Earnings Call: H2 2017

Mar 26, 2018

Evening, and welcome to Meitu's 2017 annual results conference call. I'm Angelina Chen from the IR team. Joining me today to discuss our results are Cai Wensheng, Chairman, Wu Xinhong, CEO, Gary Ngan, CFO, and Bryan Cheng, COO. I would like to take this opportunity to remind you that our remarks today may include certain forward-looking statements. A number of risks and factors beyond our control may cause the actual results to differ materially from those contemplated by these forward-looking statements. During this call, we will present both IFRS and non-IFRS financial measures. We will also discuss general market conditions for our industry, and such information may come from a variety of sources outside of Meitu. For a detailed discussion of the risks factors with these and non-IFRS measures, please refer to our public documents on corp.meitu.com/en/. Now, I'd like to turn the call over to Mr. Cai. He will present in Chinese, followed by translation. Okay. Thanks to all the investors for joining our results today. We have executed very well on our 2017 plan of laying the foundation of scalable internet monetization, and I'm very proud of our team for working hard to deliver these results. Overall revenues in 2017 have grown 187% year-on-year. In particular, revenues from internet businesses have grown 652% year-on-year. Importantly, as guided in the IPO, we have delivered on our plans to break even by the end of 2017. Based on unaudited management accounts, we have generated non-IFRS net profit for the last quarter of 2017. The monetization infrastructure that we've built over the past year has three key elements: people, data analytics, and brand influence. With that, we are entering 2018 with multiple fast-growing revenue models, which we believe can lead to a step change in profitability in 2019 and beyond. I'll now hand over the call to Xinhong to discuss our business strategy. Xinhong is our Chief Executive Officer. Thank you, Wensheng. Hi, everyone. I'm Xinhong. 2018 is a special year, and it marks the 10th year since Meitu was founded. It will also mark the year which we embrace the entrepreneurial spirit once more and regard Meitu as a startup again. A lot has changed over the past years, but there are two keywords, beauty and technology, which will remain at the core of what we do for the next 10 years. In 2017, we have made significant progress in our internet monetization. Our revenues from online advertising have increased 409% from a year ago. Advertisers are very excited about being able to display their brands and products to our young, high-quality user base. Within our user base, 81% of them are female. From an age perspective, 61% of our total users are aged between 18 to 30 years old. Additionally, as we have connected all our apps with a unique device identifier system, we are able to help our advertisers to place targeted ads. Our high-quality user base and intelligent advertising system have led to a series of successful campaigns for some of our advertisers generating click-through rates of over 10%. We will continue to leverage on our strengths and launch more advertising products such as News Feed and customized ads in 2018. 其次在互联网增值服务方面，为了满足用户对变美和娱乐的需求，我们提供了一系列的服务。2017年我们以女性内容为主的直播业务发展良好，带动增值服务收入全年增长985%。同时我们观察到，在去年的移动游戏市场中，女性的参与度大幅提升。我相信这只是一个开始，未来女性的在线消费娱乐还会大幅增加。2018年我们将推出一系列的增值服务，包括游戏、阅读、抓娃娃机和超级会员等。 On the Internet Value-Added Services or IVAS side, our strategy is to provide a portfolio of services to satisfy our female users' diverse demand for beauty and entertainment. We had a good year with revenues growing over 985% year-on-year, as our female focused live streaming services have continued to see increased traction. Also, we have observed that female gamers have increased significantly over the past year. We believe a trend of increasing female consumption in online entertainment is underway. In 2018, we intend to expand our IVAS portfolio to include games, online literature, claw crane machines, VIP membership services and more to capture this huge opportunity. 第三，在智能硬件方面，我们在2017年共售出了1,570,000台美图手机，出货量符合预期，同时平均售价高于预期，从而使毛利率在2017年有显著的提升。2018年我们在智能硬件方面主要会有两大策略：一是把焦点放在高端智能手机T系列和V系列，二是我们会推出帮助用户在现实中变美的智能硬件，从而打造美丽生态链。 Thirdly, for our smart hardware businesses, the shipment in 2017 was in line with our expectation to reach 1.57 million. The average selling price was higher than what we expected, which has in turn driven a gross margin expansion for this segment in the second half. In 2018, the two major strategies for our smart hardware business are: one, increasing our focus on the premium priced T and V series; two, make a foray into beauty related smart hardware and begin to build an ecosystem around beauty. 接下来我想跟大家分享一下用户方面的战略。2017年我们的主要目标是为用户增长和粘性的增强打好基础，因此不同的app采取了不同的策略，从而能更好地为各自的核心用户群体服务。 Next, I would like to talk a little bit about our user strategy. The primary objective in 2017 was to lay a foundation for future growth in user base and engagement. As such, we have adopted different strategies for different apps in order to better serve the target audience. 那我给大家介绍一下我们三个核心应用的情况。2017年美图秀秀的MAU增加14.8%。我们相信未来通过对非一二线城市的持续渗透，它还有很大的用户增长空间。同时我们也在准备把美图秀秀升级为图片社交平台，用户不仅可以分享他们在生活中的乐趣，还可以关注最新最潮的内容。这个升级预计会在今年的6月底之前完成。 Now let me go through the details of our three core apps. For Meitu, MAU growth remained solid at 14.8% year-on-year in 2017. We believe there is still significant potential to grow our user base by penetrating into lower tier cities. We are also working to transform Meitu into a photo social platform where users can share their interesting lives, follow the latest trends and fashionable content. We expect to launch this upgrade by the end of June this year. 美颜相机方面，我们的策略是更加关注女性用户。虽然美颜相机的月活跃数在2017年12月有所下降，但这只是战略性的调整。重要的是，女性用户的占比和他们的粘性有显著提升。用户的日均使用时长在2018年初达到了历史新高。 For BeautyCam, we have adjusted our strategy to focus more on serving the female user group. Although its MAU in December 2017 has declined 23% year-on-year, we believe this is just temporary due to a strategic shift. Importantly, the proportion of female users have increased and their engagement measured in terms of daily time spent, reached a historical high in early 2018. 美拍方面，2017年客户端内的MAU同比增长25%。2017年我们做了一些尝试，把网页版的用户转化成客户端内的用户，因此网页版的MAU有所下降，但用户的平均播放次数显著提升，整体用户的粘性有所提高。 For Meipai, in-app MAU have increased 25% year-on-year. In 2017, we have been experimenting with converting the web MAUs into in-app MAUs. This has led to some decline in web MAUs, but has also driven a significant increase in the number of daily video viewed per user, indicating an increase in overall user engagement. 经过这一系列的调整，2018年我们的核心应用有了更清晰的战略定位。我们也很高兴地看到，美图公司的总体MAU在2018年2月份回升到了4.547亿，继续在影像类app市场保持首位。 Some of the apps experienced short-term volatility in their MAU numbers as a result of these adjustments, but all of them were in a much better position strategically entering into 2018. We are very pleased to see that the total MAUs in February 2018 have rebounded to 454.7 million, and we have maintained the number one position in the photo app market in terms of monthly active users. 最后我想跟大家分享我们去年在运营上的两个重大调整，也就是AI驱动和数据驱动。 Now, I would like to share the two changes in how we run our business. They are AI-driven and data-driven. 首先是AI驱动。2017年，我们对AI技术有多项应用，我想分享这四个案例。 Firstly, it is AI-driven. In 2017, we further integrated our AI technology into various areas of our business, each of which has exhibited promising results. I would like to share four examples. 第一，我们通过AI技术打造了不少爆款功能，比如美图秀秀的跨次元相机、绘画机器人Andy和美拍的百变背景。这些功能累计的使用次数超过了10亿，且大幅提升了用户粘性。 First, we have employed AI to develop highly popular app features, such as the Dimensional Camera and Andy the ArtBot in Meitu, as well as Creative Backdrop in Meipai. They have in aggregate generated over 1 billion times of usage, increasing engagement of our users. 第二，我们在电商平台美图美妆中推出了AI测肤功能。根据测肤结果，用户可以获得个性化的护肤建议和美妆产品的推荐。这个功能不仅成倍提高了用户的购买转化率，也让美图美妆的留存有了显著的增长。 Second, we have launched an AI-based skin detection feature in our e-commerce platform, MeituBeauty, which recommends skincare and cosmetic products according to one's skin condition. Users who have used the skin detection feature showed significantly higher buying conversion and retention rates. 第三，我们也把AI技术应用到美图手机。 Third, we are also integrating our AI technology into our smartphone products. 举个例子，美图手机推出了独家功能光效相机，通过AI重构用户的3D人脸模型，并获取周围环境的深度信息。AI可以为照片模拟摄影棚的灯光效果，拍出专业的大片。这是非常独特的用户体验，使得美图手机在拍照效果方面独树一帜。 For example, our proprietary 光效相机, an exclusive feature of the Meitu smartphones, employs AI to reconstruct a 3D model of a user's face and obtain depth information from its surroundings. User can then apply a simulated light source to the photo as if it is being taken in a studio with professional lightings. This creates a highly differentiated experience for our users and sets Meitu smartphone apart from its competitors. 第四，AI能够有效识别美拍的视频内容。比如区分视频中的舞蹈是芭蕾舞还是街舞。随着对用户的行为和喜好的深入了解，AI可以推荐相关的视频，提升用户的粘性。 Finally, our AI was also employed in our video recognition technology, helping us to understand the context of the video that were uploaded to Meipai, such as telling between a street dancer and a ballet dancer. With more insights into our users' behavior and preferences, we can recommend more relevant videos to them based on their interests to increase engagement. 其次是数据驱动。2017年下半年，在产品设计、社区运营和市场营销上，我们更加强调数据驱动。 Secondly, is data-driven. In the second half of 2017, we have also introduced a company-wide initiative to emphasize data analytics in driving many business decisions, such as product design, community management, and marketing. 以美拍为例，通过算法的调整，单个用户的日均视频浏览量从2017年上半年的52个增加到下半年的63个。这些视频的时长普遍在15秒到5分钟之间。 Taking Meipai as an example, after increasing the weighting of the algorithmic input in the overall video recommendation mechanism, the number of video views per user per day has increased to an average of 63 compared to 52 in the first half of 2017. These videos' duration usually lasts between 15 seconds to 5 minutes. 同时，数据驱动也缩短了产品的开发周期。通过大量的A/B测试，大部分的App平均每周更新一个版本。另外，我们也积极搭建美图的统一账号体系，为未来推出跨app的服务做好准备。 We've also become a lot more nimble in our product development cycle. With numerous A/B testing results as the guiding principle, we are launching a new update version for most of our apps every week. We are also aggressively building up our unified account base, which will help us to gain deeper insights of our users' behavior, as well as serving as a foundation for launching services across different apps. [Foreign language] As of the end of 2017, we had 267 million of accumulated MTID, representing 33.5% increase from June 30, 2017. [Foreign language] In our view, AI is a very important trend going forward. AI will help us tremendously in providing more personalized service to our user in the future. We believe these two changes will lead to a significant user growth in 2018. [Foreign language] Now let me turn to Gary for a discussion of business and financial results. Thank you. Thank you, Xinhong. I will first focus on discussing the revenue performance in the second half of 2017, as they will give you a sense of how fast our business is growing. Total revenues in the second half of 2017 were RMB 2.35 billion, up 136% year-on-year. In particular, revenues from the internet businesses were RMB 541 million, up 611% year-on-year. Our internet businesses in the second half of 2017 accounted for 23% of total revenues, whereas 18 months ago, in the first half of 2016, it only accounted for 5% of total revenues. This represents very significant growth, but we believe this is just an early beginning of a very scalable business. Our confidence is now stronger with Bryan Cheng joining us as Chief Operating Officer, as he brought over many years of experience in building various monetization model from scratch at Weibo as their Senior Vice President. Advertising revenues in the second half of 2017 were RMB 225 million, grew 558% year-on-year, and 172% sequentially compared to first half of 2017. As we previously mentioned during our IPO, our advertising revenues in 2016 were mainly limited by the size of our advertising team. In December 2016, the entire advertising department consists of only 23 people. By the end of 2017, we have built a team of 166 people, which includes salesmen, engineers, product managers, ad planners, and designers. The expanded team size enable us to serve more than four times the key account clients or brand advertisers in the second half of 2017 compared to a year ago. Additionally, we are expanding our advertising product offerings, such as audience targeting, programmatic sales, and new formats such as News Feed. We believe these measures will underpin our advertising growth due to an expansion of our ad inventory, increasing the sell-through rate of our ads, and increasing the per-advertiser spend as the campaigns became more efficient. For our IVAS and other business, revenues in the second half of 2017 were RMB 316 million, grew 661% year-on-year, and 92% sequentially compared to the first half of 2017. Virtual item sales from Meipai live streaming accounted for the vast majority of this segment. Average monthly paying users were 313,000 in 2017. We want to emphasize that live streaming is only one of the many internet value-added services that we will provide to our users. In 2018, we will be expanding that portfolio to include games, VIP membership services, online literature, claw crane machines, and so on. From a traffic monetization perspective, live streaming in 2017 was monetizing only about 25% of the 29.5 million in-app MAUs of Meipai. The upcoming IVAS that we are launching will utilize the broader traffic of Meitu's product matrix, which is more than 10 times the size of the user base of our live streaming services. We expect revenues from IVAS to grow rapidly in 2018, driven mainly by the increasing number of paying users. However, we do expect ARPU to reduce as many of the IVAS that we are launching in 2018 will carry a lower ARPU compared to live streaming. Our e-commerce platform, MeituBeauty, was officially launched in late October 2017. Although its revenue contribution was insignificant, it has shown some really encouraging operational metrics, such as an average ticket size of over 400 RMB and close to 60% of the sales were contributed by repeat customers. Our vision for MeituBeauty is to provide our user with the most personalized skincare and cosmetic products through AI. At this stage, we are still prioritizing the optimization of user experience over maximizing GMV. For our smart hardware business, revenues in the second half of 2017 were 1.8 billion RMB, grew 97% year-on-year, and decreased 7% sequentially compared to the first half of 2017. We sold approximately 728,000 units in the second half and a total of 1.57 million for the full year of 2017. This is ahead of the 1.5 million units guidance that we have given out during the IPO. Looking ahead, we are expecting to launch two new models of the higher priced T and V series in 2018. We are temporarily suspending our mass market N series to make way for our beauty related smart hardware, which we expect to launch two products in 2018. As a result, we expect the 2018 revenue growth in the smart hardware segment to be driven primarily by ASP expansion and to a less extent, the number of phone units sold. Now let me turn to some full year profitability metrics. Gross profit increased by 336.7% to 1.044 billion RMB in 2017 from 239.2 million RMB in 2016. Overall gross margin increased to 23.1% in 2017, up from 15.2% in 2016. Gross margin of our internet business segment was 23.5% in 2017, compared to a gross loss margin of 55.1% in 2016. Expansion of gross margin was mainly due to the rapid growth in revenues and associated operating leverage. Gross margin for our smart hardware segment was 23% in 2017, compared to 20.1% in 2016. This margin expansion is mainly due to increased revenue contribution from the higher priced T and V series model within the product mix. Now moving down to income statement. The primary driver for growth in operating expenses was personnel related costs and to a less extent, marketing and promotional expenses. We had a net addition of 738 employees in 2017, mostly related to engineering, product development, and monetization. Excluding share-based compensation, sales and marketing, research and development, and administrative expenses account for 13%, 9.2%, and 3.7% of revenues in 2017, respectively. As our revenues were growing much faster than our cost base, our adjusted net loss has narrowed significantly to 46.9 million RMB in 2017 compared to 540.5 million RMB in 2016. Based on the unaudited management account, we have turned profitable in the fourth quarter of 2017 on an adjusted non-IFRS basis. Our capital expenditure in 2017 was 54.8 million RMB, mainly related to server and computer equipment. We expect CapEx to increase in 2018 as we are expanding our infrastructure capacity for growth in both active user base and engagement. As of 31st of December 2017, our cash position was 5.17 billion RMB, and we do not have any debt. With that, I will turn the call back to the operator to open up for questions. Operator? We now begin our question and answer session. If you have questions for today's speaker, please press 01 on your telephone keypad and you will enter the queue. After you are announced, please ask your question. If you find your question has been answered before it is your turn to speak, please press 02 to cancel the question. Once again, please press 01 on your telephone keypad to ask a question. The first question is from Alicia Yap at Citigroup. Your line is open. Please go ahead. Hi. Good evening, management. Thanks for taking my questions. I have two questions. Number one is regarding your initiative to transform Meitu into the photo social platform. How are you going to have the differentiated social networking features? How do you differentiate yourself versus other social networking products in the market? So far, what is the feedback? Second question is regarding the live streaming. I understand you have a lot more female centric user base. How are you going to grow in terms of the business model with such a bigger groups on the female user base versus the other live streaming platform? Thank you. Okay. Let me just translate the question to the management team first. 所以用户有个性化的需求，希望能够有一个平台满足他们的兴趣。我们现在在一个内测的阶段，现在数据暂时不能对外公布，但我们也可以说一下，数据都有在不断地提升。 The idea of creating a social network based on Meitu is very much driven by the demand from our users. There's frankly not a lot of choices of social networks in China, and some of the demands can't really be satisfied by the current choices. We do see a lot of users very willing to share their lives and share their photos on Meitu, and that's why we want to create this social platform. Right now we're in the status of closed beta. I cannot really disclose the detailed figures, but in terms of trend, they are very positive on a daily basis. 直播是这样。直接用英语吧。 This is Bryan Cheng. About live streaming, currently our pool for the live streaming user is pretty good, and we are seeing a huge potential for the upgoing of the numbers in terms of the number of female users. Most of the live streaming broadcasters are females already, and we have a very good ratio in terms of audience between the female and male audience. Going forward, we are adding more live streaming broadcasters with a special skill, for example, singing or dancing, to attract more female users alongside male users. Does that answer the question? Yes. I think just to follow up a bit on it, I understand you guys will be launching games and literature and other service, kind of complementing the live streaming. How important will live streaming among the overall internet services in the future? Okay. Live streaming will be serving as gravity of the user base. Using the live streaming, we will be able to filter out the high output users, and then we can transfer those users to literature readers group and to other value-added services. I see. Okay, got it. Thank you so much. Sure. Next question, please. From Xingchen at CCBI, please go ahead. 蔡总、Xinhong总、Gary，你好。我有一个问题是关于广告这方面的。我想知道一下咱们3B的广告收入里，美拍的贡献大概是多大？然后，如果我们海外用户的商业化开始了没有？如果还没有的话，大概几几年会开始？还有就是我们有提过seasonality，我想知道一下一般来讲是Q4会是peak season吗？多谢。 For that one. Okay. Xingchen, do you want to translate the question into English or got it? Sure. My question is about advertising. Among the 300 million RMB advertising revenue, how much does Meipai's contribution among this? Also, among the overseas, have we started monetization for the overseas advertising users? If not so, what's the timeline for that? Also, the last bit is, do we have a number for the top three customers' contribution for advertising? Or top one or top five? Any color would be helpful. Thank you. This is Bryan. In terms of Meipai's contribution to overall ads revenue, at the current moment we don't have exact numbers, but in terms of ratio, in terms of percentage, it has a huge potential for the future because the short video market is growing rapidly. But currently, it has a small percentage in terms of ads revenue. In terms of overseas revenue potential, we're still at a stage of growing our user base currently, and we are monetizing portion of our overseas user via working with Facebook and Google. Going forward, we're seeing huge potential for the overseas user monetization in the future, next few years. In terms of seasonality, I think most of the time First quarter is going to be a little bit slower. Then second quarter is probably starting to be better. But I think seasonality for us right now, it's important, but because the overall revenue growth is actually very fast, you wouldn't see the normal seasonality in the sense that, oh, you will see first quarter, it will be lower, and then second quarter and third quarter will be similar. We're not seeing that. I think the trend of increasing revenue will still be more prominent than the seasonality effect. Thank you. Next question, please. Next question is from Thomas Chung at Credit Suisse. Your line is open, please go ahead. Hi. Thanks, management, for taking my questions. I have three questions. The first question is about our advertising business. Given we are seeing the monthly run rate continues to increase since 2017, what are the feedback from the brands? Why they keep on allocating more and more budget on our platform, and how we should think about our AI compared to other applications? That's the first one. My second question is about short video. Can management comment about the competitive landscape right now, and should we expect there will be a step up in sales and marketing expenses going into the future? My third question is about the step change in terms of the profitability in 2019. Is there any color about the margin trend that we should think about in the next couple of years? Thank you. Yeah. Let me take the first question. This is Bryan. In the last one year, we have lots of advertising coming into our platform, especially cosmetic and fast consumer products, those two verticals. We are seeing huge interest for the big advertisers, big advertisers and small and medium-sized advertisers as well. Those are the cosmetic. Going forward, cosmetic, fast consumer products, and other verticals which are targeting the female users who are seeing those as our potential big spender for advertising. In terms of the sales and marketing, I think, in 2018, we are going to obviously increase the sales and marketing expenses. Overall, we are not expecting the sales and marketing as a percentage of revenue to change significantly compared to 2017. I think for the third question regarding the step change in profitability, I think we will have to understand it in a couple different drivers. First of all, as advertising continues to grow, it actually carries a very high gross margin. I think advertising is easily over 70%. Even if you allocate all the server and bandwidth cost to advertising, it is still over 70%. That will actually drive margin at a growth level to continue to expand. The second thing is, because we already have such a large user base, the expenses, as we have discussed in the call earlier, will be driven majority by personnel cost. If you look at the revenue growth and put that side to side against our personnel-related cost growth, personnel cost growth cannot be growing that fast compared to revenue. That is why we are expecting the gross margin will continue to expand as our revenue continue to grow, especially when the revenue growth is coming from advertising. Now, I do not want to give a specific guidance in terms of numbers, but I think you should focus more on the operating leverage coming out of our business. I think one very key differentiator for Meitu is we already have built the user base, and that is usually the highest drain on expenses for most other internet companies. Whereas for us, we have already got that user base and the upcoming costs or expenses are mostly related to people. Thank you. Next question, please. Our next question is from Wesley Lee at Gold Mountains Asset Management. Please proceed. Hi. Hello? Hello. Oh, thank you. Thank you for taking my call. Congratulations for your result in 2017. I have several questions regarding your result, because I just look at the announcement. You reported adjusted net loss is about RMB 15 million, but the reported net loss is about RMB 200 million. Can you tell me what are the extraordinary items that is included? Last year, Chairman Cai Wensheng did some buyback in the market. I wonder if the company have any plan for some share buyback or any management officers will have any plan to buy the shares. Last question is about the pre-IPO shareholders. Any discussion among the pre-IPO shareholders regarding their plan? Thank you very much. Okay. Let me just take the first question. In fact, if you look at our announcement, there is a specific session that talks about how the adjusted net loss reconciles to the overall headline loss. You should refer to page 11 of our announcement. I think, just to give you a quick sense, the difference is mostly related to share-based compensation and, to a less extent, the net fair value gain or loss related to our long-term investments. That is the first question. Maybe I will first speak on behalf of the company to talk about the share buyback. I think we will consider that when there is the right timing and opportunity and right price. It is our goal to return excess cash to shareholder, but I think right now we are at a point of growing our business. I think at this point in time, our cash will be deployed more to growing the business, which we think will generate better overall long-term shareholder value. We would not rule out the possibility to do share buyback. At that point, I personally think that the share is quite undervalued. That is why I have purchased in the open market. I would not rule out the possibility to do that again when the opportunity arises. As of today, we do not have any concrete plans to do it. Okay. Would you mind to repeat your question? The third question. Yeah. I have another question, sir, about your write-down of your products. Last year you write down 33 million RMB. May I know the reason behind it? Do you see any write-down in this year? Okay. So actually, if you look at our 2017, we have written down 72 million, and then it was offset by a gain on disposal of about 32 million. We have invested a lot of different early-stage businesses, which we think will be complementary to our overall business, as well as building an ecosystem around beauty. Obviously, all of these are very early-stage investment, and they are very risky. I think we will control our risk exposure in terms of the size of the investment. But all in all, I think a lot of investment that we make are very promising, and they are very complementary to our business. Again, we have already do what we should have done in our 2017 results. We don't have any current plans to write up or write down investment, but depending on the performance of these investment, and also depends on whether they will have a mixed round of financing, we will measure the fair value every time we announce our results. Okay. Thank you very much. Next question, please. Our next question is from Jeff Hao at Milestone Asset Management. Please go ahead. Hi. Thank you for taking my question, and congratulations for your good results. I have two questions. The first is about competition. Can the management give some comments and your views on the competition with Douyin? Because do you see any threats from Douyin in terms of user time spent, particularly compared with your Meipai app? Because if I am correct, the Douyin's user profile and the content offering in terms of type of contents are quite similar. That is my first question. My second question is about your user acquisition strategy. Maybe can you give us some color on how would you acquire new users, and can we expect your MAU to start to grow this year and maybe next year? Thank you. 他第一个问题就是关于竞争的，就是我们怎么看抖音会不会给我们带来一些威胁，特别是在用户的市场的争夺上面。然后他也知道这个抖音的这个用户数好像是跟美拍比较类似，他们也觉得抖音的内容可能跟美拍是比较类似的。实际上，抖音和美拍这两个产品的定位有很大的区隔。因为抖音是一个泛娱乐的短视频平台，而美拍更多是面向女生兴趣的视频社区。所以我们会基于美图女性用户庞大的优势，针对女生的兴趣做很多的内容布局。然后也会将美拍跟美图其他产品，像美图秀秀、美颜相机做进一步的打通，比如说内容的双向输出。美拍现在的定位主要是两块，一个是高颜值，一个超好看，都是针对女生的一个定位。So we actually think that the positioning for Douyin and Meipai is quite different. Douyin is a little bit more related to funny videos and overall entertainment, whereas Meipai is more focused on the different vertical interests of the female user group. We are also going to build a lot of content around these various interests of female users, and we will also integrate or do mutual content exports, so to speak, among the apps of the entire Meitu user product matrix. The two positioning of Meipai right now is to have very good-looking people on Meipai, and also the videos are very fun to watch. [Foreign language] The other observation that we want to make here is we believe a lot of demand from female in terms of short-form videos has not been very well satisfied. In fact, a lot of short-form video platforms today are supplying male-related content. We do think there is a strong value proposition for Meipai. We also note that the interest of female in the first and second-tier cities is actually very similar to that of lower-tier cities. They all would like to watch similar fashion content, so on and so forth. That actually is a very good opportunity for Meipai to continue to penetrate into cities other than first and second-tier cities. In terms of the user acquisition strategy, I want to say that we do expect MAU to grow. In fact, if you look at the February MAU numbers, already back to 454 million, which is again very substantial increase from December last year. I think as usual, our strategy is going to be a mix of organic and paid marketing. Most of our user growth will be driven by organic traffic. I think delivering good products is one of the key ways to grow our user base. Thank you. Thank you, Manfred. Many thanks for joining us today. We appreciate your time, and we look forward to speaking with you again.