Tuya Inc.

Welcome to our first quarter 2025 earnings call. Joining us today are founder and CEO of Tuya, Ms. Jerry Wang, and our co-founder and CFO, Ms. Ashley Yang. The first quarter 2025 financial results in the webcast of this conference call are available at ir.tuya.com. A replay of this call will also be available on our website in a few hours. Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call, as we will make for a looking statement. With that, I will now turn the floor to our founder and CEO, Mr. Jerry Wang. Jerry will deliver his remarks in Chinese, which will be followed by a corresponding English translation.

Jerry, please. Hello, everyone. Thank you for attending Tuya's first quarter of 2025.

Hello, everyone. Thank you for joining Tuya's earnings call for the first quarter of 2025.

This quarter, we achieved about 21% of our revenue growth on the basis of QE growth last year. This quarter, building in a high growth base from Q1 last year, we achieved approximately 21% year-over-year revenue growth

while maintaining a solid gross margin. Our stable team structure and organizational management supported a strong operating leverage. Coupled with the continued declining historical share-based compensation expenses, we achieved a record gap net profit in what is traditionally an off-season, with a net profit margin of around 15%, a significant improvement.

開年以來,從AI科技的加速演進到經驗政治影響下的貿易波動, Since the beginning of the year, the micro environment has been like a roller coaster.

From the rapid advancement of AI technology to treat fluctuations under geopolitical pressures, the smart consumer electronics sector and its upstream and downstream supply chains have faced immense challenges. Some of these we can manage through internal adjustments, while others require an industry-wide response. In such a context, it's even more critical for us to stay core strategically and leverage our unique value to navigate uncertainties. and embrace a new landscape.

After the launch of AI Agents Coffee Night last year, we continued to promote AI capabilities from cloud to server in the first quarter, covering all types of AI agents and smart solutions. On April 23, we held the first global conference of AI agents and smart solutions in 2025, and released four AIoT development engines and multiple AI hardware product solutions to support global developers and partners to realize the optimization and commercialization of AI products. The conference attracted more than 2,700 live audiences, including customers from Europe, Latin America, South America, Asia and Thailand, and the audience was enthusiastic. We believe that the unique platform model will not only help the deep integration of AI and smart devices, but will also continue to drive the increase in the rate of automation in the industry.

Following the launch of our 2i AI agent development platform last year, we continued to expand our AI capabilities from cloud to device into one. covering a wide range of AI agents and smart solutions. On April 23rd, we hosted our first Global Developer Conference of 2025, unveiling four AIoT development engines and a series of AI hardware solutions to support global developers and partners in commercializing AI-powered products. The conference attracted over 2,700 on-site attendees, including enthusiastic participants patients from customers across Europe, Latin America, South Africa, and Asia-Pacific. We firmly believe that Tuya's unique platform model not only facilitates the deep integration of AI and smart hardware, but also drives continuous improvement in industry-wide intelligence adoption. We will maintain efficient organization execution, safeguard a favorable environment for R&D and technology development amid external uncertainties, and remain disciplined in managing costs to maximize operating profits and shareholder returns. Now I will turn it over to 3SQ founder and SAFO, Alex Yang, who will walk you through the financial results and the business highlights.

Hello, everyone. This is Alex. Please note that all the figures I mentioned below is in U.S. dollars, and all the compensation is year-over-year based. In Q1 of 2025, we delivered approximately 74.7 million U.S. dollars revenue and representing a year-over-year growth of about 21.1%. The past revenue grows by roughly 70.9% with strong performance across major categories led by home appliances and followed by security sensory and then electrical and lighting products. Thus and others generated about 10 million U.S. dollars revenue growing approximately 15.5% year-over-year, primarily driven by the steady growth in device-related SaaS value-added services. Smart solution revenue reaches approximately $11 million, with a year-over-year increase of about 47.1%, with excellent growth in smart video products, central control, innovative appliances, and professional lighting solutions. From a regional revenue source perspective, Europe accounted for about one-third of the total revenue, and then come after that is Asia Pacific, excluding China, and then China and Latin America, each of them contributing around 15%. And then with many regions such as the Pacific and the window is contributing in a combined of 5%, maintaining our diversified revenue structures in regional basis. It is worth to mention that since we empower and serve the smart hardware sector, our revenue also reflects a unique pattern and the sincerity of the hardware industry, especially on the international manufacturers. We present the result of the business actions and strategies from the past several quarters. or even longer. In Q1, blended gross margin stood about 48.5%, with all three revenue lines maintained steady margins. Specifically, this quarter's past gross margin rose to 48.4%, primarily due to structural improvements raised by product mix change. Smart Solutions and SAS at a gross margin of 25.7% and 74.4%, continuing to demonstrate the value proposition related through software and technology. In the meantime, our net operation expenses for this quarter were 37.7 million US dollars, a nearly 18% decrease from the same period last year. primarily benefiting from a substantial reduction in share-based composition expenses, a trend that is expected to continue. Excluding equity incentives and other non-operational business factors, our non-GAAP net operational expenses were $29.4 million, down 2% year-over-year. The vast majority of our operational experiences are related to product development and technical teams. Thanks to the groundwork that we do in our AI transformation since 2023, we have completed the foundational AI product development and service system while maintaining a good discipline in ongoing development. Those structural improvements directly drive the release of operating average, enabling us to achieve over 11 million US dollars in gap net profit in Q1, more than double that of last year's full year. Non-gap net profit reaches 19.3 million US dollars, a nearly 60% year-over-year increase. with a non-GAAP net profit margin of 25.8%. This matrix provides strong support of the company's future business operation, capital expenditure, and shareholder returns. So that includes a brief overview of Q1 financial performance. And also in Q1 is a typical off season for the industry we serve. So we usually focus our efforts on exploring ideas, opportunities across our product lines. And then next, I'll talk about some key moves that we made in our business over the past few months. As we anticipated at the beginning of this year, 2025 marks as a structural transformation year for the entire industry to embrace AI. So AI is penetrating various industries, At pre-decent speed, in Victoria and the smart sector, this presents a clear window of strategic opportunity for the future. Although the physical nature of hardware devices means that the commercialization of AI capability on devices is gradually a long-term process. Technical and production reserves in software can take the lead, and then that is precisely our strategy. So first, we are committed to foundationizing and generalizing the AI capability needed in the smart era to solve the end users' problems and issues. This allows developers to select whatever they needed based on their commercial goals and product designs, thereby promoting the AI adoption. So focus on four core areas. So large language model integration, hardware development, edge deployment, and open source ecosystems, we released our four core engines at the end of April developer conference globally. The Tuya AI agent development platform, the Tuya.ai, Tuya Open, and Hedwig. So the Tuya AI agent development platform significantly reduced the technical threshold for developers to access any mainstream logic-language model and built various intelligence agents functions such as semantic understandings and image recognitions. So that is for the agent development. 2.0.ai, the second one, provides a full-process toolchain from high-performance edge AI modeling to smart cloud deployment, greatly lowering the difficulty and social time for AI hardware development. And 2.0.open, as our open-source framework enables developers to perform differentiated development innovations and integrate into the ecosystem. The HedgeWeek platform offers a controllable and secure edge AI computing environment for enterprise customers requiring localized deployment and data platforms and compliances. This entire system forms the technical foundations of our AI platform capabilities that provides a solid support for the large-scale implementation of AI products in the long term. At the same time, we're increasing investment in the development ecosystem, developer ecosystem around 2.0 OS, 2.0 Open, and the T5 AI development boards. initially establishing a content plus tools plus community trialed frameworks for the developers. Since the developer conference, we have released eight open source DIY projects, such as open source desktop pets, AI wash boxes, and AI robots, aimed at building a developer creativity incubation system Our key five AI developer boards has started to be adapted throughout collaborations with multiple developer platforms and communities. And our AI developer communities has grown by more than 10,000 new members. Next, we're also committed to identifying the product-specific opportunities and driving customers' products launches through our Smart Solution offering. directly increasing our revenue and gross profit and achieving high-quality commercial conversions. For example, in the energy domain, we launched the CoreNow AI Energy Assistant with features like the strategy recommendation, power generation forecasting, load identification, and energy consumption diagnostics. Combined with supporting hardware such as all-in-one energy storage system, circuit breaker, and energy data controllers, it forms a comprehensive integrated hardware software solution, primarily tapping in Europe and Southeast Asia market. In video-related AI products, we continue to advance the AI capability of smart screens and video devices, focusing on models for detecting and objectives, vehicles, birds, and flames combined with the sound recognition and anomaly detection to build an integrated hardware and software general production solution that covers basic home safety needs and extends it to semi-commercial scenarios like hotels and real estate. In the meantime, We are also actively promoting external ecosystem collaborations to amplify the enabled efforts of the AI platform. For example, in Q1, we partnered with Vakino Engines under ByteDance to integrate with the dual biologic language model into our AI agent development platform, further enhancing the multi-modeling, understanding, and interaction capabilities of our AI agents. In addition, We are collaborating commercially with leading players in retail and marginal infant industries to join development of smart hardware such as AI wearables and home robots, advancing the application of AI in children and families in areas. Collaborations with upstream and downstream partners will further enrich our capabilities and ecosystem scope. strengthen Tuya's strategies depth in a smart hardware sector that creates expensively projects that global developers and customers can refer and replicate. Although the AI hardware ecosystem, community, and the product developments are still in the early stage, we believe that explorations in functionality experience and business models will open up space for Tuya and the entire industry's future business exchanges, laying the foundation of new engines of long-term growth. So there about is our sharing on Tuya's Q1 2025 financial performance and recent company developments. Although there has been partially improvements in the existential environment recently, Uncertainty remains. In response, we will continue to operate diligently and to long-term approach of the technique-driven and the platform-enabled development, laying a solid foundation on the AIoT track, continuously capturing industry certainty trends and creating long-term value for Tuya. Finally, a piece of good news. So MSCI recently upgraded updated our 2025 ESG rating from a single A into a double A, particularly in the fields of secure and compliance to achieve a full score of 10 points, thanks to its extensive compliance experience and through our framework. We believe that whether in business, operations, or emerging areas such as ESG, steady, fast progress will bring rewards and recognition. Thank you all, operators, and right now we can begin our Q&A section.

Thank you. We will now begin the question and answer session. To ask a question now, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Additionally, when asking a question, please state your questions in Chinese first and immediately translate them into English for the convenience of everyone on the call. Once again, that's star 11 for questions. We will now take our first question from the line of Yang Liu from Morgan Stanley. Please ask your question, Yang.

. Let's look at which AI hardware has started to show a relatively strong trend in the amount of delivery. The second question is also about the impact of tariffs. I want to hear what the management has seen in the past month or two, some changes in customer behavior. We experienced a very high tariffs and then it dropped again. Let me translate my question. I have two questions here. The first one is regarding the AIoT development. To have a development platform, could management share what kind of AIoT hardware is doing well in terms of shipment or is there any signpost that we observed what kind of AI hardware can outperform relative fast? The second question is regarding the customer's behavior in the past around two months given the huge volatility in tariffs. Could management share what the customer is doing in the past two months?

Thank you. Thank you, Leo. So for the first questions, what we see here for the AI sectors, we found that there will be two major directions that show more interest. The first one is that the audio and the video interaction, interactive experiences. So one example is the bird feeders. We mentioned that in the past quarter. So to be able to help people to recognize the wildlife and to interact with it, and that will be one thing. And the second one, second typical use cases would be like the toys or any type of use cases for kids that use the large language model capabilities that you can have a new way to interact with the kids, show as education, as entertainment, and as a companion as well. So that would be the one. And so recently, update about the the kids is that in China we already signed a strategic partnership with Heizuwang which is the top tier and the toy group in China and we're looking forward to help them to launch the production to the market pretty soon pretty soon and so that'd be one thing so all any type of audio video in new interactive experience based on larger language model and the second is on the data-based dynamic decision making. So one typical use case will be the energy management system for our core now. And through that, the AI agents, based on the new modeling, will be able to continue to not only collect analysis of all those data from either the energy generators but also from the energy consumptive consumption devices but also in the same time that the agent will be able to come out different type of strategy and turn that into the specific actions and continues to re-analysis the new strategy and improve that so that can help to do a lot to improve the energy efficiency no matter it's saving the total consumptions be more greener or saving the the energy bill directly. So that would be the two very typical trends that we found that to show more interest and have more short-term interactions coming directly from the customers and to the market as well. So that would be the first question. And the second one, yes, the tariffs become a major topic for the entire market, not only the United States. So in the past couple of in the past four or five weeks right after the new tariff topic raised, I think the very direct reaction from the customers is that every people on the international trading pipeline become more concerned and hesitate because nobody knows what comes out. So right now people are waiting for some certainty. And even now, we have 90 days of certainty between China and US. So people are starting to do some very careful decisions based on the 90 days terms. But I think the longer terms, I think we need to wait for the final answers between the national negotiations. That would be one thing. But I have to mention that for the short term, every people are slowing down or become more conscious about any proactive or aggressive decisions. But the unique business model and the value proposition for Tuya is that the first one, the tariffs are not directly acted on us because what we deliver will be a portion or key component and technology, especially the software, of the finished goods. So the tariffs are more directly related to my customers either my brand customers or my manufacturer customers so that'll be one thing so we are like the indirectly and connected and the second one is that and so for us in the past couple of years what we have been doing is we just follow the flow that if there is the trend that the entire global economy are we localizing the manufacturing supply chain. We just follow the customers to do that. So not have to be stick to one or some specific manufacturers in specific locations. So right now, the manufacturers we showed already cover over 11 countries out there. That would be the second one. And the third one is that so the tablets are majorly focused on the finished goods. and it's only a portion of the cost of that goods. So that would be, that's one. But for the tariffs, for us that will pay more attention on the macro impact, so starting from the buying forces demand impact on the US market, so whether that will bring into the retail price raising, and to lower the buying forces for the end users of the American barrels. And also that whether that kind of single nation economy impact is going to bring a wider multinational macroeconomy slowing down or recession. So I think that will be the more long term.

Got it. Thank you.

Thank you. As a reminder, to ask a question now, please press star 11 on your telephone. We will now take our next question from the line of Timothy Chow from Goldman Sachs. Please ask your question, Timothy.

Okay. Thank you for giving me this opportunity to ask a question. And congratulations on the company's very strong one-week performance. 我这边有两条问题想要请教关于层。 第一条还是关于AI的, 那想要请教一下, 如果我们从一个比较大的货币化的角度去考虑的话, 公司计划从哪些方面去货币化AI带来的这些机会? 那我们看到AIoT这部分的产品和服务的定价方式, 和传统的我们IoT的Path的定价方式和成本有哪些不同? 那第二个问题是关于我们的全年的收入和利润的展望 那请向相亲关系层分享一下我们对二季度以及全年的收入和利润现在是如何看待的 那我们看到IoT pass的毛利率在一个比较稳定的向上的一个趋势 那这个趋势是否会进一步的在2025年的下半年我们还可以继续看到 那我很快翻译一下 Thank you, Benjamin, for taking my question and congrats on the very strong quarterly results. Two questions here. The first question is on the AI monetization. Wondering how or in which area that we would have to plan to monetize the opportunities bring by AI and what is the difference in terms of the pricing model and cost between the new IoT port services versus the traditional IoT path services that you provide? And secondly, it's on your full year and second quarter outlook on revenue and profitability. Could measurement share any color? And specifically on the IOT path segment, we have seen very steady upward trend in gross margin of this segment. Could measurement provide an outlook for this segment as well? Thank you.

Yeah, thank you. I think that for the first question, it's a good one. That's all my customers have been asking at the end of last year. So what we are offering for the AI capabilities to the customers, that we seamlessly integrate the AI capability into my existing three business models. So I still offer that as a pass or as a solution. So for the customers, we'll be very, very friendly. They don't have to be educated for a new type of business model and how can mix that with their existing one. So it's like a seamless transition. And for the AI income that even I offer as maybe it's AI-empowered new patch or AI new SASH, we will consider some of the repricing. Some example is that recently we offered for the audio-interacted AI based on the LLMs. So the patch pricing will be different than the regular. my regular patch in the same categories. So that would be one. So we can looking for that either we use the seamless AI offering to speed up the penetrating of the entire smart devices penetration in the global market or we use that to repricing some of the offerings. So that would be one thing. And so also that will be very easy to continue to enlarge our partnership with the upstream providers. Because right now the major, like the larger language model are providing through the major cloud guy. So this is the same way like how we cooperate with them on the cloud infrastructures. Right now we cooperate with them in the same model with a larger language model. So that'd be the first answer for the first question. And the second one, yes, that's combined with a tariff. Even we don't involve in the international supply chain or training business directly, but we are very deeply integrated into that part. We are a core part of that. So the tariffs indeed bring the short-term bumping about the demand cycle. So I can describe that very typically in the major weeks of April, for all those kind of order shipments to United States. And a lot of people, most people put a pause button on that and wait and see until the two countries make agreement. So we're seeing that this will have topics globally, majorly from China and US, but also side impact into the Southeast Asia and Mexico. and a partial U.S. cash flow. So that type of tariff topics will bring a bumping rise in the short term, maybe in a quarter or two. It depends on how soon that we can make an agreement and provide the certainty for the commercial, for the commerce world. All the businessmen are waiting to see what type of price that they can pay extra and how they can observe that. So for the short term, there will be a bumping. But it's not the first time we've experienced that. So this kind of new type of terms, challenge, already starting to take place since 2018. But this seems like the harsher bumping point. So for the short term, there's still uncertainty for that. And even US market only covers less than 20% of our business. But yeah, that's still 20%. So that's certainly, it's the same for us and my customers. We just wait and see, and every people trying to take more careful actions and decisions every single day or week. So that's what we see. Then challenge exists. But for the long term, we believe that in a year or next year, until, I mean, right after the negotiations being settled and the entire demand and the penetrations will put it back into the normal model. And all the buying cycles and GTMs will get into the normal cycles again. So that would be what we see for the short term. And for the past margin, I think that the past hysterical records already proven that we take the high value propositions of an entire industrial cycle. And we're good with it and we're satisfied with that. So for us is that we don't have the strong, or we don't think it will be very necessary to have to continue to push the margin into a higher cycle, because we'll really be in the highest value proposition in the entire one. including my suppliers and my customers. We really take a very high position for that. So we think that the key part is to maintain the position, but also in the same time be able to motivate either my suppliers or my customers to continue to invest in these sectors. I think that would be more important for us because their activity will ensure that where continuous to improve the penetrations, continuous to find more innovations, to turn that into reality and bring that into market. So for the past, we think that it will be fine for us just to maintain at the right range. And for us, how we do that in the past two or three years. So we're satisfied with that. We don't have to ensure to push to the next level. Yeah.

Thank you. That's very helpful.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone keypad. We will now take our next question from Kai Schell from CICC. Please ask your question, Kai.

Thank you, management. Congratulations on a very strong performance. I also have two questions. First, I would like to ask the leaders to update us on the progress of our Singapore real estate project and two other projects, as well as the supply of goods this year. And then Alex just mentioned that we have more product updates on energy. I would like to ask whether we would like to see more similar cooperation projects in the future. This is the first question. So thanks, Benjamin, and congratulations for the John Carter. I have two questions. First, Could you share the progress of your cooperation with Singapore and Chiari, and any similar projects can we expect in the coming quarters? And second one is, could you share the geography expansion of 2S AI developers, and is there any difference on the development of AI applications between domestic markets and overseas markets? Thank you.

Yeah, so thank you for the questions. So the first one is talking about the Singapore use cases. I like to put it into vital coverage. So Singapore use case will be a typical progress we like to take in places for the commercial or industrial OT solutions. So the partnership we had or the contract we signed with the Singapore government is from the HDB, so it's Singapore Home development theory, and they're managing over 1.4 million Singapore public apartments. So the majority of Singapore citizens living in the government-provided rental apartments, and it should be managed that. And what we're offering is that it's a centralized energy management platform that helps them to enable not only censoring the different consumptions in each of the apartments, That's why I contribute a significant consumption of the total Singapore nation powers. But also, we offer them some controller. So to help them to identify how each of the households been using the power, through what type of devices, by what purpose, and then through some AI enabled modeling and control actions to reduce that. And through our over one and a half years POC with HDB, before we sign the contract, that there will be significant reductions about total consumption of the powers, which can help the Singapore government to reach, we want to be the pioneer of ESG nation, or smart nation. So that's what we want. And the HDB's plan is that we'll really We're finalizing the deployment implementation of the entire platforms, and we're really starting to produce the first shipment of the devices. It's an energy hub in the home. And so the first implementation about the software platform and the hardware into the first part of the households were taken places around the end of the Q3. And their plan is to be able to finish the phase one entire penetration of the homes in three years. Yeah, so that'll be one stop. And we are very excited by it because that will show that not only providing our DIY devices to penetrate in homes improvement through those kind of decentralized devices, but we should be able to provide a centralized solutions through the right channels like HDBs to have an entire and regional end users to improve their lives. Yeah, so that would be one. And also, we found that using Singapore as a perfect use case spot, we'll be able to duplicate that and to influence that the other Southeast Asian countries, like the rental apartments, what we call spatial management solutions, and really show a good potential of growth in Southeast Asia. So that's one thing. And not only for the apartment management, but also we're really penetrating quite well in some of the telecoms players in that area too. So that would be one thing. And also in the same time, two weeks later, we will open our new Singapore offices and by providing our more local resources to supporting our customers penetrations implementations but also in the same time to search for all business opportunities in that area and expanding to global market yeah so and that'll be the answers for the for the singapore parts and uh

Yeah, so that's it for that.

And then for the... Could you repeat the question? So the second one is about returns, right? The shareholders' returns, right? The extension of AI developers and the different... So the AI developers, what we hear is that... I think it's just started. I think right after the DeepSeq expansion in January and so the first one is that we found majority of my customers and developers are reaching out to back to us to asking about all the AI capability offering because in the past on the recognition side is that they know AI is there and a lot of news about AI, but they don't really think that the AI offering will be connected to their existing business. Either it's more expensive, too expensive, unaffordable, or it will be too difficult. So I think that right after the Deep Six exposure, both in America and the China market, every person aware that they can bring AI into the physical use cases. And then I think the first one is that we get so many calls. And then we use that time windows to launch, either launch our new platform, the AI agent development platform, but also to hold our, to launch that as our developer conference. So that bring up very positive and very active feedback. And so right now the AI developer penetration is that we're starting to educate those customers who calls and by telling them what capabilities out there in the platform and how they can develop upon those capability to turn that into the real devices use cases. It's more like an educating period. And right now we see that the demand comes from the global market. So majority of my major or key customers, either from Europe, from America, from Latin America and Southeast Asia. So those major, those customers who have very strong retention channels or have very strong brands who can do quite well about the end users' education and marketing. So those customers will be the major cost on the demanding side. And on the technical development side, So in two parts, the first part is that those ones who are focused on turn the AI or integrate the AI capability into the device. So it's more following the right penetration on the device development and manufacturing. So maybe a bigger portion come from mainland China, but still we got multiple one from Korea, from Turkey, from Southeast Asia too. And so that perfectly fit the penetration about the hardware manufacturing deployment. That's the first one. And the second one is about software. So software, I'll say that it's more diversified. And either it's through different type of software innovators through the MTP protocols, and more come from the mobile internet developer ecosystem, and also the cloud-based developers who come through the cloud infrastructures into us. Yeah, so it's more diversified on a global basis. I think that's for the first quarter or including till now. It's shown in the phase one. It's about the recognition of our capability, education about the developer kit, and then a lot of prototype POC and demonstration deployment.

All right. Thank you. We will now take our next question from the line of John Roy from Water Tower Research. Please ask your question, John.

Yeah, I have a slightly different question. I was wondering if you could give us any insight into how you're using AI internally. internal processes, documents, code development, et cetera, and if that can really possibly increase margins and decrease costs going forward. Thank you.

Yeah, thank you, John. So I think every single department within the company is trying to use different types of AI tools. I can take some of the examples, right? Like for marketing team, right now that's... majority of all the marketing resources we use are generated through AI. So we don't require a lot of labor-based designer to do that. And including our operation team to do all those online training, webinars, I think a big portion of the webinar content are generated through AI too. And also we have our TikTok live view, to the end users, the AI helps a lot too. And that's the marketing side. And including the legal and human resources side, we're using AI to help us either to do the research and review on the candidate's resume and with the key words that we identify. and also to help us to double check with all those standardized contracts that come directly from the customer side to see that whether there's any modifications, et cetera. So use that to improve the efficiency about the internal processing of either the HR and the legal process. So that'd be one thing. And another use case is about the development for sure. That we're using AI toolkit, different UI kits to do the project management and anonymizing about the progress of the development, and the coding, double checking, debugging, presetting, and maintenance of the cloud infrastructure. So what we call the auto-patrolling on the maintenance of the cloud services as well. Yeah, so that would be typical things. We believe that in the future, like we mentioned, not only providing the AI capability to help the customers to build more commercialized or more higher ROI products, but also in the same time that we continue to use AI internally to improve our operation efficiency. And so either lowering the cost of the operation or to increase the income for our customers. to enhance our lab operating average. That'll be some basic. Excellent.

Thank you so much, and congratulations on the quarter.

Thank you for that. Excited about the long-term future because this is the only very starting point for the AI penetration for the physical world. Very, very early. We're very excited about it.

All right, thank you. There are no additional questions at this time. I'll now hand back to the management team for closing remarks.

Okay, thank you, everyone. Thank you, operator, and thanks for all of you for participating on today's forum. So see you next week, see you next quarter, and have a nice day today. Bye. Goodbye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.