Jianpu Technology Inc.

presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I'd now like to turn the conference over to Colin Cheung, Head of Corporate Development and IR. Please go ahead.

Thank you, Operator. Hello, everyone, and thank you for joining us today. Our second half and fiscal year 2021 earnings release were distributed earlier today and is available on our IR website at ir.jianpu.ai, as well as on PR Newswire services. On the call today from JEMPU Technology, we have Mr. David Yeh, co-founded chairman and chief executive officer, and Mr. Oscar Chen, chief financial officer. Mr. Yeh will talk about operations and company highlights, followed by Mr. Chen, who will discuss the financials and guidance. They will all be available to answer your questions during the Q&A session that follows. Before we begin, I'd like to remind you that this conference call contains forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control. These risks may cause the company's actual results or performance to differ materially. Further information regarding these and other risks, uncertainties, or factors is included in the company's filings with the USFCC. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required under applicable law. Finally, Please note that unless otherwise stated, all figures mentioned during this conference call are in renminbi. It is now my pleasure to introduce our co-founder chairman and chief executive officer, Mr. David Yeh. David, please go ahead.

Thank you, Colin. Hello, everyone, and thank you for joining us today. It has been a while since we have last spoken with some of you. And for those of you who are new to our story, I would like to give a quick overview of our company. JMPool Technology is a leading independent open platform for the discovery and the recommendation of financial products in China. We connect consumers' SMEs with financial service providers in a convenient, efficient, and secure way, providing consumers' SMEs with customized search results, and recommendations tailored to each user's particular financial need and profile through our proprietary technology. We also provide financial institutions with digital sales and marketing solutions to reach and serve their customers more effectively and efficiently and enhance their competitiveness by providing them with tailored data, risk management services, and solutions. As an independent third-party platform, we depreciate ourselves as being an asset-light fintech company. This is a highly scalable business model that allows us to be nimble and low-risk fundamentals where we do not take on credit risk, liquidity, or market risk. Our vision is to become everyone's financial partner. I will now walk through some key business highlights and the takeaways for 2021 before diving into further details on the business segment and the new strategic initiatives that we have undertaken. I will then pass the call to Oscar to discuss our financials. There are four key takeaways that we would like to highlight for 2021. First, and perhaps the most important, is that our business has resumed growth. in 2021, with the revenue up 37.4% year-over-year. And we developed a more diversified and balanced business and revenue structure, with no recommendation revenue, accounting for 28% of the mix. Second, through leveraging our integrated marketing and enhancing operating and technical capabilities, we have improved our business efficiency. We also expanded our business into other non-financial categories. Third, we continued to expand our efforts in empowering financial institutions' digital transformation. We now cooperate with 46, which account for 80% of online credit card issuing banks in China, enabling issuing over 23 million credit cards We also achieved significant wins in our big data and the system-based risk management services. Finally, our cost optimization initiatives continue to provide effective driving margin improvement and better cost performance, leading to a narrowing of operating loss by 44%. These results were primarily driven by our experience navigating through turbulence, our readiness to make changes and execute well in a dynamic environment, and the effective execution of our omni-channel strategies and solid technological capabilities. As part of our vision to become everyone's financial partner, we are continuously innovating our technology and exploring new growth drivers as we push forth our mission to empowering users and enabling digital transformation of financial service providers to better serve them. Now, let me go through our operations in 2021 in greater detail. I will begin with our recommendation services, built upon one of our core digital transformation capabilities, which is digital marketing. Throughout the years, we have successfully expanded our traffic acquisition channel to cover online, offline, and across mainstream media, social media, and private traffic sources based on social and demographic. By leveraging our strong technical capability, we have equipped financial service providers on our platform with a suite of product and solutions, allowing them to digitally market their products through an omni-channel strategy. we have also been recognized by the media and other key traffic channel partners, bringing more opportunities for us to move forward. As a result of our persistent efforts, our recommendation services business returned to a growth with their revenue up 71.4% year-over-year and 25.7% sequentially versus the first half of 2021. Our credit card recommendation business retained its industry-leading position as we maintained strong relationships with 46 credit card issuers, representing over 80% of banks that issue credit cards online in China. As part of our omnichannel strategy, our social media and the partnership program continue to deliver growth and improve efficiency. contributing 54.9% of recommendation service revenue. We have also successfully expanded the program into other product verticals, which we'll talk more later. I will now move to our enterprise R2B product and solutions, i.e. big data and system-based risk management services. Catering to financial institutions increasing demand for digital transformation, we continue to invest in our enterprise business and develop more products and solutions to enhance the risk management capabilities of financial ecosystem, including financial service provider, regulators, and other ecosystem partners. Our tech-driven solutions allow us to utilize AI big data to optimize risk control models according to the changing marketing environment and the consumer need, which is one of the key driving force of helping financial institutions, regulatory authorities to achieve their digital transformation initiatives. Our product and solutions are highly recognized by financial institutions, regulators, and industry. We received the national certification in recognition of our work in data security. Our achievements in digital transformation in the financial sector landed us the top 10 FinTech innovation awarded by the Banker magazine and outstanding partners by leading Chinese financial institutions such as Ping An Bank, Credit Card Center, and Everbright Bank. We entered into strategic partnership agreements with the top government-backed credit bureaus to cooperate on data, credit scoring, and risk management initiatives. In addition, we supplied a new suite of financial regulatory technology software as a service-based product to provincial government and financial regulatory authorities, helping them to assess, monitor, and react to regulatory risks of financial institutions in their jurisdictions. We believe these products and services could potentially be a big area of growth for us in the future, especially as current regulatory policies are supportive of the digital transformation of financial institutions. Now I would like to discuss our new growth engines. To expand and diversify our revenue structure, The company has applied its omni-channel digital marketing solutions, social media and partnership program in particular, and our recommendation capabilities toward adjacent categories and sectors with large data-rich user base find great financial need. The result of such expansion seems to be very promising. Revenue from the new business segment has more than doubled compared to 2020, currently accounted for 12.3% of the total revenue. We are now extending this customer acquisition model together with our credit card business partners to help financial institutions develop other financial products and services. We are also adopting the social media and the partner program for the development into non-financial sectors. In 2021, the revenue contributed by social media and partner program account for 46.6% of our total revenue, validating our initial success of applying an omni-channel strategy across different financial and non-financial categories. We have also seized development opportunities to apply our proven business models and knowledge to exciting overseas markets. We applied and successfully obtained financial marketplace, credit scoring, and e-KYC licenses in Indonesia, the largest country in terms of population in Southeast Asia. Going forward, GenPool will continue to drive inclusive finance services overseas to benefit more consumers and SMEs around the world. Finally, we have further advanced our cost reduction and efficiency optimization initiatives, which include closely assessing existing business lines, consolidating and cutting overlapping resources. Our strategy has already seen some initial results from these initiatives, as long gaps and net loss was further narrowed by 44% year-over-year. Let me also give a bit of a background of China's macroeconomical environment under the latest regulatory dynamics. The business environment that we're operating, we saw a raft of policy change, with the Chinese government implementing new rules and measures affecting the consumer finance industry. such as requesting all internet platforms to ensure data security and data protection for their users. New restrictions on direct transfer of borrowing information to financial institutions by internet platform. As the window guideline issued to financial institutions for the lowering of interest rate on consumer finance products. The letter of which has prompted some financial institutions to adjusting their product portfolio and credit policy, which has moderated the growth in consumer finance product provided by the financial institutions. In addition to rules affecting the consumer finance industry, the Chinese government has also rolled out other broader-based policies, tightening rules and regulations across multiple sectors and industries, in particular, affecting Internet companies. The tightening regulatory environment in conjunction with strict COVID control measures and overall macro weaknesses have dampened the general business sentiment. To summarize, 2021 was a year where we made continuous progress. We are a firm believer in when there is a challenge, there are always opportunities. Despite the ongoing regulatory and economic headwinds, we have worked extremely hard throughout the year to navigating through these dynamics. Despite the ongoing pandemic and the volatile macroeconomic environment, our businesses returned to growth, became more diversified and more efficient, and we have set a strong foundation for further growth in 2022. As for long-term, we remain positive about the economic outlook in China. And the recent rhetoric from Vice Premier Liu He contained strong messages supporting the development of China's economy, especially relating to us. Premier Liu mentioned that concrete actions must be taken to bolster the economy in the first quarter, including administrating appropriate monetary policy and promoting new loans for consumers, especially SMEs, to facilitate economic growth. Furthermore, authorities will promote the steady and healthy development of the platform economy and improve its international competitiveness. Premier Liu also stressed the importance of introducing market-friendly policies, and any policy that has a significant impact on the capital market should be coordinated with the financial regulatory authorities, you know, to smoothen the market expectations. In addition, the government has more recently issued guidelines supporting consumers and SME credit loans, COVID-related loans, and promoting and awaiting financial service products. We believe that the overarching theme of these policies is to provide a more sustainable economic growth and a healthier development of financial and capital markets. We are beginning to see a more supportive environment for the development of consumer finance, where additional measures shall be introduced to drive private consumption through the potential loosening of the monetary policy and the strong long growth, giving a positive tailwind for the industry in 2022. There should also be a tremendous opportunity for financial institutions and tech companies like us to work together and accelerate the financial sector's digital transformation. Naturally, in the short term, the resurgence of the Omicron variant in China recently has posted some challenges to our businesses due to the large-scale lockdown in cities where we are operating. We have seen partial and full lockdowns in cities such as Shenzhen, Changchun, and of course, more recently, Shanghai, where the lockdown is still ongoing. We expect a challenging first half in 2022, but this will not stop us from pressing forward. We will actively explore new product innovation applications and services. We will embrace regulations, continue to deepen our cooperation with licensed financial institutions, support the digital transformation of financial service industry, and further enhance operating efficiency. We remain hopeful that once the latest wave of pandemic subsides, our business will resume a moderate growth trend once more. With that, I now turn the call over to our CFO, Oscar Chen, who will discuss our financial results. Thank you.

Thank you, David. And hello, everyone. Our performance in the second half and the full year 2021 reflects our continuous efforts in business development and optimization as we continue to capitalize on the ongoing digitalization of the financial industry. Despite the tightening micro environment and ongoing pandemic, our business made a turnaround with second half total revenue up 62.7% year on year to RMB 461.5 million and fiscal year 2021 revenue up 37.4 percent to RMB 805 million. More importantly, along with the resumption of growth, we are pleased to see a more diversified and balanced revenue structure. Fifty-one percent contribution from our credit card recommendation service, 21 percent from loan recommendation, 16 from big data and system-based risk management services, and 12 percent from our new business initiatives. which proves the scalability and the resilience of our business model, as well as our team's capability to navigate through and adapt to dynamic environments. Total recommendation services revenues increased by 71.4% year-over-year to RMB 320.3 million in the second half, and 42.2% to RMB 500 million and $75.2 million for the full year of 2021. On the back of 38.4 percent and the 52.6 percent annual increase in credit card and the loan recommendation service revenues respectively, as we continue to refine our business model and strengthen our digital marketing efforts to acquire new customers. Revenue from big data and system-based risk management services decreased by 10.4% to RMB 67.3 million in the second half and 9.6% to RMB 130.4 million for the full year 2021. Despite the unfavorable pressure from the ongoing pandemic and credit tightening in the past year, our continuous efforts on technology development, product innovation, and data compliance have won certain industry-wide awards, and we believe such efforts will benefit us in the long run. Revenue from advertising and marketing services and other services increased by 240.6 percent to RMB 73.9 million in the second half, and 100 and the 67.2% to RMB 99.4 million for the full year 2021, primarily due to the growth of insurance brokerage service and the successful category expansion of the social media and partner program into non-financial service areas, as David outlined. In light of the business development, we newly added a line item, namely cost of promotion and acquisition, which mainly consists of the expenditures relating to our marketing efforts and activities. Cost of promotion and acquisition increased by 72.5% year-on-year to RMB $334.9 million in the second half and 48.2% increase to RMB $562.1 million for the full year 2021. which was in line with the growth of our revenues from recommendation services, advertising, and marketing services, and other services. Due to our continued cost optimization measures, cost of operation decreased by 11.4% year-on-year to RMB 45.1 million in the second half of 2021, and 4.2% to RMB 88 million for the full year 2021. Also, the cost optimization efforts lead to the reduction of sales and marketing, RMB and the GMA expenses measured as percentage of total revenue to 45% in the second half of 2021, compared with 76% in the prior period, and the decrease of 20 percentage points for the full year 2021. In 2021, we divested the investment in a decentralized application blockchain solution provider and realized investment gain of RMB 51.2 million. As a result, our non-gap adjusted net loss continued to narrow sequentially, decreasing by 55% to RMB 96.7 million. from RMB 215.1 million in the second half of 2020 and decreasing by 44% to RMB 186.7 million for the full year 2021. As of December 31st, 2021, we maintained a strong balance sheet with cash, cash equivalents, and short-term liquidity of RMB 762.8 million. With that, I will conclude our prepared remarks. We will now open the call to questions. Operator, please go ahead.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we'll pause momentarily to assemble our roster. Again, if you have a question, please press star, then 1. Our first question is from Brian Lee from Spica Capital. Please go ahead.

Hey, David. Hey, Oscar. Thanks a lot for taking my questions, and congrats on all the progress made. First of all, you guys mentioned quite a bit your digital marketing capabilities and how it seems to be a key competitive advantage. So I wanted to, first of all, get some more color on what exactly are these competitive advantages in terms of your digital marketing capabilities. And How are you using these to drive value to the financial institution customers? And then related to these capabilities, you mentioned that you were leveraging these capabilities to expand into other categories or growth engines. So how exactly are you guys doing that and what are your future strategies and kind of outlook on that segment? And then secondly, my question is related to the cost optimization program. And so, I mean, you guys have any specific targets that you're trying to achieve or how should we be looking at your cost base down the road? And then for these, you know, initiatives, how do you guys foresee the cost and resources being allocated between the existing businesses and the new growth engines and initiatives? Thank you.

Thank you, Ryan. I will go ahead and start to answer the first question. So Oscar can answer the second question related to the cost optimization. Okay. Yes. Your first question about the digital marketing capability, also the value provided to financial institutions and also expansion to other sectors. So, I mean, two or three questions, they are connected. So, Let me start with what we have done in the last 18 months. It's two years. I mean, I started with the recommendation services. So basically, as an example, we are well positioned as a leader in the area of financial institutions' digital marketing transformation. So the recommendation services continue to be our most important revenue line with their contribution near 70% in 2021. And in terms of the digital marketing services for our credit card businesses, which is contributed for around 51% of our revenues, we combined the omni-channel our digital marketing capability with our big data and system-based risk management solutions. So in the past two years, we have some efforts, specific efforts and initiatives in our recommendation engine, in our product, in our technology, and also we have also strengthened compliance for example, in terms of the data security, user privacy, and also we have developed a strategic partnership with one of the leading government-backed credit bureaus. And we have also received an industry-wide award and the recognitions. So all those initiatives, we are helping our financial service providers, including 46 of the largest online credit card issuers are the licensed financial institutions such as banks, non-bank finance companies, consumer finance companies, and the FinTech companies. So they are better able to acquire customers in this turbulent market, and they are also able to manage their credit and manage their risk better in this challenging economic environment. So as a result, we have seen our overall unit economics or our efficiency, we have improved year over year. And also, the Omni-Channel Partnership Program, we have we have developed, we have seen tremendous growth. We have expanded that to other sectors, such as e-commerce. So basically, we've extended our social media or partnership program into new sectors, including other financial and no financial So this new sector, you saw the growth in 2021 was 160% quarter over quarter. And we also see our total revenue driven by our social media and the partnership program now count for about 47% of our total revenue. In the end, we believe the digital transformation of financial institutions is a big trend in the financial sector and other known financial sectors. So our investment in the past two years, we have seen a huge payoff. It will put us in a much better competitive position, enabling our financial service providers and e-commerce and other providers to better serve their customers in this growth-challenging environment. Did I answer your question right, the first one? If yes, I will turn it over to Oscar. Oscar, for the second part of the question.

Sure, David. Brian, thank you for the questions. For the second question about the cost optimization, Firstly, I want to emphasize that the growing scale and efficiency gain play a more important role than cost optimization to our business. Leveraging our digital marketing capability, we definitely see an improvement of our recommendation service, advertising, and the marketing service and other service. The improvement is four percentage points for the full year and 11% percentage points in the second half. At the same time, considering the uncertainties and the challenges around the ongoing pandemic and the regulatory change, we have continued to execute cost optimization initiatives in the past two years. That means we are closely monitoring and evaluating the resources allocated among the existing business lines and the new business initiatives and consolidating overlapping resources to enhance operating efficiency and optimize the cost structure. That resulted in a reduction of operating expenses. So, yeah, the total operating expenses, the percentage of revenue in 2021 decreased by, you know, 20 percentage points compared with the same percentage of 2020. That includes, you know, our efforts in fixed cost reduction and headcount optimization and the resources allocation and balance between the existing business lines and the new initiatives. I want to emphasize that at the same time, we continue to explore and invest in new business to find new growth engine. A significant part of our loss are attributable to the upfront investment in the new business. So, down the road, we will continue to closely monitor and evaluate our cost structure and the resources allocation. Along with the growth recovery, we expect our operating efficiency will further improve. The cost optimization measure adopted in the past two years, and we also expect that it will continuously benefit our operations in 2022. Hope that answers your question, Brian.

Thanks, David. Thanks, Oscar.

Okay. Thank you.

Our next question comes from Alex Yee from UBS. Please go ahead.

Hi, management. Thanks for taking my question. I guess I have two questions here. Number one is on your credit card and loan recommendation business. I guess the lockdown will surely cause some headwinds to your growth in the first half. But I'm wondering if you could share with us some more general trends that you have seen on customer demand over the past year. So that's before the lockdown. So because we have seen different moving factors on the one hand. the micro data on consumption has remained quite weak, and on the other hand, there has been multiple rounds of industry tightening. So many small players may have affected the market, and then some bigger players, they may face some kind of constraint on growth. So have you also seen the sovereign demand from the loan products? and credit cards, or is it the other way around that you are seeing stronger demand from customers because people just find it hard to borrow elsewhere? So yeah, that's the first one. And secondly, on the regulation from, so given the ongoing regulation on the credit bureau, so FinTech platform, they are not allowed to directly transfer the customer data to the bank. So I'm wondering, how has that affected your business model and what are the changes you need to make in order to stay compliant? Thanks.

Okay. Thank you, Alex. I understand you have two parts of the question. I'm going to take a stab. If anything, Oscar can follow up. So the first question about the overall low markets, the impacts about the COVID situation, lockdowns, right? So you saw the data. Last year, we had growth. We turned around and we managed growth. I think it's a dynamic market. I mean, the demand is strong. Consumers need to borrow. They need money, right? I mean, SMEs also need liquidity, need to borrow, so demand is strong. No question about it, right? On the other hand, we actually have found out, like, for the retail side of the banking business, that's consumer finance company, credit card issuers, the non-secure credit type of products, or even some of the fintech companies, I mean, Actually, we have seen the whole year last year, there are enough, I think there are sufficient liquidity or credits available for those financial institutions. But we do see some shift because of the lockdown, because of the COVID. Financial institutions, they're shifting their line of credit, their available credit from our front branch from traditional direct sales channel toward online. So that's why I would say the supply of the online credit, the light assets, or the loans offered through internet or through mobile platform, through like WeChat, a micro program, there are plenty. So that's getting interesting. Demand is strong. Also, supply of SME consumer online Not weak, right? What's the problem? But we do see there's a huge information asymmetry or inefficiency between the demand side and the supply side. I mean, as we know, the financial institutions, they are adjusting their credit policies. They are tightening their credit policy overall. They have more stringent underwriting or fraud detection or risk management or They are also shifting their marketing channel. So that's why our omnichannel strategy combined with our strong recommendation capabilities also combined with our experience and expertise cultivating risk management and credit and also even like red tech and also or collection tech technology, our whole suite solution really helped enable the financial institutions to accomplish growth and also increase their marketing efficiency and also enhancing their risk management capability. I just want to give one example. Our largest customer, In the credit card digital marketing and also recommendation business, we saw exponential growth of the revenue from these credit card banks, exponential growth. It's increased from below top five to top number one in just 12 months, and also the the qualified recommendation or the new card issued by this credit card bank, we are the largest recommendation service provider, owner recommendation service provider for this company. So that's the reality. So, of course, this year, this quarter, we definitely will see more impact of lockdown, especially full lockdown like Shanghai. And so the management has been very cautious in terms of our strategy, our growth strategy. We are optimizing our marketing spend. We also closely monitoring our costs in all aspects. And we are also working even closer with financial institutions in terms of their dynamic change, acquisition and marketing policies, their credit risk management policies and strategies to further optimize our omnichannel digital marketing capabilities also with our recommendation capabilities. So that's the first part of the question. Let me go ahead to answer the second part. Okay, the second part you asked about the regulation and specifically you also mentioned about the direct transfer of data or the credit bureau would have impacted to the industry or to us in general. So last year we entered a strategic partnership with leading and credit bureau that's governed by the credit bureau in China in terms of risk management and data initiatives. So basically this credit bureau would work directly with financial institutions in terms of credit scoring data and other initiatives. And we are a strategic partner providing risk analytical and digital marketing services with this government-backed credit bureaus. We are also working with other bureaus together. I think for this type of strategic partnership, our goals or vision are the same, to become financial institutions' partners. So that's why the vision, I mean, our vision and mission are really truly aligned. So we definitely have seen this part of the business has been stable. And we also like to see, we also love the fully transparent or more clear regulatory environment or guidance that make financial institutions, partners like us also authorize the government-backed credit bureau to grow the business forward. So that's my three cents for you, Alex. So Oscar, you have anything to add in terms of regulation and in terms of the COVID impact?

I think, Stevie, you are well-covered. Yeah, I don't have any further comments.

Okay. Okay, Alex, turn it over to you.

Okay, thanks very much, Ricardo. Thanks.

Thank you, Alex.

Again, if you have a question, please press star, then 1. Our next question comes from Peter Lau from Bloomberg. Please go ahead.

Thanks, Benjamin, for the introduction, and congrats again for your sales results. Just a quick question on the gross margins. I'm very glad to see there's a slight improvement in the gross margin of different business lines. Do you mind sharing what's the big driver behind the margin improvements? For example, is it coming from loans or credit card recognition? We'd love to hear more on that front. And the second question is, obviously, we have the plunge rate and regulatory curve coming in. Obviously, I think JMPO has done pretty well in countering this regulatory headwind. I just wanted to know if there is any impact on the fee rates front. will this regulation change the pricing dynamics? And will that, you know, pose any benefits or pose a headwind to JMPO's fee rates, say, the loan commission's rates? We'd love to hear more on that. Yeah, that's two questions. Thank you.

Okay. Thank you, Peter. So, Oscar, go ahead. I think he's is the margin with some financials, and I will add if needed.

OK, yeah. David, I will take the first part to discuss about the margins. For the second part, I think it's still about the regulatory something. So I will answer the first part. Yeah. So thank you, Peter, for your questions. Yeah, I think the overall, the margin improvement As I said also in the last questions, I think it's a growing scale. You can see our top line have close to 40% year-over-year growth for the full year and more stronger growth for the second half of 2021. Our business is still, if you have larger scale, you can have better bargaining power to discuss the price, to negotiate the price and the terms with the financial institutions. So we are seeing the price increasing trend for credit card business. But for the loan recommendation business, we are seeing a declining pricing trend. That's mainly because the credit tightening limited the loan products available on our platform. At the same time, when the scale grows, we achieved the efficiency gain from our core marketing capabilities. Mainly from the omni-channel marketing strategy, the social media and the partner program. That part accounts for almost more than 50% of our traffic source for the recommendation services. And also leveraging that, we enter into the new business. That's advertising and marketing services and other services. So with that, we are seeing an improvement. If you divide the revenue by the cost of promotion and acquisition, we can see a higher margin. We can see an efficiency gain that is 4 percentage points for the full year and 11 percentage points in the second half. So I hope that answers your questions about margin improvement.

Yeah, it does. Thanks a lot.

Okay. Yeah, Peter, I'm going to go about your second part about the regulation, about the C rates. Here's the regulatory dynamic overall. We have some headwinds. We also have strong tailwinds. And I mentioned earlier that there are restrictions in terms of direct transfer of foreign data, and also we have COVID-related lockdown, right? But the tailwind I mentioned earlier, the digital transformation of the overall financial sectors, financial institutions actually are shifting more of their acquisition or marketing or risk management capability for online channel, for online channel, And also, we have seen in banks, large and also even medium-sized, like a shareholder-owned bank or even some of the regional banks, the rural commercial banks, they have been really truly beefing up their own and decisioning capabilities. And so the way we price our product is based on quality. in terms of marketing quality and risk quality. So technically, really, we price our loan recommendation or even credit card approvals based on its strong proxy, strongly correlated with the pull rate and charge-off rate or the risk rate. So banks are willing to pay more in terms of if they see a higher pull rate from us versus a lower application fraud rate and a lower delinquency rate. That's how we, as an AI-driven, data-driven, analytical-driven recommendation platform, we truly optimize the omni-channel acquisition process. stage digital marketing capability with the recommendation engine, which we optimize both approval with approval rate with risk management rate. And of course, lockdowns, original lockdowns, lockdowns are original, cause some trouble for some national bank. They may have to temporarily suspend some of the user application in Shanghai area, for example, right? So we were truly able to dynamically adjust our national-based recommendation into a quickly turn over to a regional-based optimization engine to shifting our volume based on different region or different bank, different bank's product. and also the dynamic credit policy and the marketing policy and the budget. That's how we are able to actually achieve the better prices. We have seen in better pricing, I just use credit card, like recommendation fee as an example. If you look at the quarter over quarter, or in some cases, if you look at a specific credit card issue, quarter over quarter, we were able to, last year, we were able to see our recommendation, like credit card recommendation fee per pool. Actually, we were able to see a median to long-term increased trend. So that's why, just to summarize, the regulatory dynamic really has less or little impact in terms of our our pricing or our fee as a unique economics. It's more driven by our capability, our dynamic insight adopting the market change and also our relationship, our strong partnership with our financial institutions and also our customer insights for our for our consumers and SME customers.

I see. That's very comprehensive. Thanks very much.

Thank you, Peter.

There are no more questions in the queue. This concludes our question and answer session. I'd like to turn the conference back over to Colin Cheung for any closing remarks.

That's right. Thank you, everyone, for joining the call today. Thank you, David, Oscar, for presenting our remarks. So if there are no further questions with that, I will conclude the call. Thank you for your support. I appreciate your interest and look forward to speaking to you again in the near future. Thank you and good night.

Thank you, everyone. Good night.

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