Kingsoft Corp Ltd Adr

Good day and thank you for standing by. Welcome to Kingstop Corporation 2025 Interim Results 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Ms. 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 2025 interim audience call. I'm Yinan, 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 other sources, which we believe to be reliable. They refer to the other publicly disclosed documents for 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. The third-part interpreter will provide a consecutive interpretation into English. During the Q&A section, we will accept questions in both English and Chinese with alternating interpretation provided by the third-part interpreter. Contact translation is so little facilitated 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. Zhou Tao, our executive director and CEO, and Ms. Li Yi, our acting CFO. Now, I'm turning the call to Mr. Zhou.

Hello, everyone. Welcome to today's software 2025 medium-term business conference. In the second quarter of 2025, we firmly implement a certain strategy The core business is stable. Today's office focuses on AI cooperation and internationalization. Continue to strengthen the development resource configuration in the relevant fields. Develop a solution that deeply matches the needs of user scenarios. Continue to maintain competitive advantages in the field of smart office. Game business around content innovation continues to advance with global expansion. Classic IT is a new type of joint development.

Hello, everyone, and thank you all for joining King Doctor 2025 Interim Reload Earnings Call. In the second quarter of 2025, we remain committed to executing our established strategies and the core business maintenance table. King Doctor Office Group focused on AI collaboration and internationalization, continued to strengthen the allocation of R&D resources in related fields, And developmental solutions deeply aligned with users' scenarios need to stay competitive in the field of the intelligence office. The online business continues to advance content innovation and global expansion, achieving the development of flagship IPs and news journals.

二十度 集团总收入23.07亿元人民币 同比下降 办公业务稳健增长 In the second quarter, Pinterest's total revenue reached RMB 2.07 billion, representing a year-on-year decrease.

Revenue from the office software and services business amounted to RMB 1.36 billion, up 14% year-on-year. The online game business, affected by the high base in the same tier that last year, generating revenue from nearly RMB 1 million, representing a year-on-year decline. However, the expansion into new journals and global layout have opened a new chapter.

Daqi Du, 办公业务稳健发展, 在WSA产品方面, we released RTS AI 3.0 and launched the original Office office intelligence, RTS 0C. RTS AI 3.0, through dual-way transformation, promotes the deep integration of AI and office software, and realizes the original integration and deep participation of AI capabilities. RTS 0C, as the core capacity of RTS AI 3.0, integrates multiple AI functions, marking our AI capabilities In the second quarter, our office software and services business continues to grow steadily.

For WPS AI products, we released the WPS AI 3.0 and launched the native office intelligent agent WPS0C. WPS AI 3.0 drives deep integration between AI and office software through bad reaction transformation, achieving native embedding of AI capabilities and deep deployment in office workflows. WPS Lean is serving as a core capability module of WPS AI 3.0, integrating multiple AI functions. marking our transition from tool-based AI applications to collaborative intelligent applications. We have also employed intelligent upgrades to WPS 365 components, launching messaging, meeting, and email assistance to enhance office productivity.

For WPS's personal business, we have improved product efficiency and user experience, combined with detailed operation and business strategy adjustments, to ensure stable domestic income growth. In the first half of the year, the number of users of AI Moonfire reached 29.51 million. As AI fully launches and completes its AI new products, it is expected that the number of AI users and AI Moonfire will increase rapidly in the second half of the year. At the same time, we have launched the development of the new version of Datix and the international version, which has gradually achieved the lead of domestic high-price functions.

For WPS individual business, we enhanced the product's capability and user experience and strengthened the refined operations and commercial strategy adjustments. Their efforts have ensured stable domestic revenue growth. In the first half of the year, monthly active AI users reached nearly 13 million with the completion of AI feature rollout as well as the launch and the promotion of new AI products. The number of AI users and monthly active AI users is expected to grow rapidly in the second half of the year. For overseas markets, we initiated the development of the new WPS international edition to gradually integrate a high-value domestic feature.

For the CS365 business, we are constantly improving the cooperative infrastructure function, promoting the interoperability of application development, to enhance the ability to fully integrate security and security, to continue to approach the industry and the scene of X365, to actively promote the landing of AI projects, and to co-create with the leading customers, and to promote the benchmarking project. For the X software business, we actively participate in the central and local government-owned enterprises, domestic office software bidding. Our products are in the priority position of the market in the Liu City and Baishi Wen Da markets.

For W4365, we will consistently improve the collaboration component, functionalities, and advanced application development integration. We will enhance end-to-end security capabilities. At the same time, we will continuously enhance the B2 industry and scenario, actively promoting the implementation of AI projects, and engaging in co-creation with tech clients. Based on industry technical solutions, we replicated and scaled up their successes. For WPS software business, we actively participate in the bidding for office software among central and local governments and enterprises. Their effect has helped us maintain a leading market share in both flow and fixed layout document software markets.

In the second quarter, the game business is focused on the classic D&D series based on the general knowledge principle of the game industry, and continues to take a big step towards the new track and expand the game industry. With stable content updates and continuous technical optimization, the flagship IP DL3 maintains a high-profile user group. D&D 0 is launched on the basis of the traditional classic D&D series IP core gameplay to achieve innovative exploration. The 20-year-old game is in full swing, continuing the long-term operation strategy to maintain stable user performance. The self-proclaimed sci-fi mecha game, The Uncharted, is set to be released on the 7th of July. On the day of its release, the game, which is the most popular game in the London Steam market, and the hot-mailed game platform, received high ratings from many international game media such as IGN, indicating that we have made progress in the development of the game in the new category. At the same time, we are also actively strengthening cooperation with overseas user IPs to deepen localization and operation capabilities in the domestic market. Social push games such as EYASA and Guofu will be released in June. The number of pre-orders has exceeded 5 million and has shown high popularity. It is expected to be launched in the second half of the year. Catnip and soup is a magic food. The pre-order has been opened in May or August.

In the second quarter, our online game business continued to enrich the value of the classic GX series and expand into new game genres. Our flagship IP, GX3 Online, maintained an engaged play base and demonstrated resilience through consistent content updates and continued technical optimization. Without the fate of XOR 0, due on the core gameplay of the classical GX series IP, and introducing new innovations, the end-shooter game Snowbreak, Containment Zoo, continued to follow its long-term operation strategy and keeping stable user base. At the same time, we have made a significant progress in the new game genre and global expansion. Our job development aside from Metro Game, Metro Break, that is global public data in July. On its launch day, it topped the themes of Monster Blade and the trending games list and earned a high score from several international authorities in media outlines like IGN. This reflects our progress in new journals and the global market expansion. Additionally, we are actively strengthening our operation with high-quality overseas IPs and deepening our localized operation capabilities in the domestic market. We have obtained the publishing license for the social deduction game Gusto Stock in June, and it has already surpassed 5 million pre-registrations. It's set to launch in the second half of the year. We obtained the publishing license for Catsuit from Magic recipe in May and began pre-registration in August, generating immediate excitement in the market. We will focus on refining the operations of our core products and continuously optimize the gaming experience based on players' feedback.

In the future, Jinshan Office will continue to expand the development and investment of AI and cooperation, promote product and service in the workplace scene of each industry, Looking ahead, Kingsoft Office Group will continue to increase its R&D investment in AI and collaboration,

and promote the implementation of its products and services across a wide range of offices in areas in viral industries. The online business will remain focused on premium games, continue to cultivate its IP franchise and steadily advance its global expansion. It aims to enhance the quality of long-term We believe that their effort will strengthen the group's competitive needs and lay a solid foundation for achieving long-term high-quality growth. Next, I would like to invite Ms. Yi to introduce the finance performance for the second quarter and first half of 2025. Thank you. Thank you, Zouzhu and Yilan. Good evening and good morning, everyone. I will now discuss the second quarter and first half of 2025 operational and financial results. I'm starting from the second quarter used RMB as a currency. The revenue split was 59% for office software and services and 41% for online games and others. Revenue from office software and services business increased 14% year-on-year and 4% quarter-on-quarter. to $1,356 million. The year-on-year increase was mainly attributable to the growth of WPS 365, WPS individual business, and T-Soft Office Group. The robust growth of WPS 365 business was primarily attributable to enhanced productive capabilities, high-quality service, as well as further penetration into industry and business scenarios. driven by the replication and promotion of typical solutions. The steady growth of WPS individual business was mainly driven by enriched AI-enabled features, improved user experience, and optimized operations. Value from online games and other business decreased 26% year-on-year and 8% quarter-on-quarter to $952 million. The year-on-year decrease was mainly due to the high base of agonies against Snowbreak, Containment Zone, and J3O9 in the second quarter of 2024. The quarter-on-quarter decrease was mainly due to the decline of Snowbreak, Containment Zone, and J3O9, partially offset by revenue growth from other gains. Cost of revenue increased 5% year-on-year and 8% quarter-on-quarter, to $454 million. The increases were primarily due to higher server and bandwidth costs, greater channel costs, as well as increased purchasing costs, along with the business growth of Kingsoft Office Group, partially offset by the lower channel costs of online games business. Force profit decreased 9% year-on-year and 3% quarter-on-quarter to $1,000 Gross profit margin decreased by 3 percentage points year-on-year and 2 percentage points quarter-on-quarter to 8%. Research and diligence costs increased 50% year-on-year and 3% quarter-on-quarter to $854 million. The year-on-year increase was mainly driven by continued investments in AI and collaboration capabilities. as well as increased investments in new game genres. Selling and distribution expenses increased 12% year-on-year and 25% quarter-on-quarter to $424 million. The increases were mainly driven by greater marketing and promotional activities of case office groups, as well as increased promotional and advertising efforts in supporting pre-land activities of new games. Administrative expenses increased 12% year-on-year and 8% quote-on-quote to $174 million. The year-on-year increase was mainly due to personal related expenses of key soft office groups. Share-based compensation costs decreased 30% year-on-year and increased 32% quote-on-quote to $71 million. The quote-on-quote increase was mainly due to The grounds are awarded shares to the selected employees of certain subsidiaries of the company in this quarter. Operating profit before Shabat compensation cost decreased 48% year-on-year and 31% quarter-on-quarter to $454 million. Later up again for the second quarter of 2025 were $343 million. Compact with losses of 12 million and 22 million for the second quarter of 2024 and the first quarter of 2025 respectively. The gains in this quarter were mainly due to that we recognize the gain in the disposal of Kingsock Cloud as a result of the dilution impacts of issue of new shares of aid in the second quarter of 2025. Share of loss of associates of 170 million were recorded for the second quarter of 2025 compared with share of losses of 169 million and 153 million for the second quarter of 2024 and the first quarter of 2025 respectively. Income tax expense for the second quarter of 2025 was 104 million compared with income tax expenses of 48 million for the second quarter of 2024 and the first quarter of 2025 respectively. The increases were mainly due to the accrued deferred tax expense related to the interdisposal of Kingsoft Cloud in the second quarter of 2025. As a result of the reasons discussed above, Profit attributable to owners or the parent was $532 million for the second quarter of 2020 filed, compared with the profit of $393 million and $284 million for the second quarter of 2024 and the first quarter of 2020 filed respectively. Profit attributable to owners or the parent, excluding share-based compensation costs, was $570 million for the second quarter of 2025, compared with the profit of $441 million and $360 million for the second quarter of 2024 and the first quarter of 2025, respectively. The net profit margin, excluding Sherbet compensation costs, was 25%, 80%, and 40% for this quarter, The second quarter of 2024 and the first quarter of 2025 respectively. On the first half of 2025, review increased 1% year-on-year to 4,645 million. Office software and services made up 57% and increased 10% year-on-year to 2,657 million. Online games and others made up 43% and decreased 10% year-on-year to around $988 million. Gross profit margin decreased by 1% year-on-year to 81%. Operating profit before Shopify's commission cost decreased 29% year-on-year to around $109 million. Share of losses of associates of $323 million and $338 million were recorded for the first half of 2025 and 2024 respectively. As a result of the reasons discussed above, profit attributable to owners of the parents was $860 million for the first half of 2025 compared with the profit of $678 million in the same period last year. Profit attributable to owners with apparent exclusive share price compensation costs was $886 million, compared with the profit of $770 million in the per-year period. The net profit margin, excluding share price compensation costs, was 90% 70% for the first half of 2025 and 2024 respectively. Our state of financial position, we have cash responses of 27 billion as of 30 June 2025. Native cash from operating activities was 665 million and 1,354 million for the first half of 2025 and 2024 respectively. Cash used for capital expenditures was $203 million and $164 million for the first half of 2025 and 2024 respectively. That's all for the introduction of our operational and financial results. Thank you all. Now we are waiting for the Q&A session. Thank you. Thank you. We will now begin the question and answer session. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Please stand by while we compile the Q&A roster. We will now take our first question from the line of Sheldon Zhang from CICC.

Please ask your question, Sheldon. Hello, Chairman Zhou, Chairman Li, Chairman Yinan. I have two questions here. First of all, the first one is about our game business. I would like to ask the management to share how they see the performance since the release of the decoder. The latter is our focus will be around which aspects to carry out a game update. I would also like to ask the management to update one of our year-round game business income of a new career. So thanks, management, for taking my questions. And my first question is on the gaming business. So could managers share your views on the performance of Mecha Break after its release in July? And also any update on the full-year revenue guidance for the director? And secondly, the revenue growth of WPS office business seems to reaccelerate since the second quarter. So what is the outlook for the second half of this year? Thank you.

我先回答一下,等下看你有什么补充。 第一个,节线机。 这应该是大家都普遍关注的问题啊,因为我们7月2号呢,正式进行了公测。 现在也过去了一个多月啊, From the general conclusion, we certainly did not meet the previous expectations of our product. Although there was a lot of popularity and good reviews between the previous period, but in fact, after more than a month, we still found a lot of problems. I will pick a few here, because to be honest, the whole game has a lot of comprehensive factors. I pick a few. We are currently dealing with the most important problems. The first one is that after the test in February and March, we actually made some changes based on the players' opinions. I will use the most common way of saying it. At that time, everyone generally reacted that the game was too objective and too dry. So we also made some changes to these opinions. This is what we think. This is probably the most, the most, the most, the most, the most, the most, the most, the most, the most, the most, the most, the most, the most, We have defined it as a black mass, especially long-term. This leads to a big difference in the game environment compared to what we had in mind. It even caused a lot of damage to our black mass, to our entire game environment. To put it simply, the entire game environment has become worse. Of course, there is some content . . . . . It takes a longer time for users to work together. This is similar to the previous year. So our next strategy is to interact closely with players to build a long-term IP. So this is very difficult. It takes a lot of time to adjust and optimize.

And finally, Yezai. So firstly, let me just answer the question. And regarding the merger break, as everybody paid attention to it, and when we officially get into the, like entered into the test, and our P&R is already past the one month, and based on the conclusion, didn't realize the expectation. Although the early stage when we launched, the population and also the good comments are quite good, but after one month. So generally speaking for the whole game, in a lot of the comprehensive elements, right now the key point is that firstly, after the test in February and March, actually based on the feedback from the players, we did some modification. So generally speaking is that the player told us that this game is really like you need to put a lot of energy and also spend a lot of money into it. This is their feedback. That is why we base the obvious feedback to do some modification and trying to avoid that. But actually, our team is actually getting the overlap. So if the seller told us that they're going to spend too much energy into it and too much money into it, it means that this game is worth to invest. So it means that this game is good for them. They could play, they would like to play it. So in different perspectives. But right now, because we have did the modification, so this game becomes not that meaningful. So we think that this is actually a very feared point with this modification. And second is that when we did the official test and also started to get into the charger operation, we think that the whole ecosystem has been changed, which we didn't expect that. Especially in China, the black industry is really bad, especially in the game industry. We didn't expect it that much. And so because of that, it really has a very big damage for the ecosystem in the game industry. And because it's become worse, and also we have some concerns when we officially get launched for the target we design, and finally the actual results for the final players is going to have a very big difference. So comprehensively speaking, one side is that this is a new IP. We have some improvements, and we have some progress, but we also realize that in this new type category and also their new play way, we need more time to control it. as it's quite similar like GX3 online. So our strategy is that we need to have a very close interaction with the players to build up this IP. So we need some certain time to do the adjustments and optimization.

Okay. The second one is about the half-life of the office. Half-life of the office. Half-life of the office. After the half-life of the office, our overall evaluation is that the internal is actually not as good as the internal. Basically, all the strategies that were implemented last year, including the data from the year-end meeting, are still very stable. This includes the personal business, the 365 business, and the software business. The key to the personal business in the first half of this year, apart from the win-win situation, the key is the improvement of the AI function. We just talked about it. We talked about the 3.0. At this point, especially in the past two days, we are also in the process of holding a press conference. We at the Board of Directors think that the direction of the process is very correct. I talked about this in the previous Q&A, or in the beginning of this year, that from the early days, we hoped that AGI would gradually turn into, we should say, In the past, it was set from 0 to 1, and now it has gradually entered the 0 to 0.5, 0.6, 0.7 mode. So we have launched 0C, including this kind of semi-script, and so on. There are many functions. Anyway, we also feel that this is more in line with the current real office development scene. Yes, so we are for this year's follow-up The high-speed growth of this strategic goal is still full of confidence. Yes, this strategic business has been maintaining a high-speed growth since last year, including this year. This is still full of confidence at present. Smartly explaining the efforts of the past few years around the strategic advancement of the AI structure is still very, very successful. In fact, in the first half of this year, we have also achieved a lot of breakthroughs. Many Chinese enterprises, including private enterprises, are in the process of deploying our 3365. So I think that in the second half of this year, we will still maintain a strong progress. In terms of software business, I would like to mention that in the first half of this year, we still maintained . . . . .

Okay, so regarding the office thing and the outlook of the office, and it's going to include for the office, and based on our internal evaluation, we have some progress. And basically speaking, with all of the elements compared to with the strategy last year and here at the beginning of this year, a lot of like the personal business, the office business, and software business. From the personal business in the first half year of this year, based on this AI functions informant, as I just mentioned. And especially in these two days, we have a lot of meetings. And so together with the broad meetings, we realized that this direction is correct. As I mentioned at the beginning of this year, we hope that from the positioning, it's going to be from 0 to 1. And say by that, you realize all of them. So currently, we are moving into 0.5 and 0.6 and probably 0.7. So it's more stick to the reality, the official, like, officing situation. And we believe that for the contingency with this year, for the schools of the membership, we have a strong confidence for that. And regarding 365 visits since last year up to this year, and you can see if that is good. So currently, based on the situation, we have strong confidence and spirit that based on this, collaboration of AI, we're going to promote strategically, and this is going to be quite successful as well. And we have a lot of breakthroughs in the first half year, and we're going to continue to do it. And in the second half year, we believe that this is going to be a very strong business. For the software perspective, and basically we're going to have this domestic and also some innovation So in the first half year, we're going to have a pretty high market share. And in the second half year, we're going to continue for this trend. And at this moment, for the second half year, generally speaking, no matter for 365 or software authentication, we're going to have a very big confidence that we're going to be maintaining the same growth rate as the first half year.

All right, thank you.

We will now take our next question from the line of Wen Ting Yu from CLFA. Please ask your question, Wen Ting. Hi, President Sun, President Li, President Lin, good evening. I am a question. Thank you for giving me the opportunity to ask a question. I have two questions here that I want to ask. The first one is about Internet 3. Can you please share with us the trend of active players in recent years and the trend of Asus? Because we will face a relatively high technical problem in the second half of the year. Then how do we see the performance of the network in the second half of the year, and the impact on the trade and business efficiency? The second question is about the official software. Because we saw that WPS AI recently updated the products of AI Agents, PTT, and knowledge library. Then how do we see the products of WPS AI Agents and some products, such as MIMOS, Okay. Okay. I'll quickly translate the questions. Thanks for mentioning my question. The first one is about JX3. Could you please share the recent trends in active user base and output for JX3? And considering the upcoming high basis that you have this year, how do you see the JX3's revenue growth and the potential impact on our first margin and operating profit margin? And the second question is regarding the office software. WPS AI recently updated the AI agent-based features for B2T and knowledge library, and how do you see the WPS AI agent differentiating from competitors like Manus and G4Auto GLM to a broad sense of software sector, which ties the products and more vulnerable to the disruption by AI agents, and which have a relatively different mode, in your view? Thank you.

Good question. I will now answer the first question on the website. Indeed, last year, with the launch of the mobile phone version, the income of the entire Jianwang Mountain, including the monthly monthly income, has created a historical height. This is definitely a pressure for us this year. So from now on, the monthly income of the Jianwang Mountain is still a relatively high level, but compared to last year, there is indeed a certain decline. In addition, This itself, CNG, especially its own experience, in the first half of this year, the focus is on the decelerator. This is clear to everyone, because it itself has a decelerator. So, in addition to the distribution of management experience, in fact, it still has a great impact on the whole of Jianwan 3. So, the whole year, Jianwan 3 has to maintain a, compared to last year's technology, We think there are still a lot of challenges. So, whether it's this product or this operation, in fact, we still need to continue to add investment and attention, especially the experience of this CEO. Yes, but for the last three years, we are still in a relatively high level. We are still very confident. After all, this game has been on the line since 2009. Now it has been 16 years. Similar difficulties and challenges have happened many times in history. So I think if we keep the Internet 3 running for a long time, we will still have the confidence. But compared to last year, such a high speed, whether it can reach the height again or keep such a high water level, we currently think that there is still a certain pressure in this short time. This is the Internet 3.

so firstly i would like to answer the question regarding gx3 online so this is actually a very good question and for gx3 online um last year and when we promote the mobile version and no matter for the income and also their active players is going to reach to a peak level historically So this year, this is actually a pretty big pressure for us. And up to now, although the GX3 online is still pretty high, but compared with last year, it's had a slightly drop. And also we have, like, the season, and we also put a lot of energy in the nature break. So in the first half year, we're going to put too much energy into the nature break. and the business has marked the influence of the GX3 Online. But no matter for the product and also for their improvement, we think that to maintain GX3 Online as a pretty high level, we still have confidence on it because we have been operating for GX3 Online since 2009 up until now. It has been 15 years. We have met a lot of challenges. We have met a lot of difficulties. It all happens. So, from the long-term operation, it still works. But we believe that if we would need to reach to such a high foundation as last year, and whether we could maintain this high level, we still have a little bit of pressure for it.

Okay. Especially when you compare it with other companies. I think this question is essentially about the next wave. The big model has been out for two or three years. How does the big model really help users in a specific scene? Whether it's a school or a city, it's such a problem. So, I think first of all, we need to know that APES, in fact, APES AI, it is essentially producing self-written articles. It's not about writing, or anything like that. APES itself is doing this kind of self-written articles, producing, reading, and so on. It's a platform. So, this is it is not a comprehensive agent solution. It is only for the work environment. I think this should first of all reduce its positioning. Otherwise, it can only be done in the same type of industry, or the same type of user, the same type of industry. I personally think it will have its own specific meaning. Yes. So you just talked about these two companies, Manas and Zipo. I think in fact, today we do not think We don't treat them as our direct competitors. In fact, Zipo's large model is also one of the core technologies of the third-party AI. So, first of all, I want to express this point of view. This is not completely accurate. Of course, we also see that these companies are doing a lot of work. So I have to express that we are actually working in this field.

Second, AI theory in my scene, can it be done well?

My point of view is that if you don't have the core scene, the core use, the core data, and continue to optimize it, Actually, it is very difficult to really do it. Recently, we have repeatedly mentioned a word in the Ministry of Internal Affairs. So from this point of view, we have 6.5 billion monthly users. Our daily users are also over a billion. From the point of view of PEC, this is the number of public users. We have more than 300 million monthly users. So there are C customers and B customers here. So we believe that in the field of semi-autonomous scenarios, or semi-autonomous scenarios based on intellectual documents, we have enough users, enough data, and enough scenarios to promote our scenarios. In fact, seeing AI from 1.0 to 3.0, including the rapid growth of AI and user numbers, is actually a verification of this. Although we have a certain gap with the general-use AI products, but in fact, the data we also announced today, we are in the office, this is the office field of Wenda. We have already approached 30 million in the market. In fact, we still have a leak. Compared to the end of last year, our use and the number of users increased by more than 50%. Yes. So, What I want to express is that we are focused on using AI to improve the generation, reading, and understanding of digital documents in various professional companies. We have enough users and data. AI is helping us to improve our industry. This is called experience-based. So, Uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh. So what I want to emphasize more is that in the field of office, intellectual and cultural education is deeply rooted in the office environment. We have found a relatively practical path through these years, and we have enough data and enough scenarios to help us improve it. I think I will end this question like this.

Okay, so regarding the second question, this is actually a very good question. And actually, you mentioned that especially the cooperation with the other companies. I think that this, regarding this question, from the basic think of that for the next generation, we can see that for this big merger, it has been created for two to three years after now. and how their big motor is going to actually increase their working efficiency and also to do the collaboration with the human beings in the actual weird, like, typical scenario. So I think that this is going to get back to what exactly the AI is. So for us, we're going to have a typical documentation creation. That is not just a notebook. This is actually a typical documentation and also together with reading. So we are kind of a platform like this. That is why this is not just a regular, very generous solution for customers. This is actually typically for the office working. So we have to very clearly identify our position. Otherwise, we cannot compete with the other things because we need to compete in the same type of the product. So I think that for the users, compared with the users, as you just mentioned, you have mentioned two companies. for this matrix. So I actually didn't think they are our competitors. So for the big module, for the Kingsoft, the Office AI, the key things, I think I would like to express my very best. I don't think these two, the other companies are our actual competitors. So target for this job, we are in the office in this area. And for their AI, whether we could make a very good scenario and serve for the better serve for our customers. So my idea is that we need to have a core scenario to serve for our customers, including the data. We have enough users. We have enough data. All of this could help us to constantly improve and optimize the AI. So compared with the other companies, they are very hard to do that. And this is actually recently we get the feedback internally. This is kind of a closed loop. So from this perspective, we can think that our monthly active users could be 650 million. And for the daily active users, it's more than 100 million. And for the PC, this is actually for the monthly active users would be more than 300 million. So actually, no matter for their BNs or CMs, For the office working scenario, we have enough customers, we have enough data, and we have enough scenarios to help us to optimize our product. And for the AI, from 1.0 to 3.0 version, the multi-active users' growth has improved what I just mentioned. This is not just a general thing. So we can see from this data, the monthly active users we have compared with the other companies, that this is way much better. So we are actually in this officing field. This is kind of a very vertical characteristics. So we have almost 30 million users doing it. And another thing is that compared with last year, the increase of our users could be more than 50%. So Competitive speaking, so comprehensive speaking is that we are focusing on the AI to improve the creation for the documentations, and we have enough users, we have enough data to help us to create a better product and better experience platforms for our customers. That is why we have a strong confidence that at least for the officing field, compared with the other two companies we have just mentioned, they are not directly competitors for us. So each of us have a vertical and which is going to help us to improve better, to do better. And also we know that after several years of hard work, we're going to find a way that we think is quite actual and we have enough customers, we have enough scenarios to help us to improve our service and constantly to create better products for our customers. Thank you. We will now take our next question from the line of Lin Yang from Guangfa Securities. Please ask your question, Lin Min. Okay. . . . . . . . So I would like to ask about the current number of users of this game. And then how do we continue to update the content of this game? And then the second question is about our AI system. Because our AI Uh. A quick follow-up question about the merger break. Similar situations have occurred with other games during their initial launch period, but they eventually achieved great success. So what is this game's current user base? situation and how will the game be operated going forward. Second question is about AI team. What's the management position of this AI team and what is its advantage of this team? Can management give us some comments about its product progress and

monetization outlook and their synergies with WCS and cloud business thank you um It was not particularly difficult to go online at the beginning, and then through the team and the players' co-creation, we worked together to gradually change it. Anyway, that's what it means. I think if you don't say this today, I'll forget it a little bit. But you said it's really what's going on. Yes, so we are the same. It's also easy to communicate with the team. After going online, maybe it's just the beginning. With the real player's experience of playing, It reveals our problems and helps us improve. And from a long-term perspective, it is a long-term game. This is right. Because to be honest, this game is only a month old. We have a lot of work to do. So now I can't just press 3. Anyway, this big idea you just mentioned is right. I think we should give the team some time. Maybe we can look at it for a while. Maybe we can look at it more clearly. Including how much time it takes to improve those aspects. This may need some time to observe. Let me translate this first.

And so we think that regarding the moisture break, and you are absolutely correct for the Arkansas begins. And from the historical, it can prove many times that very few have always had good comments. And like GX3 online and also for the snow break containment zones, And at the beginning, at the initial stage, when we launched, we had quite good feedback. And then we did the modification. And so from a theoretical perspective, that is true. So at the early stage, our team internally, we had a ton of communication. And after launch, because the players are going to give us their feedback, and they need to hear about their actual experience. And then they're going to get back to our team. And then we're going to modify it, improve it. And from the long-term perspective, the strategy is quite good. It's correct. And so this game is just launched for one month. So we have a lot of work, like to repeat all the work, to think back how we're going to improve it. And we are doing the job right now. So I don't have that much things to say, but I think that the general main direction is that we need to give some time to our team. And then we think that... after a certain period of time, we're going to have a more clear picture, including how long time we're going to improve, and which part we have to improve. I think that we need to observe for a certain time, then have some better clear conclusion.

The second question is very good. Because the second question needs to be interpreted. It will take a long time, so I'll talk about it quickly. Why did the body software become an AI product center? What is its positioning? Very simple. Positioning is to help companies use AI. I have said this before. How does it think about the entire network layout? Of course, the first straw is that I believe that no one should doubt that this wave of AI technology based on the large-scale model will have a profound impact on the future of the human digital economy. My view is that all the digital systems will be ready for AI. All the digital systems of all companies will be ready for AI. But based on our own experience in the past few years, most companies are not prepared for the ability to train their own large model. . . . . . . . . In the above few points, plus our entire network, you see, Xiaomi's 7B model has been released. Of course, that is the first one. This kind of multi-level parameter model is expected to continue to be released at the end of this year. Of course, there are others out there, such as DeepSeq, such as Zipo, such as Kinect. . . . . . . . . We are talking about a large state-owned bank that has completed the first full payment of the scene. In fact, it is self-reliant. But from our point of view, it is actually called the self-reliance of the credit report. This bank has tens of thousands of creditors. So the credit report is a very heavy burden for them. In fact, we have already completed the payment. . . . . . It's already close to 80 points. Of course, it's still in a deep fight. So you can see that it's around finance and politics in two areas. In addition, we are with a large law firm and a high school law school. We are also in deep cooperation around the law model. You should say the legal scene is also in depth. So this is the progress that has been made so far. From what was said last time to now, in fact, the whole has been handed over to a bank. The legal field is on the way. In the legal field, we have basically advanced. It should be said that the small-scale trial is already online. It has not been officially launched yet. OK, these are a few specific events. . In order to help companies to use AI, it must be a huge market. Today, we chose a few scenarios to complete from 0 to 1. In the future, on the basis of 0 to 1, we will continue to optimize and complete from 1 to N. This is a strategic layout. So the progress so far is that from 0 to 1, we have completed two or three. Our next stage is around this. to think about how to go from 1 to N. Finally, indeed, in this process, we are working together with Jinshan Office and Jinshan Cloud. In the future, we will also work with Xiaomi, because we just talked about the Jima team, which is made by the Xiaomi team. So in the future, I repeatedly emphasized the AI policy. Xiaomi plus Jinshan Group and Jinshan Qisha, So regarding the second question, this is a quite good question.

So when I need to have further explanation, so let me just quickly explain that. For the teams of the AI product, what is our core positioning? So our positioning is that we're going to help their enterprises to use the AI better, as I just previously mentioned. So this is actually the whole lay system, how we consider that. The first thing is that for their big module, their AI technology, they deeply influence their human digital economic systems. which means that all of the enterprises' digital systems, based on this AI, is going to have that grid structure. But for the AI itself, for the majority of the enterprises, it doesn't have that ability to train the big module. And for the majority of the enterprises, even in the future, we're going to have this machine module, but we believe that the machine module is going to shrink. up here, three to five types of the machine module. But actually, even we have the machine module, majority of the enterprises, they both have these IT abilities for them to use the AI better. So comprehensively speaking, based on the several points, plus the late systems ecosystem like Xiaomi, we have GD module has already been launched. And we also have a reference module, which is going to be launched at the end of this year. So based on that, including some other big modules like DC, Gantt-Driven, et cetera. So basically speaking, the whole market targets for the whole late systems scenario based on the Xiaomi's big module. And also we have, we're going to solve the machine modules issue. So the remaining is that. We need a certain team to complete the engineering ability for the AI to help their enterprises to use the AI better. So firstly, is that we need to have a machine model. And secondly, we need to have a good team at the back to help them to realize the AI usage. So this is actually the background explanation. So how about our progress? Let me just record that. Actually, for the same as the office thing, we collaborated with the cloud And we currently work together with a state-owned bank. We have to deliver the first scenario. So currently for the national bank, they need to report, they need to generate the credit report in the loan. So this is actually for them is a quite heavy job. So we have already completed and delivered it. We worked together with the Kings of the Cloud, the Kingswater office, together with the Cloud AI. And up to now, we got a very positive feedback. So altogether, the full score is 100 score, and we reached to above 85. So their feedback is that good quality and usable. And the second thing is that we collaborated with regional government for the officing area. We worked together with them, and after one year's work, optimization. Basically speaking, right now it's almost 80 years ago and we are still improving it. So, based on this financing, based on this governance and we also have cooperated with a big law firm and worked together with like law university and we need to have a deep cooperation with them. We need to have a legal module using the legal scenario and we're going to create a deep product this is actually the current progress so since last time until now the total delivery we have realized from zero to one including the governance this is on the process and also the legal scenario basically is still on the process so my understanding is that needs to have a smaller scale that's suitable And we didn't officially promote it yet, but I believe that in the future, the AI big model is definitely going to be used for a lot of different scenarios. And therefore, the big model in the future is going to shrink into three to five types. The key thing is that we need to have the AI engineering ability, which means that we need to have the IT ability. This is actually a very big gateway for majority of the enterprises That is why we need to help them to use the AI better. We believe that this is going to be a very big market. So currently, we have selected several scenarios. We have completed from zero to one. In the future, we are going to constantly improve it to have some strategy layout. And then based on this progress from zero to one, we have already delivered two to three projects. The next stage, we need to think about how we have realized from zero to one. So we need to think about how to realized from zero, from one to N. So, largely, it's actually the same, choosing a stand for, together with the King Software Office, King Software Cloud, this collaboration, in future, we're going to collaborate with Xiaomi to realize the machine module, and in the future, we're going to have a matrix of the AI to working together, target for how to tip the enterprises to use the AI better. This is going to realize the whole chair of the AI assistance. All right. Thank you. I'm showing no further questions. Thank you all very much for your questions. And with that, we conclude our conference call for today. Thank you for participating. You may now disconnect your lines.