Earnings Call: H2 2020

Mar 17, 2021

Good evening, ladies and gentlemen. Welcome to Remark Incorporation's twenty twenty Annual Results Conference Call. A copy of the annual results announcement can be found and downloaded from the company's Investor Relations website at http:group.remob.comen/pages/relation. This time, all lines have been placed on listen only mode and the floor will be opened for questions following today's presentation. Joining us today on the call are mister Sun Tao Yong, Chairman of the Board and Chief Executive Officer and Mr. Cao Yi, Chief Financial Officer and Joint Company Secretary and Mr. Wasson Ng, COO, who will be joining the Q and A session later. This call will be conducted in Chinese and English. Before we begin, I would also like to remind you that management's comments during the call will include forward looking statements that are based on the current expectations. All statements other than statements of historical fact during the conference call are forward looking statements, which are subject to a number of risks and uncertainties and may not be realized in the future for various reasons. Information about general market conditions is coming from a variety of sources outside of the company, And this presentation also contains some unaudited non GAAP financial measures that should be considered in addition to, but not as a substitute for measures of the company's financial performance prepared in accordance with IFRS. So please do take a minute to read the Risk Factors and non GAAP measures discussion in Weimar's twenty twenty Annual Results Earnings Release. I will now turn the call over to Mr. Tsao. Thank you. Good evening, investors. Thank you for joining the call. Time flies as we did every year. It's time for us to review the performance and results of past year and share with the investor the future directions of the company. First, I'll go through the key performance and financials, and our CEO, Mr. Sun, will talk about the strategy and business development. On a financial performance, excluding the impact of compensation due to sabotage event, adjusted revenue has exceeded 2,000,000,000 in 2020, representing 44% year over year growth. Adjusted EBITDA increased by 78% to million. 2020 is a special year. This year led us to think more deeply on the coming industrial digitization trend and what the customer really want. We firmly believe what the merchant really want is not just a single software tool or an ad to get some traffic or having both but deliver separately. Instead, what the merchant wants is a full chain omni channel solutions that connects with multiple traffic ecosystems and enable merchants to digitize not only systems, but also marketing management and operation processes. As a result, starting from 2020 annual report, we'll reorganize our business segments into three segments, digital commerce, including subscription solutions and merchant solutions and digital media. Digital commerce is our core business. We help merchants to transform their marketing and commercial processes by digitizing their system, marketing and operation. Subscription solutions which correspond to our previous SaaS segment represent our SaaS and other software solutions, including Waymo, smart retail, smart catering, smart hotel, Heading ERP and other industrial vertical solutions, as well as some software customization in our Weibo Cloud business. In 2020, adjusted subscription solution revenue reached million, which is 42% year over year growth. Merchant solution represent value added services as part of the full chain omni channel solutions to meet merchant demand in addition to the software functionalities. Merchant solution currently include mainly our target marketing services to connect merchants to multiple top traffic platforms to acquire online traffic with enhanced performance. The scope will be further expand to more value added services in the future. In 2020, revenue from merchant solution totaled RMB528 million, a 47% increase year over year And the gross billing incurred in the merchant solution reached 970,000,000.00, more than double the size of 2019. In digital media business, we offer advertising services to specific advertisers in which we commit results. The revenue from digital media business reached RMB $818,000,000, representing 43% year over year growth. The gross billing of digital media business is RMB $916,000,000. A quick highlight of some key business data. The total number of paying merchants who are using our subscription solution by 2020 has reached 98,000, a 23% increase year over year. Within the subscription solution, smart retail business achieved high growth in 2020. The smart retail revenue increased by 224% to RMB145 million and the number of paying merchants increased by 234% to over 3,600 merchants. The brand merchants reached six eighteen with average contract value exceeding RMB 280,000. With Yazoo integration and COVID-nineteen impact, the catering segment has gone through a tough year. Our smart catering revenue is 44,800,000.0 and the number of merchants paying merchants reached nearly 7,000. However, since we launched our integrated solution in second half of last year, we have seen some changes happening in the way we expected. Average contract value for smart catering segment had increased from 130,000 per year in 2019 to 190,000 in 2020. In merchant solution, our paying merchants increased by 41% to 46,000 in 2020. In the 2020, some of the key capital market events include our acquisition of Heading Information and the Weimov stock joining MSCI or China Index. Since we will have our CEO, Mr. Sun, to talk more about the strategy and business development in later pages, I'll leave the business update later and get through the financial performance first. In terms of the financial performance, we have achieved a solid growth in 2020. Full year adjusted revenue increased by 43%. Percent. And within that, our core business, digital commerce achieved 44% year over year growth. Our digital commerce business, including subscription solution and merchant solution is operated under the same core strategy and business model. In 2020, 33% of our total revenue comes from subscription solution and 40% from merchant solutions, while 67% of paying merchants are using our subscription solutions and 31% are using merchant solutions. We expect digital commerce to represent majority of our merchants, while increase its proportion within the total revenue continually in the next few years. Subscription solution will be the fundamental deliverable we provide and the merchant solution will really add on to provide value added services that enhance merchants' chance of business success and at the same time help us monetize more. As a technology company, we continuously to invest today for future. The core investment is in R and D organization. The total R and D expenditure in 2020 amounts to $251,000,000, which increased by 74% comparing with 2019. Even though we invest heavily today by properly balancing our business portfolio and generating profit for merchant solutions, we are able to come up with adjusted net profit of 107,000,000 in 2020. Last but not least, we have a healthy balance sheet. By the 2020, the total assets reached 5,800,000,000.0 with 1,800,000,000.0 cash and cash equivalents. We are successfully managing our operating cash flow to reduce the operating cash outflow from 452,000,000 to $553,000,000 in 2020. So next pages will be will be some deep guidance, and we will quickly go through go through it. On page seven, it's mainly about digital commerce business. As we can see from the chart, digital commerce business grow at a high CAGR over 50% in the past three years. And this high growth was mainly attributable to the growth in both the number of paying merchants, which in the year of 2020 reached 98,000, representing 23% growth. And there are altogether 45,000 merchants using our merchant solution increased by 41% year over year. The ARPU also increased by 15% to 7,300 per year. With our strategy to moving up the market, we look forward to sustainable growth in ARPU for digital commerce as a whole. Our merchant solution was successful in the past three years. The total gross billing for 2020 reached nearly 1,000,000,000, and the CAGR is over 115% year over year. Digital media is our legacy business in which we provide advertising services and commit certain results to specific advertisers. In 2020, altogether, 2,500 advertisers use our digital media service and the ARPU is 26,000,000. Total revenue is 18,000,000 and total gross billing is JPY $915,000,000. Now let's come to gross margin. The gross margin on the financial statement decreased from 55% in 2019 to 53 in 2020. By breaking down to each business segment, we found gross margin for subscription solution decreased mainly due to the heavy investment in R and D and a significant portion of our R and D cost has been capitalized in the past few years in amortizing to cost of revenue. Since we continue to invest in R and D capabilities in the next few years, I expect the cost to have continued pressure on gross margin in the next two to three years before our revenue ramp up and reverse the curve. Gross margin for Merchant Solutions is pretty high as currently majority of the revenue in Merchant Solutions are net rebate or commission from Target Marketing Services. The gross margin for digital media business went down a little bit due to increased operations costs. On Page eight, basically, we talk about the R and D investment. As a technology company, a significant portion of our revenue are reinvested into R and D activity so that we can continue upgrade our SaaS solutions and expand our product offerings. By strengthening our R and D investment in addition to the traditional Waymo solution, we have been offering a number of industrial vertical solutions. And our Waymo cloud supports over 560 ISVs and offers over 1,000 applications. Recently, we started to further upgrade Waymo Cloud to turn it into an ecosystem, which build up not only a platform, but also partnership with numerous ISVs and service providers. Our investment in R and D has been increasing over the past three years. In 2020, the total R and D expenditure has increased to $258,000,000, representing 20% of the digital commerce revenue. Despite the headwind and a strengthened R and D investment, we continue to be profitable on adjusted EBITA and adjusted net profit basis in 2020. The net loss from the financial statement is RMB 1,160,000,000.00. However, the loss is mainly resulted from the fair value change of convertible bonds, which is 1,080,000,000.00 compensation due to SARS sabotage event, 94,000,000 and other non GAAP items. After adjusting these items, we have an adjusted net profit of JPY 107,000,000 in 2020, which has increased to 39% comparing with last year. The adjusted EBITDA reached million, representing 78% increase. As we explained before, the fair value loss of convertible bonds is directly associated with the increase in the price of our convertible bonds in line with our share price. So this is a pure accounting matter and a little bit counter intuitive. We will continue to adjust this item so that investor can see a better picture of our business results. The compensation due to SaaS sabotage events will be a onetime event and we have completed substantially all the compensation to the qualified merchants. So majority of the financial impact has already been reflected in 2020. So with that, I've completed the financial revolve. Next, let's have our CEO, Mr. Sun, to share with us the business strategy and development. Good evening, everyone, and welcome to the twenty twenty annual results conference call and remarks. And in January 15, we have held our investment meeting, and I believe that most of you are quite familiar with the strategy of 2020 for our company. And it was including the three parts and which is the moving up market, globalization, and ecosystem build up. And I will also elaborate on these three parts. And about the moving up market, we have realized a strong growth in smart retailing. Look at this this chart that we have realized more than 200% of increase of the revenue. And also, we have increased more than 600 of brand merchants. And also, their ACV has realized a 31 percentage of growth. And we have penetrated into all kinds of industries, especially in the fashion shoes and the home textiles and also women's fashion. And our leading position in the fashion industry has a share of 44%. And also, we have also have reached a very great result in the food and beverage, in jewelry, electric electrical appliance and other industries. And our KA has accounting for 10 to 20%, and we think that it would realize a 30 to 50% of growth in the future. And last year, we have acquired the Hadi investment, and they are quite strong at the commercial real estate and also the convenience convenience stores. So we can see that they have a share of 8058% of market share in commercial properties and also 35% in the chain convenience stores. Therefore, we think that the combine combination of these two companies would help us to have more penetration in these two regards. And we have now combined ourselves, and also all of their products are in our cloud. And we hope that we believe that after this integration, it would also accelerate the business for them. And also last year, we also have acquired the Yatsuo, and they are quite good at the smart signing and also help us to have a leading positioning in this regard. And we're thinking that about the dining technology, besides Mi Meituan and Ali, the other is focused on the WeChat private traffic flow. And we think that in this regard, we can have more SaaS products and to have a leading position. We think that in the Smart Dining, it was including the operating, the marketing, cashier, payments, and also delivery. So we think that we could have a this one stop solutions for the Smart Dining. And we all know that it is not easy for the dining the company companies and the restaurants in 2020. And, also, this recovery speed is low slower than the retailing. But and the revenue of the SmartDining of our company is not so prominent. But we still have seen the ACV of SmartDining realized a 30 to 40 percentage of growth. And also, we think that we will have more than five to maybe 30 the ACV. And also my dining would be a highlight of the moving up market strategy, and we think that we have become one more mature in this regard, and it would have the very bright future very bright future in this year. And the the second strategy is ecosystem development. It's also very important, including traffic ecosystem, developer ecosystem, and investment ecosystem. And about the traffic ecosystem, we have facilitated the omnichannel smart operation. Besides the Douyin, Alipay, Kuaishou, Baidu, we also have help and empower the offline long tail traffic, like the offline store, post cashier, and offline app. And in the future, we will have we will penetrate more like the KOL and also the short videos to help them the merchant. And what's worth noticing is that the going the traffic flow is surpassed 20%. And we have now re the mature into the past two point o. And in this June, I think it would be launched. And right now, it is undergoing testing in in house. And we think that whether it is about the technology or this openness would be unprecedented. And also, think that we model is also one user of the the cloud path. And together with our developers, we would provide much better solutions for our merchants. And our WeMob cloud would provide three areas of solutions for our merchants. One is the individualization, one is the professionalization, and also the customization. And about the and we will have the targeted solutions. Like, we would provide this customization for a medium and a large account and also the the marketing market solutions and also customization for our medium and small companies. And, also, we would have the plug and use model for the the other professionalization solutions like for Baisheng and Wannyou. We will have a more penetration of virtualization. In the investment ecosystem, we have the investment scope as in the retailing, catering, hotel tourism, short video education, and live streaming. For example, in retailing, we have acquired the having and technology and DAML. And in the catering, we have acquired the Yasuo and Shangyo. So that we would have three models, the direct investment plus the M and A and also the industry fund. And also this year in the Beijing, we have set up an industrial fund, and this is the first industry fund of WeMob at AGP. It means that we can use this monetization way to manage the funds, and it means that we our investment ecosystem is quite improved. And the third strategy is the globalization. Now we have a footprint in more than 10 countries, and most of them them are doing by agents model. But this is not our main main business. We have the other business arrangements. The first service is for the clients going outside, and we would provide the staff and also the ad placement for them. And besides that, we would maybe select one to two pilot areas to to test the local solution. And then right now, we are under discussion with Facebook, Google, and TikTok, and we would launch the the ad replacement very soon. And next, I will talk about the 2021 business outlook. The first one is to expand the leading position by enhancing industrial penetration and to move up market. In the previous years, we are quite strong at the fashion and the textile region. And later, we would have more achievements in and also to localization. And since we have acquired the HUDN technology, probably would move a little bit to the shopping mall and the convenience store, M and F, F and B, and also the health care industry. And we predicted that the the Ka revenue was accounting for 3050% by 2025. And also the upgrading we were focusing on upgrading full chain operating capabilities. Also, in the annual investors meeting, we have mentioned the TSO concept, which is the traffic staff, the software, and also the operation. And we would empower our users and the clients to improve their traffic and operating capabilities. And we have carried out those TSO strategies for our head clients and which has been praised by them and welcomed by them all. So we hope we would continue to provide a TSO for them. And for our meat parts clients, we would provide a t plus s solutions for them. And for our long tail, those SMEs, we would provide a t or s a service for them, which is a very comprehensive arrangement. And, also, we will establish an open ecosystem, which I have mentioned before, so I will not go in detail. And how to expand the cloud service offer offerings? Right now, our business focus is on the commercial cloud. For example, the smart dining, retailing, and lifestyle. And, also, our smart beauty would be put online that this tonight or tomorrow. And, also, we would pay more attention to smart hotel. In the marketing cloud, we would enhancing the back chain conversion and mainly through the waystation and marketing assistant. And we have just issued an inform a piece of information that we have comprehensively connected to WeChat, and we would issue a WeChat private flow and a WeAssistant, which would be connected to the commercial cloud and have this package. And in the terms of the self cloud, telco has been improved last year, and we believe that this year, it would realize an explosive growth. And how about the acceleration of a globalization, the first, we would provide the one stop solutions, including those the DDC to our overseas merchants to going overseas. And also the the multi platform traffic access, we would connect with the at Facebook, Google, and also TikTok. And, also, we would realize the localization that you set up this network deployment and also to explore more international m and a to increase our competitiveness. So this this is the my part of the business overview and outlook, and we will come to the q and a session. Thank you management for the presentation. Now we'll start the q and a session. If you want to raise a question, please press 01. If you want to cancel a question, please press 02. Please feel free to reach any questions. First question comes from Lee Chong Han. Please go ahead. My question. My first question will be what are the reasons behind our increasing churn rate, and what's our forecast? And the second question is how will will our TSO solution hit our gross profit and and gross margin? And what's our outlook for gross margin going forward given that there will be more operation revenue in the top line? Alright. Thank you for your question, and I will answer that one by one. The first about the restriction, and we all know that 2020 is a very challenging year for the all our clients, and some cannot even open in offline stores. So some of our clients cannot renew their contracts or their fees, and we pleased we the we very and there will be more and more larger clients, and then we think that depreciation would decrease definitely. And about your second question, TSO would be our core strategies in the future, and it would empower our clients to realize the the multichannel and the omni traffic and also the all size solutions, whether it is in the private or in the public traffic region. And about the key, the traffic, our margin would come from the ad commission, and it would be quite high. And also SaaS, they're also very high. And the o is operating, and we would use the model of a GMV, probably not so as high as the previous two, but still not slow. And in the future, we think that we would have this t plus s plus o. The those three parts combined together, it's gonna be a very prominent. And also, we are developing all kinds of smart tools to to facilitate the operating. And we hope that in the future, 70% of our operating is from the smart tools, and only 30% is by the human being human being and manpower. The question is, well, we might leverage third party partners to help with our operation work, or it will be free by Waymo itself? About the operating, of course, if they are very qualified and they're very affluent departments or third parties, and that will also, we we are we can we are willing to outsource. Then also the operating is one part of our ecosystem building up, and we hope that we can open it and to have a a more open service. But in the first, the beginning that we want to set up a very qualified and high capacity team and to have it standardized and to provide our solutions and also our methodologies to our partners. Maybe I can add something. So, actually, our TSO, the beta target for the future is to build out our operating platform, and it's open to the a partnership who are very capable of operating some, you know, services. So we are open to that. At the beginning, we are trying to consolidate all the best practices. We're trying to elect them to the public accounts and others. So at the beginning, we we are investing some labels to do the operations. And in the future, we are open to the we will be open to the ecosystem. Our next question comes from at Citrix Securities. Please go ahead. My question is about what about the future planning of the remote cloud platform in three years? And what is the possible way of of monetization in the future? Thank you. Alright. Very good question. Thank you for your question. And we think that right now, we have initiated the past, and this is great upgrade of our past two point o. It's the past cloud with the provider the following services. The first one is the the developer tools platform and including those database, the informat matrix that you have more facilitation for the developers to use our platform. And the second is the mid stage capabilities would improve quite a lot. And for example, we would have our transaction center. We would have services that would be put online. We think that it's in May or June. And first one is the APAP that's in in house in our company. It is also a to set up this mid stage as a business logic logic logic platform, and we could provide customization services for our clients. And to realize that it is not only the standardized, but also according to their own needs and the demands. And then the four is the iPad. IPad is now right right now, it's under survey. And we think that the issue would be put online very soon. And, also, we would right now, a lot of KA are using our iPaaS to meet their customized or individualized demand, like the Coca Cola. And also through the M and A, we would have more strategic partners like Baisheng, and also we will have a more industrial partner. And about multi money for that monetization, and within that, in 2021, probably, we would not have so much monetization. And if there will be the monetization would come from three parts. One is the application service commission. And the the second one is the k a service commission. They would use our server, and it's it's with one in our package solution. And the third one is the usage fee for our solutions. Our next question comes from. Please go ahead. How much how much increment could TFO bring to our business, and what revenue proportion will the operation part accounts for in the future? Just just mentioned in 2021, we we will develop more virtual industries in smart retail, such as shopping center, fresh convenience, and the smart smart catering, and the smart wide travel. Among this is the need which are the most important to expand and will bring increment this year and which are in the oh, okay. Okay. This is this is the question. Okay. Also, there's a TSO. We hope that we could provide this added value for our clients to increase their ACV. For example, if they are using our t and we would provide the s and o. And if they are using our s, and we would provide their t plus o. So that this it it is a one order that they could have a three aspects of service. It could improve their income. And we would probably not focus so much on the SME. Rather, we would focus on the middle and the large size enterprises and the clients so whether we can have more commission. But the commission also depends on how many clients we are serving and also how many proportion that we could get. For example, if we plan to have 150 GMV surpassing the 100,000,000 clients and each we would have a 5% of commission, then if it is for a year, then it would be quite a large number. But whether we could reach that, it is still open in the air. So we would help focus more on our head clients. Okay. So, actually, regarding TSO, you must say it's a kind of new model of business. So regarding the operation part, in the, say, in the future, you know, so we are relying on a CPS or CPA, this kind of new, you know, charging models, including software revenues. So the potential for these kinds of business is is quite quite huge. You know, it's it's it's actually we are charging the CPS or CPA majorly. So if we have almost a fixed amount of people serving a customer, if the scale can be increased, then actually the profit will increased. So the portion of the the this kind of business in the future could be could could open a much bigger market for us. Yep. About your second question about the vertical retailing penetration. Yes, the not retail. The retailing industry would be the biggest one. And the hotel, the beauty or the lifestyle that we are focusing on right now, of course, the revenue could could cannot be as much as the retail. But we think that we could build up the digital or commercial platform. It is quite important to have more vertical sections. And also, in the marketing cloud, we would provide, as I have mentioned, the we enterprises assistant. And this function can be cross buying with the commercial cloud services so that it could add more value to our and also in the future, we're seeing that in the sales, the shopping mall and also the convenience store would be the next focus. The next question from at UBS. Please go ahead. I've seen quite a lot of large retail chains deploying SaaS infrastructure while there are different stores might be using different vendors. How do we see the difficulties to replace these different vendors? And my second question is, in 02/2020, China's China based ecommerce platforms like Xiein achieved a great development in overseas market. So can we elaborate more about the market potential related to the SaaS products? Thank you. About this retailing SaaS replacement or the competition, and we know that most some most of our clients, they have been through from the informationization to the digitalization. They have their own system, most of them. And some, we think we can have cooperation with them, to connect with them. Some, we could definitely replace them. And for those o two o, the up online to offline, the smart retailer, those two c platform, we could we some of them are from the online to the offline, smart retail to see end, and some of them are doing the ERP or CRM. We would connect with them, not replace them. And for those the previous system, some of them are from the third party convert maybe they are not satisfied with their customization development or their responding time. And some of them, they cannot have a very strong competitive activities in the SaaS. And but for WeMob, during this past seven years, we are improving our capabilities to provide the one stop and integration services for them, including the transaction, the marketing, and the other aspects. So our advantages are very prominent and very obvious. So it is not difficult for them to choose us. And also through the different words of words of mouth promotion, and also we have accumulated more and more clients. It has realized a stronger become stronger, that's the phenomenon. So, some of them, we can cope with them, and some, we can replace them very easily. And and about the service for the overseas overseas clients, yes, the market potential is quite huge, and we would help them with their retailing, their with their trade. And seeing it's very successful, they can have their own independent app. But we know that many of our clients don't have this capability to do their individual app replacement. So I think that we could use our TSO service for them to, like, facilitate the DPC and to focus more in the empowerment of they are going overseas. And our advantages is also about the TSO from the traffic to the software tools and then to the operation. Okay. Thank you. Our next question is from Stephanie Ng at Credit Suisse. Please go ahead. I quickly translate. The first question is we connected to the in store and WeChat video channel and for live streaming services for the merchant. So will we consider some additional monetization from this live streaming ecommerce in the future? And the second question is on the progress of high having information integration with our overall business in the SaaS in the SaaS part. Let me first answer your question, and then we'll have to add more. Of course, we would have a more multilateral and multi diverse ways to monetization. And right now, we are providing those clients the solutions besides the targeted ads and the targeted marketing. We can also expand the other services, for example, the WeMob monetization, WeMobby live streaming, WeMobby finance even. So that we could and also we can help our clients to guide their traffic and manage to have the commission into this. And right now, we are using this the customization are mainly using our past tools, past two two point o. And also a lot of KA are using the past tools, and it is very effective according to their feedback. And also, we could use our ISV together with our ISV to improve the services for our KH. So maybe let me add some points on that. We see doing shop and also WeChat video accounts. It's an opportunity. As the least two, you can say, they're evolving every day. So we are carefully managing and and monitoring the progress. We already has been a service provider for doing, and we are doing something for some customers to help them to open shops on on domain and also open, you know, shops and on a WeChat video account, including providing SDKs. So we see this is a very good opportunity. And but these two these two opportunities are involved with the best. We are currently and closely monitoring the progress. But we are seeing some very good trend on that. So for we are helping some customers to do the live stream live broadcasting only to each other, then the result is quite good. Then we are also helping some customers to livestream streaming on the WeChat video accounts. So we are seeing it as a quick potential I think those studies too. It's It's a sound the owners to do at a very beginning stage of commission additions. We see opportunities, but also even to And about our n g business integration with the Hacking Technology, right now, we have have a that in-depth integration with their products, with their sales, business, and also agent channels. And this journey is quite smooth. And we and our phase one product will be online very soon. And also, also, this smart mall and the smart convenience stores would be put online in this first half of this year. And the purpose we're having was focused probably mainly is about the mid stage ERP. And right now, after the business integration, they could move to the the front end, like the shopping mall convenience store, and to have a integration of the front end, mid end, and the the back end. Our next question is from Brian Gong at Citi. Please go ahead. I will translate myself. My first question is still regarding KSO. We just mentioned that some few top clients already, you know, use our KSO. So not sure what take rate we are charging on the operation part. And over long run, what take rates we expect to reach when this business become more mature? And the second is question is about the customer acquisition cost. I'm wondering if management share, you know, the customer acquisition cost for the k client? Thank you. The first question I would like Watson to answer. So we we have some part of customers to inspiring our tier source, and the the range is depends on their industries. So we have some customers, 3%. We have some customers more than 10%. So it's really dependent on the industries. So in the future, we have we haven't make a very clear judgment on the future, but it seems that if our scale can be increased, our parking power will increase. Yeah. Okay. So the customer acquisition cost for small medium merchants versus large merchants is very different. You know, the average customer acquisition cost for brand merchants is about is about, you know, 200,000 RMB for each individual customer. The major reason is due to, you know, the relatively longer customer conversion cycle because for large merchants, basically, they have to go through a formal internal evaluation process in order to decide which, you know, independent software vendor they would like to choose. And the second reason is because we had a relatively independent BD team, which consists of high quality salespeople. So these are all our direct sales force, which basically we use in the, you know, small retail business to, you know, go to those big merchants, prime merchants. So because of these two reasons, the customer acquisition cost for large merchants is relatively high. But if you compare that with the longer life cycle for the large merchants as well as the higher much higher, you know, average contract value for these large merchants, basically, would say the profitability of large merchants would be much higher than the small medium merchants. Meanwhile, Seacom Bank. Yeah. Thank you. Due to time constraints, we will now conclude today's call. On behalf of the management team, I would like to thank you for your participation in today's conference call. If you have further questions about Remark, please feel free to contact us. Thank you and goodbye.