Youdao, Inc.

Good day and welcome to the Yodow 2024 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 Wang, investor relations director of Yodow. Please go ahead.

Thank you, operator. Please note the discussion today will contain forward looking statements related to the future performance of the company, which are intended to qualify for the safe harbor from liability as established by the U.S. Previous Securities Litigation Reform Act. Such statements are now guarantees of future performance and are subject to certain risks and uncertainties, exceptions 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 Yodow's business and financial results is included in certain company filings with the U.S. 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-gap financial measures for comparison purposes only. For the definitions of non-gap financial measures and reconsolations of gap to non-gap financial results, please see the 2024 fourth quarter and full year financial results news release issued earlier today. As a reminder, this conference is being recorded. A webcast replay of this conference call will be available on Yodow's corporate website at .Yodow.com. Joining us today on the call from Yodow's senior management, Dr. Feng Zhou, our chief executive officer, Mr. Lei Jin, our president, Mr. Peng Shu, our VP of strategy and capital markets, and Mr. Wayne Lee, our VP of finance. I will now turn the call over to Dr. Zhou to review some of our recent highlights and strategic direction.

Thank you, Jeffrey, and thank you all for participating in today's call. Before we begin, I would like to remind everyone that all numbers are based on RENB, unless otherwise specifically stated. In the fourth quarter, our profitability further improved. Net revenues reached IMB 1.3 billion, a .5% decline compared to the same period last year, primarily driven by a decrease in revenues from learning services. Since the summer, we have proactively focused on courses and services with strong demand and maintained a rational approach to customer acquisition. This strategy has enhanced our overall health. Income of operations for the fourth quarter reached IMB 84.2 million, representing an increase of .3% year over year. Operating cash inflow was RMB 158.2 million, largely stable compared with the same period of last year. For the full year 2024, our key financial indicators demonstrated significant improvement with record profitability and cash flow performance. Net revenues totaled IMB 5.6 billion, up .4% year over year. Income from operations amounted to RMB 148.8 million, a remarkable turnaround from loss of operations of RMB 466.3 million in 2023, marking a substantial improvement in financial health and achieving our first ever operating profit from a full year basis. Operating cash outflow narrowed to RMB 67.9 million, representing an improvement of .5% year over year. Then let's review the major progress across our business lines. In the fourth quarter, net revenues from learning services reached RMB 617.7 million, down by .2% year over year. By maintaining financial disciplines and focusing on courses like Youdao Ling Shi, we enhanced our financial health and long-term competitiveness significantly. Within the learning services segment, net revenues from digital content services reached RMB 388.8 million in the fourth quarter, which covered the cost and operating expenses, generating meaningful profits. We are committed to fostering long-term growth with top priorities centered on elevating customer satisfaction, optimizing operational vitality, and driving forward-looking innovation initiatives. Youdao Ling Shi has pioneered a customer acquisition path by focusing on operations on director's IP, leading to over 10% year over year growth in growth buildings for the fourth quarter. Additionally, our flagship product, which integrates AI tiered learning videos, comprehensive learning counseling, and small-class study experiences, has enhanced customer loyalty, with retention rates surpassing 70% in the fourth quarter, and an improvement of more than 5 percentage points year over year. This rise in customer loyalty gives us greater confidence in the future development of Youdao Ling Shi. In terms of STEAM courses, our franchise programming courses focused on informatics programming and have continuously iterated our products about transitioning from large-class to smaller classes. This approach has driven a more than 20% year over year increase in growth buildings during the fourth quarter, with retention rates exceeding 70%. Next, within the learning services segment, we see strong growth in our AI-driven subscription services. Total sales witnessed an impressive streak of eight conservative quarters with over 50% year over year growth. For the full year of 2024, AI-driven subscription services generated sales of over RMB 200 million, representing an increase of over 130% year over year. Recently, we launched and open sourced China's first -by-step exposition reasoning model, Confucius 01. As a 14 billion parameter lightweight single model, Confucius 01 supports deployments on consumer-grade GPUs and utilizes chain of thought technology to provide detailed problem-solving processes. It achieves high accuracy in problem-solving with strong logic and reasoning capabilities and offers reasoning in Chinese. Notably, Confucius 01 has officially been open sourced to encourage broader use and innovation of reasoning models in the education sector. Currently, Confucius 01 has been implemented in our AI learning assistant, Mr. P. AI Tutor, which received positive feedback with over 100 million cumulative users since the product launched. Udall Desktop Translation has won the Best Online Education App Award at the Microsoft Store 2024 Annual App Rewards. Furthermore, we are continuing to develop the HiEcho ecosystem. In the fourth quarter, we partnered with RoKIT to deliver an immersive AI-powered English learning experience through AI plus AR technology. HiEcho, alongside Udall Dictionary, was named one of the top nine apps of 2024 by LaTeX. We quickly embraced the recent DeepSeq wave by integrating both Confucius models and DeepSeq R1 across many of our products. Our teams rapidly experimented with blending the best of both worlds. DeepSeq R1 delivers robust reasoning and intelligence, while our domain-specific Confucius models are optimized for high traffic scenarios unique to our offerings. This powerful combination already enhances products like Mr. P AI Tutor, providing users with smarter, more friendly chat experiences, deeper insights into learning materials, and more effective support for challenging problems. Additionally, it enables us to offer faster, more responsive, and cost-efficient service. For online marketing services, Net Revenue reached RMB 481.7 million in Q4, representing an increase of .6% -over-year. Gross margin increased to 34.2%, up 1.5 percentage points -over-year. In terms of domestic performance-based advertising, industries such as gaming and AI tools have seen record-breaking revenues. On the international advertising front, we recently established an official partnership with Google. This milestone lays a solid foundation for the future growth of our overseas advertising. Additionally, in the field of overseas KOL, key opinion leader marketing, we have leveraged our extensive database of global influencers and advanced technologies such as launch language models and image recognition. With these tools, we have developed an evaluation model for KOL video conversion effectiveness. This model comprehensively analyzes trends in influencer videos in their comment sections, allowing us to identify which creator possesses strong virality and widespread reach, therefore driving high conversion rates. By using commercial conversion effectiveness as a key metric, the model assigns ratings to each influencer and uses existing data to predict their conversion potential. Furthermore, we played a pivotal role in the global promotion of the game Marvel Rivals. In the first two weeks after the game's launch, we successfully facilitated the release of nearly 200 pieces of KOL content, resulting in over 80 million impressions across the internet. Looking ahead, we are optimistic about the long-term prospects of our online marketing services. We are committed to strengthening collaboration with clients in the gaming sector, particularly through enhanced synergy with NETE's group in both traffic side and demand side. Turning to our smart devices segment, net revenues reached RMB 240.4 million in Q4, marking an .1% -over-year increase. With significantly improved financial health, our flagship product, the Udall Dictionary Pans performed exceptionally well during the November 11th Shopping Festival, maintaining its position as the top seller in its category on both JD.com and TMO for five consecutive years. The X7 Pro also earned the top spot in single item sales for dictionary pants on both platforms. These successes contributed to an annual 20% -over-year increase of revenues for the dictionary pants. In addition, we are thrilled to announce that cumulative sales of our dictionary pants have surpassed the 10 million units since its market debut. In terms of product, we recently launched the Udall Dictionary Pans A7 Pro, featuring an instant scan and translation feature. The product offers top tier performance at an accessible price point. Earlier this week, we also launched the Space One, a brand new dictionary pants incorporating the DeepSeek reasoning model, delivering in-depth analytical reasoning capabilities and providing clearer guidance for complex problem solving scenarios. Moving forward, we are committed to continuing to pioneer innovations in smart devices, particularly for dictionary pants, enhancing personalized educational experiences for our users and strengthening our leadership in this product. In 2024, we executed a focused business strategy that combined rapid generative AI implementation with a steadfast drive towards operational profitability. It was a breakthrough year during which several of our business units, such as Udall Ads, Udall Ling Shi, our dictionary pants, and our AI powered English learning and translation apps emerged as clear leaders in their perspective segments. Looking ahead, 2025 has started with the explosive popularity of DeepSeek, a trend that is reshaping the Chinese tech industry. As we discussed on this call, we anticipated that open source and reasoning models would revolutionize how people learn and market. And that transformation is now underway. Our response has been swift. Over the past few weeks, we have seamlessly integrated DeepSeek into our apps, courses, app platforms, and hardware devices. Yet this is just the beginning. We believe that large AI models should serve not merely as additional features, but as autonomous agents that drive outcomes. They should be deeply embedded into our learning and work processes to unlock higher productivity. Accordingly, we are launching our AI native strategy, integrating AI more comprehensively across our business lines by, for example, automating our advertising platforms and introducing AI driven tutoring for our cost customers. We're excited by the rapid maturing of the reasoning models and eager to deliver these innovative projects to our customers this year. Another significant milestone for 2024 was achieving four-year operating profitability for the first time. For 2025, given the current economic conditions and our ongoing progress, we are targeting moderate revenue growth alongside fast-paced improvements in our bottom line. With that, I will turn the call over to SuPong to provide you with more detailed insights into our financial performance.

Thank you, Dr. Kuo. Today I will be presenting some financial highlights from our first quarter and fourth year of 2024, bringing you to our question issue earlier today for further details. For the first quarter, total net revenue was RMB 1.3 billion, or $183.6 million, representing a .5% decrease from the same period of 2023. Net revenue from our learning services was RMB 617.7 million, or $84.6 million, representing a .2% decrease from the same period of 2023. The -over-year decrease was due to our continued strategy focus on a more selective customer acquisition approach, prioritizing to higher return on investment engagements. We believe that despite the short-term revenue decline, the strategy has been enhanced to overall resilience and operational efficiency of our business. Net revenue from our smart devices was RMB 240.4 million, or $32.9 million, up .1% from the same period of 2023, primarily due to the continuing increase in sales of UDAG extremely pain in 2024. Net revenue from our online marketing services was RMB 481.7 million, or US$666 million, representing a modest increase from the same period of 2023. For the fourth quarter, our total gross profit was RMB 640.8 million, or $87.8 million, representing a .3% decrease from the fourth quarter of 2023. Gross material for Learning Services was 60% for the fourth quarter of 2024, compared with .6% for the same period of 2023. Gross material for smart devices was .9% for the fourth quarter of 2024, compared with .3% for the same period of 2023. For SmartDent for online marketing services was .2% for the first quarter of 2024, compared with .7% for the same period of 2023. For the first quarter, we reduced our total operating expense to RMB 556.6 million, or US dollar, 76.3 million, compared with RMB 662.5 million for the same period of last year. Looking at our expense in more detail, sales and marketing expense declined to RMB 381.8 million, compared with RMB 441.4 million in the first quarter of 2023. Research and development expense was decreased to RMB 120.7 million, compared with RMB 168.1 million in the first quarter of 2023. Our operating income margin was .3% in the first quarter of 2024, compared with .2% for the same period of last year. For the first quarter of 2024, our net income attributable to the ordinary shareholders was RMB 83 million, or US dollar 11.4 million, compared with RMB 56.5 million for the same period of last year. Non-GAAP net income attributable to the ordinary shareholders for the first quarter was RMB 91.8 million, or US dollar 12.6 million, compared with RMB 69.3 million for the same period of last year. Basic and dilute net income per ADS attributable to the ordinary shareholders for the first quarter of 2024, or RMB 0.71, or US dollar 0.1, and RMB 0.7, or US dollar 0.1, respectively. Non-GAAP basic and dilute net income per ADS attributable to the ordinary shareholders for the first quarter was RMB 0.78, or US dollar 0.11, and RMB 0.77, or US dollar 0.11, respectively. Our net cash provided by operating activity was RMB 158.2 million, or US dollar 21.7 million for the first quarter. Turning to our full-year results, our total revenue for the 2024 increased by .4% to RMB 5.6 billion, or US dollar 770.7 million. Net revenue from our services for 2024 down by .7% year over year to RMB 2.7 billion, or US dollar 376.4 million. Net revenue from our smart devices for 2024 up by 903.7 million, or US dollar 123.8 million, remaining stable compared to the 2023. Net revenue from our online marketing services for 2024 were up by .3% year over year to RMB 2 billion, or US dollar 270.6 million. Total gross profit for 2024 were RMB 2.7 billion, or US dollar 376.5 million, remaining stable compared to the 2023. Total operating expense for 2024 decreased to RMB 2.6 billion, or US dollar 356.2 million, compared with RMB 3.2 billion in the 2023. Net income attributable to the ordinary shareholders for 2024 was RMB 82.2 million, or US dollar 11.3 million. And the basic and dilute net income per EDS attributable to the ordinary shareholders for 2024 were RMB 0.7, or US dollar 0.1. Looking at our balance sheets as of December 31, 2024, our contract liabilities, which mainly consist of different revenue generated from our online services, were RMB 961 million, or US dollar 131.7 million, compared with RMB 1.1 billion as of December 31, 2023. At the end of the period, our cash equivalents and non-current and non-current restricted cash and short-term investment totaled RMB 662.6 million, or US dollar 90.8 million. This concludes our prepared remarks. Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.

Thank you. We will now begin the question and answer session. To ask a question, you may press star and then 1 on your telephone keypad. If you are using a speakerphone, please pick up your 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. The first question we have is from Brian Gong of Citi. Please go ahead.

Thanks, management, for taking my question and congrats on decent profitability achieved for this quarter. Just a very quick question. Can management elaborate on the outlook for this year 2025, like for different business lines and our overall strategies? Thank you.

Thank you, Brian. Our company is focused on two key areas. One is AI-driven education technology. The other is AI-driven online marketing technologies. I will talk about our strategy in 2025 along these two lines. We see significant opportunities in both areas. One, our strategy is to enhance our offering by leveraging cutting-edge AI, improving our content quality, gaining deeper insights into customer needs. We try to establish leadership positions in each of our key product segments. As we discussed earlier, reasoning models have become very important for the education segment and also marketing segment. We anticipated rapid advancement in this area. The actual case actually exceeded our expectations. Today, not only do we have models that are really good at reasoning, at solving problems, but also they are very affordable. I think if you look at history, breakthroughs in infrastructure technology have often led to explosive growth in applications. We believe this year 2025, likely next year, will be very important, pivotal for widespread developing of large language model applications in education and advertising. That is where we will be focusing on the product and tech side. On the financial side, 2024 was a milestone year for us as we achieved profitability. Looking ahead to 2025, we plan to maintain a drive towards a modest revenue growth while keeping profitability a key focus for us, particularly in today's challenging economic environment. We will remain financially disciplined, balancing growth and profitability. Looking at the separate businesses, for learning services, we remain focused on high-demand products like your Dalin Shi. As we talked about, we think this is the right strategy. This is good for our financial health and this is also good for long-term growth. For this year, for courses, AI is going to be more important for us compared to past years. Because technology is finally ready, it is in place to introduce features like AI tutoring as a core element of our course offerings. That is a major project we are working on right now. Combined with our high-quality video learning content and expert service teams, we believe AI tutoring will provide much enhanced learning experiences for our customers. Additionally, we are also working on other AI features like AI-driven college admission advisor. We believe that will be important too. We are also expanding our AI subscription services, which will be supported by interactive learning experiences. We recently upgraded Hi-Echo with much better conversation experience, much lower conversation latency. That is an example of what we will do down the line. We will enhance a lot of our services and release new subscription services this year. As regards to smart devices, we see continued opportunities in 2025. Our focus remains on maintaining market leadership with the dictionary PEN category. Also, at the same time, we would like to introduce new category products. We have a very good product pipeline for 2025. Just two days ago, we launched our first high-end product of this year, the Youdao Space One PEN. This device represents our vision for what a next-generation AI tutoring learning device should look like. It is a very different product as our dictionary PENs. It is a very good example of how we continue to differentiate through this kind of innovation, especially in terms of enhanced personalized learning experiences for home learners. Finally, but also very importantly, in online marketing services, the key trends continue to be twofold. One important trend is the shift of the training at industry towards performance-based advertising. The second trend is the growing application of AI, of large language models in advertising. We are still a relatively small player in this space, but we see significant growth opportunities in 2025 by leveraging these trends. We plan to deepen our strategic collaboration with NetEase to integrate more traffic ecosystems and advertiser resources. The partnership which began last year, 2024, currently represents less than 10% of our ad revenue. We expect this to grow considerably in 2025. In parallel, we will also continue to expand globally with a focus on key opinion leaders, marketing, and performance-based advertising. Moreover, we are actively exploring AI and LIM-driven projects that will enhance platform capabilities for our ad clients. Our goal is to replicate the step growth we achieved in Q4 2023. While this kind of step growth is challenging to attain, we are committed to find them and pursue them. At the same time, continue to optimize and expand our business on a -to-day basis. We think that will ensure more stable and sustainable growth. As our AI technology matures, we will accumulate more customers, develop more experienced teams, contributing to our ad business growth.

Thank you, Dr. Tsu. This is Wayne. I would like to add more color from the financial perspective. There was remarkable financial progress in 2024. We will continue to monitor the key financial metrics to track our progress in 2025, particularly in the financial sector. We are also working on probability and cash flow improvement aspects. First, from the probability front, as mentioned by Dr. Tsu, 2024 marks the first year to achieve the scale of our projects. The net income attributable to the thousand ordinary shareholders for 2024 was over $80 million compared with the around $550 million in 2023. The significant improvements in our pipeline primarily stem from our focus on strategy projects and the streamline of loss-making operating units. We believe AI and LIM-driven technology, as mentioned by Dr. Tsu, such as AI tutoring, will enhance our advantages of our business. It will further drive the improvement in financial performance in 2025. Looking ahead to 2025, with AI technology becoming more mature and cost-effective, we will further leverage these developments and implement new cost optimization measures to enhance business profitability. Second, from the cash flow perspective, we have to massively improve our net cash also from the potential improvements from $440 million RMB net also in 2023 to around $70 million RMB in 2024. Such improvements stem from both enhanced profitability and the rapid growth of our AI subscription in 2025. We will continue our efforts in revenue expansion and cost control, aiming to achieve historical break-even in annual operating cash flow for further improvements. Regarding revenue growth, as mentioned by Dr. Tsu, we anticipate continued moderate growth considering today's challenging economic environment, while keeping profitability a key focus. While we face significant challenges from competitors and business uncertainty, we remain confident in delivering better business and performance in 2025.

The next question we have is from Brenda Zhao of CICC. Please go ahead.

Good evening, Jozo and Suzo. Thanks for taking my question and congrats on the improvements in your progress in your AI products, both in education and in the ad sector. My question is about the online marketing business because we saw that the Q4 growth of this business is kind of like flat-push. What kind of opportunities will arise for this business in 2025? Are we going to expand our – because previously we were mainly in the domestic market, are we going to expand in the overseas market and what's our strategy? Thank you.

Hi, this is Jozo. Thank you for your question. In 2025, your advertising strategy will focus on three interconnected growth drivers. The first, we are intensifying our collaboration with the NETIS Group through both technological integration and ecosystem expansion. By developing your data analytics and AI algorithm across NETIS platforms, they are driving a major improvement in advertising efficiency. We are now identifying new high potential traffic channels with the ecosystem to create additional devices. Notably, our AD services for NETIS Group achieved over 200% on -over-year revenue growth in 2024. Yet, they still account for less than 10% of our total AD revenue, demonstrating substantial and heavy potential. Second, as you mentioned, our global expansion is again strong momentum. Last year, market tools strategic breakthroughs became a one – tier one TikTok partner helped us surpass RMB 100 million in international AD revenue. This is over 100% -over-year growth. Well, our recent Google partnership certification established sustainable foundation for cross-border growth. This alliance strategically positions us to capture the emerging opportunities in global digital marketing through 2025 and beyond. Finally, we are illusionizing our advertising tech stacks through AI innovation, following the successful integration of our typing LRM with DG6 capabilities. We are now developing an AI advertising optimizer. This solution automates campaign strategy generation along with marketing objectives, enable dynamic budget optimization and execute real-time data adjustment. Significantly, it helps both position and operation efficiency in AD delivery. Okay. Thank you.

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

Hi. Good evening. Thanks, management, for taking my question. My question is about the priority for learning services this year. Thank you.

Thank you, Thomas. This is Super. I will handle the question first. I think the last year we initiated the structure of the adjustments in our learning services product portfolios. We intensified the focus on the courses with robust demand, especially in the Yu Daoling Shi. We are facing out non-essential programs at some times. This restructuring remains ongoing, I think, and it's projected to conclude in the second half of this year. Upon completion, revenue from the learning services is back to stabilize in the latter half of this year. I think Yu Daoling Shi will serve as the strategic priority for learning services in this year 2025. We commit to the advance following the key initials to deliver the more personalized and efficient learning experience for our customers. And at the same time, we expect the revenue, whatever the cost readings of the Yu Daoling Shi will keep growing in the 2025 as well. The first we think we will leverage is the advanced capability of the DeepSec, the life-saving models. We will comprehensively upgrade the AI services within the Yu Daoling Shi intelligence learning system. Post-upgrade enhancement will include the first more precisely, the identification of knowledge gaps, optimize the learning class design, enhance the clarify in QA and explanations, and more comprehensive college application planning solutions. Secondly, we are implementing the data-driven updates to the instructional videos beyond routine updates aligned with the curriculum revisions. Our primary updates create criteria derived from the students' exercise accuracy rates within the intelligence learning system. When the error rates exceed the threshold, our dedicated advisor will proactively engage the students to collect feedback on the specific video content, expedite the consolidated feedback to the content managers and our RD teams, facilitate media and video update and system redevelopments. And we think that will be the things we did in the 2025 on the learning services and we are confident about the business and the content and we expect to deliver the high quality product and services to our students. Thank you Thomas, I hope that answers your questions.

Thank you.

The next question we have is from Bojan of Watai Securities. Please go ahead.

Thanks for taking my question. This is Janbo of Watai. My question is after the integration of your last language model, can users with Dixie, what positive impact can they expect on the business operation?

Thank you. Yeah, thank you Janbo for the question. Yeah, I'll take it. So I think there are three points. So first, building on DeepSeek, particularly DeepSeek R1, the reasoning model, it opens up a lot of exciting opportunities for us. So we're one of the first teams in the education and advertising area to integrate DeepSeek into our products, including Mr. .A.I. Tutor, Udall Dictionary, Udall Dictionary Pan, China University MOOC, and Udall Smart Cloud. So we're doing it first. However, what's more powerful is enhancing these models with domain specific, business specific knowledge. So one key technology that you can enhance the base model, the base DeepSeek model is to augment it with a retrieval augmented generation, RAC, technology. So this integrates the model with knowledge bases and vector databases to combine general capabilities with domain specific expertise. So our team has a significant experience with RAC and our Q-Anything framework. It is actually one of China's leading RAC platform. So that's a good example. So we've also developed popular RAC applications in education, such as our AI college application assistance last year. So now with DeepSeek, we will strengthen these RAC applications, making them more effective. So from a competitive standpoint, the deeper integration of strong models into applications is, I think it's quite similar to developing apps for mobile platforms like iPhone and Android. So those teams with better app building experiences, I think right now we'll have an edge here. So these teams will develop AI applications better, just as we have been able to develop mobile applications very well. So that's one. So the second point is, agents are a newer, very promising application model of large language models. So instead of just answering single questions, so agents solve multi-step tasks. So AI agents have already seen success in areas like programming, and I expect education and advertising to be the next major area where agents will be very successful. So Jinlei just talked about AI as optimizers. These are agent applications that we are already exploring, and we already see very good early results for these AI agents. So there are a lot of very highly frequent scenarios where we see that a strong model combined with agent technology can automate tasks with very high success rates, such as tutoring on specific topics, such as optimizing advertising assets and performing ad attribution analysis. Third, we are enhancing general purpose large scale models with smaller, more dimensional perspective vertical models. So this is different from RAG. So essentially, RAG is you combine a model with knowledge base. So vertical model is you develop new, smaller, and more specialized models. This actually has been our strategy since 2023, and it's proving to be highly effective. So for instance, we recently open sourced the Confucius 01 14B reasoning model I talked about. So this one is optimized to run on a consumer grade GPU, like the 3090 or 4090. So it actually outperforms the distilled version of DeepSeq R1 of the same size, of the same 14B size in math tasks. So basically, we developed a model for math tasks that's more effective than DeepSeq of the same size. So I think that's very exciting. So and what's also exciting is that Confucius 01 was developed by our teams in just a month, just under a month. So that showcases how rapid open source models development has empowered our team and others in the industry to create competitive vertical models. So alongside Confucius 01, we've actually also developed a Confucius translation model with just 10% of the parameters of larger size general models. And also, we also have Confucius edge model with fewer than 1 billion parameters that delivers offline translation quality better than many online NMT translation models. So as we continue to understand and anticipate usage scenarios in the coming quarters, we will quickly upgrade these models and develop new vertical models. So keeping R&D and compute cost efficient while delivering valuable results to our users and business. Yeah, so I hope that answers the question. Thank you.

Thank you.

This concludes our question and answer session. And I would like to turn the conference back over to management for any closing remarks.

Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Udall directly or reach out to Pearson financial communications in China or the US. Have a nice day.

The conference is now concluded. Thank you for attending today's presentation. You may now.