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spk01: Ladies and gentlemen, thank you for standing by and welcome to the Jehu Incorporated First Quarter 2021 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a Q&A session. Today's conference is being recorded at this time. I'd like to turn the conference over to Ms. Jingjing Du, Head of Investor Relations. Please go ahead, ma'am.
spk02: Thank you, Operator. Hello, everyone. Welcome to our first quarter 2021 Financial Results Conference call. Joining us today are Mr. Zhou Yuan, Chairman and CEO of Zhihu, and Mr. Sun Wei, our CFO. Before we start, we would like to remind you that today's discussion may contain forward-looking statements which involve a number of risks and uncertainties. Actual results and outcomes may differ materially from those mentioned in today's announcement and this discussion. The company does not undertake any obligation to update this forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earning release issued earlier today. As a reminder, this conference is being recorded. In addition, A webcast replay of this conference call will be available on our website at ir.juhu.com. I will now turn the call over to Mr. Sun Wei, our CFO. Please. Okay.
spk04: Thank you, Jingjing. I'm pleased to deliver today's opening remarks on behalf of Mr. Julia, founder and CEO of Juhu. Thank you, everyone, for joining our first earnings call. I'm pleased to report that Juhu delivered a strong federal result in the first quarter of 2021. Our user base and revenue both experienced significant growth during the period. In Q1, our user base continued to grow rapidly. Our average MAUs reached 85 million, representing a year-over-year growth of 38%. This is an impressive growth momentum we successfully managed to maintain. Even after the significant growth we realized in Q1 2020, during which most users spend more time online due to the COVID-19 pandemic. Our revenue increased significantly, growing 154% year-over-year to RMB 478.3 million. This growth was largely attributable to our commitment to the execution of our content-centric monetization capabilities. Now I will elaborate a little bit of our revenue growth by business line. Most impressively, our content commerce solution, also known as Triplus, continues to deliver expectation-beating results, contributing RMB 121 million in revenue during the first quarter. This compares with the annual revenue of RMB 136 million from the business line in 2020. The strong growth momentum of Triplus was reflective of the market recognition of its high marketing efficiencies, among merchants and brands. The number of customers for the business line experienced a tenfold increase compared with Q1 last year. In addition, our growing merchant and brand portfolio for the business line also represents a much broader industry coverage, such as fast-moving consumer goods, education, beauty, and personal care, as well as daily life services. We see great We see great growth momentum in the business line, delivering optimal marketing efficiency to our customers and contributing great commercial content to our users. Najihu's advertising business continued its rapid growth in Q1 2021, effectively overcoming the negative impact of COVID-19 on the internet advertising sector. In the quarter, our advertising revenue reached RMB $214 million, representing a year-over-year increase of 70%. The increase was mainly due to the growth of brand advertising, which was driven by our growing user base and the brand recognition, as well as our strong capability in offering tailored marketing solutions to our brand customers. We also saw a steady increase in performance-based advertising revenue. We expect the advertising sector will experience a strong recovery as the implications of COVID-19 pandemic continue to weaken. And we will continue to benefit from both a favorable industry trend, as well as our strong recognition among advertisers target audiences, uniquely strong product offering and execution capability. The rapid growth of Zhihu's paying member is another important engine driving the development of Zhihu's content-centric business model. In the first quarter of 2021, Revenue from paid membership was RMB 127 million, representing a year-over-year increase of 127%. The average quarterly paying members reached 3.98 million, representing a 138% increase on a year-over-year basis. The paying ratio reached 4.7% in a quarter. Our paid membership program is a vital component of our community. With great growth potential, we will continue to invest in its growth through offering more premium content and improving our paying members' user experience. In the first quarter, we'll continue to expand the coverage and depth of Zhihu's paid content library. By the end of Q1 2021, items of paid content had increased by 190% on a year-over-year basis, with a broader range of categories offered. In the first quarter, we continue to fine-tune and execute our other counter-centric monetization channels and initiatives, such as recommended goodies. In the first quarter, the GMOA generated by recommended goodies reached RMB 1.5 billion, representing a year-over-year increase of 214%. With our business benefiting from deep ongoing cooperation with our strategic shareholders, such as Taobao and JD, we expect to make further breakthroughs in the e-commerce space. We continue to deepen our monetization in the education sector as we start to enhance the quality and depth of our education content offering, including our self-operated course portfolio, which has expanded from examination to now also cover courses in finance and business. We have also expanded offering to cover more target audience through a variety of partnerships, with offline third-party vendors. We will continue to seek strategic partners in the education sector to offer great growth potential and product synergies with Zhihu's current offerings. Now, let's dig a little bit deeper to review our operations across a couple of our key operating perspectives. Content, content creation, user growth, and monetization capabilities. As a comprehensive online content community, we are dedicated to addressing the needs of people as they seek inspiration, find solutions, make decisions, or help fund. In Q1, we have maintained lifestyle and consumer content category as our most active and popular category on our platform. This was closely followed by the entertainment category and the cornerstone categories, including natural science, engineering, psychology, and politics, et cetera. which form the bedrock of our content library. Active content creation, especially those focusing on high-quality content, is a vital factor in driving strong growth of our user base and monetization capabilities. To this end, we continuously strive to enhance the breadth and depth of our content offering with strong product development and refined operational initiatives. During Q1, We also concentrated on strengthening the timeliness of content created in response to trending events and enriching the format of our content offerings to include more videos carrying strong Zhihu content features and styles. Trending topics in Zhihu communities are also attracting an increasing number of views. In-depth discussions on trending topics have generated significant organic traffic and word-of-mouth recommendations Zhihu training topics in Chinese Zhihu Reba has become a favorite place for in-depth discussion following the current major event. In the first quarter, more than 23,000 training topic events were discussed on Zhihu. Discussions of these topics increase user activity and interaction on our platform. This further strengthens Zhihu's brand recognition by encouraging users' participation in both spontaneous content creation and in-depth discussion. Through our 10 years of operation, we have successfully developed a comprehensive system for attracting users and increasing their interactions on our platform. In order to cater to the various demands of users, we encourage our content creators to generate a diverse spectrum of content, making full use of the rich media format our platform has to offer. We also launched creative online campaigns for targeted demographics. Highlights of these included content creation workshops specifically organized for younger and amateur users, and open forums focusing on certain specialized areas for a certain group of users. All these events were well received by users and generated a great volume of content creation and engagement activities. We are focusing on offering a broader range of such events to a great category and have received satisfying results. By the end of the first quarter, our content library measured by accumulated content pieces on Zhihu platform grew about 60% year over year. Now I will spend a little bit of time on our regionalization initiative, which is rapidly becoming a core part of our business. Daily time spent on video by video viewers has increased by 1.6 times in the quarter, compared to the same period of last year. We saw very impressive growth in the volume of uploaded mainframe videos in the quarter, increasing 17 times on a year-over-year basis. We believe that leveraging our rich content pool, Zhihu is well-placed to capitalize video's increasing dominance in online content consumption. By adopting a visualization strategy for our platform, our accumulated library of premium content will be consumed by ever larger groups of users, further accelerating our user growth. As part of our visualization strategy, we launched various video creation utilities and toolkits for our video content creators and have also introduced a dedicated video tab on the app homepage. Going forward, we believe our premium video content will differentiate Zhuhu in the market and will be a key driver of growth for the segment. To facilitate our strategy, we will continue to invest in product innovation and introduce more monetization channels for video content services. As we move to the next stage, we are committed to providing more made-from-video content with a differentiating sense of fulfillment for our users. Our content creators continue to be highly active on our platform. In the first quarter, there were 3.4 million active content creators per month on average, representing an increase of 100,000 from the first quarter of 2020. Our creator community contributed more than 12.8 million pieces of content in March 2021 alone. These achievements reflect our continuous efforts in improving the ecosystem for our content creators. We provide our creators with a sophisticated and dedicated platform encompassing various effective creativity toolkits and utilities, such as AI-powered video creation functionality that greatly simplifies the process of making video content. We also offer full service assistance to the video content creators through a project we call Project Haiyan, which includes training courses on video creation, traffic support, cash incentive plans, and connectivity with the merchant partners for content monetization. We are excited to see that these efforts have led to a rapid increase in video creation volume over the past 12 months. As I just mentioned, made from videos increased 17 times in the quarter on a year-over-year basis. Notably, we are seeing more and more video content created, not only by our top content creators, but also from medium-level and new content creators, encompassing an increasing coverage ratio among our content creators. Our continuously solidifying partnership with a growing group of new talented creators will help us further accelerate the visualization of our business. In addition to supporting operations and content creation, we have also provided our content creator community with multiple channels for recognition and ways to monetize their contribution. An example of this is our recent New Generation of Knowing ceremony in Chinese 新知青年大会. Here, we are recognized, awarded, and honored 187 outstanding young people who provided premium answers to high-quality topics on our platform. By continuously building partnerships with younger generations and new content creators, we are fortifying our ecosystem by building a pipeline of future premium content to the benefit of our entire community. Shuhu has maintained its industry leading position in terms of user acquisition efficiency by adopting a content and technology-driven growth strategy. The acquisition cost per new MAU for Q1 was RMB 37, which represents an optimal level of cost efficiency among other players in the online content community industry. Going forward, we will continue to grow our user base while maintaining user acquisition efficiency. On our 10th anniversary in January this year, we launched a series of branding campaigns to further improve Zhihu's brand awareness in a marketplace centered around our new tagline. If there's a question, there will be an answer. In Chinese, 有问题就会有答案。 We believe this branding concept clearly reflects Zhihu's values and mission and will enable us to attract a wider range of users to our Compton community. In the quarter, we launched events such as an Adventurous Evening with Answers and an online New Generation of Knowing Ceremony aimed at encouraging excellent answers and recognizing them for their contribution to our community. These branding campaigns have enhanced Chihuahua's brand identity and the recognition among common community users. In future, we will continue to invest in our brand, which is a key asset to driving long-term user growth. The foundation of our closed-loop ecosystem is trust. Trust in our community enhances the partnerships among common creators, brands, and merchants, encouraging an integrated approach to answering user acquisition and fulfilling their needs In the first quarter, the number of content creators that received income on the Zhuhu platform increased by 296% compared to the same period of last year. This is a solid evidence of how the growing maturity and the success of our content-centric monetization approach has incentivized our content creators. In conclusion, we are very pleased with Zhuhu's solid growth in the first quarter. In the past 10 years, we have become China's largest Q&A-inspired online content community. Going forward, our growing user base, enriching premium content, expanding content creator base, and diversifying monetization channels will continue to make Zhihu well-positioned to capitalize opportunities in China's rapidly expanding online content sector. Okay, this concludes the remarks remarks of Mr. Julian, our founder and CEO. I will now start with our financial performance review for the first quarter of 2021. As a quick review, in the first quarter of 2021, our total revenues experienced solid growth. Our total revenues amounted to RMB 478.3 million, representing a 154% year-over-year increase compared with the same period, 2020. This was driven by our strong user growth and the fast-evolving content-centric monetization model. In the first quarter, our new monetization channel continued to grow and contributed a more balanced portion to our total revenue. For example, content commerce solutions represented 25.3% of our total revenue in the quarter. compared with 0.6% in Q1 2020 and 10% in 2020, full fiscal year. While the contribution of advertising revenues decreased to 44.7% from 66.8% in the same period of last year, paid membership accounted for 26.5% of our total revenues, compared to 29.6% in Q1 2020. And other revenues accounted for the remaining 3.6% for the first quarter 2021. Growth profit for the quarter was RMB 272.7 million, up 248% year over year. Our growth margin was also significantly enhanced to 57% in the quarter. compared to 42% in Q1 of last year, benefiting mainly from our change in revenue makes, with higher contributions from business contributing significantly higher margins, such as a common commerce solution. Moving on to the cost and expenses, our cost increased in line with our growth of our business scale, though at a relatively lower pace, delivering a higher growth margin, in particular, Increased advertising execution and content-related costs dropped much of our 87% year-over-year increase in cost of revenue, which were RMB $205.6 million for the quarter. We also saw increases in cloud services and bandwidth costs incurred in support of the significant increase in user traffic and activity on our platform. As an illustration, Our average MAU increased by 38% in the quarter on a year-over-year basis, and we experienced a 138% year-over-year increase in average monthly paying members. Our total operating expenses also increased in support of our growth, with the total expenses amounting to RMB $615.1 million. As a percentage of total revenues, It decreased to 129% in the quarter, compared with 154% during the same period of last year. This shows a continuously enhancing operational efficiency, which we focus a lot in association with driving our growth. The main driver of operating expense growth in the quarter was selling and marketing expenses. reflecting various marketing and branding events and campaigns we launched during the same period. We also experienced higher personnel and share-based compensation costs as we continue to invest in talent to support our growth. Loss from operations was RMB 342.5 million compared to RMB 210.9 million for Q1 2020. And net loss for the quarter was RMB $324.7 million, compared to RMB $201.3 million for the same period of last year. Our adjusted net loss, which is a non-GAAP measure that includes share-based compensation expenses, was RMB $193.6 million for the first quarter of 2021. Proceeds from our IPO continue to enhance our balance sheet. As of the end of March 2021, the company had cash and cash equivalent term deposits and short-term investments of RMB 7,960.4 million. I will make a brief remark on our financial outlook. Looking into the second quarter of 2021, the company expects that our total revenue will be in the range of RMB 622 million and RMB 627 million. This only reflects our current and preliminary estimates and is subject to any change due to factors including those that are beyond our control. This concludes our earnings remarks. We will take questions from the audience. Could the operator please open the line and let the That will commence our Q&A session.
spk01: 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 will pause momentarily to assemble a roster. Our first question comes from Piyush Malby from Goldman Sachs. Please go ahead.
spk00: Good evening. Congratulations on your numbers as well as the listing a couple of weeks ago. My first question centers around your MAU progression, which we note has done very well. May I ask you to talk through the MAU as of the end of the quarter and where you've seen that growth come through? And if possible, could you reflect on the trajectory you're observing at the end of the quarter and whether that trajectory can be maintained at that pace through the rest of the year potentially. That's my first question. My second question, at the time of the IPO, you talked about, you disclosed what the total visitor number was. And I wonder if we could go back and get a feel for how that visitor number has changed potentially since the last time we saw that number reported in the filings. Thank you.
spk03: Hello, this is the first question from GS. The first question is, we saw that in the past quarter, our M&A growth was very optimistic. So I would like to ask, what kind of factors drive such a growth? And is such a growth still possible at the end of the quarter or April? The second question is, in the process of our IPO, we learned that some of our visitors' data is also very high. I would like to ask about the current situation of these customers and how many of them can be converted into our MAU users. Thank you. Okay, thank you for this question.
spk07: Let me answer the question about user growth. The future user growth has always been driven by content. We now have a very high proportion of new users. The semi-year growth in Zhihu has always been driven by our content.
spk03: we have a very high percentage of new users coming from the content created by the organic traffic. And in terms of profiling our new users, we noticed that they are presenting the same features and behaviors generally. However, relatively speaking, I should say, the female new users are giving us a higher percentage on a year-on-year basis.
spk07: We have the best content for the knowledge field and the creator group. In the industry, we have maintained the leading advantage and have been growing healthily. For example, In terms of our content, our ecosystem has been growing very sustainably and we are well penetrating into a wider range of topic areas.
spk03: In different scenarios, we are able to meet the demands from various users. We have the best-in-class content as well as content creators in 10 knowledge areas. And we have been maintaining our advantage in our industry all the time. I can give you some examples. For instance, our unique visitor number increased by 220% in material science and by 560% in microeconomics year-on-year.
spk07: At the same time, we are very active in various fields of interest, such as animation, digital and game. In these fields, our content and creator groups are also very active. In the past,
spk03: We are at the same time, we are also well positioned in other topic areas such as hobbies. For instance, in ACG, in 3Cs, and in gaming, the content and content creators are also very active. This helps us to attract more younger users. Our percentage, the percentage of users under 25 years old are also on the rise.
spk07: For example, in the field of education, I would like to share a number with you. Now, there are nearly one million users who are browsing the test content every day. For example, in the field of food that helps users improve their life skills, and in the field of workplace that answers the questions of young people who enter the workplace. The changes in these fields will not only help users to meet their interests and exchanges,
spk03: In terms of on top of knowledge sharing and interest discussion, we are also helping our users to solve their actual problems. These kinds of content are also on the rise. For instance, we have a very popular topic that is about preparation for the exam for graduation school in China. Right now, every day, there are more than 1 million users looking at those information. And we're also helping our users to gain life skills, such as cooking. And we are also providing solutions for the newbies in the workplace. So these will help our users not only to share their views about their interests, but also solving their actual problems in their work and life.
spk07: We see that in both retention rate and in tax,
spk03: These new contents are giving us very nice numbers in terms of users that we have, and we will continue to invest and gaining more and more users this way. Thank you.
spk07: 关于第二个问题,我们的Monthly Viewer现在的数据是4.6亿。 总体来说是保持稳定的。
spk03: As to your second question, the monthly viewers we are having right now is 460 million. Maintain a stable level.
spk07: 我补充一点,我们MAU除以monthly viewers的比例现在正在稳步的提升过程中,谢谢。
spk03: And also, the percentage of MAU to monthly viewers are also on a stable uprising trajectory. Thank you.
spk01: Thank you. The next question comes from Alex Z from Credit Suisse. Please go ahead.
spk05: Thank you very much for taking my questions and congratulations on very good results. I'll ask my questions first in Chinese and translate in English by myself. about the size of video consumption and production, and the situation of penetration between MAU and content providers. What are the key actions to further improve video production and consumption? My first question will be about the progress And in the video collation strategy, we will show some more figures about the scale of video consumption and the production. Also, what will be the key initiatives to further drive penetration of video in MAU and content creators. And my second question is about the GP margins breakdown outlook. Would you please show us about the business segment GP margins, such as, for example, GP margins for content commerce solution and the membership business? Also, how should we think about the GP margin trend in the rest of this year? Thank you.
spk07: Hello, thank you for your question. Let me answer the first question. which is about video. Video content is an important component of the call-in content system. In the past, the amount of video creation and consumption in the community has increased significantly. The number of video uploads per quarter has increased by 17 times in the past one minute. The market of video consumption per capita Okay.
spk03: Well, thank you. Mr. Julian will address your first question about video strategy. Well, video content is a very important part in our ecosystem. And in the past couple of months, you see that our value of video, both in terms of creation and consumption, increased significantly. For those videos that are over one minute long, the daily uploading volume increased by 17 times on the past quarter, and the average consumption on video also increased by over 60%. 知乎社区是有非常高的开放性的,可以包容不同类型的创作者,不同的媒介形式。
spk07: and different needs of users. Now, in the community, the penetration rate of video consumers in DAU has reached 30%. Everyone really likes to watch videos in the future. With our product and technology innovation advances, video will also become a must-have creative tool for future creators. I think the answers to each question
spk03: Our Zhihu community is very open and highly accommodating to different kinds of content creators, different kinds of media formats, and different kinds of user groups. So right now, you see video-penetrated CAU is now over 30%. People do enjoy watching video on Juhu's platform. And also, as we're progressing in our product, as well as technology innovation, video is going to be a very important element to content creators as one of their creation tools. And we believe that every answer on Juhu should have a video version. Text and image, as well as video, are just part and parcel of our entire content library.
spk07: Now we see that on the one hand, video presents a good increase in the community. The quality and quality of the content is healthy development. On the other hand, in the entire industry, video is still in a early stage of development. We can make a comparison with the content community based on video. Now we add all the upload volume of the Japanese army together. As you can see in our community, video is
spk03: are presenting very nice growth rate and also the content as well as the categories are looking very healthy. On the other hand, in the entire industry of video, midform video is still at a very early stage. If you look at many other similar content communities, if we put all the uploading volumes of midform videos all together, The daily uploading volume is only by hundreds of thousands. And we believe that going forward, this volume will explode to about to by millions on a daily basis. So we believe that this sector still has enormous potential. And we believe that we will be able to see more and more quality video content and video content creators in the community of Chihuahua.
spk07: Unlike other platforms in the industry, the development of the community is driven by the community ecosystem. The healthy development of the community ecosystem will lead to the rapid development of content, including video content. This will counteract the improvement of the community ecosystem. In the past quarter, we have actively and effectively suppressed the low quality video content. This provides more exposure to our high-quality content. At the same time, it also provides a better growth space for our high-quality content creators. We plan to continue to expand the structural adjustment of low-quality and high-quality content in the next quarter, and continue to expand the construction of community ecology to promote overall improvement. Thank you.
spk03: Thank you. And I also want to mention the ecosystem that we're building for video development. Unlike many other platforms, our community's video strategy is driven by our ecosystem, which is very healthy, that promotes the good quality to come out from the rest. And this will, again, reinforce a healthy atmosphere that we are enjoying in our community. In Q1, we actively taking some measures to control the low quality content, meaning that it will give more exposure opportunities for better quality videos. And also at the same time, our content creators for better quality videos are enjoying a wider space for their creation. And in the second quarter, we hope to make some structural changes to the content videos as well as to further build on our ecosystem so that as an entirety, our video business will continue to grow very fast.
spk04: Thank you. This is a CFO of the company, Sun Wei. I'll try to answer the second question from Alex regarding the gross profit margin. I'll speak in Chinese and Grace will help on translation. 刚才Alex问的是一个关于毛利率的问题。 那我们在2021年的Q1呢,我们的gross margin是达到了57%。 那这个数据相对于这个57%呢,相对于去年的Q1是一个显著的提升。 那主要是有这个几方面原因来这个造成的。 Thank you. This is from CFO Sunwei of Zhihu.
spk03: The answer to the gross margin is by 2021, our Q1 gross margin stood at 57%, which represented a very significant increase over the same period last year. The third reason for that is the economy of scale that we are enjoying as a result of increased revenue that we are seeing from our businesses. Both of our G-plus and paid membership business represented over 100% increase, whereas our advertisement grew by over 70%. 第二点是我们的收入结构也在发生非常大的变化。 我们非常高毛利的这个支家的业务占收入的比例从2020年的Q1的大概1%提升到了2021年Q1的25%。
spk04: OK.
spk03: Second reason is the significant mix change that you're seeing in our revenue. For instance, for a two-plus business in 2020 first quarter accounted for only 1% of our total revenue, whereas by the Q1 2021, it's accounting for 25%. And our revenue Contributions from paid membership and advertisement stood at 67% and 30% respectively in the first quarter of 2020, whereas the percentage has now dropped to 45% and 26% respectively. So, therefore, you see that our higher margin business, that is G+, is contributing more to our gross margin as a whole.
spk04: OK, the last point is that some of our costs are increased in proportion to the growth of revenue. For example, the cost of our bandwidth and server is relatively low compared to our revenue. This mainly reflects the scale effect of our overall revenue growth. The growth of revenue does not bring a significant increase in our fixed costs. The above points are the main reasons for our growth in gross margin.
spk03: And the third reason is that we keep very good control on our fixed cost items. For instance, the cost for bandwidth as well as for servers are not increasing at the same pace as we are increasing our user base and our business. Therefore, due to the economy of scale that we're getting from the fixed items of cost, we are also registering a higher growth margin. So the above mentioned three reasons of contributing to a higher gross margin this quarter. Thank you.
spk04: 关于这个Gross Margin未来的变化呢, 因为我们随着公司的整体视频化策略的推进, 我们会加大对优质的视频创作和视频创作者的这样的补贴, 鼓励视频创作者进行视频的回答, 相应的会增加在内容方面的投入。 Going forward, I think in the next couple of quarters, we might see some slight changes in our gross margin level as we are seeing very nice perspectives in terms of the video contents that we have.
spk03: Therefore, we will invest a little bit more in encouraging the video creations and content creators by compensating them more on their content creation in video format. Thank you.
spk01: The next question is from Binbin Diang from J.P. Morgan. Please go ahead.
spk06: Thank you, Mr. Guan, for accepting my question. And congratulations on the first performance of our listed company and a very strong performance. I have two questions. The first question is about our content commercialization solution. After our strong performance in the first quarter, some of the main matrix or driver behind it, Mr. Guan, can you share with us? For example, what are the main advertisers worth paying attention to or some business clients' industries? And then some of the major operating metrics, such as click-through, eCPM, etc. What is it like in the first quarter? And then how do we see the performance of the rest of the seasons in 2021? The second question is about the management of sales and marketing. This is about three times more than last year's first quarter. And then I want to understand which are the main investment areas behind this. And then how do we see the rest of the seasons? I'll translate it myself. So my question, I have two questions. My first question is about the content commerce solution. So can management share some colors in terms of the drivers behind the strong goals in the first quarter? For example, what are the key industries or notable business customers who have contributed to the growth? And how does the operating matrix such as click-through rate, VCPM look like in the first quarter? And how should we look at the trend in the rest of 2021? And my second question is about your sales and marketing expenses, which nearly tripled in the first quarter of 2021 compared to the same period last year. Can management elaborate on the key investment areas of the sales and marketing investment, and how should we look at the trend in the following quarters? Thank you very much.
spk04: Okay, thank you, Bingbing. Let me answer these two questions. The first question is about our common commerce solution business. Thank you. Let me address the first question on content commerce solution first.
spk03: Well, actually in Q1, content commerce solution beat our expectations for that, which registered a revenue of 121 million, accounting for about 89% of the number that we got from the last year entirely, increasing by over 100%. And even on a quarter-on-quarter basis... 从增长的驱动的driver来看,主要是
spk04: There are two factors. First, the number of brands and merchants in Zhijia has increased significantly. Compared to the first quarter of last year, it is almost 10 times the number. Second, due to the increase in the number of merchants, there has been a sharp drop in the price of Zhijia products, which has led to an overall increase in CPC. As for the drivers behind the content commerce solution, I would say that we are very happy to see that both the number of the brands and merchants on our platform are on the rise as well.
spk03: increased by about 10 times if you compare the number in Q1 2020. And because there are larger volumes of merchants working on our community platform, we are seeing very nice price out of the bidding from the merchants. Therefore, we have very nice CPC numbers as well. So in conclusion, I think I would say that both the volume as well as the price are the drivers behind our CCS growth content commerce solution. Thank you.
spk04: Okay. In terms of the industry concentration, we see very nice popularities from the sectors such as FM3G, education, beauty, products, 3Cs, and automobiles, whereas
spk03: we're seeing very nice conversion rates from the CCS that we're having. And I would say for FMCG, education, and beauty, they have been the biggest contributors to our merchant base and brand base.
spk04: Okay, this is the answer to the question about the family business. And about the second question, the marketing cost, In the first quarter, the cost has increased compared to last year's Q1. The main reason for this increase is that we had a series of brand events in January, the 10th anniversary of Q1, including the answer area party, the New Year's Eve party, and so on. This series of brand events is actually OK.
spk03: As to your second question, the increase of sales and marketing expenses in our Q1, well, I should say that in general, we were celebrating the 10th anniversary of Zhihu as a community. Therefore, we launched a number of brand campaigns heavily in the country, such as Night Party Adventure, as well as the award ceremony for new generation Of knowing, which is very welcomed by the community as a whole. And this helped us a lot in building our brand recognition. And that is why we see a jump in terms of sales and marketing expenses, especially in this Q1. 当然我们在增加投放市场费用的同时,我们非常关注投放市场费用。
spk04: This is the efficiency of the user acquisition. We saw that when we were in Q1, the cost of each new MAU was still 37 yuan, which is a very low level.
spk03: That said, I should say that we're still very stringent in terms of our sales and marketing expenses and looking at the efficiency of our marketing dollars. And the CAC of our MAU still stood at 37 RMB per MAU, and therefore still keeping at a very low level.
spk04: 好的,这个问题回答完毕。 Thank you.
spk01: 好,非常有帮助,谢谢。 The next question is from Vicky Gee from CICC. Please go ahead.
spk03: Thank you for accepting my question. Congratulations on your performance. My question is about advertising. You mentioned that brand ads perform well. I would like to know about the performance of effective ads, such as ad loads and eCPM. What is the future trend? I will briefly transmit myself. Thanks, management, for taking my question and congrats on your strong financial performance. My question is regarding the drivers of the advertising business. Since it is said that brand ads have strong performance, How do you view and project the growth of performance at low ratio and in CPM? And maybe in terms of advertisers, is it because that you have gained more share in their accounts or there are more KA or SME clients? Thank you.
spk04: Okay. Our ads are currently divided into brands and effects. In the past year, our brand ads accounted for a relatively high percentage of revenue, and contributed a relatively high amount of revenue increase. This is mainly because we have done a product delivery in terms of brands. In addition to traditional brand ads based on traffic, we will also provide a longer-term value for brands based on content. We have also created good content for brands, such as good content that can be stored on the platform. This is mainly what we have done Thank you for the question. Well, our advertisement business revenue increased by 70% compared with the previous year.
spk03: And that was mainly contributed by our brand advertisement. It used to account for the majority part of our advertisement income. That is because we have launched a new product as well as helping our brand advertisers building more values on our community by giving them better high-quality content that would accumulate in our communities. And our advertisement income mainly comes from the KAs. OK. Our performance ad is accounting for less of a percentage versus the brand's ad, which is pretty much in line with our development strategy. And we hope to work even harder for the brand advertisement and trying to gain more of their budget on advertisement. 关于刚才您提到的这个
spk04: OK.
spk03: As for the upload, going forward, we will keep our upload unchanged. Instead, we will rely on the increase on our user base, the better and higher recognition of our JuFu as a community, and also diversifying our format so that there will be more forms of consumption of advertisement on our community. Thank you.
spk04: That's the answer to this question. Thank you.
spk01: Due to time constraints, that concludes today's question and answer session. At this time, I will turn the conference back to Jingjing for any additional or closing remarks.
spk02: Thank you once again for joining us today. If you have any further questions, please contact our IR team directly or TPG Investment Relationship. Thank you.
spk01: Thank you once again for joining us today. If you have any further questions, please contact our IR team directly or TPG Investor Relations. Thank you.
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