAAP financial measures. Such as this CARE earnings press release contains reconsolidation of the un-audited non-GAAP measures to the un-audited GAAP measures. And please note that all amount members are in RMB. I will now turn the call over to our co-chairman and CEO, Mr. Da Gangfeng. Paul, please go ahead.
spk07: Thank you. Hello, everyone. I am grateful to all of you for attending our second quarter of 2023.
spk06: Thank you. Hello, everyone. Thank you for joining our second quarter 2023 Earnings Conference Call.
spk07: This quarter, we are pleased to see that the company's main business continues to develop. The total revenue has increased by 3%. Among them, corporate service revenue has increased by 17%, and subscription service revenue has increased by 11%. The profit-making rate has reached a strong rebound, rising to 55%. The company's B-end and C-end businesses are growing together, continuing to improve the high-quality multi-channel content system. At the same time, we are deeply exploring AI technology
spk06: We are glad to note that our primary business segments continue to develop with steady growth in the second quarter of 2023. Our total revenue increased by 3% year-over-year, with revenue from our enterprise value-added services up 17% year-over-year and revenue from our subscription services up 11% year-over-year. Notably, our growth margin rebounded strongly to 55%. We also made great strides in both to-be and to-see businesses. As we continue to enhance our high-quality, multidimensional content matrix and deeply AI empowerment and applications in diverse scenarios across our business segments, we embarked on a new development stage of diversified growth.
spk07: First of all, in that aspect, First off, content.
spk06: We constantly explore new growth areas for our content ecosystem during the course and made great advancements on multiple fronts, including greater industry coverage, content asset accumulation, high-quality customer engagement, and our broadening multi-channel dissemination network. Furthermore, the number of our articles kept rising. In the second quarter, we had 160 articles with page views exceeding 100,000. fully showcasing Certificate of Care's leading insights and industrial influence. Our consistent creation of high-quality content enabled us to meaningfully extend our user base and enhance long-term user loyalty. As of the end of the second quarter, we had more than 30 million followers, up 21% year-over-year, achieving nine consecutive quarters of growth.
spk07: Our professional sub-media An Yongwei and Zhimeng Yongjian continue to achieve remarkable results after the launch. Not only did we provide a window for users to delve deeply into the new field, but we also further intensified our leading position in the new field. At the same time, we continued to strengthen the content barrier, and optimized the content of the product evaluation page and the data report page. We used more simplified content to open up the needs of the general consumer community. In addition, we continuously resumed the media format, and launched a new live broadcast broadcast program, and continued to strengthen the audio and video field.
spk06: The vertical media we launched, including Waves and the Emergency of Intelligence, achieved continuous impressive outcomes, allowing users to gain deeper insights into booming sectors, and equally important, further convincing our leadership in the new economy sector. We also further solidified our content advantage in our business during the quarter. By optimizing the content of SuperView, a product test review program, and a new white paper, a survey report column, we attracted a broader audience through more appealing content offerings on everyday life. We also enriched our medium format through the launch of a live podcast entitled Get Off Work, Have Fun. We've also been actively working on audio offerings to bring more Listeners more up to the minute business intelligence as well as fun ideas and topics to enjoy each day.
spk07: I also want to highlight our short video business. Through an integrated approach to branding, new economic theme, content and content monetization, we have accelerated the optimization of our short video content matrix
spk06: transforming it into a new growth region for advertising and marketing. Some of the shop videos we created on trending topics were streamed over a million times, including coffee homes, why buy when you can rent, and Elon Musk's mass plan on Earth, thanks to their diverse ideas and fresh perspectives that kept our users engaged. As of the end of the second quarter, we had over 8.3 million shop video followers, up 42% year-over-year, among which more than 2 million were Bilibili users. We have indeed become a leader among all platform-based official accounts, and we stand ready to seize more opportunities for commercialization of cooperation.
spk07: We have seen the first season of Bilibili in 2033, and the second season has already begun. The program has not only inspired the audience, but also gained a lot of commercialization opportunities for leading enterprises.
spk06: We also successfully wrapped up the first season of our first long video show, Forsaken 2033, which will soon return for a second season. It attracted the immersed audience's attention, bringing us additional commercialization opportunities with leading companies.
spk07: At the same time as promoting the diversity of content and innovating the product, we have built a short video array of social media such as Bilibili, Douyin, Kuaishou, Xiaohongshu, Xigua, and Shiba Inu to deliver accurate content to users on different platforms. As we diversify and strengthen our content landscape with innovative themes and formats, we also developed our short video lineup on a wide variety of
spk06: platforms including Bilibili, Douyin, Kuaishou, Xiaohongshu, Xigua, and WeChat video account, targeting diverse groups of users with precise marketing. These initiatives made our content more engaging and empowered more effective, more powerful communication with users. Recently, we entered into a strategic cooperation with Beijing Radio and Television Station to promote the full lifecycle synergetic development of long videos. from project planning and content production, all the way to distribution, commotion, and IP commercialization.
spk07: As we continue to explore and innovate our AIGC applications, our companies are actively promoting the integration of AI technology, including file generation, text translation, keyword capture, image generation, and smart customer service. Our AI e-commerce store has also held its first digital live broadcast, attracting 1.6 million people to watch. The daily sales have surpassed 10,000 yuan, We also explore more AIGC use big pieces for our business during the quarter.
spk06: Through customer product innovation, we have been actively integrating pioneering AI technology into our day-to-day operations, including copywriting, translation, keyword matching, image generation, and intelligent customer service, among other functions. In our AI e-commerce store, our first live streaming sales session hosted by digital humans was a big hit. With 160,000 views and an impressive daily GMV exceeding RMB 10,000, it was included in Taobao's list of Super 30 emerging clothing stores. During the 618 e-commerce shopping festival, we were featured on China's central television. The end program was broadcast on multiple channels, including CCTV.com, as well as the CCTV app. Our AI marketing success story was again highly recognized by the China Content Marketing Award, a testament to our leadership in AI innovation and application.
spk07: Recently, we have collaborated with Baidu to jointly explore and promote the innovation and commercialization process of AI technology in the media, clothing, and training, and to work together to realize the diversification and expansion of scenes such as in-house production, large-scale, large-model application market, large-model management plan, and AI application training.
spk06: On a related note, we recently entered into a strategic cooperation with Baidu, joining hands in broadening AI applications across our media platforms, enterprise services, and training, driving commercialization and innovation as we empower mutual growth. Our teams are working closely on a diversified AI-powered landscape, including content production, and application marketplace showcasing applications powered by large language model LLM functions, LLM solutions, and training programs on AI applications.
spk07: To sum up, we are constantly upgrading the content and ecosystem, and combining AI technology's strong performance. This series of measures not only boosts the steady development of our company's business, but also establishes a solid foundation for continuous improvement in the promotion of performance. Next, I will review the progress we have made in the commercialization of the second quarter of 2023.
spk06: In summary, as we persistently advance and empower our content ecosystem with AI technology, we propiled our business steady growth, laying a solid foundation for continuous performance improvement. Next, I'd like to reveal our commercialization progress during the second quarter.
spk07: This quarter, our total revenue increased by 3%, reaching 84,36 million yuan, of which the advertising revenue reached 57 million yuan, which is the same as last year.
spk06: In the second quarter of 2023, our total revenue increased by 3% year-over-year to RMB 84.36 million. Notably, our advertising revenue reached RMB 57 million, basically on par with the same period last year. Our advertising approval increased to RMB 310,000, up 14% year-over-year.
spk07: Provide a diversified content and creative service for customers. Effectively help customers achieve their potential in different groups of people. Provide marketing solutions for customers that are equally efficient. In this quarter, we are actively fulfilling the customer demand. With Ali, Jindong, Self-Driving, Huawei, and other world-renowned companies, we have started a deeper cooperation. At the same time, we continue to develop new customer areas and achieve expansion in the business field. For example, this is the first time we have expanded the video industry. We have created a new video advertising for the video brand G3C. 36KR provides customers with differentiated content offerings and creative services tailored to the features of each and every brand.
spk06: Our one-stop marketing solutions centered on branding and advocacy provide customers with precise, effective marketing promotions targeting diverse customer groups. In the second quarter, to actively address the needs of our customers, we deepened cooperation with global giants such as Alibaba, JD.com, and Huawei, and added new accounts to broaden our industry reach. We also signed with Givenchy, our first luxury brand, and designed an innovative, engaging splash and campaign for them. Furthermore, we created diverse promotional content for Jiuyang's three flagship household applicants in the form of graphics, texts, videos, as well as test reviews, and promoted them across numerous online channels through our new media matrix. Our multi-dimensional targeted approach helped Jiuyang effectively reach their target users when you have raised from the time. .
spk07: Next, our short video business, which delivered another quarter of stellar results.
spk06: In the second quarter of 2023, as Tencent's advertising business partner, we were invited to Kindness and offered extensive on-site coverage at the Kindness Lions International Festival of Creativity. Meanwhile, we released a short-form TV commercial with Bosenden to tell its low-carbon story showcasing strong ESG commitment. Regarding the auto complex matrix we launched earlier this year, our WeChat video account, ServicesKR Auto, delivered a short video promotion for BMW during the second quarter, featuring the evolution of the auto industry in the circular economy. With our short video business, we have established a virtuous cycle where our primary content attracts users and increases their sickness, driving an overall increase in traffic. We then leverage our massive traffic to attract greater advertising interest from even more landing partners.
spk07: In terms of corporate promotion services, the total revenue of this quarter reached 16.75 million yuan, which is 17% of the total increase. As the current activities become more and more normal, and the scale of this team's delivery has been significantly improved. We have launched a new IP, WAVES, to create an open and easy social environment for young people. We have further strengthened the brand awareness and influence of 3.6G. At the same time, we have closely focused on globalization and sustainable development areas and held a global value conference. Based on the continuous service of B-level users, we have continuously approached high-quality C-level users and successfully held the CKLive Life Festival to attract a wide range of young people to participate. In addition, the layout and expansion of our regional business has shown significant results. In Beijing, Chengdu, and Xi'an, SKTX has held a series of trend sharing meetings, which has further verified the innovative service capabilities of Sinovac for large enterprises.
spk06: With respect to enterprise value-added services, our revenue grew up 17% year-over-year to RMB 16.8 million. We greatly increased the number and scale of our events during the second quarter as consumption and offline activities regained steam. we hosted the All Health Summit Wave, integrating venture capital, technology, culture, and music themes to create open and relaxed social networking scenarios for the younger generation, further enhancing 36KR's brand awareness and influence. In the meantime, as part of our continued efforts in global expansion and sustainable development, we hosted the WISE 2023 Globalization Value Conference, Opportunity for Vibrance, In addition to our 2D business, we continue to affectionately reach more high-quality users in our 2C business, successfully attracting a wide range of young customers with our lifestyle festival City Life. We have also made meaningful progress in developing and expanding our regional business. We have successfully staged various sharing sessions featuring stylish items in SKPS shopping malls across Beijing, Chengdu, and Xi'an during the call, fully reflecting our ability to support innovation among our large enterprise customers.
spk07: In the field of consulting services, as an industry observer and trendsetter, we always focus on advanced technology, innovation trends, and commercial development. Through rich data analysis and insight, Next, our consulting services. As a shrewd observer providing insight into industry trends, 36KR Research Institute has always been dedicated to in-depth research on cutting-edge technologies
spk06: innovation trends and business tech development. Leveraging massive data analysis and business insights, we provide informed opinions and guidance on industrial transformation and innovation. In the second quarter, we joined hands with NetEase Cloud Music in releasing the post-20,000-generation long-form audio consumption trend report. Providing a valuable reference for the audio content industry as well as strong support for our commercialization in long form of .
spk07: As for subscription services, we made great strides in training programs, substantially increasing our revenue by 11% to RMB 10.6 million.
spk06: In the second quarter, 36K, our business school, cooperated with the University of Oxford to launch a cable college post-doctoral research program. This program brought top-tier learning experiences to our users through a combination of online and offline initiatives, driving a vast increase in our pool to over 2,000. Meanwhile, we continue to enrich the high-quality training courses offered through our venture capital, class, and funding acceleration, further propelling high-quality usable and drawing place from a wide array of builders.
spk07: In terms of platform and product, Zendure's GIF platform continues to improve product core information and integrate strategic data, and launched a multi-dimensional selection list, and at the same time, through AI technology, applications, and renewable energy, provide more accurate and efficient product selection information and decision support for users, and enhance intelligent customer service and friendly interaction. As of the second quarter of 2023, the number of platform accumulations has increased by 99%, and the number of online products has increased by 40%, and the number of entry-level merchants has increased by 43%. At the commercial level, Qifu's rating platform has been able to gain customer trust with high-quality products and services. In many areas, it has established long-term cooperation with its manufacturers, such as Wanxing Technology, Pingping Yun, Ai Ren Shi, Zhiyuan Huo Lian, etc. Last but not least, I'd like to share an update on the services to our enterprises review platform.
spk06: While continuously refining core product information, we rolled out multidimensional rankings based on our analysis of data across the platform. Through AI applications and empowerment, We provided users with more precise and efficient overall product information and decision-making support, and enabled more interactive, user-friendly, intelligent customer service. As of the end of the second quarter, the cumulative number of reviews increased by 99% year-over-year. The cumulative number of products on the platform was up 40% year-over-year, and the number of merchants on the platform increased by 43% year-over-year. Commercially, the 36KR standard-priced service review platform has won lasting customer trust with its high-quality products and services, securing long-term cooperation with SaaS manufacturers in various fields, including Wondershare, P&B, IHR, and ZEON. Looking ahead. The 36K enterprise service review platform will continue to address our customers' needs to better support their digital transformation, making both marketing and customer acquisition easier for enterprise customers. We will play an even more active role in AI integration and application to attend more sophisticated intelligence operations.
spk07: As stated above, In the second quarter of 2023, we achieved a good financial performance again. Our total income reached 84.4 million yuan. We continue to maintain the same rate and the same rate of growth. The net profit has also returned to a 55% higher level. At the same time, our content influence is constantly improving. The leading advantage accumulated in the new business field is constantly being strengthened. The number of small and medium-sized fans has exceeded 30 million and achieved a continuous growth of nine quarters. The rapid development of AI and large language-based technology is bringing a new opportunity for development as a content industry. We believe that with the creative spirit of the past, To sum up, for the second quarter, we delivered solid financial results once again with total revenue of RMB 84.4 million, maintaining growth momentum both year-over-year and quarter-over-quarter.
spk06: Our growth margin also rebounded to the above 55% level. Moreover, we continue to enhance our content influence and build our competitive advantages in the new content sector. The number of our followers exceeded 30 million content-wise for my quarter straight. We believe the boom of generative AI and LLM has lavished tremendous opportunities on the content industry. Our consistent commitment to innovation Unraveled technology foresight and the thorough cooperation with global giants will further empower us as we progressively integrate AI into our business scenarios, propelling long-term, high-quality growth across all our business segments. With that, I will now turn the call over to our CFO, Ms. Lin Wei, who will discuss our key financial results.
spk02: Thank you, Paul. Now I'd like to walk you through more details of our second quarter 2023 financial results. Please note all amount numbers are in RMB, unless otherwise stated. Total revenues increased by 3% to $84.4 million in the second quarter of 2023, up from $81.7 million in the same period of last year. Online advertising services revenues were $57 million in the second quarter of 2023 compared to $57.8 million in the same period of last year. The slight year-over-year decrease was primarily attributable to the lagging effect of the microeconomy, which is still in the early stage of recovery. Enterprise value-added services revenues increased by 17% to $16.8 million in the second quarter of 2023 as we continuously developed various proactive enterprise-level services for our customers. Our offline events business achieved notable growth during the quarter as the reopening continues and we hosted several successful conferences and summits. Subscription services revenue increased by 11% to $10.6 million in the second quarter of 2023 compared to $9.5 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 revenues was $37.6 million in the second quarter of 2023 compared to $30.8 million in the same period of last year. The increase was primarily attributable to higher fulfillment costs and content costs. Gross profit was $46.7 million in the second quarter of 2023 compared to $50.9 million in the same period of last year. Gross profit margin was 55% in the second quarter of 2023 compared to 42% in the previous quarter and 62% in the same period of last year. As we forecasted on our Q1 earnings call, our GP margin rebounded strongly as expected and was back to the above 55% level. On year-over-year basis, the slight decrease was primarily attributable to the resumption of offline events and offline training courses, which usually occur at higher costs. Operating expenses were $65.1 million in the second quarter of 2023, slightly increasing by 1% compared to $64.6 million in the same period of last year. Sales and marketing expenses were $33.9 million in the second quarter of 2023, an increase of 24% from $27.4 million in the same period of last year. This was primarily attributable to the increase in payroll related expenses and business travel related expenses. G&A expenses were $17.7 million in the second quarter of 2023, a 26% decrease compared to $23.8 million in the same period of last year. The decrease was primarily attributable to the decrease in payroll related expenses, share based compensation expenses, professional fees, and allowance for credit losses. Research and development expenses were $13.6 million in the second quarter of 2023, slightly increasing from $13.4 million in the same period of last year. This was primarily attributable to the increase in payroll-related expenses as well as bandwidth and server expenses, partially offset by the decrease in share-based compensation expenses. Share-based compensation expenses recognized in cost of revenues, sales and marketing expenses, research and development expenses as well as G&A expenses totaled $1.8 million in the second quarter of 2023 compared to $2.6 million in the same period of last year. Other income was $4.8 million in the second quarter of 2023 compared to $22.7 million in the same period of last year. The decrease was primarily because the company recognized approximately $18.5 million of investment income arriving from failed value change of long-term investments in the second quarter of last year. Net loss was $13.7 million in the second quarter of 2023, compared to net income of $9 million in the same period of last year. Non-GAAP adjusted net loss was $11.9 million in the second quarter of 2023, compared to non-GAAP adjusted net income of $11.6 million in the same period of last year. Net loss attributable to 36 KR's ordinary shareholders was 13.9 million in the second quarter of 2023, compared to net income attributable to 36 KR's owner shareholders of 8 million in the same period of last year. Basic and diluted net loss for ADS were both 33.5 cents in the second quarter of 2023, compared to basic and diluted net income per ADS of 19.5 cents in the same period of last year. As of June 30th, 2023, The company had cash, cash equivalents, restricted cash, and short-term investments of $136.5 million compared to $169.8 million as of March 31, 2023. The decrease was mainly attributable to net cash outflow from operating activities, which include approximately $10 million cash payments related to the company's move of its headquarters to a lower rental office building in Beijing. This concludes all of our prepared remarks today. We will now open the call to questions. Operator, please go ahead.
spk01: Thank you. If you wish to ask a question, please press star then 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then 2. If you are on a speakerphone, please pick up the handset to ask your question. 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. Our first question today will come from Jing Tang of CICC. Please go ahead.
spk04: Hello. Thank you for accepting my question. I would like to ask two questions. The first one is about advertising. I would like to ask about the advertising market that the company may see, including the company's own business, and how the supply situation is. In other words, how do we look forward to the supply trend of the advertising industry in the future? This is the first question. Then the second question, I would like to ask about this year. In fact, offline activities will not be normal. Many activities are actually in the same direction. I would like to ask the company about offline activities. What are the upgrades? I have two questions. The first is, how is the advertising market and the company's business recover in the third quarter? And what is outlook for the recovery trend afterwards? And the second question is, as offline activities return to normal, what are the company's plans of upgrades to offline activities? Thank you.
spk02: Thank you, Jing. This is Lin. I will answer your first questions on advertising. we think as the market recovers, the demand for advertising has expected a gradual increase. And, you know, the growth of advertisements usually has a lagoon effect as the macro economy is still in the early stage of recovery. And if you look at Sense36KR, our client pool of advertising, we have both big names big companies, including the Fortune 500, as well as the giant of the Internet names and the big brands. But also, on the other hand, we have mostly a lot of new economy clients, and usually they are the medium to small to medium-sized companies, which they usually have a more cautious advertising spending compared to those big names. If you look at our Q2 results, actually, our number of advertising customers decreased compared to a year ago, but our advertising pool grew strongly compared to a year ago. So, net, the advertising revenue is basically on par from a year ago. So, that's the Q2 results, and if you are asking our Q3 outlook or the guidance for the rest of the year, we think because we already observed the recovery of the microeconomy and we think we have an optimistic view, although we might have a cautiously optimistic view, but still optimistic for the rest of the year. And we think our advertising will go back to the upward trend, meaning we will still achieve year-over-year growth for the next two quarters. for 2023 and hopefully that answers your question thank you um
spk07: Even if it's a successful IP, we still have to make a lot of upgrades. So today, for example, we have shown a lot of innovation in the 2B type of activity. So this effect is to allow the participants to achieve better social effects. We continue to strengthen the activities of C-end users and C-end users. For example, our City Life Festival has been expanding in the C-end region for a long time. has always been a focus for us over the past two years. We have also achieved good results in this area. The third point is how our Xianxia Business School is developing. Based on the new economy courses such as the creative class and the new economy course, we have also launched a new academic course with Ningjing University, which has led to a significant increase in the number of our participants, which has reached 42,000 yuan. We will also continue to expand our business with such a good partner like Ningjing University in the future, and then achieve greater development in this business.
spk06: Thank you, Jing. Let me answer your second question. This year, we designed and launched a variety of offline events. We were pleased with the number of events we hosted as well as the commercialization achievements, gaining momentum on both fronts. In the meantime, with creative initiatives, through events like our all-new Summit Waves and our 2C Lifestyle Festival CityLab, we greatly enhanced the skill and influence of our offline events. Meanwhile, 36 KR Business School programs were also in full swing. As we continue to enrich the content and the format of the courses offered through our venture capital class and the funding acceleration camp, we launched an all-new degree-based program in partnership with the University of Oxford, driving a vast increase in our pool to over RMB $42,000. Thank you. Next question, please.
spk01: Thank you. And our next question today will come from Jaijon Hong of Industrial Securities. Please go ahead.
spk00: Thank you for accepting my question. My question is, you just mentioned some AI business opportunities. So I would like to ask for more specific business plans, including our internal use, such as the creation of AIGC, as well as some related product services, as well as cooperation with external AI companies. Let me translate it again. The management just mentioned about the business opportunity brought by AI. Could you give us more color about more relevant plan about your AI internal use product offering and cooperation with the AI enterprise? Thank you.
spk07: Thank you, Huang. I would like to answer your question from three angles. First of all, as a media, we have experienced the sensitivity of our new technology. As a technology-based media, we have launched our own digital media called Smart Lines. In the last quarter, we held an AI-based industry summit. We will continue to provide AI-based information, reports, and in-depth interpretation. We will continue to investigate and inspire people from all walks of life. Secondly, as a company, how can we use AI? We have been actively promoting the deep integration of generated AI and various businesses, including the creation of files, translation of texts, key words, picture creation, and intelligent customer service. These AI technologies can reduce the investment of employees, save time and resources, and help to reduce costs and improve efficiency. In addition, we will use AI technology to open e-commerce stores, Thank you, Mr. Huang.
spk06: Thank you, Jiajun. Let me answer your question from three perspectives. First of all, we're proud of our consistent and nuanced understanding and foresight in terms of generative AI technology. Besides launching our vertical submedia, the emergency of intelligence, we also hosted our wide 2023 AIGC Summit in the second quarter. By continuously offering the latest developments, special reports and in-depth interpretations of AI, we have inspired the public with a steady stream of insights and stimulating ideas. Second, we have been actively integrating pioneering generative AI into our day-to-day operations, including copywriting, translation, keyword matching, image generation, and intelligent customer service, among other functions. By reducing manual efforts and saving time and resources, AI effectively facilitates our cost reduction and efficiency enhancement. I'd like to point out that 36KR was the first-ever industry pioneer in using AI technologies to create an e-commerce store on Taobao, launching live streaming sales sessions hosted by digital humans, and we were exclusively featured on CCTV with multiple follow-up initiatives. In addition, We recently entered into a strategic cooperation with Baidu, joining hands in broadening AI applications across our media platforms, enterprise services, and training offerings, driving commercialization and innovation as we empower the manual goals. Our teams are working closely on a diversified AI-powered landscape including content production, application marketplace showcasing applications powered by large language model LLM functions, LLM solutions, and training programs on AI applications. Thank you, Jiajun. Next question, please.
spk01: Our next question today will come from Lingyi Zhao of SWS Research. Please go ahead.
spk03: The short video business has been doing really well. And what's our plan to further tap into this growth potential? Thank you.
spk07: Thank you, Linyi. First of all, we will continue to provide diversified content and continuously expand more C-end products. At present, our short video content has covered many areas such as technological innovation, commercial survey, and lifestyle. We have provided many rich options for users. In addition, we pay great attention to the distribution of channels. In addition to broadcasting on short video platforms such as Bilibili, Douyin, Kuaishou, and Xigua, we are also actively expanding the layout of video media platforms. We are very happy to see that the total number of fans of this short video has exceeded 8.3 million, with a total growth of 42%. Among them, the number of fans has exceeded 2 million. As we have said before, for the institutions, such a number is actually a very hard-to-understand number. In terms of commercialization cooperation, our brand provides the opportunity for creative marketing, so we combine 18 short videos with creative marketing in depth, so as to attract customers from all walks of life, leading to a short video revenue Thank you, Lingyi.
spk06: First of all, we will continue to launch diversified content offerings and further expand our 2C products. At present, our short video lineup covers diverse topics, including technological innovation, business insights, and lifestyle, delighting users with a variety of content options. In addition, multi-channel content distribution remains a key focus for us. In addition to posting on short video media platforms, including Bilibili, Douyin, Kuaishou, Xiaohongshu, Jigua, and WeChat video accounts, we also actively expanded our reach across social media platforms. We are pleased to see the number of our short video followers surpass 8.3 million, up 42% year-over-year, among which more than 2 million were Bilibili users. Regarding our commercial cooperation for creative brand marketing, we send additional customers from a wide array of industries. Revenue from this segment doubled year-over-year, accounting for more than 20% of our total advertising revenue. Thanks again. Next question, please.
spk01: Our next question today will come from Ruquie Liu. of C-Lin Securities. Please go ahead.
spk05: 然后我可以翻一下英文。 How did the company achieve a rebound in gross profit margin this quarter? Thank you, Riki. This is Lin. I will take your questions regarding gross profit margin.
spk02: I think the rebound is mainly attributable to our seasonality of our business nature, as well as the economy of scale. We have mentioned several times on our previous calls that our cost structure is largely fixed. That means when our revenues grow, there is not such a linear relationship between our revenue growth and cost growth. So if you look at our Q2 revenues, our sequential revenue growth was almost 52%. That's a very big jump. But if you look at our costs, actually our costs only grow by 5%. That's a very obvious economy of scale. So that's basically the visionality and the economy of scale contributed to the sequential strong rebound of our GP margins. Also, in Q1, we started off several new content initiatives. For example, we launched our first long-form video program called Forecasting for Seeing 2033. That's a long-form video started to produce in the beginning of the year. So in Q1, we basically haven't started off the commercialization, but in Q2, this program has been very well received by both the audiences and also our advertising customer. So in Q2, we have achieved revenue to cover the production cost of this program, and actually more than cover the cost. of this program. That's another reason contributing to our GT margin growth. Looking ahead, we think our GT margin will be able to maintain at a high level of 55% or even between 55% to 60% because as we said, we believe our advertising revenue will continue to grow and advertising revenue is a relatively high margin business and our enterprise as well as our training business will also grow. That will, you know, contribute to a higher revenue and has contributed to higher growth profit and GP margin. Hope this answers your question, Ritchie. Thank you.
spk01: Thank you. As there are no further questions, I'd like to now turn the call back over to the company for closing remarks.
spk06: Thank you once again for joining us today. If you have further questions, feel free to contact 3rd District CARES Investor Relations through the content information provided on our website or the PS&T Group Investor Relations.
spk01: Thank you. This concludes the conference call. You may now disconnect your line. Thank you.
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