Kingsoft Corp Ltd Adr

Good day and thank you for standing by. Welcome to the Q1 2024 Kingsoft Corporation Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Yinan Li, IR Director of Kingsoft. Please go ahead.

Thank you, operator. Ladies and gentlemen, good evening and good morning. I would like to welcome everyone to our 2024 first quarter earnings call. I'm Yinan Li, the IR Director of Kingsoft. I would like to start by reminding you that some information provided during the earnings call may include forward-looking statements, which may not be reliable in the future for virus reasons. These forward-looking statements are based on our information and information from our sources, which we believe to be reliable. Please refer to the other publicly disclosed documents or detailed discussion on risk factors which may affect our business and operations. Additionally, in today's earnings call, the management will deliver prepared remarks in both Chinese and English. A third-party interpreter will provide a consecutive interpretation into English. During the Q&A session, we will accept questions in both English and Chinese with alternating interpretations provided by the third-party interpreter. On-site translation is solely to facilitate communication during the conference call. In case of any discrepancies between the original remarks and the translation, the statements made by the management will prevail. Having said that, please allow me to introduce our management team who joined us today. Mr. Zou Tao, our executive director and CEO, and Ms. Li Yi, our acting staff. Now, I'm turning the call to Mr. Zou.

Hello, everyone. Welcome to the first quarter of today's software in 2024. In the first quarter, the overall opening of the Group in 2024 achieved a double growth in total income and profits. The total income reached RMB21.3 billion, which increased by 8% in total. The operating profit reached RMB6.02 billion, which increased by 31% in total. The operating profit rate increased by 28%, which increased by 5%. The estimated net profit is 2.8 billion yuan, which is 48% higher than before. The first quarter of today's office income is 12.3 billion yuan, which is 16.5% higher than before. Game and other business income is 9.1 billion yuan. Next, I would like to focus on the performance of the first quarter of 2024. This quarter, Today's office continues to maintain a stable business environment Surrounded by multi-level cloud content AI cooperation The strategy continues to invest in the field of cooperation and AI research and development Through technical innovation, product delivery, performance improvement, etc. Continuous increase in product competitiveness To achieve new productivity in the field of office The first breakthrough of 600 million for the main product, Yuehuo equipment, reached 602 million, which is a 2.2% increase. Of which, the PC version of Yuehuo equipment is 270 million, which is a 7.1% increase. In terms of personal subscription, by continuously enriching the rights of members, increasing user annuality and return transfer, this quarter achieved a revenue of 7.3 billion yuan. with a growth of 24.8%. PSAI released the product price at the end of March 2024, entered the gray area test, and initially started commercialization. In terms of institutional subscription, we continue to improve the product system, improve service experience, widen the ecosystem, actively pushing for the transformation of cloud-based cooperation, and the sales model of institutional subscription has entered a transitional stage. This quarter, the actual income of 2.4 billion yuan has increased by 13.6% in total. In terms of institutional authorization, it has been promoted by the addition of new purchase orders by the party government. The institutional authorization business has increased. This quarter, the income of 1.94 billion yuan An increase of 6.31% in the same ratio Surrounding the clouding of enterprises and organizational offices Cooperative and intelligent development trends On April 9th, we launched a new upgraded office new productivity platform WPS365 Covering upgraded WPS Office WPS AI Business Edition and WPS Cooperative For users to open up once an AI office The AI business version is used by customers to build a business platform. It is divided into three core products such as AI Hub, AI Dobbs, and Copilot Blocks. AI Hub reduces the threshold of the enterprise deployment of large models and accumulates the AI capabilities of mainstream large models in China. For example, Minimax, Sipu AI, Wenxinyan, We are in the big model field of positioning is the application side with more than a hundred domestic models for fitting and matching Realize the basic AI service of unboxing and use This also allows users to overcome the difficulty of choosing a large model and greatly reduce the use threshold AI box to solve user digital asset management of the focus will be traditional cloud storage One upgrade to a smart document library allows smart creation to have a basis. Complete document transmission system protection information is not more powerful. Copilot Pro can optimize the user's workflow through natural language to achieve the automation of tasks, help operators use natural language to drive BI product analysis data, It can also use the 365 API and the free API of the enterprise to solve office automation needs. The RPCS AI enterprise version improves team cooperation efficiency, management, development projects, low-cost building, and review processes, and provides important support. Game business, under the general guidance principle of the product strategy, focusing on the deep-rooted and classic series of Genshin Impact, and continue to vigorously set up new racing tracks to expand new games. The flagship game, Genshin Impact 3, shows a strong vitality and maintains stable development. The mobile version of Genshin Impact 3 has now opened multiple rounds of testing, and continues to work together with users to polish the game. The quality of the product is constantly improving. The game will be released in mid-June, bringing players a multi-faceted fusion experience, and successfully realizing the trend of online games on all platforms. While we are growing in the category of martial arts games, the exploration of the new track has also been step-by-step. The 2D design of the game has become more and more popular, Since its official launch on July 20, 2023, it has maintained a high level of user-friendly communication, user-friendly experience, highly valued user feedback and suggestions, and continued improvement in the performance and gameplay of the screen. In the first quarter, the number of active users and income of the game has been significantly increased, and the popularity has been constantly increasing. The sci-fi mecha game The release date is March. The game has been tested and optimized in mainland China and overseas regions. The promotional video has been on Steam for the first time since it was released last December. It is on the Top 100 of the global wish list. It has also been interviewed by international famous game media such as IGN and PC Gamer. Looking forward to the future, Jinshan Office will continue to uphold the multi-level cloud content collaboration AI strategy, firmly invest in AI and collaboration, and continue to explore WS AI in the landing of office scenarios in various industries. Game business will firmly focus on high-quality game strategy, and it will also be effective in the promotion of new product-based strategy. We will continue to actively listen to the players' voices, Hi, now we are turning the call to translator.

Mm-hmm. Yes. So we have come to about achieving double growth in both total income and profit in the first quarter. The total income amounted to RMB 2,136 million, representing a year-on-year increase of 8%. The operating profit amounted to RMB 602 meeting representing a year-on-year increase of 31 percent. attributable to shareholders of the parent company amounted to RMB 280 million representing a significant year-on-year increase of 48%. In particular, the revenue of Kingsoft Office Group reached RMB 1,225 million in the first quarter, representing a year-on-year increase of 16.5%. The revenue generated from the games business and other amounted to RMB 912 million. Now, I would like to summarize our performances in the first quarter of 2024. In this quarter, Kingsoft Office Group has maintained a solid operation focusing on the strategy of multi-screen, cloud, content, collaboration, AI. Kingsoft Office Group continued to invest in R&D of collaboration and AI. and strengthened the competitiveness of its products through technical innovation, product integration, performances, enhancements, and other initiatives. of our key products exist of 600 million for the first time and reached 602 million, representing a year-on-year increase of 2.2%, of which the number of monthly achieved devices of the PC version product amounted to 270 million, representing a year-on-year increase of 7.1%. In terms of individual subscription, we have continuously enriched membership benefits to enhance user stickiness and paying conversion and realized the revenue of RMB 734 million in the quarter. representing a year-on-year increase of 24.8%. The pricing of the WPS AI product was announced at the end of March, which is under gray box testing, marking its initial steps towards commercialization In terms of institutional subscription, we have continued to improve the product offerings. enhance the service experience, broaden their equal channels, and actively promoted application of the cloud and collaboration in office with the sales module of institutional subscription, entering the stage of transformation, achieving the revenue of RMB 242 million in this quarter, representing a year-on-year increase of 13.6%. In terms of institutional licensing, the institutional licensing business achieved growth, driven by increased purchase orders on localization solutions. We achieved the revenue of RMB 194 million in the first quarter, representing a year-on-year increase of 6.31%. Too elegant with development trends of application of the cloud. On April 9, we launched the upgraded New Quality Productive Force in Office WPS 365, covering the upgraded WPS Office, WPS AI for enterprises, and WPS Collaboration. offering a one-stop AI office solution for users. The WPS AI Enterprise Edition is designed as an enterprise brand for clients. AI Hub is an intelligent document library and co-plied for enterprise smart assistance. AI Hub reduces the for enterprises to deploy large modules and integrate the AI capabilities of mainstream large modules in China, such as Minimax, Drupal AI, Our position in the field of large modules is the application provider, and we have accommodated hundreds of modules in China to achieve the basic AI services out of the box, which also allows users to overcome the difficulties in the selection of large modules and greatly reduces the threshold for use. AI DOTS solves the user's pain points of digital asset management. transferring the traditional cloud document library into an intelligent document library through one-click upgrade so that the source of the intelligent correction has a basic and the completed document authorization system guarantees that the information is not overstepping the authority Copilot Pro can automate tasks through natural languages, optimize users' workflow, help operational staff to analyze data using BI products driven by natural languages, and use WPS 365 APIs and enterprises-owned APIs to address the needs for office automation. WPS AI for enterprises provides feature support for customers to improve their collaboration efficiency, manage their R&D projects, and set up low-cost approval processes, et cetera. In terms of online games business, Under the overall guiding principle of prime game strategy, we focus on cultivating and expanding the classical JX series and actively exploring new market segments so as to venture into innovative game genres. Two flagship game, JX3, online showed strong vitality maintaining steady development. They conducted multiple rounds of testing the mobile version of GX3, ultimate for research, elaboration, adjustment, and optimization with users, so that the game quality continues to improve. The game will be launched in June. which will bring about multi-technical integrated experience for players. Achieving accessibility of GX3 online, our flagship through all platforms. While deeply involving the cultivation of the material arts, art generating, we have also made incremental process in exploring new game genres. Since the official launch of the Emmy Shooter Game, Snow Break, Containment Zone on the July 20th last year, we have adhered to the tenet of putting users first, engaged in sincerely communication with users to other product experience, attached great importance to user feedback and suggestions. And after improving its graphic and gameplay through the number of the active users and income in the first quarter, achieved a significant quarter-on-quarter growth, indicating a continuous rise in popularity. The SAIFI main game, MIGAR-BRIC, has received the license approval in March 2024 and has been tested and continuously optimized in mainland China and overseas regions. It has still been ranked in the top 100 of Steam wishlists since it was first exposed last December, attracting exclusive interviews for internationally-renovated gaming media such as IGN, PC Gamer, and Famitsu. Looking ahead, Kingsoft Office will continue to adhere to the strategy of multi-screen, cloud, content, collaboration, AI, firmly invest in AI and collaboration and development, and continuously explore their application of WPS AI in office scenarios in various industries. In terms of online games business, We will servingly adhere to the strategy of producing prime games and strive to achieve effective implementation of the strategy of expanding new genres. We will continue to actively listen to the voices of players, striving to provide better gaming experience. Also, we will remain dedicated to the product philosophy of putting users first, being technology-based, upholding innovation, and strive to create sustainable and long-lasting value for our customers, shareholders, and employees. Now let's give it up for Mrs. Li Yi to present financial results for the first quarter 2024. Thank you.

Thank you. Good evening, everyone. We now discuss the first quarter financial results used RMB as currency. Revenue increased 8% year-on-year and decreased 7% quarter-on-quarter to $2,137 million. The revenue fleet was 57% for office software and services and 43% for online games and others. Revenue from the office software and service business increased 70% year-on-year and decreased 5% quarter-on-quarter to $1,225 million. The year-on-year increase was mainly due to the growth of domestic individual office subscription business, institutional subscription business, and institutional licensing business, a consort office group, partially offset by the decreased internet advertising business. The growth of domestic individual office subscription business was mainly attributable to the increases in both the user's thickness and the paying ratio. Resulting from enraged membership benefits, the growth of domestic institutional subscription business was mainly because we continuously promoted the transformation to subscription models at the launch of the WPS 365, the new productive forces in office. The increase of institutional licensed business was mainly driven by purchase orders on localization solutions. The decrease of internet advertising business was mainly due to the shutdown of our domestic third-party advertising business at the end of 2023. Revenue from the online games and others business decreased 1% year-on-year and 11% quarter-on-quarter to $912 million. The slightly year-on-year decrease was primarily due to a natural decline in revenue from certain existing games, partially offset by revenue contribution from titles released in the second half of 2023. The quarter-on-quarter decrease mainly reflected the natural decline of certain existing games, partially offset by the growth from proactive operation of the aluminum short game, Snowbreak Containment Zone, Cost of revenue increased 50% year-on-year and decreased 4% quarter-on-quarter to $396 million. The year-on-year increase was primarily attributable to great server and bandwidth costs, as well as higher service costs of institutional clients, both of which were associated with the business growth of Kingsoft Office Group. Cost profit increased 7% year-on-year and decreased 8% quarter-on-quarter to $1,741 million. Cost profit margin decreased by 1 percentage point year-on-year and quarter-on-quarter to 81%. Research and development costs increased 8% year-on-year and 4% quarter-on-quarter to $713 million. The year-on-year increase primarily reflected the continuous Investment in AI and Collaborative Products and Services of Kingsoft Office Group. Selling and distribution expenses decreased 26% year-on-year and 31% quarter-on-quarter to $261 million. The decreases mainly reflected declined promotion spending on online games. Administrative expenses increased 7% year-on-year and decreased 6% quarter-on-quarter to $160 million. The year-on-year increase was mainly due to personal related expenses of consort office groups. The quarter-on-quarter decrease was largely due to a one-off expense in the first quarter of 2023. Share-based compensation costs increased 5% year-on-year and decreased 1% quarter-on-quarter to 76 million. The year-on-year increase was mainly due to the grants awarded shares to the selected employees of certain subsidiaries of the company. Operating profit before share-based compensation costs increased 27 year-on-year and decreased 14% quarter-on-quarter to 600 and 78 million. Net other losses were $4 million for this quarter, compared with gains of $44 million and $80 million for the first quarter and the fourth quarter of 2023, respectively. Share of losses of associates of $169 million were recorded for this quarter, compared with losses of $231 million and $286 million for the first quarter and the fourth quarter of 2023, respectively. Income tax expenses increased 63% year-on-year and decreased 66% quote-on-quote to $42 million. As a result of the reasons discussed above, profit attributable to owners of the parent was $285 million, compared with the profit of $192 million and $205 million for the first quarter and the fourth quarter of 2023, respectively. Profit attributable to owners of the parent, excluding share-based compensation costs, was $329 million, compared with the profit of $236 million and $257 million for first and fourth quarter of 2023, respectively. The net profit margin, excluding the effect of share-based compensation costs, was 15%, 12%, and 11% for this quarter, the first quarter, and the fourth quarter of 2023, respectively. The group had a strong cash position towards the end of the reporting period. As at 31st March, 2024, the group had cash resources of $23 billion. Needed cash generated for operating activities was $329 million, $363 million, and $1,000 billion. $734 million for this quarter, the first quarter, and the fourth quarter of 2023. Capital expenditure was $150 million, $80 million, and $131 million for this quarter, the first quarter, and the fourth quarter of 2023. That's all for the brief on our first quarter operational and financial results. Thank you all. Now, operator, we are ready for the Q&A section. Thank you.

Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A queue. Our first question comes from the line of Xiaodan Zhang from CICC. Please go ahead.

Hello, Chairman Zhou. Good evening, President Yinan. Thank you for accepting my question. I have two questions to ask. The first question is about our game business. We saw that after Chen Baijin's new version was released in July, it actually aroused the market's attention. So how do you expect the game to continue? What is the plan of the company's operation strategy in the second round of this second round? My second question is about our office business. So thanks management for taking my questions, and I got two questions here. So first is regarding the gaming business. The new version of Containment Zone launched in April has become a hit in the market. So how should we think of its performance going onwards, and what is your operational strategies for the anime game sector? And second is on WPS AI. So could you please update us with the commercialization progress of your individual-oriented products, as well as the enterprise version? Thank you.

Let me answer this question. First, let's talk about the consistency of the game. We just had a meeting today. At the board meeting of the Fintech software, there was a question about this issue. Today, the CEO of CNG, Chris, was present. In conclusion, from Chris' feedback, he believes it is a continuous, not a short-term phenomenon. And of course, why can we continue to do this? We've been doing this for eight years. This is the third generation. From Girls' Café to Double World to White God. It's been eight years of continuous exploration and accumulation. We, we are in this, although the ASEAN race is also very intense, we think we still found a specific category. So this, uh, we are still relatively confident in this, this track. Uh, currently, this is still relatively competitive. Of course, from the data of April 4th and May 5th, at least so far, this is still confirmed. This is our own opinion. So, regarding the revenue for the whole year, we have also made an update. Compared to the beginning of the year, there is still a significant increase. So, the overall revenue for the whole year, we have also made some adjustments. We think we should be able to over the next decade or so. But if other games are released on time, the results might be better. In terms of strategy, we've been working on it since February 2nd last year. We've been working on it since February 2nd last year. We've been working on it since February 2nd last year. We've been working on it since February 2nd last year. We've been working on it since February 2nd last year. we also fully listened to the feedback and opinions of the users. By the end of this year, the team has gradually found the feeling. So I think the core of our operation strategy is to continue to pay attention to the needs of the customers themselves, and to innovate around the needs of the users. I think this is the core operation strategy. I think this will continue to persist. I think this... But today at the meeting, I also expressed my point of view. I said this is the third year since the establishment of the Xianxia Group. What are we going to do? In a new field of success And it's in a new field After the online By continuing to make friends with users Continue to improve Continue to take advantage of the game Start again and do it again Successful another case It should be considered to be the first This is this game Li Chengbei This is another seal OK This is the game aspect Translate first Translator for me to go

Okay. So actually, from this again perspective, is that we constantly is going to improve ourselves. And so this afternoon, we just finished the meeting with the likes of the board of directors at the board of meeting. And talking for this question, we also have raised this. So today during the CHCO, Mr. Chris is on the site. So our conclusion is that according to the Chris feedback, he thinks that we're going to continue to do it. It's not just a short time. We're going to make it as a long-term. We're going to constantly ask ourselves and our team, actually, for the eight years of the development we have for getting to the third generation. And from this, initially, we started to do this game, to this publishing, and until we have so many games come out, we're going to have these eight years of this exploration and experience collection. We believe that for the game industry, the competition is quite heavy. But we probably, we can see that we have found a dedicated classification which is suitable for us. We have the confidence that in this trial, currently we're quite competitive enough, which is showing from the data of April and May, which can prove ourselves. And also for this whole total annual income, we also have an update. We're going to have a very big increase. And we got to do some adjustments, which we can think that probably we can make it around 10% of increase, compared with if, of course, the other game is gonna launch in time, so the results will be much better. From the strategy perspective, last year, since the game has launched, the 20th, last of July, we constantly to cooperate, to communicate with our clients, with players, especially from this February, we have listened to suggestions and ideas from the players And this year, our team has found the true feeling that we need to, based on those users, to continue to do the optimization. So we need to, firstly, make friends with our users, and then constantly have different generations come out to optimize it constantly. So this is, we can say, that is kind of a milestone for us. OK.

The second question is about the progress of the PSAIC section and the planning of the B section. Let's talk about the C section first. Since the test, we have summed it up ourselves. If we use one sentence to describe it, it is to meet the expectations. If we want to expand it, in fact, in terms of the type of user, in the actual scene of the user using AI, as well as the year and activity of the user using AI. All of these dimensions have successfully met our expectations before the test. Of course, we will still spend a considerable amount of time to deal with the problems that have been exposed, especially in terms of the performance of some of the experiences. We will continue to improve and optimize. Of course, it also includes This is a big model that is exposed to all kinds of people Under different scenarios This is a further adjustment All right And then on the B side Our core idea is actually Uh, to put it simply, it's just one Uh, it's called with our existing customers Uh, deep binding to co-create Uh, what does this mean Uh, this this Everyone knows, uh, this big model This this this since last year uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, Uh, but we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, with our clients, we are already co-creating with them. There is some time for the case to come to a standstill. So, to sum up, we are co-creating with our clients in order to create a large-scale landing site. This is one of our general principles. Of course, in the future, which industries uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh,

So actually from this WPS AI's see and the progress and also the strategy from this grayscale testing we have make a conclusion that we have realized our expectation if we need to expand it to describe it like from this the users module and also the AI scenarios, application, and also for these activities for the users to stick with the AI, which has realized our great testing expectation. But we will still spend a very long time, especially for this customer experience, to have different function optimized. We're going to constantly to optimize it, including some different optimization for different scenarios. From this C and call point, we think that We already have some existing customers, and then we would like to have a deep connection with them to have innovation together. So what does that mean is that we all know that for the AI big module, since this comes out into the market last year, for this C-end, we have discussed quite a lot. It's like AIGZ or whatever, this type of things. So from the C-end perspective, we constantly need to have some practice. And also for the B-end, for the enterprises, how are they going to use it? For the whole industry, we are constantly trying to understand it, trying to touch it to get into a certain perspective. But we believe that for the big module, for these enterprises, they're going to have some value added. It's going to be very powerful. But which is going to be the correct road for it? And in the future, how are we going to use this big module to make the small module, to have the industrial module, to have these private customers scenarios, to integrate them together? So from last Q3, we have discussed with our customer that we need to create together. We already have some practicals, so we're going to have some localized. So from the BN perspective, we think that we're going to have the communication with our customers together, target for this big module to have this creation together. So generally speaking, that for the BN, what exactly the industry is going to have a very good future, a very good result is It's hard to say, but for the AI industry to have the value added, it's going to be a very big trend, and the market will be very big.

So, operator, we're ready for the next question.

Thank you.

Please stand by.

Our next question comes from the line of Linlin Yang from Guangfa. Please go ahead. Your line is open.

Good evening, Mr. Du, Ms. Yi, and Ms. Yina. I have two questions I'd like to ask. About the 10% growth in gaming this year, can you explain that for us? This includes the new game industry, such as the Chen Bai Jing area, as well as Jian Wang San and Wu Jie. In this 10% range, we can probably consider how much we can increase. The second question is about... Looking at our current business, the percentage of profits is basically increasing in the area, including the Jin Shan Yun area. My first question is about the growth of game. Can you break down the 10% growth for us? How much incremental growth does each contribute? My second question is about the dividends and share buyback. As the bottom line tends to improve, will you consider to

increase the amount of the dividend payout and share buyback thank you um Uh, but, uh, personally, I'm more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, more, The number of users in the game itself... ...or the number of players in the game itself... ...is more than the number of players in the game itself. So from a financial perspective... ...the profits will be more. But from the number of players in the game itself... So actually for this, Cheng Bai and Jie Wang said this is for this contribution for our growth.

We need to discuss it from different perspective. If for this the income and also the profit, of course, Cheng Bai is going to be met and also Jie Wang said Wu Jie is going to be better. The reason is that for the J.A. Wang Sen, it's going to be an ERP game. From the tester perspective, we believe that the focus, the future is going to be much better. But for this J.A. Wang Sen, which is the mobile version, for this total users quantity for this Kingsoft game, it's going to have a much bigger percentage from the financial feedback And also for Cheng Bai, it's going to be much better. So the King Software users, to the quality, we think that for Chia Wang and Wu Jie, it's going to be much better. This is according to our expectation.

Okay. The second question is, as you said, the profits of our entire financial software are indeed good. The main reasons are the office and game itself. Its income growth is relatively good. Second, it's true that that crack is the loss of the cloud itself It's all in the hands of the hands of the hands of the hands of the hands of the hands of the hands of the hands of the hands of the hands of the hands of the Actually, we just finished the board meeting today, and we just did a review on the return of this new stock. At present, what I mean is that the total money of the board is 1 billion. 1 billion Hong Kong dollars is such an amount. In fact, last year, we returned 3.1 billion, right? Of course, I still have to express my point of view on the subject of the return. In the past, I may have talked about it in some cases. We certainly think that the current market share of this stock is very low. Yes, in fact, every Q will answer this question. However, the entire market environment is also an factor that we fully consider. If the entire market environment is in favor of this area, we will be able to This this uh uh should say strength also good this quality also good uh this this this may be relatively ah is is uh a little bit lower but on the other hand is to say if if if will not deteriorate uh this our recovery of the strength and quality will be relatively speaking will be a little higher good but this this I also with you this this this is very candid to express that in fact in the past we also do so

So from this, actually the profits of the entire Kingsoftware, the whole group from the office and also game, the group's performance is quite good. And also for Liabao and Benshan, this type of products, we have this reduction of the losing. So from this king of the group, the whole profit is going to get into a better performance. And also for the repurchase density, and because today we have the board meeting and also discussed about the total amount of the stocks, So the board of directors, the board of meeting has the authorised of one billion Hong Kong dollars, this amount. And last year, the total, the rate purchase limit is going to be this 310 million. So regarding this topic, my opinion is that I think currently for this Kingsoft group, our whole evaluation has been reduced quite a lot, has been evaluated quite low because every Q is going to answer this question. The whole market situation is the very important part we need to consider. If the whole market is going to get into better performances, then, of course, the repurchasement limitation, no matter for the amount and also for the frequency, is going to be higher. But if the whole economy of this whole market is going to be getting worse and worse, then our repurchase limit will quality and also the frequency will be higher. So this is just a very frankly use to express myself. So competitively speaking is that, so comprehensively for make a conclusion is that our evaluation has been considered lower than the market. And also for this repurchase limit, the total amount and also the frequency, it depends on the whole market.

Hi operator, we're ready for the last question.

Thank you. Please stand by. Our last question comes from the line of Bing Duan from Nomura. Please go ahead. Your line is open.

Thank you for giving me the last chance to ask a question. My name is Duan Bing, and I am an analyst in the technology industry at Yechun Stock Exchange. I have a follow-up question about AI. I would like to ask the management team how they view the competition pattern in the AI field. On the one hand, we have seen a lot of basic models are going down recently. Does this have any positive impact on the cost of our WPS AI? On the other hand, from the competition pattern of our WPS AI itself, In the past two days, we saw that the Microsoft Build Conference has launched some new Co-Pilot updates. In China, there are also products like Kimmy Chat. I would like to ask, how do you see the growth of our AI-related business and users in China and abroad? Will it be affected by competition? Thank you, management, for giving me the opportunity for the last question. So a follow-up on AI, how do you think about the competition landscape? First, the large language models pricing are declining. Will that affect our WPS AI's cost positively? The other one is how do we think about other Let me answer your question.

Let's talk about the industry first. uh, uh, uh, uh, That side of this cost drop Then it must be a good thing for today's office itself Of course, we are also discussing today If it really is to expose this this this cost drop I think we are at the member price Because we are still doing return tests Uh, do you have to make some adjustments appropriately? Okay, this is this is from that Uh, this is the price to look at the office itself From the industry point of view, in fact, this prediction was predicted last year last year At the beginning, it must have been done by everyone. In the end, it must have been through price to grab the market. This is a very common competitive method. In the end, everyone has always believed that it is impossible for such a large-scale presence to exist for a long time. It must be relative to my personal opinion. Maybe there will only be one or two left. The possibility of three is not great. This is my personal opinion, because there's really no need for this kind of communication model. Just like in the past, in the competition of M, in the competition of search engines, and even in the competition of this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, The second part is about the AI itself. In my understanding, it's like the competition between AI office products. You just mentioned two of them. One is Microsoft and the other is Kimmy. We've also done some research on this. To be honest, we never worry about Microsoft. We don't worry about it when it's the hardest time for us. But now, to be honest, we think that we are in this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, So at least in the Chinese market, we are not too worried. The second one is Kimmy. To be honest, this is a very hot topic these days. We are also using it. Kimmy and I are also partners. To be honest, from my own understanding, it is not the same type of product as Datix. You can understand more about Kimmy. We are talking about our three big pieces in the office today, called AIGC, Copilot, and Insight, etc. This is the second one. We are talking about text, form, display, etc. There are many forms and formats. Kimmy is more like Insight in terms of its understanding of long text. Of course, its AIGC is also very strong. It's more about this, and it's based on the script, creation, sharing, and collaboration. It's a process that AI can't do. So it's different. Of course, some of it is similar, so people will instinctively think it's a banned product. Actually, it's the same as what I said about flying books. I said that we are completely different from flying books. You see, you say that it is essentially based on the creation of articles, uh, editing, uh, editing, uh, collaboration, sharing, reading, such a, a, a set, a set, a set of systems, right? That, that, that, that, that, that, uh, uh, if I want this, uh, to talk about this, then in fact, if you talk about it, then in fact, this, that, that seems to become all, all, all, all competition. All right, so my personal is not our point of view In fact, of course, I just quoted a non-fiction book In fact, you look at it from a non-fiction book Everyone will think that non-fiction books are not What will happen But in fact Anyway, now we have developed better than non-fiction books Yes, so this is this This office is a form of concept So I myself Of course, we ourselves are also saying that our office is an office But I, I, I, my point of view is that today's office is essentially a It's a digital platform that surrounds literature, creation, sharing and cooperation All right. And now we're here. We're also going to have this on this platform. On this basis, it's just a negative energy. It's just a negative energy. Yes. So in that case, it's easy for you to do something with other products. In fact, in the interpretation and editing of the article, etc. Kimmy hopes that we can open this interface for him. I hope to be able to cooperate with us. So basically, we are a cooperative ecosystem. Can you translate that?

Yes. So from this industry, that is correct. For this, for ByteDance, and also their cost is quite low. And also for Alibaba and ByteDance, they are also followed up with the topic. For the King Software Office perspective, we are actually the motor to explore the third parties, and also we are charging for the members, for our users, from the AI perspective. So for the motor itself, of course the cost is going to be decreased. That is going to be good for us. But if we're going to really disclose this whole situation to make sure that the cost is lower from the price of the users, and also from this great task. We also have to do the adjustment of quality to reduce the price. And this is only for the office itself. And from the industry perspective, lastly, we have already got that everybody is trying to do it because they are trying to get a lower price to grab this market. And finally, everybody is thinking that it is impossible that we're going to have such a lot of the big modules existing. I personally think that one or two big module existing in the market should be good enough. The third one is probably not possible. And also for the very similar like the searching engine. And so the searching engine initially is supposed to be a very heavy competition but currently and there's only one company or several companies existing in the market. And also for like a comprehensive media competition is also the same thing. It's like there's a TikTok and also the Toutiao, they are the one or two very big ones. This is from a C perspective. Of course, from B perspective, it's different. Different industries have different modules. From the AI perspective, my understanding is that for the office products, the AI competition is quite hard. We are discussing about the two companies. One is for the software, the other is for the teams. We actually did an internal discussion. We are not worried about Microsoft yet. Up till now, Even we are doing this Office AI very added. We are not later than Microsoft, especially after so many years development up to today. We have a very solid customer foundation. Our AI have a very quickly updating. For the Chinese market, we are not worried about that. And also for the Kimmy, this is a very hot topic. We're also just discussing it. Kimmy is actually our partner. My understanding is that It is different than WPS. This is different product type. My understanding is that for the skin soft, we have three many parts, the AIGC, the close, and insight. And we have the documentations, Excel, PowerPoint, et cetera. You have the multiple documentations profile. And for Kimi, that is mostly like insight, reading, understanding. Of course, the AIGC is quite strong, but for WPS, it's based on this document. We're going to have this innovation for the document. sharing, collaboration, to have the value added, value function added. So probably everybody is thinking that we are competitors. It's like facial privacy, but actually we are completely different. WPS is kind of an addition for this document, just sharing the reading and discussing for this topic, and for the office thing, it's become, everybody thinks that it's gonna be a competitor, but our perspective, our understanding, and our idea is that facial is different. We are definitely much better than official. But office, this is a very general concept. So basically, it's that we're going to base on the office to have some collaboration, to have the creation for the board, and we're going to have using the digital platform. And right now, AI is coming. So we're going to have AI to value add on it. In that case, it's going to be easier for us to have a division of different products. So Kibbe would like to cooperate with us. So they would like us to do this collaboration the addition for this documentation. So while we are partners, we are not competitors.

Thank you for joining us today and this will conclude our presentation for the 2024 first quarter earnings call. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.