Youdao, Inc.

Good day and welcome to the Udall 2021 Fourth Quarter and Full Year Earnings Conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jeffrey Wong, Investor Relations Director of Udall. Please go ahead, sir.

Thank you, operator. Please note the discussion today will contain forward-looking statements related to future performance of the company. which are intended to qualify for the safe harbor from liability, as established by the U.S. Private Securities Litigation Reform Act. Such statements announce guarantees of the future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect UW's business and financial results is included in certain filings of the company with the Securities and Exchange Commission. The company does not undertake any obligation to update this forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For the definitions of non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial results, please see the 2021 fourth quarter and full year financial results news released issued earlier today. As a reminder, this conference is being recorded. A webcast replay of this conference call will be available on UDAO's corporate website at ir.udao.com. Joining us today on the call from UDAO Senior Management is Dr. Feng Zhou, our Chief Executive Officer, Mr. Lei Jin, VP of Operations, Mr. Peng Su, a VP of Strategy and Capital Market, and Mr. Wayne Lee, a VP of Finance, I will now turn the call over to Dr. Zhou to review some of our recent highlights and strategic directions.

Before we begin, I would like to remind everyone that the financial information and non-GAAP financial information mentioned in this release is presented on a continuing operations basis, and all numbers are based on MMB. unless otherwise specifically stated. We finished the fourth quarter and the whole fiscal year 2021 with strong financial results. Total net revenue reached RMB 1.0 billion in Q4 2021 and RMB 4 billion in 2021 whole year, representing an increase of 22.6% and 58.9% year-over-year respectively in Q4. We achieved positive net income on a non-GAAP basis for the first time since our IPO at RMB 31.1 million. Operating cash flow from continuing operations was positive RMB 142.2 million, mainly due to strong revenue and lower sales and marketing expenses incurred. To be fair, Achieving non-GAAP profitability was helped by favorable seasonality in Q4, including the year-end shopping season. Nonetheless, the year-over-year trend is clear. The results demonstrated that our financials are steadily improving and our business is on the right track to sustained profitability, even under the challenging regulatory environment. Q4 results showed that our strategy of doubling down on new growth opportunities is working. We continue to make good progress on multiple fronts, including the smart devices segment, B2B business, and STEAM education business. In Q4, Youdao has also been added to the MSCI China All Shares Small Cap Index as of market close on November 30th, 2021. We're pleased to be part of this widely recognized global benchmark and recognized our business performance and growth potential. We continue to comply with the updated laws and government policies. We have ceased offering the after-school tutoring services on academic subjects in China's compulsory education system and completed the disposal of this business. As a result, the K-9 academic AST business met the criteria of discontinued operation and retrospective adjustments to the historical statements of operations have also been made for the previous periods, which provides a consistent basis of comparison for the financial results of the continuing operations. I would like to thank all former teaching and operations staff for their contribution to the K-9 academic AST business in the last several years. Now let me walk you through some of the details of our fourth quarter. First, our smart devices segment kept strong momentum. It generated revenue of RMB 317 million in Q4, up 24.8% quarter over quarter and 33.9% year over year from Q4 2020's high base. Dictionary PAN sales exceeded 500,000, a new record. For the full year of 2021, revenue from the smart devices segment reached RMB 980.4 million, representing an 81.6% increase from 2020. In Q4, we entered into a strategic partnership with the commercial press, with the exclusive inclusion of Xinhua Dictionary in Yudao Dictionary pens. In addition, Many of the well-known dictionaries published by the commercial press will also be included in UDAO Smart Devices. The integration of smart AI and classic content makes the dictionary pen a truly indispensable tool for language learning and usage. We also kept improving our core technologies. A new feature called Writing Guide was introduced for the pro version of UDAO dictionary pen. Powered by our proprietary natural language processing technology, the writing guide feature provides personalized assessments for students' English writing, evaluating vocabulary usage, grammar correctness, and then offers suggestions for improvements. This is another novel application of Udall's AI learning technology. Our new category product, Udall Listening Pod, was released at the end of Q3, so Q4 was the first full quarter of sales. We're happy to say it is off to a strong start. The units of UDAO listening pods sold in Q4 was double that of the UDAO dictionary PEN1 in the same period. In Q4, we introduced more licensed textbooks and added AI listening comprehension mock tests to the device. We believe Yodal Dictionary Pod is a strong product compared with its peers from other companies and will gain further popularity in coming quarters. Then let's turn to STEAM courses. The growth buildings of Yodal Weiqi or Yodal Go increased by around 130% year-over-year and over 30% quarter-over-quarter, reflecting the sustainable growth and retaining the leading position in the goal course market. We recently launched the Youdao Ballgame Academy app for our learners to play goal and chess matches online with fellow learners. It matches players with similar skill levels, supports both human to human and AI matches, and provides high quality quizzes for improving skills. Our STEAM courses are also gaining more recognition in the sector. We received two excellent course awards for our STEAM courses from Beijing Association for Science and Technology. In terms of adult and vocational courses, our current strategy is to drive growth in areas that have a large addressable market and fits our expertise. Examples include graduate school entrance exam preparation, and digital skills training courses. In 2021, the Ministry of Human Resources and Social Security released a working plan on enhancing digital skills, focusing on digital skills training such as artificial intelligence, big data, and cloud computing. This is a good fit for us. Those buildings of vocational education courses grew approximately 170% quarter over quarter in Q4. Besides, Youdao was included in a new base of adult education by Zhejiang Province Human Resources and Social Security Department. We believe adult and vocational training have a bright future and we are patient in this area. As for education digitization solutions, we kept rolling out new features for our solutions and signing up new customers and partnerships. In Q4, we signed a strategic partnership with Suzhou municipal government to build smart education solutions in the city. Suzhou is a large and prosperous city, whose GDP is number six among all Chinese cities, right after Chongqing. So Suzhou's endorsement is a milestone for our education digitization business. We're also dedicated to fulfilling our social responsibilities. Your Dao Foreign Language Reading Corner, the public welfare project, benefited over 30,000 people. Besides, Your Dao was awarded as the annual model enterprise of CSR for its special contribution to helping the disabled and CSR China Top 100 Best Brand of Fulfilling CSR of the Year. As we close our books on 2021, we had an eventful year, which I believe will still be special when we look back a couple of years from now. Despite the challenges, our teams were able to drive significant growth of our business at 58.9% of revenue growth, and likely more importantly, our diversified investments in smart devices, steam courses, and others in the last couple of years, and long-term support from our parent company, Netease, have allowed us to navigate the changing environment relatively smoothly and to build a stronger position for us in the market. Looking ahead, we are committed to compliance and the focus on our growth areas, including smart devices, STEAM courses, adult and vocational courses, and education digitization solutions. Education technology is still in its early days, and we firmly believe it has a bright future. I'd like to thank our investors for your continued support, and we look forward to . With that, I will turn the call over to Supong to give you more details on our financial performance.

Thank you, Dr. Zhou, and hello, everyone. Today I will be presenting some financial highlights from our 2021 fourth quarter and the full year. We encourage you to read through our press release issued earlier today for further detail. Growth speeding increased by 37.3% year-over-year to RMB $854.5 million, or US dollar $134.1 million in Q4. 18.9% of our growth speeding came from adult and vocational courses, Given the current regulatory environment and the completion of our disposal of K9 academic AIC business, more focus will be concentrated on AI and the technology-driven business, such as smart devices and the education digitalization solution. Revenue is a key matrix that could reflect the business performance. Therefore, we would not treat the growth speeding of our tutoring services as our key financial measures. a going-forward basis. For the fourth quarter, total net revenue were RMB $1 billion, or US$164.6 million. This represents an increase of 22.6% from the fourth quarter of 2020. Looking at this growth by segment, net revenue from our learning services were RMB $579.3 million, or US$90.9 million, up 20.6% from the same period in 2020. We attribute this growth to the increased revenue generated from our learning services, which were further driven by the growth in paid student enrollment during the period in 2021. Net revenue from our smart devices were $317.7 million, or US dollar, $49.9 million, up 33.9% from the same period in 2020. driven by the substantial increase in the sales volume of Youdao dictionary pen in the first quarter of 2021. Net revenue from our online marketing services were RMB 151.8 million, or US dollar, 23.8 million, representing a 10.2% increase from the same period in 2020. For the first quarter, our total gross profit reached RMB 445.3 million, or US dollar, 69.9 million, up 11.5% compared with the first quarter of 2020. Gross margin for learning services was 51.4% for the first quarter of 2021, compared with 55.9% for the same period in 2020. Gross margin for smart devices was 30.8% for the first quarter of 2021, compared with 39.5% for the same period in 2020. Gross margin for online marketing services was 32.6% for the quarter of 2021, compared with 26.9% for the same period in 2020. For the first quarter, total operating expense were RMB $693.6 million, or US dollar $108.8 million, up 5.8% from RMB $655.7 million for the same period last year. With that, for the first quarter, Our sales and marketing expense were RMB 420.4 million compared with RMB 511.1 million in the first quarter of 2020. Research and development expense were RMB 170.2 million compared with RMB 109 million in the first quarter of 2020. Our operating loss margin was 23.7% in the first quarter of 2021 compared with 30% for the same period of last year. For the first quarter of 2021, our net loss from our continuing operations attributable to ordinary shareholders was RMB 215.9 million, or US dollar, 33.9 million, compared with RMB 251.2 million for the same period of last year. Non-GAAP net loss from continuing operations attributable to ordinary shareholders for the first quarter was RMB 168.2 million, or US dollar 26.4 million, compared with RMB 238.1 million for the same period of last year. Basic and diluted net loss per EDS from continuing operations attributable to ordinary shareholders for the first quarter of 2021 was RMB 1.75, or US dollar 0.27. Non-GAAP basic and diluted net loss from continuing operation per ADF for the first quarter was RMB 1.37 or US dollar 0.21. Our net cash provided by the continuing operating activities was RMB 142.2 million or US dollar 22.3 million for the first quarter. Turning to our full year results, Our total revenue for 2021 increased by 58.9% to RMB $4 billion, OUS $630.2 million. Net revenue from our learning services for 2021 for RMB $2.4 billion, OUS $383.1 million, up 61.3% from the 2020. Net revenue from our smart devices for 2021 grow by 81.6% year-over-year to RMB $980.4 million, or $153.9 million. Net revenue from online marketing services for 2021 were up 25.6% year-over-year to RMB $593.9 million, or $93.2 million. Total gross profit for 2021 was RMB $2 billion, compared with RMB $1.1 billion in 2020. Total operating expense for the 2021 increased to RMB 2.9 billion, or US dollar, 460.1 million, compared with RMB 2 billion in 2020. Net loss from continuing operation attributable to UDAOs ordinary shareholders for 2021 was RMB 895.4 million, or US dollar, 140.5 million. And the basic and diluting net loss per ADS from continuing operation Attributable to ordinary shareholders for 2021 was RMB 7.36 or US dollar 1.15. Looking at our balance sheet as of the December 31st, 2021, our contract liabilities, which mainly consists of the default revenue for our tilting courses, were RMB 1.1 billion or US dollar 167.2 million. compared with RMB 894.2 million as of December 31, 2020. At the end of the period, our cash, cash equivalents, restricted cash, time deposit, and short-term investment totaled RMB 1.6 billion, or US dollar, 247.4 million. This concludes our prepared remarks. Thank you for your attention. We would now like to open the call to our questions. Operator, please go ahead.

Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star and then 1 on your touch-tone phone. If you are using a speakerphone, please pick up the handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2. Our first question is from Shen Zhong of Morgan Stanley. Please go ahead.

Hey, good evening. Thank you for taking my question. So could you please provide an outlook on your learning devices growth in 2022? And if you can break down to your current products and the new product pipeline, that would be great. Thank you.

Yeah, thank you, Shen. Yeah, this is Zhoufeng. I believe that this year is going to be an inflection year for us in terms of smart devices. We have a lot of exciting work underway and we will not only drive growth but also lay the foundation for next year and next next year's growth. Now first we are going to release new generations of our dictionary pen and listening products in 2022. There's a lot to do there. For example, we have just added English writing related features to the dictionary pen. It was made possible by years of R&D and users really like them, so expect us to to add more hardware capabilities and more advanced AI technologies to help users in new scenarios, new learning cases in the new dictionary pens and listening pods this year. Second, so we expect to release more new categories of devices this year. We're going to bring to these new products our strengths like attention to detail, great design, seamless AI, and that really works. All the strengths that we have building Dictionary Pen to be a really popular learning product, we will bring them to to our new categories of devices. Actually, there is one that's pretty close to launch. So next month, we will launch the Youdao Smart Learning Lamp. We think a smart tabletop device like the Learning Lamp is a very intriguing device. It's a very interesting device to help learners in multiple ways. And we have quite a few new ideas there and we really like the ideas and we want to introduce them to our users. In general, what fascinates me is the fact that we have only really scratched the surface in using AI to help learners learn better. With new sensors, more computing power, more data, we see a future where AI really understands the learner and makes learning orders of magnitude better. Smart devices, or we like to call them AIoT devices, AI plus IoT, Internet of Things. AIoT devices are the best vehicle, we believe, for helping us to get the AI to the user because they allow us to really deploy these sensors, these industrial designs, and the exact user interface that we want that works best for any particular learning scenario. And I want to share with you that we think the trend is becoming more and more clear. According to 2021 China Education Smart Devices Trend Insights Report by Tencent Research Institute. The education smart devices market is expected to be close to RMB 100 billion in 2024. So we intend to be a leading player in this market. So since 2019, we have already achieved three consecutive years triple digit or high double digit growth for smart devices. In 2021, the growth was 82% and revenue reached about RMB 1 billion. So I believe we have demonstrated fast growth for us in this area and sustainable growth. As I talked about in earlier calls, compared to our peers, Yodong has deep knowledge in both the technologies and the content required for the success of smart devices. Compared to many of our peers, we have also a head start in terms of supply chain buildup and also sales channel construction. We are in a very good position here as we compete for customers. So far, I believe the results have agreed with our view. And we believe we could achieve good growth in 2022 as well. Thank you.

Thank you very much, Dr. Zhou. May I follow up a quick question? You mentioned, I remember in the 111, the listening devices had a very good self-momentum. Can you please quickly comment what the momentum is recently for this new product?

So I didn't get your last sentence.

Yes, sure. About the learning device, I remember in the 2011, the sales was pretty good. So would you comment about the recent momentum of this learning device, which actually was a new product for you?

Right, so recent trend, as you know, the seasonality of hardware products, learning devices, so we have actually multiple months in the year that are kind of key drivers of sales. Double 11 is one of that. And also December, the shopping festival in December is also pretty good. And the sales there was also good for us. And the one after that would be the beginning of the semester. That is basically this month and next month. So February and March are normally the strong months. So after Q2, yeah, so we are looking at the, yeah, it's doing pretty well for us right now, and you can expect that the The beginning of the new semester is the one that we are looking at right now, and it's not finished yet. Let me say a few words about the general whole year trend. Normally, the sales actually are strong in February and March, and also one of the key months is the beginning of the whole school year. That will be August and September. That's normally stronger than February and March. Because our products are sold more online, So the e-commerce shopping, shopping festivals are very important. So Q4 tends to be also pretty strong. So that's the normal seasonality.

Thank you very much.

Thank you. The next question is from Brian Gong of Citigroup. Please go ahead.

Good evening, Dr. Zhou, Suzhou, and Jeffrey. Thanks for taking my question. So my question is regarding our latest strategy and the investment plan on steam courses, especially considering, you know, the latest regulation, regulatory environment, and the policies from MOE in late January. Thank you.

Thank you, Brian. This is Supong. I will take these questions. As for the theme courses, right now there is currently no law or the regulations that impact us to develop the theme courses. In our plan, we will smoothly enhance the investment on the theme courses in our business segments. You'd all insist on empowering the theme courses with innovative technology. And it's always committed to offering the high-quality courses to our users. And the purpose for us to produce that high-quality courses is, for example, like Dr. Wu mentioned, the goal and as well as the chess program. And it's not only to teach something to students, but also we expect our students could understand about the history and the culture of the goal game as well as the chess game. And they know how to play the game and they can play with their family friends and families. And further, we hope they can make a new friend through playing the games with the others. And we think about that's really something related to the fundamental of the innovation and education. So that's what we think about our non-subject or theme courses. at this moment. And as Dr. Lu mentioned, and we have built up a Go app to organize or to host about that online game for player versus player for our students with the others. So we think about that. We expect to build that kind of online family for our students to play with the others. And also, go back to the I think about what you mentioned about the regulation issues. Definitely, we will have been close attention to the latest regulatory requirement and ensure running the business within the scope of the relevant law and regulation, obviously. And we will keep our eye open and watch closely to the updates about the regulation issues. I hope that answers your question. Thank you, Brian.

Thank you. That's very helpful.

Thank you. The next question is from Thomas Chong of Jefferies. Please go ahead.

Hi, good evening. Thanks, management. May I ask about how we should think about the competitive environment for our long AST courses such as adult education and STEAM courses going forward? Would we expect that the competition will be intensified? Thank you.

Thank you, Thomas. This is Shupeng. For the competitive landscape issues regarding adult and vocational courses, I believe you have already read about the information on the news from the public channels regarding there are several or peers have been announced to enter into this area. That definitely will be the good news for these sectors because they are also being supported by the central government with regard to releasing several policies to support the growth of this and the development of this vocational education business. From our business, when we think about the new business, we will think about what's the fundamental issues about the quality of our products. We think that will be the fundamental things and the fundamental value which we can provide to our users and students. And second thing is we own about that kind of user dictionary, that user's tool. And we always try to leverage our advantage from our own users on the user dictionary to pass the product info as well as to pass that services through our platform and to help them to understand our business and what we can help them in the different sectors. So the third thing is about right now is because of the also with the support of several different policies on the vocational training, more and more people notice about the progress and growth in this area. So we think about the total number of users, potentially the total number of users for the vocational training. It will grow year over year. And as we think about it, we can be part of the top players in this area. I hope that answers your question. Thank you, Thomas.

Thank you.

Thank you very much. The next question is from Linda Huang of Macquarie. Please go ahead.

Hi, management. Thank you very much for taking my question. I have one regarding for our normalized business. And can you share with us how should we expect your normalized growth rate? and how should we look at the profit margin for the remaining business, especially for 2022 and 2023? Thank you. Hi, Linda.

This is Wayne. I would like to take your question. As I mentioned, the K9 academic AST business was stopped in the end of 2021, and we already respectively disclosed our financial figures in our earnings for the remaining business, say, continued operation business. Compared with 2020, the annual growth rate of the revenue from the continuing operations is close to 50%. The overall gross profit margin for continuing operations is around 50%. Going forward, we will concentrate more on the segment of smart devices education digitalization solution and the theme and setup. Although we will not provide specific guidance on the revenue rate and the profit margin for 2022 or 2023, however, I would like to add some colors going forward basis for this business respectively. For smart devices, we are good at this business and already have a strong business, including but not limited to branding, technology, and channel advantages when compared with those peers or new entrants. And we are committed to investing more resources in a new category or new pipeline. As mentioned by Dr. Song, new pipelines are expected to be launched in the near future. We believe it helps maintain a great lower-year growth rate of our revenue, although our revenue basis is already a bit high. We also expect a better profit margin, which is mainly contributed from the achievement of economic skills. Second, for the big business, say, educational digitalizing solutions, we have got certain milestones in 2021. For example, partnerships with and recently also to provide school and the teachers with our learning terminal and the solutions, which empower them to efficiently check students' learning progress and optimize teaching guidelines. Further, the business skills were expected to enlarge. We believe we will achieve over 100% growth to a relatively low basis in 2021. Lastly, we also plan to invest more R&D and marketing resources to update the product version. Therefore, great growth rates as well as more losses expected in investing in this segment. Finally, for steam and adult business, as explained by my comments, these segments are supported by the State Council and we will strictly follow the regulator's guidance. In addition, we have multiple products in steam such as weighty science, which have increased quickly. On our hand, we expect to launch more competitive FKUs to achieve faster growth. Considering the increasing user demand and the large economic scale, better profit margin are expected to achieve for this segment. Above all, we are very confident in the growth rate in revenue and the improved profit margin for the remaining business going forward. I wish this is helpful. Thank you.

Thank you very much. Very clear.

Thank you. The next question is from Hongyu Cao of CICC. Please go ahead.

Thanks for taking my questions. First, congratulations for the great financial performance. My question is, can you give us more color on the growth strategy for vocational tutoring service in future? For example, consider the policy encouraging the vocational education. Is there any chance to cooperate with government or other vocational skills? Thank you.

Yeah, this is Feng Chou. So, yeah, of course, we all know that the vocational training services, these are really encouraged by the government right now, and it's a very, very interesting area. So we combine that. For Yodao, we combine that with adult courses, like English training courses, a segment. We call that Adult and Vocational Tutoring Services. Let me share with you a few points regarding the overall segment. This is traditionally a strong area for adults. We had very successful courses like the Logic English courses in the last couple of years. So we have quite some experience in this area. And the business is changing. So because of COVID, because of other factors, so we had some challenges in last year, recent quarters. And right now we are looking at several growth areas. for this sector. One important area is along the similar lines of the successful courses we have and one very interesting area we think is graduate school entrance exam, tutoring for graduate school entrance exams. This is interesting for us because We all know that this exam is becoming more and more popular. Over four million students are expected to take this exam this year. Last year was 3.7 million in 2021. Because it's such a popular exam, We have a few years of experience in it and we found that it's an exam that students invest a lot of time and energy in, which we can really help with the vast experience we have in designing courses and also using AI to improve the learning process. We have our team looking really seriously at this exam, graduate school entrance exam. We have already updated the course starting recently and also we will continue to update it throughout the coming quarters. We think it's a very promising area. Other areas that we think are really interesting are what we call the digital skills training. So things like big data and artificial intelligence application, these kind of subjects, and also digital art design and similar subjects. We think these are... really helpful courses for adults to take and potentially have a much better chance of getting higher paid. And also it's something that our teams are really familiar with and good at teaching. So we are investing a lot in these courses and so far the progress have been really well. Going further, we are also working with different local governments. Recently, we have cooperated with Beijing Municipal Human Resources and Social Security Department. Also, as I just talked about in the prepared remarks, we also signed a collaboration in Q4 with Zhejiang Human Resources and Social Security Department. or working on providing vocational training and courses to adults and workers. Overall, we think it's a very good area. Right now, we are focusing our efforts on doing this online. Instead of actually operating offline schools, We are doing this online because we think online is great for us. Online also has the benefit that we can use our software and artificial intelligence skills in designing the learning experience. So we are constantly focusing on online and we will of course keep an eye on other ways.

Thank you. Thank you. The next question is from Candice Chan of Daiwa. Please go ahead.

Thank you for taking my question. My question is about your customer acquisition strategies for various business segments and also your key investment areas in 2022. And how will that customer acquisition strategy be different from what we've seen in the prior years? And are we further expanding our studios or hiring more teachers in this year? Thank you.

Thank you, Kenneth. This is Lei Jin. I will answer your question. In terms of our customer acquisition strategy in 2022, We will answer your question from the two perspectives. Firstly, for smart devices, our customer resilience strategy will stick to multi-channels. Online channels, such as e-commerce platforms and short video platforms, accounted for around two-thirds of sales of our smart devices. We made more efforts in Douyin in Q4 and achieved good results. We tried the potential of offline channels at the same time. We collaborated with Costco, Sam's Club, Citiq, and Yanji Youbu store and other offline channels for our dictionary pen and listening pod. To increase our product awareness, we made several viral videos that impressed users with the product features and users are willing to share them on social media. With the multi-channel strategy, we shipped more than 500,000 dictionary pens in Q4. Secondly, as for customer resilience strategy for steam closets, we decided to open more offline steam centers in due course as our first steam center established in Beijing in Q4 last year. The first UW steam center opened in Beijing last November focusing on children's internal development, logic training, and strategic thinking, where we offer Yodal iCode programming courses, Yodal Dossophila science courses, and Yodal VG course. Most team courses will be on our offline centers so that our user could have a closer and a more comprehensive interaction with us. In terms of business, We will continue to invest and focus on smart devices, DIMM courses, adult and vocational courses, and education digitization solutions in 2022. Thank you.

Thank you.

Thank you very much. Ladies and gentlemen, that concludes the question and answer session, and I would now like to turn the conference back to management for any additional or closing comments.

Thank you once again for joining us today. If you have any further questions, please feel free to contact us at UDAO directly and reach out to TPG Inventory Relations in China or the U.S. Have a great day.

Thank you very much. Ladies and gentlemen, that concludes this event, and you may now disconnect.