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spk03: Ladies and gentlemen, thank you for standing by, and welcome to the Juhu Inc. Third Quarter 2023 Financial Results Conference Call. At this time, all participants are in a 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 would like to turn the conference over to Ms. Iris Liu, IR Manager. Please go ahead, ma'am.
spk08: Thank you, Operator. Hello, everyone. Welcome to our third quarter 2023 Financial Results Conference Call. Participants on today's call will include Mr. Zhou Yuan, Founder, Chairman, and Chief Executive Officer of Tencent, Mr. Li Dahai, Chief Technology Officer, and Mr. Henry Hsia, our Chief Financial Officer. Before we continue, Please note that today's discussion will contain forward-looking statements made under the safe hazard provisions of the U.S. Private Securities Litigation Reform Act of 1995, forward-looking statements involving hero rates and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings as well with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures, and the reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our IR website at ir.zhuo.com. I will now turn this call over to Mr. Harish Shah, CFO of Zhuhu.
spk05: Thank you, Iris. I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou Yuan founder and CEO of Zhuhu. Hello, everyone. Thank you for joining Zhuhu's third quarter 2023 earnings call. During the quarter, we made considerable progress in our multi-engine commercialization across the entire community, boosting our total revenue by 12.1% year-over-year. Notably, revenues from our membership and vocational training business increased 39.2% and 85.6% year-over-year, contributing 45.7% and 14.2% of our total revenues respectively. Throughout the quarter, we continued to unlock the vitality and prosperity of the Zhihu community, inspiring our content creators' high-quality production while continuously expanding our user base and encouraging user interaction. Our number of MAUs reached another milestone for the quarter, rising to 110.5 million. We continue to view cost control and operational efficiency as one of our strategic priorities. Consequently, we witnessed a five percentage points increase in our gross margin, bringing it to 53.7% for the quarter. along with a notable 10.1% reduction in our non-GAAP net loss compared to the previous year. Going forward, I will be dedicated to leading the team to enhance our operating efficiencies and further narrow losses. Now, I'd like to delve into the details of our third quarter initiatives and discuss our progress concerning content and creators and the commercialization progress. Let's start with our content and the content creators. As of Q3, the accumulated pieces of content across the Zhihu community reached 743.7 million, representing a year-over-year increase of 28.4%. In addition to expanding our overall content library across various verticals, since our users cannibal in July, We have specifically focused on expanding and enriching content related to new generation professionals' evolving demands, including their career growth, lifestyle, and consumption-related scenarios. Furthermore, to bolster our community ecosystem, we continued to focus on the organic commercialization of our content. At our Zhihu Business Conference in September, we announced the official release of a new commercial content product, Zhiyao, designed for credentialed professionals. With this product, professionals can answer questions, share product experience, and provide industry insights as experts in their specific fields. Alongside this initiative, we also enhanced our new generation professional content creators by providing high-quality traffic support through our micro-influencer incubation plan, Bawang KOP Fu Hua Jihua, leading to greater and more direct influence on users' consumption decisions. We also launched a data product, the Zhihu Youshu Mini Program, which can help our merchants and the brands capture precise market growth potential by analyzing trending topics, industry research, and many other factors as a valuable part of our marketing services. We also drove increased operational efficiency and performance across the Zhihu community in the third quarter as we continued to elevate our content supply by integrating AI and other technologies, by enhancing algorithms and AI-powered content comprehension, we were able to deliver more customized and balanced content to users, especially content with a higher commercial value. Content creators continue to contribute immersed value to the Zhihu community. During the quarter, in addition to enhancing our content library, we strive to inspire new content creators to join us while also increasing support for our existing content creators. During Q3, the average financial income of continent creators who received financial income from our platform increased by more than 30% year-over-year. We stimulated both the quality and equality of their production by actively engaging in operating activities. Simultaneously, we provided support through improved community governance and a strengthened interest protection mechanism. Additionally, we intensified our crackdown on pirated content. To promote the sustainable growth of our dynamic and flourishing content ecosystem, we adopted a more active approach to our multi-engine commercialization in this quarter. As a result, our membership business maintained its accelerated growth momentum and the revenue contribution from the vocational training business continued to increase. This stands as a strong testament to our outstanding continent monetization capability and the effectiveness and the resilience of our business model. Our total revenue for the quarter was RMB 1.0 billion, up 12.1% year-over-year. Among our various revenue streams, pay membership revenue grew by 39.2% year-over-year, and average monthly prescribing members increased by 35.9% year-over-year to 14.8 million. This strong revenue performance was boosted by our persistent efforts to broaden content coverage while improving content distribution efficiency. Zhihuo IT products have begun to demonstrate huge potential within the online entertainment industry in China. Our content and blockbuster IP have garnered broad recognition beyond the Zhihu community, amplifying the potential for audience-based growth. A hit TV drama, Scent of Time, adapted from novel Xi Qianhua on the Zhihu platform, debuted on Youku in October to broad market acclaim. We believe that the strong sense of connection and the broader peer of the original stories in Zhihu's library offer great opportunities for film and television adaptation, which will further unlock our content ecosystem's growth in the monetization potential for our valuable IPs. Zhihu has already accumulated more than 100,000 IPs in its library, including short stories and science fiction, et cetera. There are currently many other Zhuhu works in the film and television pipeline, and we look forward to sharing more details of these projects once they are available. By leveraging our technology and operation capabilities, we are confident we can share the massive value and influence of our IPs with our users, content creators, and business partners. We will continue advancing the development of our high-quality IP content and integrate AI technologies from content creation to commercialization. An array of functions and tools we have recently launched or improved, such as our AIGC-powered illustration tool, Rider Assistant, have significantly boosted content creation. Meanwhile, our updated interactive functions together with our broader and more diverse content categories, have effectively expanded our user coverage. Moving forward, we will continue to strengthen our commercialization capabilities through innovation and exploration to increase our pool. Moving on to marketing services. In the third quarter, our marketing services were still affected by the overall fluctuations in the macro environment. Despite these challenges, our cornerstone verticals, especially those as a product requiring a relatively longer decision-making process with high values, have been widely recognized among brands and manufacturers. For example, IT and 3C and home appliance continue to make solid progress. Together, these increase significantly by double digits year over year highlighting the effectiveness of our content-centric marketing solutions. To further unleash the commercial value of the Zhihu community's high-quality content, traffic, and other opportunities for brands and manufacturers, we have been consistently upgrading our products and expanding content consumption scenarios. We have enhanced our partnerships with third-party e-commerce platforms such as Taobao for traffic data and analysis. This includes live monitoring of comprehensive indices, including traffic volume, user engagement, user acquisition, and transaction number. This enables merchants and brands to enhance their ROI through more optimized performance-based marketing. Our newly launched content product also helps to maximize the value of the credential professionals and influence on users' consumption decisions. Furthermore, we continue to upgrade our underlying technology capabilities to achieve better ROI for our brands through our smart advertisement allocation model and streamline order placement functions. Boosted by these efforts, our advertising business recovery has begun to pick up sequentially in the fourth quarter. Moving forward, we are confident that our operational effectiveness and enhanced brand recognition will enable us to capture the market's growth potential. Moving on to our vocational training business, we have been striving to broaden and diversify our program offerings by identifying and fulfilling users' demand for academic and vocational qualifications, as well as employment skills. Our well-rounded product and service spectrum now covers postgraduate entrance examination, civil service examination, ESG, CFA and CPA examinations, language testing, writing or data analytical skills, and AGI, among others. As a result, vocational training revenues soared 85.6% year-over-year in the third quarter We will continue to adjust our service offerings to capture market growth. We also boosted the operational efficiency of our vocational training business and focus on resources and post-merger integration during the quarter. The resulting optimized ROI in user acquisition significantly strengthened our business product competitiveness. Furthermore, We remain confident in the opportunities that the AI revolution is bringing to the education industry. As such, we continue to fortify our R&D capabilities and integrate AI into products and services to improve user experience. During the quarter, we released the AI Powered Paper Correction Tool, which sets a new benchmark for user experience in the vocational training industry. We also expanded our AI technology application scenarios to improve our sales conversion and users' interactive learning experience. Our strategic investment in AI technology is playing a pivotal role in our development as we approach our next stage of growth. Our large language model Zhihai to AI, which received regulatory approval in early November, has now reached 100 billion level parameters. With the regulatory approval secured, Zhihai 2.0 AI can serve more users and commercial clients, marking another milestone in the process of transforming the Zhihu community into Zhihu intelligent community. We believe Zhihai 2.0 AI's advantage lies in the ability to naturally combine large language model with specific scenarios powered by superior content understanding and the inference abilities. We will gradually open our large language model benefiting our users and partners while preparing the sustainable growth of the entire industry. We will better empower our content creators and users in various scenarios when enabling brands and manufacturers to reap the benefits and reach their operational targets. In short, Zhihu's success and resilience are underpinned by our dynamic ecosystem with high quality content at its core. With progress across content and commercialization of our diverse revenue streams in this quarter, we are well positioned to capture driving healthy and sustainable growth while enhancing probability. Going forward, we will continue to seek and seize opportunities to empower users and creators with advanced technology, creating value for all of our stakeholders. This concludes Mr. Zhou Yuan's remarks. Now I will turn to our financial details in the third quarter for a review of our third quarter 2023 results. Please see our press release issued earlier today. I'm pleased to announce another solid quarter with accelerated progress in our multi-engine commercialization, driven by robust growth in pay membership and the vocational training in business. Our total revenues for the quarter increased with strong resilience, rising by 12.1% year-over-year. which is in line with our management guidance provided previously. As we consistently broaden and diversified our products and service, pay membership revenue for Q3 increased by 39.2% year-over-year, while vocational training revenue increased by 85.6% from the same period of last year. Our gross margin for Q3 first expanded by 5 percentage points year-over-year to 53.7% as we focused on high-margin business and projects. Our ongoing prudent cost control measure and operating efficiency enhancements also improved the company's bottom line. Accordingly, our non-GAAP net loss for Q3 narrowed by 10.1% from the same period of 2022. Our paid membership revenue for the quarter was RMB 466.8 million, up 39.2% from RMB 335.4 million for the same period of 2022. This increase was prepared by the continued growth of our subscribing members, which increased by 35.9% year-over-year to 14.8 million. Our vocational training business revenue for the third quarter was RMB $144.8 million, up 85.6% year-over-year. This organic growth came from new courses offerings provided by our existing business. And notably, our newly launched online courses for ESG-related examination preparation received excellent feedback from our users. The remainder of the revenue growth was attributable to the acquisition of MBA master, which was acquired previously. Our marketing services revenue for the quarter was RMB 383 million, despite the overall industry challenges. Our cornerstone verticals, including IT industry C and home appliance, maintained their growth momentum, increasing significantly by double digit year over year. Gross profit for the third quarter increased by 23.4% year-over-year to RMB 548.5 million, with gross margin expanding to 53.7% from 48.7% for the same period of 2022. Primarily due to our enhanced monetization efforts, as well as our improved efficiency in cloud services and bandwidth utilization, Total operating expenses were RMB $898.6 million for the third quarter compared with RMB $723 million for the same period of 2022. Selling and marketing expenses for the third quarter increased to RMB $534.3 million from RMB $478.3 million for the same period of 2022, as we continued to invest in promoting our products and brand names. Research and development expenses increased to RMB 249.7 million for the third quarter from RMB 160.8 million for the same period of 2022. The increase was primarily attributable to our increased spending on technology innovation as we believe strongly in the potential opportunities in large language model technology. General and administrative expenses increased for the quarter to RMB 114.6 million from RMB 83.9 million in the same period of 2022 due to increased rental expenses and an increase in share-based compensation expenses from our acquired business. In this quarter, we incurred approximately RMB 18 million relocation expenses as we moved into our new headquarters in Beijing. Driven by our ongoing efforts to control costs and operational efficiency improvements, our gap net loss for the quarter was RMB 278.4 million, narrowed by 6.5% on a year-over-year basis. Our non-GAAP adjusted net loss, which primarily includes share-based compensation expenses and amortization of intangible assets resulting from business acquisition, was RMB 225.3 million for the third quarter, narrowed by around 10% from the same period last year. As of September 30, 2023, The company had cash and cash equivalents, term deposits, and short-term investments of approximately RMB 5.7 billion, compared with RMB 6.3 billion as of December 21, 2022. As of September 30, 2023, we repurchased approximately 18.3 million Class A ordinary shares for a total of $42.6 million on both the New York Stock Exchange and the Stock Exchange of Hong Kong. This concludes my prepared remarks on our financial performance for this quarter. Let's turn the call over to the operator for Q&A session. Thank you.
spk03: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Steve Key with Goldman Sachs. Please go ahead.
spk00: Hello, good evening. Thank you for answering my question. I might ask a question about the progress of our big model. In early November, we also acquired a backup of the ZhihaiTU model. Can you share the progress of our AI big model and what kind of commercialized landing scenarios there will be in the future? Thanks for taking my question. So first congratulating on receiving the approval for our large language model Zhihai 2.0 AI. Could management share with us the latest progress of our large language model as well as the future monetization roadmap? Thanks.
spk06: Okay, thank you for your question. I am Zhihu's CTO, Li Da Hai. Let me answer this question. We have used our own Thank you, Stu, for the question. This is Da Hai Li, CTO of Zhihu. To summarize, Zhihu is well-positioned as a content community that has high-quality content and data on its platform,
spk08: and we have made tremendous progress in terms of building up our large-language model capabilities in the past few months. And in the future, our key focus will be on the application of our Zhihai Tool AI into different business scenarios on our platform.
spk06: Zhihai Tool AI has been upgraded to a multi-modal model with hundreds of billions of parameters. It has also been upgraded to a multi-modal model with hundreds of billions of parameters.
spk08: And more specifically speaking, our Zhihai 2 AI is now upgraded to 100 spelling level parameters of multi-model large language model. And in early November, we have obtained the regulatory approval for our large language model. In terms of application, internally, we have used our Zhihai 2 model into different aspects of our daily operations.
spk06: In terms of understanding the content, we use the language model in the content classification system to search and promote the implementation. For example, we used Zhihai 2 to reduce the time of upgrading the content classification system from one quarter to two weeks, which greatly increased
spk08: Speaking of content comprehension, our large language model has been used on the content classification, our content search, and recommendation to enhance its operating efficiency. For example, in the past, our content classification system upgrade takes about one quarter and now it's shortened to two weeks. In this way, we will enhance our user engagement as a decade.
spk06: In terms of our marketing services, our larger model helps us to
spk08: to refine the titles of our content commerce articles and help us to refine our content products to enhance our commercialization conversion rate.
spk06: In the implementation of paid membership, we also use multi-modal model capabilities to supplement the production of content cover, and provide users with a virtual solution that surrounds the story in depth.
spk08: Our multi-model large language model also facilitates the generation of cover pictures of stories of our paid membership business. And in this way, users will be able to interact with the virtual characters of our short stories and get an in-depth understanding of the contents of the stories.
spk06: Speaking of our vocational training business, our large language model helps the system to correct the assets for our students and
spk08: Also, it helps our tutors to answer the basic or frequent questions from the students in this way to enhance the operation efficiency of our vocational training business. 在安全审核方面,我们通过大模型的生成语义识别能力,帮助过滤低质量内容,提升不合规内容的识别效率,提升回答和评论的审核效率及准确性。 In terms of our content auditing, the large language model, with the help of our large language model, the indexed meaning identification abilities, the larger language model is able to filter low-quality content and identify the non-compliant content of our questions and user reviews. In this way, to enhance the overall efficiency and accuracy. 以上是我们在各个业务里面的 So this summarizes our past explorations in terms of the utilization of large language models in our community. So in terms of our future plan, with the approval of the regulators, we plan to utilize our Zhihai-2 AI into more products or functions that can be accessed by our users to enhance our content creation and consumption experiences.
spk06: AI is an important opportunity for Zhihai-2 AI. Through Zhihai-2 AI, we are constantly upgrading our technology, AI as to G2 is a very important opportunity.
spk08: And through the R&D of G2 AI start language model and continuously upgrade our basic model capabilities, we will provide better experiences for our users and content creators and also enhance our commercialization efficiency. Thank you for your question.
spk04: Eddie, please go ahead.
spk03: The next question comes from with CICC. Please go ahead.
spk09: Thanks for taking my question and congratulations on another solid loss. The membership business once again demonstrates its strong growth this quarter. What's the strategy for this business in the future? And how does the company view the recent development trend of Michael's drama series? Thank you.
spk07: Hello, Shui-Tian. I'm Zhou Yuan. We just had a data introduction of our membership business. Our Q3 growth is 39.2%. In fact, we have already accumulated 15 million users who are more and more active and paid. Of course, this is a figure. Behind this figure, we actually have a very stable creative group from creation to consumption and a consumer group that is used to consumption.
spk08: Thank you to the team for the questions. This is Zhou Yuan, CEO of Zhihu. As you can see that, as our CFO have introduced previously, in the third quarter this year, our revenue from paid membership business has increased year over year by 39.2%. And we have accumulated average monthly paying users for about 15 million. And currently, we have accumulated a mass audience base and a content creator base for our paid membership business.
spk07: In fact, all of our work is based on a relatively perfect business cycle. On the one hand, it is still growing relatively healthily. On the other hand, we are also doing a lot of new work on this basis. On the one hand, as we have just said, Based on our content business fair will, our paid membership business is experiencing resilient growth.
spk08: And firstly, we have explored our content IP commercialization currently. And in October, our H-Drama, State of Time, have released a new code and have received broad market appeal from the market.
spk07: On the other hand, our technical investment in the member business is very continuous. We continue to carry out technical implementation, including innovation. This year, we are actively introducing AI technology into our virtual business, including our plug-in tools and creative assistants. As time goes by, it will definitely continue to improve the efficiency of our content creation.
spk08: And secondly speaking, our paid membership business has constantly improved in terms of our operating efficiency with the help of technology innovation. As Scott has mentioned just now, with the approval of AI large language models, our AI technology will facilitate us in terms of the writers, assistants, and also the the cover picture generation for our stories in our membership business.
spk07: What Da Hai just mentioned about some deep interaction is actually also related to AI. But we think that it is actually not part of the marketing. It is part of the innovation of AI in the field of scenes. We are now continuously trying this area. Many users, some users have started to use it. And another aspect I would like to mention is that AI will not only help us to enhance operating efficiency, but it will also help us to create more in-depth interaction with the content of the stories.
spk08: For example, the interaction with virtual characters in the stories. And in this way, we will create more in-depth content consumption and help to increase our output for our paid membership business.
spk07: As for the other media forms you mentioned, including short stories, I think any media can't live without high-quality content. In fact, our content library has accumulated more than 100,000 stories, science fiction novels, and other IPs. And the final aspect I would like to mention is that we are constantly exploring different means of media for our paid membership business.
spk08: And in our year selection business, Not only the short video dramas you have mentioned that is developing very rapidly in China recently, but we also have about 100,000 number of stories or content in our paid membership business. And we will constantly evaluate our media and to help us to enhance our paid membership business.
spk05: And Xieqing, this is Henry, the CFO of the company. So thanks for the question. To compensate the wrong answers to our CEO about the short-form TV drama, we believe it's a huge market with brilliant potential. And as the CEO mentioned, Zhihu was equipped with a very large, we accumulated more than 100,000 stories in the library. So we believe that the market will recognize Zhihu's IP, the scarcity value of the Zhihu IPs. in this very, how to say, unique and booming market.
spk03: Thank you. The next question comes from Vicky Wei with Citi. Please go ahead.
spk11: Good evening, Director. Thank you for accepting my question. I have a small question about our advertising revenue. Thanks, management, for taking my question. Will management provide some color about the recent progress of the marketing service business and the performance of the Double Eleven performance? How should we think of 2024 outlook for this business? Thank you.
spk07: Thank you, Vicky, for your question. This is Zhou Yuan.
spk08: To introduce some of the noticeable progress of our Double 11 campaign, our content commerce solutions business have made some historical marks for the past Double 11 campaign.
spk07: During the period of double 11, our overall search volume has increased by 188%. And then the community users, during the Double 11 period, the average price of consumption in the U.S. was more than 1,300 yuan. This figure is actually going to increase a little bit.
spk08: So for some of the specific progress or metrics we have achieved for the W11 campaign, during the W11 period, our relevant content search volume has increased year-over-year by about 188%. And in terms of our average selling price of our commerce products, the average selling price has achieved more than 1,300 U.S. dollars.
spk07: In terms of quality, some of the products that people are concerned about, such as digital and computer, have increased by more than 10% during the Double 11. There are also some new products, such as outdoor activities, hiking, travel equipment, Japanese and American makeup, and food and drinks, which have increased by more than 10%.
spk08: And in terms of different variables of our marketing services, firstly speaking, for our IT, 3C, and home appliances sector, the business volume have achieved double-digit growth year over year. And for other sectors like outdoor and consumption and cosmetic products, the growth is also noticeable.
spk07: We now have a deeper cooperation with the third-party platform, which is reflected in our commercial products. It will carry out cooperation and communication on data. So now we can actually see that this year, it seems that the delivery rate generated through cooperation, I think there is a transaction rate, and the proportion of new customers are actually significantly improved.
spk08: And we have established corporations or partnerships with a lot of e-commerce platforms in terms of our data and other aspects. And during the double 11 period, the transaction volume and the new client rate for the, our marketing services have also increased noticeably. .
spk07: For some of the verticals of our marketing services, the conversion rate or the conversion rate of these
spk08: verticals have reached about 8%. So that is to say, among 100 of the people who have visited our platform, about 8 of them have been successfully converted.
spk07: And then, because this year we are more focused on defining the future user group as our new employee user group, we also have some interesting data insights or discoveries. The first is that we saw this year's monthly We have been targeting new generation professionals starting from this year. It's one of our peak targeted users.
spk08: And in this year, we have noticed some trends, interesting trends. For example, some of the lifestyle-related consumptions have increased significantly in our platform. For example, some of the cameras and washing machines are high-quality IT3C products.
spk07: In addition, we see this phenomenon in the community. In fact, our new workers are more Another interesting trend we have noticed is that in our content platform, our users
spk08: is very reliant on the introduction of the professionals in their introductions of their different products, especially some detailed metrics of these products. For some of the products, such as LED or different electronic devices, the transaction volume has almost doubled or tripled in our platform.
spk07: What I want to say is that, on the one hand, Double 11 seems to have gained significant results in terms of data construction on e-commerce platforms, and on the other hand, it has been continuously upgraded in terms of our platform basic capabilities. It reflects our more accurate promotion of commercialized content and the ROI of the user profile and perception.
spk08: Another thing is that thanks to our continuously improved data establishment and our data cooperation with different e-commerce platforms, the data capabilities of our platform has significantly improved. And in this way, our content commerce solutions and content recommendation capabilities have also converted or translated into higher ROI for performance-based
spk07: And finally, at the outlook for next year or Q4 of this year,
spk08: In the fourth quarter of this year, we have noticed a recovery trend for our marketing services, and with the enhancement of our performance-based marketing solutions, we are confident that next year our marketing services will see a more noticeable recovery. Thank you for your questions.
spk03: The next question comes from Daisy Chen with Haitong International. Please go ahead.
spk02: All right. Thank you for taking my question. My question is about the education business. We noted that Zhihu's education segment's young year growth rate is quite strong this quarter. So can management share your views on the growth rate and margins for your educational business for the next few quarters? Thank you.
spk07: Okay, thank you, Desi. Our education... Oh, sorry, I just interrupted. Thank you, Stacy for your question. This is Zhou Yuan.
spk08: In terms of our revenue from the vocational training business is rapidly growing. For this quarter, the revenue from vocational training has grown 85% year over year compared to the same period last year. And during the first half of this year, the revenue of vocational training business is already comparable to the full year last year. 那我们的其实职业教育业务呢,它其实某种意义上来说是满足了我们
spk07: Speaking of the different
spk08: different varieties of the vocational training courses provided by our business is actually serving the similar demand of the same audience, the same target group of our platform, the new generation professionals. And our courses help them to grow in terms of their personal development and their career development and also education certification. And in our platform, we already have about more than 10 kinds of courses in our platform. And we have paid attention to the data in terms of the user growth in our business operation, and I will give a more specific example.
spk07: In our third quarter, in the professional training business, we use ESG and AI technology. In fact, this is representative of the training of workplace skills. Its function is relatively significant. In this culture, the vocational training business has seen a very interesting trend.
spk08: For some of the genres provided in our platforms, such as ESG or artificial intelligence-related courses, it's very catered to the growing demand of the market to fulfill the career growth of our users. For example, the AI-related courses have seen almost doubled or tripled growth in the recent months. And moving on to the future, I think our key focus will be focused on the expansion of the different kinds of courses in our platform. And also with the help of AI, our operating efficiency will be enhanced.
spk07: In addition, as you all know, the digitalization rate of this industry is not very high. In the previous period, we invested in the construction of the technical center. So next year, we also have a more important job, which is to integrate and promote the school. We believe that with the integration and promotion of the school, our technical investment will gradually be guaranteed.
spk08: And in this industry, we have seen that there is a large room for improvement for the digitalization or enhancement in this industry. And what we are doing currently is that we are focusing on integration and operating efficiency enhancement for this segment with the help of the business expansion and commercialization. we are confident that the investment or commitment we have made in this segment will be seen in the future.
spk05: I think to conclude, we have the vocational training business. I think this vocational training business will achieve more than 20% year-over-year growth next year. But we are still, as Zhou Yuan, our CEO, mentioned that we made a technology investment integration that is business. So we believe that is still like in the investment stage of the business. Thank you for your question.
spk03: The next question comes from Thomas Chong with Jefferies. Please go ahead.
spk01: Good evening. Thank you for accepting my question. 我的問題是關於我們的GP Margin 還有我們三非未來的趨勢 王立成可以分享一下 就是我們對不給分的timing的一個時間點 Thanks management for taking my questions. My question is about margin and the OPEX trend. Can management comment about the outlook for our GP Margin as well as the OPEX outlook? On that front, can management comment about the timing to achieve a break-even? Thank you.
spk05: Okay. Okay. Hi, Thomas. Sorry, Thomas. Thank you for the question. So, while looking for the GP margin, that will be somehow be more certain or more sustainable at around maybe 53 to 55 percentage points per percent. As we are improving our utilization of, as you may know, as we introduced in the remarks that we said that we improve our utilization of the cloud services and the focus on improving the operation efficiency for the cost control. And as you can see, we have a shift in our revenue structure to see the business, for example, like paid membership, as well as the vocational training business. Maybe their margin is not as high as the advertisement business, but going forward, we believe that we will keep that around the GP margin be between 53% to 55%. That's question one. About our OPEX trend, we believe that we have seen some opportunities to lower the percent of our sales marketing as a percent of our revenue in the next year because we are a content platform. So we believe that there is still some room space to do more like better cost control in the OPEX spending. And about the breakeven point, we believe that will happen in the next year. Thank you for your question.
spk01: Thank you.
spk03: The next question comes from Eileen Lin with China Renaissance. Please go ahead. Eileen, your line is now open.
spk10: Thanks for taking my question. I have a follow-up question to Thomas' question. Can management share more quarter-to-quarter trends for the break-even timing? And is there any color you can share on the selling and marketing expense?
spk05: Hi, Eileen. Hi, this is Henry. Thank you for your question. Because we are in the year-end budgeting work streams, so I think we will update with the markets our progress about the break-even point. We believe that will be somehow some quarter, maybe one quarter next year. About the self-marketing, as I mentioned in the previous question, we believe that there is still some percentage point space to lower our self-marketing as a percentage of our total revenue in the next year and in the next quarter. That's my answer to your question.
spk11: Thank you.
spk06: Thank you.
spk03: This concludes our question and answer session. I would like to turn the conference back over to Iris for any closing remarks.
spk08: Thank you once again for joining us today. If you have any further questions, please contact our IR team directly or PSN Financial Communications. Thank you.
spk03: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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