Earnings Call: Q1 2021

May 24, 2021

Good day and thank you for standing by. Welcome to Agora Incorporated First Quarter 2021 Financial Results. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Ms. Fiona Chen, thank you. Please go ahead. Thank you, operator. Good evening and good morning, everyone. My name is Fiona Chen. I'm the Investor Thank you for joining Agora's Q1 2021 earnings conference call. Joining me today are Tony Zhao, Founder, Chairman and CEO, Energinbo Wang, CFO. Our earnings results press release and a slide deck can be found on our IR website at investor. Agora. Io. Reconciliations between our GAAP and non GAAP results can be found in our earnings press release. During this call, we will make forward looking statements about our future financial performance and other future events and trends, including guidance. These statements are only predictions that are based on what we believe today and actual results may differ materially. These forward looking statements are subject to risks, uncertainties, assumptions and other factors that could affect our financial results and the performance of our business. We will discuss them in details in our filings with the SEC, including today's earnings press release any risk factors and other information contained in the final prospectus relating to our initial public offering. Agora assumes no obligation to update any forward looking statements we may make on today's call. With that, let me turn it over to Tony. Tony Qui? Thanks, Binang, and welcome, everyone, to our earnings call. I would like to Start by saying that our hearts and thoughts are with the people in India and other parts of the world dealing with the current pandemic. Some of our own Agora team members and their families were affected. But together, we will help each other through this difficult The world has changed. Everyone is looking for a way to stay connected to their loved ones. Through our real time engagement platform, Agora is committed to making this meaningful human connection With that said, let's talk about Agora's performance for Q1 2021. We had another quarter of Strong growth in Q1 2021 as developers and innovators around the world continue to create new immersive engagement experience with our real time voice, video, chat and streaming products, transforming all industries. In this quarter, the amount of real time voice and video engagements powered by Agora exceeded 50,000,000,000 minutes per month for the first time. As we watch the bloom of innovative new use cases built with Agora over the past year, It is clear that the world is evolving from a consumer economy and knowledge economy towards a greater economy where people make a living by sharing their skills, hobbies and interests online. These creators include foreign language teachers, yoga instructors, tour guides, chefs, DJs, musicians and many more. Increasingly, these creators are leveraging the Internet and the power of Agora's real time engagement network to enable those experiences and engage with their audience. For example, we recently partnered with a virtual tour platform in Europe to enable tour guides to serve customers from thousands of miles away. Here, tourists can join the live streaming live Streamed tour, where local guides introduce the destination and share their sites And culture according to tourists' interests through real time interactions. And all of those Happens right in the tourist living room. Another example is an education platform based in San Francisco that enables artists to teach each other creative skills, such as how to DJ through VR. We believe these examples are just the beginning of the greater economy. We will continue to invest R and D efforts to reduce friction for more and more creators to engage with their audience. On enterprise side, real time engagement has evolved far beyond videoconferencing, with so many aspects Our business forced online to avoid total shutdown. The speed of digital transformation for enterprise has accelerated. For example, house closings and notarization that used to require in person meetings can now be performed by services like Adcash, which use Agora's RTE platform to provide Verification and enablement services to legal and financial providers with a powerful combination of AR, With a powerful combination of AR and real time video, our partner, Wipro, Developed a solution that enable real time export cancellation for a wide range of enterprise customers from medicine to manufacturing. Having seen the benefit of RTE driven digital transformation, Enterprise will continue to innovate and leverage RTE platform to increase productivity and customer engagement. Another example of RT innovation is XR or extended reality. Just 2 weeks ago, we announced our partnership with HTC at Viacom When they announced their latest between VR devices, but also XR live streaming, which allows users to share In the same immersive experience on any device without requiring a VR headset, making the VR experience more accessible, Productive and enjoyable for all participants. We feel strongly that XR, coupled with real time engagement, We will drive the next generation of workplace collaboration. In particular, I'm excited about the Potential of XR live streaming because it enables seamless connection between the real world And the metaverse or virtual world and between different metaverse all through the power of Agora network. On the product side, we recently released Agora SDK 3.4, which is packed with many important technical enhancements, especially on video fluency. By video frequency, we mean a stable frame rate, low jitter and solid audio video sync There must be in place for the session to be as natural and distraction free as live in person conversation. In the past, Most people believe one can either have good fluency with multiple second latency or sub second latency with Poor fluency, but not good fluency and sub second latency at the same time. This is because sub second latency means the playback buffer is extremely small, making the playback more prone to general. Through our end to end engineering improvements and adaptive transmission strategies, I'm compared to traditional long latency content delivery technology such as CDN. This is an important milestone because it removes needs for our customer to make trade offs between interactivity and video quality. Recently, this technology enabled a major education customer to deliver live lecture with excellent video quality to thousands of students in one classroom, while keeping the ability to interact with each other at any time. Here, I invite developers around the world to try our latest SDK to see for yourself. In addition to the core voice and video APIs, we have added chat and the whiteboard APIs to our platform through the acquisition of e small and Netless. We have now completed post acquisition integration for the China market and the integration effort for U. S. And other markets are well underway. I'm looking forward to supercharging across global developer community with our combined offering To force more innovation on Agora platform, we launched the Agora startup program this year to empower global startups With exclusive back end support and benefits like free minutes and direct access to VC and accelerators, The program has gained tremendous traction in the Q4 with 96 accelerators, Incubators and investment partners globally, I would like to invite all founders with big ideas to join the program and let us help you pursue your dream. Lastly, I would like to take the opportunity to thank our customers and our developer community for their innovation and passion to help people stay connected. I also want to say thank you to all the AgroGen's for their hard work and dedication to our customers' success. The Q1 was a great start to the year. And I'm very excited about all the opportunities in front of us as we continue to help build the future of real time engagement. Now, let me turn things over to Jingbo, Hu will review our financial results. Thank you, Tony. Hello, everyone. Let me start by reviewing ad accounts At the end of March, excluding growth for eSmart, adding about 11,000 per month in the quarter. We also saw significant usage growth from use cases such as interactive lecture hall and audio live cast during the quarter. Additionally, ASML contributed approximately $1,000,000 to our top line. As we mentioned in our last earnings call, in order to help investors better understand our organic growth, Excluding the impact from one off events, such as the complete lockdown in China in the first half of twenty twenty due to COVID-nineteen, We calculated adjusted total revenues for these periods. When comparing to adjusted total revenues in Q1 last year, Our revenue grew 81% year over year in this quarter. Our trailing 12 months Constant currency dollar based net expansion rate is 131%, excluding eSmart. If we use adjusted total revenues, the expansion rate would be 146%. Moving on to costs and expenses. For my following comments, I will focus on non GAAP results, which Exclude share based compensation expense, acquisition related expenses, amortization expense of acquired intangible assets and income tax related to acquired intangible assets. Please note that a significant portion of the consideration Paid or payable to the management team and employees of eSmartNetlist is accounted for as acquisition related expense In our income statement under US GAAP, non GAAP gross margin for the Q1 was 58.4%, which was 10.7% lower than Q1 last and 2.1% lower than Q4 last year. This was mainly due to the strong growth in new international markets that we are expanding into, where infrastructure costs are higher. In addition, we continue to expand our capacity around the world In anticipation of future growth, driven by the accelerated digital transformation worldwide, which led to higher depreciation of 4.7% of revenue in this quarter compared to 2.1% in Q1 last year. Non GAAP R and D expenses were CNY 17,400,000 in Q1, up 65% year over year as we continue to hire talented employees and strengthen our R and D team. Non GAAP R and D expense was 43.3% of total revenues in the quarter compared to 29.7% in Q1 last year. Here, our strategy is to focus on Long term growth opportunities and innovation instead of maximizing short term profitability. We intend to continue to invest Significant resources in our R and D capabilities in order to further strengthen our technology leadership and provide a more diverse product portfolio to develop around the world. Non GAAP sales and marketing expenses were $7,500,000 in Q1, up 38% year over year, mainly attributable to team expansion and increased advertising and event expenses. Social marketing expenses represented 18.6% of total revenues in the quarter compared to 15.3% in Q1 last year. Non GAAP G and A expenses were RMB4,500,000 in Q1, up 67.7 percent year over year, mainly due to team expansion and professional service fees. G and A expenses represented 11.1% of total revenue in the quarter compared to 7.6% in Q1 last year. Non GAAP operating loss was RMB5.6 million, translating to a 13.9 percent non GAAP operating loss margin 4th quarter. Turning to cash flow, Our operating cash flow was negative RMB2.7 million in Q1 compared to negative RMB0.9 million last year. Free cash was negative RMB8 1,000,000 compared to negative RMB3.4 million last year. Net cash outflow in the quarter was mainly due to capital expenditure as we continue to scale our network and the consideration paid for Netlist Moving on to balance sheet, we ended Q1 with 877,000,000 in cash, Cash equivalents and short term investments compared to RMB635,000,000 as in of last year. The increase was primarily due to the proceeds from a 250,000,000 private placement of ordinary shares. Now turning to guidance. COVID-nineteen is still an unprecedented variable to our business model, where historical experience may now apply. Our guidance on full year revenues Reflects a number of assumptions that are subject to change based on uncertainties related to the impact. Thank you for the opportunity. I have three questions here. The first is on the Education regulation, we noticed that there are a lot of noises in the market that some of your customer could be Subject to new regulations on their customer acquisition or their content, etcetera. And based on your Discussion ongoing discussion with your customers, what should be the expected impact From these regulation changes? And also what is revenue from this sector in the past quarter? The second question is, how should we look at the gross margin In the recent quarter it's 58%. And what should be the outlook for the Full year and what will drive the potential stabilization and turnaround of the gross margin? And the third question is, do we see intensifying competition from public cloud and other smaller players? What is the recent competitive dynamic in the market? Thank you. Yes. I'll take the first question. I think it's very hard to talk about impact From the regulations at this point, the government is still drafting more details of the new regulations and consulting with various stakeholders In the education industry, it is unclear what the final regulation will look like and at what pace The government will enforce new rules. Meanwhile, besides those regulations being discussed, I think government has made clear They are trying to promote the so called 3 classroom initiative, which is leaning towards leveraging more online services to help improve the overall education services. Therefore, we think no matter How regulatory change would happen, the overall public and the private sector use cases for online education Should online education should continue to grow. If we think in long term, I can Also, offer a few more perspectives. I think, 1, the overall education system based on merit and exams is unlikely to change, which means the demand for after school tutoring is hard to diminish. And the shift from offline to online is likely to continue given the convenience and cost advantage of the online. Then the shift From one way forecasting to interactive class is likely to accelerate given the better experience and the Learning outcome of interactive class. Who as to who will organize and provide actual tutoring service, Whether it's education companies or public schools or even individual teachers, I think this is something will Depend on the new regulation. For us, we will just continue to focus on the things that will not change, which is more and more and better experience with online classroom solutions. And we will be dedicated to trying to provide the best of such online classroom solutions For all education providers. And just to add, in Q1, education sector contributed About 35% of total revenue. Margin? Okay. The second question. So on the gross margin, there are a few factors at play here. On the one hand, we are continuing to optimize our incoming cost And our technology architecture. On the other hand, global expansion And things like new initiatives like startup program will incur additional cost. So on balance, We expect gross margin to remain relatively stable in the coming quarters. With that said, I want to highlight that we believe we are still in the early days of real time engagement technology. Use cases, Geographies, cost structure are all changing very rapidly, which means gross margin will fluctuate From quarter to quarter, at this stage, we are more focused on expanding our scale and use We think that as long as we keep innovating and delivering high quality products, there's no reason to worry about our margin in the long term. So question is about intensifying competition from public cloud and other small players. We think the completion with public clouds and startups has been happening for many years. I think In very early days, 4 or 5 years ago, when some of those giant public cloud companies start to Offer similar products or APIs and trying to compete with us. And the competition is naturally going to Strengthen as the market grow or the industry grow, the completion we are seeing in the market today is not really Out of the ordinary, it's just a natural development of the growing market. For us, as industry progress and competition grow, we will just Continue to stay focused on the needs from developers' customers and create value for them. We will also focus Product and Technology Innovations, so to provide a better and professional offerings to all developers and the customer base. As I mentioned in my opening remarks, our interactive live streaming product can now achieve sub second latency with video fluency, same as long latency technologies, such as CDN. This kind of breakthrough is innovation that help us with completion. And we will continue to roll out more products Thank you. May I just follow-up in terms of global revenue contribution? We know this will be a little bit negative for gross margin, but definitely it's a huge market opportunity For Agora, could you please update us in terms of the revenue contribution from global market outside of China? Thank you. In Q1, revenue contribution from U. S. And other international markets It was about 27% to 28% of total revenues. Thank you. Our next question comes from the line of Emerson Chan from Bofa Securities. Please ask your question. Hi. Thank you, management. I have 3 questions. My first question is a follow-up on the regulation on the education market. Given the unclear regulatory outlook, I wonder what assumptions on the record impact we build into our full year's revenue guidance. And also there is a narrative that reputation on education will favor those I just want to understand what will be the impact to us if customer are getting bigger or in case market is consolidating. Will they be more identified to do it in house or look for cheaper alternative? This is my first question. My second question is related to R and D investment. Given our R and D cost increased quite a So could management give us more color on the trend of R and D spending relative to Revenue in this year and what areas of R and D we are investing? Also, when do we expect these Investments translate into growth in the future. My last question is how we can increase I noticed that we have more than 2,300 active Customer now, we also provide some startup program to encourage our RTE adoption. But apart from our technology leadership, What value or features we are providing that can increase the stickiness of our customer? I just wonder if there's anything that our competitors are unable to offer so that our customer will stay with our platform. Thank you. Sure. In terms of the assumption under the guidance, I will say, for education sector, We are assuming a modest tightening in regulation, and we have revised our revenue growth rate Downward accordingly. We are not assuming a very drastic change in the Entire industry? So on the customer consolidation point? Right. On that part, I think in the period of time, customer cancellation in education might more or less change the composition of our But it will be dynamic because there will be continued innovation and there will be also continued change in environment As you are aware, as to the impact of consolidation, I think our current education customer base includes already quite some established large education companies. Therefore, we don't think there will be too much Impact in there. I can also further elaborate Thoughts around just in general competition with the DIY or in house solutions. First, I think this question Almost like applies to all PaaS or SaaS providers. They all might Face the situation that their customers, when they grow bigger, trying to build something on their own. For us, my view is that real time engagement platform and service It's still a very young cloud service. It still has a long way to evolve. The quality of the experience will get better, Cost will get cheaper. New features will be added every year. Even the form and format of the product This still has many things to improve or to be defined in the next few years. So it will get harder and harder To build something just in house with the same quality and cost and completeness of those offerings. No matter how big you are, if you can't build it better or cheaper, why would you still build it? And in the end, I think it's about the boundary of companies. Each company should have a clear core competency. For example, education companies should focus on education, not hardcore technologies like real time engagement Which will be used widely outside of education itself. As time goes on, every company Need to stay focused to make their competition power in their own sector better. So I think it will be a natural outcome. The second question on R and D. First of all, I would advise investors to really look at 1st of all, I would advise investors to really look at the non GAAP R and D number because the GAAP number includes one off expenses such as acquisition related expense. Significant A portion of the acquisition consideration tied to the teams of Istmop and Nephilis was classified as RMB expense in the income statement. So in terms of the non GAAP RMB expense, It was 43% of revenue in this quarter. And we actually expect this to remain at the around 40% level throughout this year as we continue to invest very heavily in R and D. So right now, we have close to 1,000 employees. That's excluding small, which has about 200. And out of that 1200 total employee base, About 2 third are R and D employees, and they are working on A lot of things. I can roughly divide these things into 3 categories. The first one is quality improvements. On the front end of the SDK is the end user software side, Video audio compression, how to minimize the video size while keeping high fidelity, how to lower CPU usage, How to reduce the size of the SDK, how to become more compatible with thousands of new devices Coming out every year, so these are the things the front end team is working on. And then the back end team, as they work on the global Network routing algorithms, how to deal with packet loss, how to deal with the failure of 1 server, 1 data center, One transmission line or one part of the whole network, how to scale up and down without affecting user experience, How to optimize cost structure? All of these things. The second category would be new products, Seems like the flexible classroom and content moderation for video is Two examples of the new products we released recently and also what Tony talked about in his opening remarks All these new products and the 3 category would be to support new use cases. When there is a new use case, it often requires new features to We developed new demos, new templates and deep optimization of all the Technical details with developers and customers. So that's a third direction. So all these things, as you can see, They don't translate 1 on 1 into revenue. Overall, they enhance our Competitiveness and the overall breadth and depth of the platform. So there will be a Gradual revenue impact. And as we scale, as The use case is proliferate. We do expect eventually R and D expense Well, it will come down as passenger revenue, but we do not expect That will change significantly during the course of this year as we are still in the phase of investment. Okay. I think there is a question around the stickiness, right? Yes. So on how we increase stickiness of our customers, I think as you can see, We are just keep rolling out new technologies, features with a bigger product portfolio And also more professional services as a result of keep focusing on creating value for developers. In addition to that, there are also a few things we always try to do at Agora. I could start the relationship early. Developers need our house the most when they are Very small. And this is why we had large developer evangelist team in place and recently launched the startup program. We offer technical support, industry best practice, new RTE use cases, free minutes or even financial advices. This kind of comprehensive engagement help us build trust with our developers. And for larger customers, we offer work We often work closely with them to deeply integrate our software with their app to create best in class and user experience. We also co explore or co developer solutions for new use cases, such as the recent lecture hall use cases. When such effort is successful, it will both deepen our relationship and drive usage. And lastly, we also try to create value for all kinds of customers. Many customers don't see Agora as just a technology provider, but a partner that can help make their business more successful. Our next question comes from the line of Vincent Yu from Needham and Company. Please ask your question. Thank you. Thanks management for taking my question and congrats on the strong quarter. I have two questions. The first one is about the progress of incorporating eSmart services into our product offering. How is the initial responses by customers? And should we still think about the annual run rate to be around 10,000,000? And the second question is about the new business expansions. Are we looking for a new acquisition target in 2021 Or other business like the expansion areas? And if so, which Like these which are these areas to enhance our capabilities? Thank you. Thank you. I'll take both questions. So the initial response from developers and customers on the eSmart has been very positive. We are now able to pitch new customers with the combined video, voice and chat offering. And we have also integrated Ishmael chat, the chat API in our flexible classroom and Flexible platform product and several open source projects such as flat. As Tony mentioned in the opening remarks, the integration in China market has been completed and we are working very hard With a small team to make the chat product ready for the global market, we are working on things like English documentation, the API convention and also GDPR compliance. Currently, we plan to launch it globally As a growth chart at the end of this year. And in terms of revenue run rate, yes, I think we can still use $10,000,000 For now? So in terms of new acquisitions, we are certainly looking at opportunities. Obviously, they may materialize or not in the end. It's highly uncertain. And to be more specific, we are looking for 3 signs. One is technology. We are looking for technology that can help make our product better. For example, video audio codecs or video intelligence algorithms. And secondly, products that can complement Our existing product portfolio, it can be either horizontal or vertical. And thirdly, We're also interested in regional presence that's complementary to our Our next question comes from the line of Akita Ayerkan from China Securities. Please ask your question. Thank you for taking my question. I just have a question about the overseas business. So management just mentioned that the revenue contribution of Overseas business is around 27% to 28%, correct me if I'm wrong. So I was wondering what is the revenue structure or contribution of different Vertical factors at non China market, such as education and social entertainment and so on. And also, I was wondering, In the global market, what is the customer acquisition strategy? It would be helpful if you can share a bit more about the current ways of acquiring customers And if there is any change in terms of sales traction in the global market? Thank you. Sure. Yes. The number is correct. And in terms of the actually, we see ourselves as a global company. So it's really Now overseas, it's we have 3 primary markets, the China market, the U. S. Market and the, we call rest of the world or the international So for the U. S. And reservoir market, actually we see a more First set of use cases, we have seen very strong growth in many use cases that don't have a strong Presence of strong usage volume in China, things like Watch We have a customer called senior, right? We have virtual event, which is very big outside China. Customers like Airme is a customer and a partner, and we have Virtual office use case, we have several large customers in this space. All these use Yes. And of course also the recent audio live cast use case, We have several large customers in that vertical already. So broadly speaking, it's still Entertainment, social, education plus enterprise. But the mix is actually A lot more levers. So in terms of the go to market Right. We pretty much okay, first of all, we have been in that market for a very long time. So it's not that we recently expanded there And hired the team. The team has been there for a long time. Our go to market is really focused on both The grassroots developer community, developer driven sales motion and also the proactive outbound hunting motion. And we have a sales team of about 20 people, mostly focused on outbound, and we have a very strong developer Oriented sales and marketing team, developer, evangelists providing developer support and we have a very easy to use Self serve portal. So the first model is quite well balanced. Our next question comes from the line of Bing Dwan from Nomura. Hi. Thank you, management, for taking my questions. I have two questions. So first is a follow-up question about the development of our large customers. Are we seeing like, for example, our top 5 customers who which have already started or accelerated their in house development of the real time Engagement solutions, like online education and social media sectors in the Q1. And So what kind of solutions we have or value added service we have to help retain and grow this kind of customers in the future. My second question is that could you elaborate So more on the extended reality opportunities or use cases, Like what kind of the technology barriers in this kind of vertical? And Are there any new or different solutions we need to provide and how does management look at the future opportunities in this segment? Thank you. All right. I think for the first question on further discuss with in house development for large From the beginning of Agora, we've been in constant battle with in house solutions Since, as you all know, initially, there is no such concept of third party professional providers. So almost all our business are winning from in house solution or it's just something customers start to Build on our platform. In the history of our business growth, we've been Seeing customers who switch to in house as well as customers who again switch back from in house to us. In multiple cases, we saw customers who switched to in house first and they had to switch back again to us. But overall, I would say more and more customers start to realize the value of professional third party providers. It's not just quality and cost, but also the fact that we are saving them from all the troubles and focus so that they can focus on their core business. This has been reflected in our steady revenue growth despite certain customer Switching to in house, as to how to retain large customers, I think the answer is always to build the best solution or more professional solution For them, showing them how big a quality difference we can make and how professional our product and service offerings we can deliver And how much of those differences leads to business success to them. In addition, We also offer work with our large customers to co develop or co explore solutions on new use cases, Such as the recent lecture hall use case. With such effort to Become successful, it will both deepen the relationship and drive usage and making The partnership is not just about technology service, rather on innovation. So in terms of the extended reality prospect, obviously, we feel very Optimistic about the potential of all these new developments in extended reality or Virtual reality, augmented reality, all these new devices, new experiences. And our strategy is We want to really help both the device manufacturers and also the software developers. As Tony mentioned in his opening remarks, right, we recently announced the partnership with HTC. And as part of that partnership, our SDK will be preinstalled in all the HTC Vive devices. So it will become a default choice for any software developer to use real time engagement capability on that device. So that As we continue to build more and more partnerships like that, we Want to really become a standard or the go to solution for RT technology on any VR XR devices. And as to the use cases, right, we have As Tongli mentioned, first of all, we can enable different device users to connect some video or voice. And additionally And probably more importantly, we can allow them to live stream their experience, what they see in the virtual world To other people, whether it's other people sitting in front of a mobile phone or people in other metaverse, you can stream this to another Virtual work has become a connector between the 2 meta works. We see a lot of potential in use cases like this. Obviously, this is all in very still very early stage and we believe the imagination of the developers are far beyond our own. Yes. I want to add a little bit to that because I'm personally very excited about the potential of Including such solutions or use cases, although as Jingbo pointed out, the overall growth is going to be long term, it's It's not going to be something just happen overnight, although we do see evidence that The growth or the improvements on those XR or ER experiences are accelerating in the past few quarters. The reason we are so much looking at this direction is because real time engagement For any XR or ER experiences, it's super important to make sure the overall fluency or real time needs of the experience. And with that, I think Agora is going to be critical for enabling or ensuring such experience to be immersive in any moment. So that's where we see the strategic value we can offer for such use cases. I think you can also see Such statement from the press release of our partnership with Different partners. Thank you very much. Our next question comes from the line of John Wong from Macquarie. Please ask your question. Thanks for taking the questions and congratulations on the impressive results. I have roughly three questions here. So firstly, can management share some colors on the user acquisition? Which verticals are we getting more new customers? And do we have more have proportionally more clients in the U. S. And rest of the world markets? And the second question is, in your prospectus, you mentioned that you powers more than 40,000,000,000 minutes of real time engagements in last March. Can management maybe update that number for us? And thirdly, what can we expect for eSmart revenue contributions in the following quarters? Thanks. Sure. So first of all, In terms of user acquisition, yes, as I mentioned in the opening remarks, right, we added About 11,000 apps, new apps registered on platform per month in this quarter, and the majority actually came from U. S. And rest of the world markets. And in terms of verticals, we've got lots of interest from the education sector, not just in China and Actually, in the U. S. And rest of the world market as well, particularly on the new flexible classroom product. And we also got a lot of inquiries from several leading Internet companies on the audio livecast The lecture hall use case obviously has huge revenue potential because it can transform The whole large class experience. And in addition, obviously, we saw a lot of Interest from next generation use cases like AR, VR and also Seems like immersive gaming platforms, people say, matters. Other interesting news cases or emerging cases into Virtual event, virtual office, virtual tours, watch party, just name some examples. So the second question on the minutes, We enabled more than 50,000,000,000 minutes of view and voice engagement per month on average In Q1 this year, that compares to the RMB40 1,000,000,000 number in March last Please note that, that RMB 40,000,000,000 number happened during the total lockdown in China, and that number Was more than double the number of minutes in December 2019. So if we compare The RMB50 1,000,000,000 in this quarter was December 2019, and it's almost tripled in the last 15 months. What's the last question, Can you repeat? The revenue contribution potential revenue contribution from eSmart. Oh, yes. Yes. We are still guiding a run rate of about RMB1 1,000,000 per month. Thanks. There's no more question at this time. I would now like to hand the conference back for today's Presenter, please continue. Thank you, operator. Thank you all for attending this call. If you have any further questions, Please feel free to e mail us. We will also upload remarks of this call on our IR website after the call. Thank you so much. Thank you. Thank you. This concludes today's conference Call. Thank you for participating. You may now disconnect.