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spk05: Ladies and gentlemen, thank you for standing by and welcome to CLPIN's third quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. After prayer of remarks by the management team, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the call over to Yilin Dai, CLPIN's investor relations representative. Please go ahead.
spk02: Hello, everyone, and thank you for joining Klupin's third quarter 2021 earnings conference call. The company's financial and operating results were issued in a press release via newswire services earlier today and are posted online. You can download the earnings press release and sign up for our distribution list by visiting our IR website. Participants on today's call will be Mr. Chang Xun Sun, our founder and chief executive officer, and Mr. Stephen Lee, chief financial officer. Management will begin with prepared remarks, and the call will conclude with a Q&A session. Before I hand it over to the management, I would like to remind you of Groupon's safe harbor statement in relation to today's call. Except for the historical information contained herein, certain matters discussed in this conference call are forward-looking statements. These statements are based on current trends, estimates, and projections, and therefore you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. For more information about the potential risks and uncertainties, please refer to the company's balance with the Securities and Exchange Commission. With that, I'm now very pleased to turn the call over to our CEO, Mr. Chang Xun Sun. Please go ahead.
spk03: while maintaining a high rate of income growth, the overall net profit of the company is still stable, reaching 43.5%. Since our launch, the strategic center has been on the right side of the cloud contact center. We focus on providing large-scale products for customers to sell and serve. This quarter, we have also made good progress in the strategic direction of the company. It has also achieved significant results. Specifically, it shows that our CC business has increased by 125.4%. 125.4% has become the largest business block of the group's income contribution. In addition, the number of large customers and the ability of large customers to earn continues to improve. Hello, everyone, and thank you for joining Crouppen's third quarter earnings call. We appreciate your interest.
spk02: We are excited to announce that we maintain strong top-line growth in the third quarter. delivering revenues of RMB 276.1 million, representing a 44.3% year-over-year increase. With the rapid revenue growth, our third quarter growth margin also remained robust at 43.5%. Since our IPO, we have strategically focused on our cloud-based CC business, and providing SaaS products for marketing and service scenarios to our customers. We made great progress executing our strategy during the third quarter and delivered excellent results. This is reflected in our 125.4% year-over-year revenue growth in CC business as the biggest revenue contributor in our group. We also increased the number of large enterprise customers to 219, accounting for 77.4% of our total revenue during the 12-month period ended September 30, 2021.
spk03: First of all, let's look at the logic of CC products. In the Chinese market, the sales system and product system for large and small customers are different. Large customers need to have industry sales. We provide special services for large customers in the industry. For small and medium customers, this is based on online traffic and local sales. We provide standardized large and medium customers. For this purpose, Ronglian has established a large-scale product brand called Rongxi. Rong of Rong and Xi of Xi. The original product name of Rongxi is RongCC, which translates to Rongxi in Chinese. The product brand of Zhongxiaoke is called QiMo, to better serve customers. The overall income of the company covers two major application scenarios, marketing and service. Our product is also based on these two major scenarios. For the marketing scenario, the path of our product is like this. At the beginning of our business, we started our business with C-Pass, which is a service for voice and text messages. This is to provide channel service for companies and customers. Next, we did SaaS service. First, it is a standardized product for small and medium-sized customers. This is what we call Qimo. It covers the service of e-commerce services and the service of text-to-text customer support robots. Then we also launched Rongxi for industry customers, including functions such as communication center, outside-the-box robot support, etc. These are all using our communication capabilities and AI technology to assist customers in marketing scenarios, help customers reduce cost-effectiveness, In March of this year, we acquired the CIM of Guo Hebin, which strengthens our ability to manage a large number of clues and sales during our marketing process. Based on a data ability that we are creating, we have newly launched a new product called GK Marketing. This product is aimed at industry customers, as well as It covers a SaaS product of small and medium-sized customers. This product can help companies achieve the transformation from public traffic to private traffic traffic, private user operation. At the same time, it also implements our ability of data centralization. Companies can understand their users deeply. It helps to achieve the re-sale of private customers. In the end, it helps companies to improve the efficiency of sales. Why can we do this marketing cloud? On the one hand, we provide communication services to tens of thousands of customers. During this process, we have accumulated a lot of business data and knowledge of user behavior after this benchmarking. This information is helpful for us to achieve accurate marketing for private domain traffic according to the needs of customers. On the other hand, our PaaS and SaaS services are all for the access to public housing clues. For business clients, this is a very important way to access. The advantages of these two aspects allow us to extend the product to the marketing SaaS. The sales path is smooth. For the service scene, we have Chimo and Rongxi products. We will include more channels of intervention, including knowledge base, including CIM, including public order management. We also serve a few thousand business customers. Previously, we helped business customers solve the problem of post-sale communication online, which is what we call customer service. Currently, there are many customers who have more needs for public orders. Mainly, after customer service, there will be a scene of business circulation. Based on our existing We hope that the customer service cloud and the customer service cloud will form a complete wall of corporate service. We not only need to serve the corporate customer service department, we also need to surround the other business departments of public and non-profit corporate customers, including its downstream retailers, including its service network points.
spk02: Today, I would like to discuss two important aspects of Groupon's business, our CC product development strategy and our technological program. First, let's talk about our products. In the Chinese market, it is important to differentiate the needs of large enterprises and small to medium-sized enterprises, or SMEs, with respect to sales and product service systems. Large enterprise customers require direct sales. Here we provide private cloud-based services specific to their industry scenarios. For SMEs, we offer standardized SaaS products to support their focus on directing online traffic with follow-up from original sales teams. To better serve each customer group, we designed two distinct product brands. Rongxi, formerly called RongxiC, is specifically for large enterprise customers, and our seven more brands serve SMEs. Our revenues are mainly derived from two categories, marketing and service scenarios. The products we offer constantly evolve to meet demand in these categories. We have made great strides in developing products for diverse marketing scenarios. Initially, we offered CPaaS solutions with channels to reach customers, including voice and messaging APIs. We then expanded our offerings to SaaS. First, providing SMEs with standardized products, including telemarketing services and a text-based chatbot for lead reception under our seven-word brand. We later added Ronci products to serve large enterprise customers, including our Ronci contact center, outbound call robot, and agent assistance. With these products, we are more fully leveraging our communications and AI technologies, empowering businesses to reach a broader range of potential customers in various marketing scenarios, reduce costs, and enhance their operating efficiency. We also acquired Elite CRM in March 2021, which reinforces our capabilities in vast pool of sales leads and sales process management during the marketing process. Based on our data foundation, We plan to release our new Zhike Marketing Cloud as a SaaS product for use by both our large enterprise customers and SMEs. Zhike Marketing Cloud is designed to help our customers realize public-to-private domain traffic conversion and private domain user operations. And with the support from our middleware capabilities, businesses can gain a better understanding of their users for remarketing opportunities from private domain users, all of which drives additional marketing efficiency. By providing communication services to tens of thousands of customers, we have accumulated a large amount of industry data and user insights that can help improve private domain targeted marketing accuracy for our customers. in compliance with their requirements. Supplying PaaS and SaaS services for leads from the public domain has also given us a deep understanding of our enterprise customers. With our advantage in these two areas, we are well positioned to extend our offerings to include marketing SaaS products with a clear sales pathway. With respect to service scenarios, we have served thousands of customers through seven more customer service cloud and Rome CC products that provide functions such as multi-channel access, knowledge base, CRM, and work order management. In the past, we helped our customers solve their online communication issues with their users. Now, many of our customers require work order function solutions as they strive to digitize their after-sales workflow management. To address their evolving needs and based on existing customer service cloud products, we developed our after-sales cloud with functions extending to after-sales and after-markets. targeting to provide a closed-loop services for enterprise customers with both our customer service cloud and after-sales cloud. Our products help businesses realize online workflow management by both empowering customer service departments and also covering other related parties such as the downstream dealerships, service outlets, and on-site engineers.
spk03: The above is about Ronglian's product logic. In addition, in terms of technology, Ronglian continues to expand its research and investment to maintain the core competitiveness of product technology. The technical team was rebuilt and completed in Q3. We established an AI research institute, AI engineering institute, big data department, audio and video department, security technology department, and continuously hired technical experts from top-level network companies and actively carry out efficient talent cooperation. Regarding the technical system, we emphasize three core capabilities. One is audio-video capability, one is big data capability, and the other is AI capability. In terms of audio-video capability, we are building an RTN network according to the latest architecture in the industry. This network will significantly improve the ability to connect weak networks and achieve high frequency and low latency. In terms of big data, we will quickly build AI direction AI direction AI direction AI direction AI direction In addition to the three core technical capabilities, we are also improving our R&D efficiency. We have upgraded the technical architecture. We only need to deploy a set of solutions to be able to integrate all kinds of cloud manufacturers and customer environments. In addition, we have built our own low-digit code platform that can be used for custom development. These will continue to improve Ronglian's technical strength and development efficiency. In the future, Ronglian will continue to strive to become a large company that services enterprise marketing and digital transformation that integrates communication data and intelligence, and serves China's enterprises better. 我的讲话到此结束,再次感谢大家参加我们的电话会。 接下来的时间交给易鹏,他将和各位分享我们近期的业务亮点和第三季度的财务数据。 Having discussed our product development strategy, now let me share with you our progress on technology front. In the third quarter, we continue to ramp up investments in RMD to sustain our core product and technology competencies.
spk02: We also added top-notch talent to further run out our technical team. We established an AI research institute and AI engineering institute, a big data department, an audio and video department, and a security technology department. Meanwhile, we successfully recruited highly regarded technical experts from leading internet companies and are actively collaborating with colleges and universities to develop and recruit talent. Our technology system emphasizes three of our core capabilities, audio and video, big data and AI. In the audio and video segment, we plan to build our own RTMs, or real-time networks, conforming to the most up-to-date industry architecture standards. This will significantly enhance connectivity performance within poor networks and realize high concurrency and low latency. In terms of big data, we quickly constructed a complete series of commercially applicable big data platform solutions in line with industry technology and innovation standards. To advance our AI capabilities, we have established two research institutes, an AI Research Institute led by a professor from the prestigious Nankai University, and an AI engineering institute led by a leading internet company's former chief scientist. With respect to AI, we focus on natural language processing, or NLP, and intelligent decisioning, and are also actively exploring computer vision, or CV technologies. While enhancing our three core capabilities, we are also improving our R&D efficiency. We upgraded our technical architecture to only need a single deployment solution to be compatible with all types of cloud vendors and customers. Furthermore, the local development platform we built will enable accelerated customized development. These refinements will consistently improve Crouppen's technical strength and R&D efficiency. Going forward, Crouppen is committed to becoming a SaaS company that integrates its capabilities in communications, big data, and AI to better support businesses' marketing needs and drive their digital and intelligent transformations. As we continue to refine our products and services to empower companies across industries, we are confident in our ability to create additional value for our shareholders. That concludes Sun Zong's prepared remarks. Now we would like to turn the call over to Stephen for a closer review of our third quarter financials.
spk00: Thank you, Changxuan and Yilin. Hello, everyone, and thank you for joining our call today. Before going through the third quarter financials in detail, I would like to share with you the recent developments. We are excited to announce that we received our first order from the Southeast Asia market. The order comes from one of Thailand's largest commercial banks, marking an important milestone in our overseas expansion plan. With the pandemic gradually receding in this region, we expect our endeavors will progressively bear fruit in the coming quarters. We will continue to expand our customer base in this region, leveraging our comprehensive proven products and services, as well as abundant experience in serving companies of all sizes across industries in China. In addition, according to the Blue Book on China's Cloud Communications Industry, which was recently released by China Insights Consultancy, or CIC. China's cloud-based communications market is expected to grow significantly from RMB 49.8 billion in 2020 to RMB 146.5 billion in 2025, at a CAGR of 24.3%, with a particularly strong impetus from CC and UCMC. As the only company that offers a full scope of products and services covering CC, UCMC, and CPaaS among cloud-based communications solutions providers in China, we believe Groupon has a long runway for growth given our strong momentum. Our belief is supported by CIC data reflecting our industry leading year-over-year growth rates in revenues for the company and our CC business for the first half of 2021. We are confident that Klopin is well positioned to address this sizable market and unlock its value with our continuous efforts to refine our products and services, enhance our innovation capabilities, optimize our customer mix, and expand our global footprint. We are pleased with our solid third quarter operating and financial performance despite impact from the after-school tilting sector. Excluding this impact, our dollar-based net customer retention rate remains sound, above 100% for the third quarter of 2021, but lower compared with the previous quarter, primarily as a result of the discontinuation of some low-margin customers using our CPaaS messaging services. As large and medium-sized enterprise customers usually have strong payment abilities and a higher user stickiness, we made strategic adjustments to optimize our customer mix during the quarter, resulting in a decrease in total active customers due to a reduced number of small-sized customers. Now, let's look at our financial results in detail. We recorded revenues of RMB 276.1 million during the quarter, up 44.3% year-over-year, mainly driven by the continued growth momentum of our CC business. With an increasing number of large enterprise customers and synergies from Elite CRM, CC business generated RMB 130.4 million in revenues, representing a remarkable 125.4% year-over-year increase. In addition, according to the... Sorry. Cost of revenues increased by 31.8% to RMB 156 million in the third quarter of 2021, from RMB 118.4 million in the third quarter of 2020, which was primarily due to increased infrastructure and equipment cost all sourcing costs and the staff costs as the company continues to scale its business. Growth profit increased by 64.6% to RMB 120.1 million in the third quarter of 2021 from RMB 72.9 million in the third quarter of 2020. Growth margin was 43.5% in the third quarter of 2021 compared with 38.1% in the third quarter of 2020. The increase of growth margin was contributed by the optimized revenue structure. In the third quarter of 2021, operating expenses were RMB 237.8 million, representing a 51.5% increase from RMB 157 million in the third quarter of 2020. RMB expenses increased by 66.9% to RMB 75.5 million in the third quarter of 2021, compared with RMB 45.3 million in the third quarter of 2020, primarily due to an increase in share-based compensation expenses of RMB 5.5 million, an increase in the RMB staff expenses of RMB 18.5 million as the company recruited highly regarded experts to develop core features and functions in cloud-based and CC solutions and cloud-based UC and C solutions, and the increase in technology service expenses paid to the outsourcing service providers for the development of certain non-core features and functions in cloud-based UC and C solutions. Sales and marketing expenses increased by 42.3% to RMB 82.6 million in the third quarter of 2021, from RMB 58.1 million in the third quarter of 2020, primarily due to an increase in share-based compensation expenses of RMB 7.5 million and an increase in staff expenses of RMB 12.6 million, as the company continues to scale its business and reach a wider customer base. G&E expenses increased by 48.4% to RMB 79.6 million in third quarter of 2021, from RMB 53.7 million in the third quarter of 2020, primarily due to an increase in personnel costs as the company continues to build its team An increase in social insurance premiums as the company had enjoyed a social insurance premiums deduction in 2020, according to the government relief policies during the COVID-19 outbreak. And the increase in the provision for doubtful accounts resulting from increase in accounts receivables. Net loss for the third quarter of 2021 was RMB 112.2 million Compared with RMB 93.9 million in the third quarter of 2020, net loss margin is sharply narrowed by around 10% year over year. For the fourth quarter of 2021, Klupin currently expects revenues to be between RMB 328 million and RMB 333 million. representing an increase of 26.8% to 28.7% year-over-year. The above outlook is based on the current market conditions and reflects the company's current preliminary estimates of market and operating conditions and customer demand, all of which are subject to substantial uncertainty. With that, I would like to open up the call to questions. Operator, please.
spk05: For the benefit of all participants on today's call, if you ask a question, please ask first in Chinese, then in English. To ask a question, 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. This time, we'll pause momentarily to assemble the roster. First question comes from Tina Hu of Goldman Sachs. Please go ahead.
spk01: Good evening. Thank you very much for your time. I have three questions. The first is, I see that our three-season CC business is growing very fast. I would like to ask, if we compare the three-season with the two-season, the competitive attitude of the entire market and the 我们跟竞争对手之间体现出来的优势 有没有什么更新的一些进展和变化 第二个问题是咱们4Q的指引 我看如果用4Q减去3Q的收入 那大概新增的收入是5400万左右 那这个增加的量其实跟 So I will translate in English. So my first question is regarding the CC business, because we saw pretty strong growth in the third quarter. So just wondering, compared to the second quarter of this year, Is there any new development or competition changes in 3Q versus 2Q? And then the second question is regarding the 4Q revenue guidance. If we take 4Q21 guidance minus 3Q21 revenue, then the incremental revenue is about 54 million RMB. When we compare this to the 4Q20 and 3Q21, Fortune 19 numbers. It's actually a little bit lower than the previous two years, so wondering what's causing this. And then the third question is, please break down the growth margin by the three different segments. Thank you.
spk00: Thank you. Okay. For the first question regarding the competitive environment for our CC business, We actually continue to enjoy bigger and bigger competitive advantage, especially for our business line, you know, focused on the large enterprise customers. Our business actually increased by over 400% compared to third quarter of last year. especially in the finance industry. We think we are now the very clear frontrunner in the finance industry. We actually had several very big lists in the third quarter. The finance industry, right now accounted for almost 70% of our total revenue from business. So as what I mentioned during the call, based on the CIC report, the revenue increase of our business is the top in the business. So I think along, you know, when we continue to increase to dig deeper into the industries we focused on, especially the finance industry. We will have more expertise and know-how in those industries, and we'll have a bigger, actually, competitive advantage compared to our competitors. The second question is regarding the guidelines for the fourth quarter of this year in terms of the revenue increase. compared to third quarter and compare that with the revenue increase for last year and the year before. Actually, the reason why we look at the total revenue increase for the coming quarter compared to third quarter is a little bit lower compared to the previous years. It's mainly due to the revenue increase not increase very much or maybe a little bit decrease of our CPAS business. If you look at our third quarter financial results, the revenue for CPAS business actually decreased a little bit compared to third quarter of last year. As we continue to shift our strategic resources to higher margin business such as CC and UCNC business, the revenue will probably, for the same class business, will probably remain very flat or even decrease a little bit. So that's the major reason why our revenue for the last quarter of this year compared to the third quarter not increased that much. But for the CC and UC and C business, we are very confident the very fast increasing trend will continue. The third question is the growth margin for each of our business. The growth margin for our CPAS business for third quarter is 28%. It's roughly the same compared to before. And the growth margin for the CC business is 56%. is also roughly the same compared to before. The gross margin for UCNC business for the third quarter is 41%. This is a little bit lower compared to previous quarters. This was mainly due to some of the revenues for UCNC for our CV business in the third quarter involves some of the hardware. So that drives our gross margin for UC and C business down a little bit. But this is more like a one-time thing. So we believe the growth margin for the UC and C business will bounce back in the coming quarters.
spk03: 我补充一下,就是过去的一个Q里面, 国内的厂家以及海外的厂家都在做一个事情, 就是在增加联络中心的产品的厚度。 and then continue to do the extension of CC products. From the perspective of the scene, I just mentioned that CC has to serve two scenarios. One is the pre-sale scene. The pre-sale scene, the main extension is to do full chain marketing. This should be a big development trend in the industry. The second is the post-sale scene. The post-sale scene was originally the application of CC So basically there are two trends. Our previous Q, we also continued in these two directions. During the past few months, we see a trend in both domestic and overseas CC vendors.
spk02: that they are all adding the CC product comprehensitivity, all expanding the functions of the traditional CC in mainly two categories. The first one is marketing, and the second is after sales and services. These two categories are just what we mentioned earlier in the earnings call. We also increased a lot in our R&D investments and established our own version of the marketing and after sales CC product, which is Rongxi and seven more cloud. Oh, yeah. That's close. Our answers to Tina's question, we can take The question is from the next analyst.
spk05: Thank you. The next question will be from Boris Vons of Bernstein. Please go ahead.
spk04: Hello. Thank you for taking my question. I have two questions. The first question is about the revenue of CC. I see that you guys are moving very fast. Can you help us figure out T-More, RongCC, and CRM, the ratio and the growth rate. The second question I want to ask you is about your company's product and Tangxun's cooperation. Can you tell us more about your strategic framework? Because we saw Tangxun in their conference also mentioned that they will do a lot of CRM business. We have two questions. The first is regarding the contact center revenue. We'd like to understand what's the split between the 7More business, the RongCC business, and also the Elite CRM that was integrated, and if you could help us understand what are the growth rates for these three sub-businesses. And the second question is regarding your corporation with Tencent that you mentioned. Could you help us understand a little bit more how the corporation would work? Also because in their recent 3Q earnings, Tencent talked a lot about developing their own CRM business and would like to understand whether your products will compete with them or will cooperate with them. Thank you.
spk00: Okay, for the first question, within our business, the revenue, like I mentioned, when I answered the first question, actually, the revenue increased by over 400%. But that, of course, includes the revenue from Elite CRM. The Elite CRM contributed about 12 million RMB revenue for the third quarter. So, even take those revenue from Elysium out, the revenue increase for the entire city business is still about 100%. And as for seven more, the revenue increase for seven more for this quarter is around 35% year-over-year. Yeah, so that's the answer to the first question. As for the second question, We are not competing with Tencent. As you know, Tencent is one of our strategic investors. We work very closely with Tencent. We actually just signed a strategic framework agreement with Tencent during October. And under this agreement, we will work with Tencent Cloud to either Tencent Cloud can actually sell our products and services to the final customers, or we can work with Tencent Cloud together and combine our products together and offer one solution to the end customers. We can also offer Tencent the product and service solution with Tencent. In short, we are not competing with Tencent, but rather work with Tencent to deliver our products and services to the final customers.
spk03: Tencent should not have its own CIM product. Tencent has invested in a company called SalesE. SalesE's CIM is for B2B companies' sales management CIM.
spk02: There are mainly two categories of CRM, and the first one is the CRM that manages sales leads, and another is the CRM managing the sales process. Tencent actually don't have its own CRM product, but one of its important portfolio. Xiaoshouyi is a B2B CRM company, which mainly does the sales process management. And Ronglian's CRM is mainly doing the management of sales leads, which we said that our CRM product is used to manage the public domain traffic. a traffic and a sales lead, but not a direct competitor to Xiaoshuoyi and Tencent. And that closed our answer to Boris' question.
spk05: Thank you. Again, if you'd like to ask a question, please press star then 1. The next question comes from Yanni Yu of CICC. Please go ahead. Hello, can you hear me?
spk01: Yes. Hi, so I have three touches. The first one is about to... So also, I guess in Chinese, the first one is... In the framework cooperation agreement with Tencent Cloud in October, how will it cooperate and develop in the future? This is the first question. The second question is, the company's active number of users, flow rate, return ratio, and oil consumption can be reduced. Can it separate the customer data of each business line? For example, how much is the customer number of CPAS, CC, and UC? The third question is, the company announced that it has just received the largest commercial bank order in Thailand. And then I will ask it in English. So congratulations on the strong growth of this solution. We noticed that Ronglin entered into the framework cooperation agreement with Tencent Cloud in October. Will you give us more color on the future cooperation agreement? And the second one is, we noticed that the number of active customers and dollar-based net customer retention rates decreased slightly compared to second quarter. So could you share more information about the number of customers by product? The third question is about the newly obtained order in Thailand. Before this, Zonin has deployed overseas expansion plan in Japan, Malaysia, and other regions. So how to compete with the overseas competitors in terms of product, customer, acquisition, channels, and so on? Thank you.
spk00: Yeah, okay, for the first question, as for the relationship or our cooperation with Tencent, like I mentioned, Tencent is one of our strategic investors. So we had a lot of synergies with Tencent. For our UCNC business, Tencent continues to offer us opportunities in industries such as industrial manufacturing, energy, governments, And for our CC business, like I mentioned in the last question, we find a strategic framework agreement with Tencent in October. And within those agreements, we have different ways to work with Tencent. Tencent can either sell all products directly to the end customers or we can combine our products and Tencent products together and offer one solution to the end customers, or we can offer our technology and service products to Tencent, and Tencent will then sell to the end customers. Right now, there are over 10 million of of contract value is either signed or is in the process of being signed, including the governments or in the insurance industry, in the finance industry, in the manufacturing industry, in the e-commerce industry, and so on. For the second question, As for the active customers for the different product lines of our business, by the end of third quarter, the active customer number is over 12,000 for the trading 12 months. CPAS business has about 6,000 active customers. SISI business has also about 6,000 active customers. And UCMC business has over 100 active customers. active customers. We actually mentioned this during the call, the major reason why the number of customers and also the net, the dollar based net retention rate is down a little bit compared to previous quarters is mainly due to one, the impact from the education sector and two, we cut off some very small enterprises on purpose so that, you know, our ROI or our gross margin will be better off. The last question is regarding our overseas expansion. We, yes, we, right now we have operations in Japan, in Malaysia, in, also in Philippines. As for our competitive advantage in the overseas markets, Right now we notice that the competition in Southeast Asia market is not as intense as the China market. So our products actually has the advantage compared to other products offered by other competitors in terms of customer experience, in terms of everything. And also we work very closely with the telecom operators in the Southeast Asia to look for potential opportunities. We mainly sell our standard products in the Southeast Asia market. And also we actually enjoy a great advantage in terms of pricing compared to the products offered by those local or other overseas companies in the Southeast Asian market and still has a better gross margin compared to the Chinese market. So those are the advantages we have when we compete in the overseas markets. 我補充兩點,一個是在東南亞這些國家的市場基本上沒有
spk03: local SaaS companies. Mainly, there are some European and American companies covering the Southeast Asian market. On the one hand, European and American companies have very high prices. Secondly, their service costs are also very high. So, in terms of cost performance, we should have an advantage in covering these markets. Secondly, we will pay attention to
spk02: We also have another two advantages over other vendors in Southeast Asia market. The first one is our price is very competitive. Not many local vendors are playing in this market in Southeast Asia. Most of the services are covered by Euro and US companies. And their license and services are both very expensive. So our price is very competitive compared to theirs. And the second advantage is that we are looking for those enterprises, those Chinese enterprises which are also doing overseas businesses that we can provide our products to those companies. That is all the answers for the questions coming from CICC. We're good to take the next questions or
spk05: Thank you. Showing no further questions, this will conclude our question and answer session. At this time, I'd like to turn the conference back over to Ilyin. Best of relations for any closing remarks.
spk02: Once again, thank you, everyone, for joining today's call. We look forward to speaking with you again soon. Good day and good night.
spk05: This concludes our earnings conference call. You may now disconnect your line. Thank you.
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