Good day and thank you for standing by. Welcome to the Kingsoft Cloud's fourth quarter and full year 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one and one on your telephone, and you will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Nicole Shan, IR Manager. Please go ahead.
Thank you, operator. Hello, everyone, and thank you for joining us today. Kingsoft Cloud's fourth quarter and full year 2022 earnings release was distributed earlier today, and it is available on our IR website at ir.ksyun.com, as well as on the global newswire services. On the call today from Kingsoft Cloud, we have our Vice Chairman and CEO, Mr. Tao Zou, and CFO, Mr. Henry He. Mr. Zou will review our business strategy, operations, and the company highlights, followed by Mr. He, who will discuss the financials and the guidance. They will be available to answer your questions during the Q&A session that follows. There will be consecutive interpretation or integration of all comments and references purposes only. In case of any discrepancies, management statement in the original language will prevail.
Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions. They relate to events that involve known or unknown risk, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance, or assumptions to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors are included in the company's filings with the U.S. SEC.
The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under applicable law. Finally, please note that unless otherwise stated, all financial figures mentioned during this conference call are denominated in RMB. It's now my pleasure to introduce our Vice Chairman and CEO, Mr. Zou. Please go ahead.
Hello, everyone, and thank you all for joining Kingsoft Cloud's fourth quarter and fiscal year 2022 earnings call. 2022 was an extraordinary year in many ways, and we're pleased to have successfully navigated the various challenges we faced in the complex and dynamic environment. Since I took on the CEO role, we have remained committed to our strategy for high-quality, sustainable growth while continuing to building success based on technologies.
We have also implemented cost reduction and efficiency initiatives, which have resulted in steady improvements to our profitability. I am pleased to highlight some of our notable results with you. In Q4, we saw a remarkable increase in our adjusted gross profits, reaching RMB 169 million, representing a four-fold increase year-over-year. Adjusted gross margin increased to 7.9%, rising by a significant 6.7% from the same period last year. Furthermore, our net operating cash inflow amounted to RMB 370 million, marking the third consecutive quarter of positive net operating cash flow since Q2 of last year. We also recorded a quarterly free cash inflow for the first time, which is an important milestone for us. These impressive results demonstrated our strong business resilience and provided a solid foundation for us to stabilize, restart, and emerge even stronger.
接 下 来 我 按 照 业 务 领 域 分 公 有 云 、 行 业 云 及 技 术 产 品 三 个 方 面 向 大 家 介 绍 我 们 的 进 展 。 公 有 云 方 面 ， 本 季 ， 本 季 度 收 入 为 人 民 币 十 三 点 五 亿 元 ， 环 比 稳 中 有 升 。 我 们 找 准 战 略 定 位 ， 对 于 头 部 KA 客 户 和 肩 腰 部 客 户 分 别 确 定 了 相 应 的 策 略 。 对 于 头 部 KA 客 户 ， 我 们 精 选 高 质 量 客 户 ， 在 平 衡 好 收 入 和 利 润 的 前 提 下 ， 打 造 极 致 的 客 户 体 验 和 全 站 式 口 碑 。 对 于 肩 腰 部 客 户 ， 我 们 利 ， 利 用 服 务 头 部 KA 客 户 形 成 的 口 碑 和 沉 淀 的 可 复 用 核 心 能 力 ， 撬 动 肩 腰 部 客 户 业 务 机 会 ， 持 续 降 低 对 头 部 KA 客 户 的 依 赖 度 ， 同 时 驱 动 公 有 云 收 入 和 盈 利 水 平 的 提 升 。 近 半 年 来 ， 我 们 系 统 性 梳 理 了 十 一 个 细 分 行 业 ， 评 估 了 其 中 两 百 余 家 公 司 ， 最 终 精 选 并 新 签 三 十 一 个 优 质 肩 腰 部 客 户 。 得 益 于 这 些 策 略 的 落 地 ， 我 们 的 公 有 云 前 三 大 客 户 收 入 占 比 持 续 下 降 ， 而 肩 腰 部 客 户 收 入 占 比 稳 步 提 升 。 在 确 保 收 入 稳 中 有 增 的 基 础 上 ， 实 现 了 客 户 结 构 的 调 整 优 化 。
I would like to provide some updates on our progress in three areas, namely public cloud, enterprise cloud and research and development. I'll start with public cloud services. In Q4, revenues from this business remained stable at RMB 1.35 billion, representing a slight increase from the third quarter. We fine-tuned our positioning and implemented differentiated strategies of key account customers and mid-size customers. With key account customers, we strive to maintain a balance between revenue and profitability while delivering the ultimate service experience to establish a superior word of mouth reputation for our full stack solutions. We leverage this strong reputation and the scalable core capabilities we have developed to serve key account customers to expand our business opportunities with mid-size customers.
This approach allows us to gradually reduce our dependence on key account customers while driving revenue growth and profit enhancement in our public cloud service business. During the past half year, we carried out a systematic review of more than 200 companies from about 10 industries, and signed more than 30 new mid-size customers with high growth potential. Thanks to these strategies, the revenue contribution from our top three public cloud customers has been slowly declining, while the revenue contribution from mid-size customers continues to increase steadily. As a result, we have improved our customer mix while maintaining stable revenue growth in the public cloud business.
行 业 云 方 面 ， 本 季 度 ， 季 度 收 入 达 人 民 币 七 点 九 亿 元 ， 环 比 增 长 百 分 之 二 十 六 点 四 。 我 们 坚 定 践 行 高 质 量 可 持 续 发 展 的 战 略 思 路 ， 将 行 业 云 项 目 管 理 的 要 求 明 细 化 、 制 度 化 、 标 准 化 ， 从 根 本 上 提 升 行 业 云 业 务 质 量 。 具 体 而 言 ， 我 们 有 四 点 举 措 。 一 、 聚 焦 于 核 心 自 有 产 品 组 件 及 解 决 方 案 能 力 的 积 累 。 第 二 、 坚 持 以 自 有 能 力 输 出 为 核 心 ， 确 保 承 接 项 目 中 有 较 高 的 自 有 产 品 解 决 方 案 的 比 例 。 第 三 、 精 选 有 较 高 全 生 命 周 期 价 值 的 行 业 和 客 户 ， 与 客 户 共 同 成 长 。 第 四 、 改 善 项 目 交 付 管 理 ， 提 升 客 户 体 验 ， 降 低 交 付 成 本 。 这 些 举 措 使 我 们 得 以 获 得 较 高 的 单 期 项 目 特 产 利 润 ， 并 驱 动 长 期 可 持 续 的 盈 利 能 力 。
Moving on to enterprise cloud services. Revenues increased by 26.4% quarter-over-quarter to RMB 790 million in Q4. We remain steadfast and further clarified and institutionalized our project management best practices to fundamentally enhance our enterprise cloud business quality. These efforts centered on four key initiatives. First, we focused on accumulating and enriching our core offering of proprietary products and solution capabilities. Second, we continued to enhance the revenue share of our proprietary products and solutions across our projects. Third, we targeted industries and customers with high potential lifetime value, catering to their evolving needs and grow with them. Lastly, we further enhanced our project execution to improve customer experience and reduce costs.
These initiatives not only generated a relatively high estimated margin for enterprise cloud projects in the current financial period, but will also drive sustainable margin expansion in the long run.
以 公 共 服 务 领 域 为 例 ， 我 们 聚 焦 政 务 云 模 式 ， 打 造 政 务 云 标 杆 产 品 服 务 运 营 体 系 。 本 季 度 ， 我 们 为 赤 壁 市 政 府 服 务 和 大 数 据 管 理 局 -完 成 其 城 市 智 慧 化 改 造 建 设 项 目 ， 交 付 公 司 核 心 自 有 行 业 云 产 品 银 河 云 。 我 们 还 在 交 付 北 京 水 务 局 政 务 云 、 市 比 政 务 云 等 项 目 ， 持 续 扩 大 我 们 在 政 务 云 领 域 的 优 势 和 业 务 规 模 。
Taking the public services sector for example. We focus on the public service cloud model and develop a benchmark system consisting of cloud products, services and operations. In Q4, we completed a smart city upgrade project for the Public Services and Big Data Management Bureau of Shishou Municipality, Hubei Province. In which we deployed our core proprietary enterprise cloud solution Galaxy Cloud. We are also carrying out a number of other projects, including the Beijing Water Authority Public Services Cloud and the Shibi Public Cloud, further sharpening our competitive advantages and business scale in public services.
在 医 疗 领 域 ， 我 们 继 续 推 广 五 大 模 式 ， 即 区 域 健 康 云 、 影 像 云 、 医 共 体 、 区 域 一 体 化 和 智 慧 医 院 模 式 。 本 季 度 ， 我 们 为 四 川 天 府 健 康 云 和 重 庆 卫 健 委 影 像 云 完 成 各 自 的 二 期 扩 容 项 目 交 付 。 这 是 我 们 凭 借 领 先 的 产 品 解 决 方 案 和 优 异 的 服 务 ， 为 行 业 云 客 户 持 续 提 供 价 值 的 明 证 。 在 金 融 领 域 ， 我 们 继 续 加 深 与 国 有 银 行 、 大 型 股 份 制 银 行 的 合 作 ， 并 聚 焦 于 金 融 大 数 据 支 撑 服 务 与 运 营 能 力 。 此 外 ， 盖 特 在 稳 定 存 量 客 户 的 同 时 ， 加 深 与 公 司 在 客 户 资 源 和 交 付 方 面 的 协 作 ， 特 别 是 在 银 行 领 域 ， 加 深 双 方 优 势 协 同 和 产 品 互 通 。
In the healthcare sector, we continue to enhance our five major models, namely the regional healthcare cloud model, medical image cloud model, integrated healthcare organization model, regional integrated model, and smart hospital model. During the quarter, we completed the second phase capacity expansion projects for the healthcare cloud in the Sichuan Tianfu New Area and the medical image cloud of the Chongqing Health Commission. This showcased our ability to provide continuous ongoing support for enterprise cloud customers using our market-leading products, solutions and services. In the financial service sector, we further deepen cooperation with state-owned banks and major commercial banks by focusing on providing financial big data support and operational capabilities. In addition, while retaining a stable existing customer base, we strengthen our project deployment partnership with Camelot, particularly enhancing our synergies and cross-selling in the banking sector.
技 术 立 业 是 金 山 云 最 核 心 的 发 展 战 略 。2022 年 第 三 季 度 ， 我 们 制 定 了 北 京 武 汉 双 研 发 中 心 的 发 展 战 略 ， 并 在 第 四 季 度 加 速 实 施 。 我 们 致 力 于 在 提 升 可 持 续 研 发 能 力 的 同 时 ， 有 效 平 衡 研 发 费 用 。 从 2022 年 12 月 武 汉 研 发 中 心 启 用 以 来 ， 短 短 三 个 月 ， 武 汉 研 发 人 员 数 量 已 经 翻 倍 。 未 来 三 年 ， 武 汉 研 发 中 心 团 队 规 模 将 达 千 人 以 上 ， 为 公 司 产 品 技 术 研 发 保 持 行 业 领 先 ， 注 入 强 劲 动 力 。
In terms of technology, we continued to advance our core strategy of building success based on technology. In third quarter 2022, we developed the Beijing Wuhan Dual Research Center strategy. We executed well in the fourth quarter. We aim to sustainably enhance our R&D capabilities while maintaining a disciplined R&D budget. We doubled the number of R&D staff in the Wuhan Research Center within just three months of its launch in December 2022. We expect to grow the headcount there to more than 1,000 over the next three years, injecting momentum into our R&D initiatives and helping cement our industry leadership.
我 们 专 注 聚 焦 于 部 分 核 心 产 品 技 术 ， 如 云 主 机 、 云 原 生 、 行 业 云 底 座 、 企 业 存 储 、 大 数 据 云 平 台 等 。 致 力 于 在 这 些 核 心 产 品 技 术 领 域 对 标 业 界 第 一 梯 队 ， 打 造 旗 帜 的 用 户 体 验 。 例 如 我 们 发 布 了 第 七 代 云 主 机 容 器 服 务 和 云 函 数 的 新 版 本 ， 性 能 均 有 明 显 提 升 。 行 业 云 底 座 核 心 产 品 银 河 云 新 版 本 新 增 七 十 九 项 IaaS、PaaS 和 运 营 核 心 功 能 ， 产 品 力 大 幅 提 升 。 大 数 据 云 平 台 大 数 据 引 擎 核 心 产 品 的 数 据 采 集 和 集 成 能 力 、 混 合 架 构 部 署 能 力 均 有 提 升 。 我 们 还 着 - 着 - 着 力 提 升 了 对 不 同 操 作 系 统 、 数 据 库 和 芯 片 的 支 持 ， 兼 容 性 显 著 提 高 。
We thrive to deliver the ultimate user experience across our core products and technology categories, including cloud hosts, cloud native, enterprise cloud infrastructure, enterprise storage, and big data cloud platforms. We benchmark ourselves against the top tier players in the cloud industry. For example, we recently launched our 7th-generation cloud host, as well as new versions of our container services and serverless cloud functions, delivering significant performance improvements. We added 79 key operating features, including various IaaS, PaaS solutions, and operation management functions to the upgraded version of Galaxy Cloud, significantly enhancing the competitiveness of our flagship enterprise cloud products. We also upgraded the data collection, data integration, and hybrid architecture deployment capabilities of our big data cloud platforms and engine solutions. In addition, we significantly enhanced our product compatibility with various operating systems, databases, and chips.
Since the debut of GPT 3.5, we have been closely following its developments and actively exploring relevant business opportunities. First, one, GPT models require massive computing power and vast troves of data, making cloud computing a natural fit for this technology and an essential enabler for use cases including both training AI models and applying them to various scenarios. Through years of collaboration with leading AI companies, we have developed a market-tested solution that can be rapidly deployed on demand. Second, major internet cloud service providers generally are developing their own GPT businesses, whereas we remain a neutral player. This means we can serve a wider range of customers, a natural advantage that the market is beginning to recognize.
Third, the application of GPT models, especially in traditional industries with relatively underdeveloped IT capabilities, will require extensive preparation work unique to each company, including consulting and planning, process re-engineering, customized development, installation and deployment, and ongoing maintenance. Our strong and wide-ranging IT support and deployment capabilities will enable us to capitalize on such huge opportunity in this market. Overall, looking back at the challenges we faced in 2022, we are gratified that our proactive strategic adjustments enable us to achieve positive initial results and strengthening our conviction that we are on the right track. Looking ahead, in the face of new challenges and opportunities, we will pursue high quality and sustainable development, no matter how the environment changes, and roll up our sleeves to create sustainable value for our customers, shareholders, employees, and the society.
I will now pass the call over to our CFO, Henry, to go over our financials for the quarter and the full year 2022. Thank you.
Thank you, Tao Zou . I welcome everyone for joining the call. Before diving into the financial details, I will walk you through a quick summary for the fourth quarter of 2022. First of all, with our strong commitment to improve profitability, we have taken comprehensive measures from all perspectives, including proactive adjustments to our CDN services, strategic restructuring of custom mix, prudent enterprise cloud selection, and a strict control for fixed assets and operational expenses. Since the third quarter of 2022, our adjusted growth margin has been increased for five consecutive quarters, increasing from 1.2% in the fourth quarter in 2022 to 3.6% in the second quarter last year. 6.3% third quarter and further to 7.9% this quarter.
Adjusted gross profit increased by 408% year-over-year to RMB 168.5 million this quarter. Revenue post certain underutilized service based on the current customer demands and record loss on disposal of properties and equipments. However, we believe this is helpful for long-term developments and growth margin expansion. Non-GAAP EBITDA margin profit was negative RMB 245.1 million , impacted by a non-recurring Hong Kong IPO listing expenses of RMB 94.9 million , and a loss of disposal of properties and equipments of RMB 28.8 million . Non-GAAP EBITDA margin was - 11.5%.
If excluding the IPO expenses and the loss of disposal of properties and equipment expenses, our non-GAAP EBITDA margin could have been - 5.7% compared with - 10.3% last quarter and a - 4.7% in the same period of 2021. Our operating cash flow has been positive for the past three quarters consecutively, and we have achieved RMB 370.4 million net operating cash inflow this quarter. Thanks to our prudent control over capital expenditures, free cash flow has measured the net cash generated from operating activities minus capital expenditures was RMB 259.6 million, marking the first quarter of the positive free cash flow, demonstrating our strong commitment and the successful execution of our cash management.
Our cash and cash equivalents and short-term investments was RMB 4.7 billion by December end 2022. Considering the improvement of our profitability, our scaling down of capital expenditures and cash inflow of operating cash flow, our cash reserve is well positioned and sufficient to support us walking through the challenging year and provide flexibility to further business development. Our total revenue was RMB 2,131 million this quarter. Revenue from public cloud services was RMB 1.34 billion, remaining stable compared with last quarter. Revenue from enterprise cloud was RMB 785.9 million, increased by 26.4% quarter-over-quarter. With a more balanced and healthy business mix, we believe we are well positioned to start a new journey for our sustainable long-term development.
Being able to allocate more resources to expand our mid to long tail customer bases and high quality non-Internet companies. Now I will go through our financial in detail. Our total cost of revenue decreased by 25.2% year-over-year to RMB 1,969.1 million. R&D costs decreased significantly by 20% year-over-year from RMB 1,321.9 million- RMB 1,037.6 million this quarter. Differentiation and evaluation costs increased by 6.4% from RMB 227.2 million in the same period last year to RMB 241.7 million this quarter. Solution development and services cost decreased from RMB 497.2 million- RMB 465.8 million this quarter.
The decrease was mainly due to the synergies from overlapping headcount reduction within Camelot and PingFei Cloud on the COVID-19 impact and other synergy initiatives on the demand side in last December. Fulfillment costs and other costs were RMB 155.6 million and RMB 48.3 million this quarter. The adjusted gross profit of this quarter increased by 408% to RMB 168.5 million, representing adjusted gross margin of 7.9%. The significant gross margin improvement was mainly due to the impact of cost control measures and the strategic adjustments of our revenue mix. In terms of expenses, excluding share-based compensation, our total adjusted operational expenses was RMB 729.7 million. Still impacted by Hong Kong IPO listing expenses of RMB 94.4 million.
The disposal of fixed assets of RMB 28.8 million. Within that, adjusted R&D expenses was RMB 239.4 million, remained relatively stable compared with RMB 231.6 million from last quarter. Adjusted selling and marketing expenses was RMB 118.4 million compared with RMB 125.5 million last quarter. Excluding the listing expenses and disposal of fixed assets of RMB 123.7 million, adjusted G&A expenses increased slightly from RMB 219.9 million last quarter to RMB 248.2 million. We have taken various measures to cut down expenses, including, but not limited to the following aspects. First of all, we review weekly the variable operational expenses, especially in marketing and administrative expenses.
Second, we streamline headcount management within the firm and review our cost strategy and adjust employee fees and other structural personnel. Third, along with the scaling down of certain customer CDN services, we're hardly improve the efficiency of underlying resources. We also dispose certain fixed assets and scaling down bandwidth costs as well. Net loss margin was -24.5% this quarter, and adjusted net loss margin was -25.9%. The adjustment was mainly due to the foreign exchange gain of RMB 132.3 million, caused by fluctuation of U.S. dollar RMB exchange rates, which is a non-cash impact. As of December 10, 2022, our cash and cash equivalents and short-term investments was RMB 4.7 billion, providing us sufficient liquidity for operations.
During the fourth quarter, we have repaid certain loans within the group and the banks to reduce our interest costs. The capital expenditure for this quarter was RMB 110.8 million, which primarily consists of payments for servers. In terms of share repurchase, regarding our $100 million share repurchase program within a 12-month period, as approved by the board of directors, announced in March 2022. Since the release of our second quarter results up to the year-end of 2022, we bought a total of 12.3 million ADR shares for the cost of roughly $29.2 million. Going forward, we still have authorization from the board of directors and the flexibility to continue execution from time to time as weight to the mandated repurchase program.
These efforts fully demonstrate our board and management's strong commitment and confidence in the long-term business development of the company. Finally, we have successfully finished the dual primary listing on the main board of Hong Kong Stock Exchange by the way of introduction on December 30, 2022. In March 2023, we have been selected and included into Hang Seng Composite Index, Shanghai-Hong Kong Stock Connect, and Shenzhen-Hong Kong Stock Connect at the same time. Primary listing in Hong Kong has helped us broaden our investor base and open up new investment channels. Our teams have been communicating more frequently and broadly with domestic investors. We have seen more active trading patterns since we joined Hong Kong Stock Connect.
Looking ahead, although we are still implementing our strategic initiatives, including business repositioning and cost control efforts on an ongoing basis, such adjustments have already yielded positive preliminary results, as reflected in the clear improvements of profit margin in Q3 and Q4. We expect our total revenue to be between RMB 1.85 billion and RMB 2.05 billion for the first quarter of 2023, while these forecasts and comments above are based on our current and preliminary views on the market and operational conditions, which are subject to change. We firmly believe that given time, our potential positive impact of our ongoing strategic initiatives will continue to amplify and reflect our financial in the mid to long term. Thank you.
This concludes our prepared remarks. Thank you for your attention. We'll now happy to take your questions. Please ask your question in both Mandarin and English if possible. Operator, please go ahead.
Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, you can press star one and one again. Please stand by while we compile the Q&A roster. Thank you. We'll now take our first question. Please stand by. This is from the line of Brian Gong from Citi. Please go ahead.
Uh,
如果企业使用他们的模型，是不是会更倾向于用他们的云服务？好，谢谢，就这两个问题。I will translate myself. Thanks management for taking my question. I have two questions. First is regarding the enterprise cloud, regarding the three verticals. How should we see the amount this year? Last year the delivery was impacted by, you know, COVID. This year should we see faster growth? How should we balance the growth, revenue growth and margin? The second question is about ChatGPT. Tao Zou just mentioned as independent cloud provider. We have some advantages in China.
You know, in China, you know, for those internet giants who have capability to develop large language models, they all have their own clouds, you know, service. If the enterprise users, they use their large language model, will those users more you know have more intention to use those internet giants cloud services. Thank you.
好 ， 我 来 回 答 。 等 下 有 些 地 方 还 得 做 些 补 充 啊 。 第 一 个 问 题 啊 ， 就 是 呃 ， 我 我 我 我 那 个 ， 就 是 谈 到 航 运 啊 ， 随 着 疫 情 的 放 开 ， 整 个 的 这 个 从 国 家 层 面 吧 ， 也 是 这 个 恢 复 到 经 济 发 展 的 这 个 ， 这 个 这 个 这 个 轨 道 上 来 。 我 们 自 己 感 知 到 了 啊 ， 虽 然 去 去 年 受 疫 情 影 响 ， 尤 其 是 在 那 个 去 年 年 底 Q 四 ， 所 以 对 我 们 整 个 的 项 目 的 交 付 啊 会 有 不 同 程 度 的 影 响 ， 也 确 实 是 有 些 原 计 划 是 去 年 交 付 完 成 了 ， 这 个 到 了 今 年 。 对 。 所 以 呢 ， 那 个 去 年 总 体 来 讲 呢 ， 航 运 这 块 呢 ， 在 Q 四 还 受 了 点 影 响 啊 。 但 是 到 了 今 年 ， 我 们 在 做 全 年 的 ， 从 去 年 优 秀 到 今 年 Q 一 已 经 结 束 啊 。 呃 ， 这 个 虽 然 我 们 没 有 对 外 去 详 细 披 露 三 个 这 个 航 运 板 块 具 体 的 一 些 细 节 啊 ， 但 从 总 体 来 看 呢 ， 我 们 对 今 年 的 这 个 航 运 的 整 体 发 展 还 是 充 满 信 心 。 呃 ， 无 论 从 收 入 还 是 毛 利 还 是 这 个 经 营 利 润 率 各 方 面 ， 呃 ， 都 会 有 一 个 比 较 显 著 的 提 升 。 好 吧 ， 这 是 ， 这 是 第 一 个 情 况 。 呃 呃 ， 第 二 块 呢 ， 其 实 就 是 你 ， 就 就 这 个 这 个 我 理 解 你 的 意 思 就 是 说 在 在 在 在 盈 利 能 力 和 市 场 这 个 这 个 这 个 占 比 这 块 是 怎 么 平 衡 。 其 实 我 刚 才 反 复 提 了 ， 就 我 刚 才 的 发 言 里 ， 呃 ， 我 我 们 始 终 是 本 着 一 个 叫 高 质 量 可 持 续 发 展 ， 这 里 头 并 不 并 不 是 说 我 们 就 不 去 追 求 收 入 的 成 长 ， 呃 呃 呃 ， 而 是 我 们 把 焦 点 放 在 每 打 一 个 客 户 ， 我 们 都 会 去 评 估 这 个 项 目 是 不 是 ， 是 不 是 这 个 ， 这 个 是 围 绕 云 的 打 开 的 项 目 ， 这 个 项 目 是 不 是 它 是 一 个 有 利 润 的 项 目 ， 我 们 不 做 ， 我 们 我 们 我 们 肯 定 不 会 去 做 。 尤 其 是 说 从 拉 长 一 个 生 命 周 期 啊 ， 就 是 说 如 果 是 长 期 的 ， 它 都 是 一 个 不 盈 利 的 项 目 ， 那 我 们 就 认 为 它 不 会 归 属 于 高 质 量 这 个 范 畴 。 其 次 就 是 叫 可 持 续 发 展 。 这 是 什 么 意 思 呢 ？ 这 个 国 家 也 在 提 啊 ， 就 是 你 不 能 说 今 年 有 了 ， 明 年 就 没 了 。 就 是 这 这 一 般 的 买 卖 ， 说 实 话 这 种 业 务 对 我 们 来 讲 没 有 战 略 意 义 ， 可 能 在 当 期 的 这 个 财 务 收 入 上 会 有 一 定 的 帮 助 啊 ， 但 实 际 上 这 个 做 公 司 的 都 清 楚 ， 就 算 你 今 年 做 的 再 多 ， 明 年 这 块 没 了 ， 这 个 其 实 对 我 们 也 没 有 什 么 太 多 战 略 意 义 。 所 以 呢 ， 可 能 大 家 有 所 误 解 啊 ， 就 是 可 能 在 前 几 个 月 我 谈 了 ， 说 我 们 要 提 升 我 们 的 收 入 能 力 。 当 然 大 家 也 看 到 我 们 的 营 收 水 平 呢 ， 跟 过 去 比 呢 ， 好 像 变 慢 了 ， 但 实 际 上 呢 ， 其 实 都 是 在 围 绕 这 个 高 质 量 可 持 续 发 展 做 调 整 。 所 以 呢 ， 大 家 也 可 以 看 到 ， 收 入 这 个 稳 步 上 升 的 同 时 ， 但 我 们 的 盈 利 能 力 大 幅 提 升 ， 其 实 就 是 因 为 我 们 过 去 呢 ， 呃 ， 关 停 并 转 了 一 些 低 质 量 不 可 持 续 发 展 的 项 目 ， 然 后 引 入 了 替 换 ， 变 成 高 质 量 可 持 续 发 展 。 所 以 呢 ， 在 市 场 千 万 不 要 误 解 ， 误 解 成 了 我 我 们 就 不 不 追 求 这 个 成 长 性 了 。 不 是 的 。 而 应 该 说 我 们 把 过 去 的 这 种 单 一 追 求 成 长 性 变 成 调 整 成 高 质 量 可 持 续 发 展 的 成 长 性 ， 因 为 我 们 认 为 这 样 才 才 具 备 更 更 从 长 远 看 ， 它 才 更 具 备 战 略 价 值 ， 否 则 那 就 是 只 能 说 是 呃 ， 一 时 的 好 ， 这 个 长 远 看 了 并 不 是 一 定 是 好 。 好 吧 ， 这 个 Crack 先 翻 译 第 一 个 问 题 。
As you rightly pointed out. We are noticing that right now we are going through the opening up phase after the COVID period. The country is also reverting back to the model of business development. Admittedly last year there had the COVID situation and relevant restrictions did have impact to our deployment and delivery of our industry of our enterprise cloud business. Some of the planned deployment that was originally planned to be completed in Q4 last year were actually delayed to this year. If we look at the situation now although we haven't disclosed the particulars and the concrete numbers of the specific three verticals that you mentioned, we do remain highly confident about our operating metrics in enterprise cloud Including revenue, including gross profit and including operating margin.
We expect to have significant improvement in those metrics. Secondly, I would like to clarifying the our pursuit of high quality and sustainable growth does not necessarily mean that we do not pursue growth.
For every customer of and for every project, what we do is to evaluate whether that customer and that project is centered around the core cloud business and whether that brings about profitability to us. In another, in other words, if some of the customers and projects, even if we evaluate them from a longer time period and will not bring about profitability to the company, then it is actually not a high quality project and not high quality development. The point I would like to mention and I would like to highlight is that in the past, we have been overly emphasizing the growth, and now what we need to do is to replace that overly emphasis on growth to a high quality and sustainable growth, which is of strategic value to us.
OK。 第 二 个 问 题 是 一 个 非 常 好 的 问 题 啊 ， 这 个 我 也 我 也 先 回 答 一 下 ， 等 一 下 看 看 Aaron 能 不 能 再 补 充 。 呃 从 你 所 说 啊 ， 就 是 我 们 也 对 外 这 个 宣 布 过 ， 无 论 是 云 还 是 金 山 办 公 ， 我 们 自 己 是 肯 定 不 会 去 做 这 个 大 语 言 模 型 的 。 呃 这 个 ， 这 个 呃 并 不 表 示 说 我 们 投 入 不 起 ， 或 者 说 那 个 ， 那 个 门 槛 很 高 啊 ， 实 际 上 就 是 呃 我 们 认 为 ， 呃 ， 说 实 话 ， 就 是 这 个 ， 这 个 对 我 们 金 山 系 来 讲 呢 ， 战 略 意 义 不 大 。 对 。 因 为 毕 竟 我 们 其 实 都 是 ， 都 是 呃 ， 呃 ， 具 体 服 务 一 些 这 个 为 我 们 的 客 户 提 出 具 体 的 一 些 解 决 方 案 的 这 种 ， 这 种 厂 商 啊 ， 或 者 说 是 这 种 类 型 。 大 语 言 模 型 呢 ， 其 实 呃 可 能 更 适 合 那 些 平 台 型 公 司 ， 它 有 ， 它 有 这 个 ， 有 有 有 有 有 大 量 数 据 的 ， 并 且 有 ， 有 一 定 的 云 基 础 能 力 的 。 对 。 这 是 我 想 再 次 去 去 去 明 确 表 达 ， 我 们 确 实 不 会 去 做 那 个 。 呃 但 是 呢 ， 这 个 我 们 也 认 真 研 究 分 析 过 啊 。 您 刚 才 问 的 问 题 ， 无 非 就 是 说 ， 那 如 果 这 些 大 厂 都 做 了 ， 大 家 都 用 他 们 的 大 语 言 模 型 ， 那 谁 还 谁 还 用 你 的 问 题 。 这 个 我 们 是 这 么 考 虑 的 啊 ， 分 几 个 层 面 。 第 一 个 呢 ， 其 实 呃 ， 这 个 ， 这 个 大 语 言 这 个 模 型 啊 ， 这 不 一 定 是 大 厂 ， 当 然 大 厂 一 定 有 它 的 ， 这 个 胜 率 更 高 ， 至 少 是 基 于 这 个 ， 这 个 庞 大 的 一 个 算 力 池 的 这 个 CapEx 支 出 呢 ， 它 就 有 优 势 ， 但 真 心 不 一 定 是 大 厂 就 能 ， 就 能 做 出 来 啊 。 像 那 个 ， 那 个 ChatGPT 也 是 OpenAI， 也 是 一 个 创 业 公 司 做 出 来 的 ， 它 ， 它 也 不 是 来 自 于 Google， 来 ， 来 ， 来 自 于 这 个 ， 这 个 ， 这 个 ， 这 个 那 些 大 厂 。 呃 当 然 我 们 刚 才 也 谈 到 大 厂 它 有 它 的 这 个 ， 这 个 ， 这 个 ， 这 个 优 势 啊 。 呃 所 以 呢 ， 就 是 说 同 样 这 个 我 们 也 看 到 市 场 上 有 一 批 这 种 ， 其 实 过 去 几 年 也 是 致 力 于 在 这 个 GPT， 这 个 一 点 零 二 点 零 基 础 或 者 其 他 开 源 模 型 上 ， 在 一 直 做 ， 一 直 在 做 这 个 ， 这 个 ， 这 个 ， 这 个 的 一 些 创 业 团 队 。 呃 实 际 上 我 刚 才 的 讲 话 已 经 谈 到 了 ， 由 于 我 们 这 种 ， 这 种 独 立 第 三 方 的 独 立 于 的 中 立 性 ， 实 际 上 呢 ， 就 是 这 些 ， 这 个 ， 这 个 新 一 波 的 这 个 ， 这 个 AI 创 业 公 司 呢 ， 其 实 大 部 分 都 会 选 择 我 们 作 为 他 们 的 这 个 ， 这 个 算 力 提 供 方 的 这 个 云 服 务 商 。 这 个 道 理 也 很 简 单 ， 就 是 你 你 你 你 你 那 些 大 厂 你 们 做 了 ， 我 干 嘛 去 找 你 ， 去 去 去 你 那 跑 ， 那 就 完 全 商 业 秘 密 都 没 了 。 所 以 呢 ， 这 这 这 个 我 刚 才 为 什 么 在 谈 话 中 谈 到 了 这 个 中 立 性 ， 这 已 经 被 市 场 证 明 了 。 好 吧 ， 这 是 一 个 。 第 二 个 呢 ， 我 们 的 观 点 啊 ， 这 观 点 是 说 ， 呃 呃 ， 我 我 们 ， 我 们 其 实 呃 ， 反 复 研 讨 ， 包 括 跟 很 多 这 个 ， 这 个 投 资 的 也 好 ， 这 个 本 身 做 基 础 也 好 ， 我 们 的 观 点 其 实 就 是 说 中 国 要 真 正 做 出 短 期 做 出 跟 美 国 这 个 或 者 达 到 美 国 水 平 的 这 个 GT-GPT 4.0 甚 至 更 高 的 ， 我 们 认 为 短 期 是 做 不 到 的 。 但 是 ， 但 是 ， 呃 ， 我 们 也 看 到 了 啊 ， 其 实 那 个 ， 呃 ， 那 个 我 们 叫 做 小 模 型 哈 ， 可 能 ， 可 能 ， 可 能 ， 可 能 六 到 十 个 billion 的 这 个 数 据 参 ， 参 数 量 的 ， 其 实 在 一 些 领 域 已 经 得 到 了 这 个 非 常 鲜 活 的 应 用 。 对 ， 我 想 大 家 也 ， 也 ， 也 能 看 到 ， 那 这 一 点 也 是 给 我 们 很 大 的 启 发 。 所 以 我 刚 才 谈 话 中 也 ， 也 谈 到 啊 ， 其 实 我 们 认 为 呃 ， 可 能 ， 呃 ， 不 叫 可 能 啊 ， 就 是 ， 就 是 以 GP 这 个 ， 这 个 ， 这 个 技 术 方 向 啊 ， 这 个 ， 这 个 ， 这 个 新 的 新 一 代 的 AI 技 术 方 向 ， 这 种 小 参 数 的 行 业 应 用 模 型 可 能 在 中 国 啊 更 具 备 现 实 价 值 。 对 。 就 虽 然 我 们 短 时 间 之 内 很 难 达 到 美 国 的 这 个 最 高 端 的 这 个 AI 能 力 ， 但 是 我 们 完 全 可 以 把 现 有 已 经 具 备 的 这 个 现 ， 现 有 的 AI 能 力 赋 能 到 各 个 行 业 当 中 去 ， 这 个 是 非 常 有 现 实 意 义 的 。 实 际 上 这 个 在 ， 在 一 些 领 域 啊 ， 这 个 我 就 不 展 开 了 ， 其 实 已 经 是 非 常 有 成 效 了 。 对 。 所 以 呢 ， 我 们 认 为 ， 呃 ， 不 是 说 走 ， 只 有 走 大 语 言 模 型 ， 这 个 AI 它 ， 它 ， 它 有 价 值 ， 才 有 前 途 。 它 不 是 的 。
所 以 呢 我 们 认 为 尤 其 是 最 多 的 这 个 创 业 公 司 当 中 ， 未 来 大 概 率 会 逐 渐 细 化 到 去 做 很 多 具 体 行 业 的 中 小 模 型 上 的 研 究 上 来 ， 或 者 你 可 以 理 解 这 就 是 行 业 模 型 上 来 。 对 。 所 以 呢 ， 呃 ， 这 些 也 会 是 我 们 潜 在 的 客 户 来 源 ， 甚 至 说 会 成 为 我 们 未 来 的 一 个 业 务 方 向 的 可 能 性 都 是 具 备 的 。 所 以 我 刚 才 也 谈 到 了 围 绕 这 种 新 型 AI 能 力 ， 这 个 如 何 给 企 业 赋 能 的 ， 这 其 实 是 一 个 新 的 技 术 时 代 产 生 的 一 个 新 的 需 求 。 对 。 所 以 我 刚 才 说 的 就 是 说 可 能 尤 其 针 对 一 些 非 IT 的 传 统 行 业 ， 他 们 可 能 知 道 GPT 和 新 的 AI 技 术 真 的 是 可 以 落 地 可 以 应 用 了 ， 但 是 他 们 不 会 ， 他 们 没 有 这 个 能 力 。 这 个 其 实 对 我 们 这 个 金 山 云 本 身 也 是 另 外 一 个 机 会 ， 好 不 好 ？ 所 以 呢 简 单 讲 呢 ， 其 实 就 是 说 完 了 ， 呃 ， 做 AI 的 那 些 中 小 创 业 公 司 都 会 选 我 们 。 此 外 ， 围 绕 着 这 个 新 的 AI 能 力 ， 这 个 赋 能 到 各 个 行 业 会 产 生 很 多 ， 很 多 小 云 吧 ， 小 模 型 ， 中 小 模 型 ， 我 觉 得 这 都 是 我 们 潜 在 的 客 户 ， 好 不 好 ？
I'll just briefly handle it from CEO. We have announced on in the sense of Kingsoft and its affiliated company, that we will not do the spend a lot of time, energy, and resources on working the on the big language model ourselves, because we have very clear value proposition, which is we're providing a solution to our to-be customers, and therefore working on such model is not of significant strategic value to us. The platform companies, the platform internet companies, they have the core capability and they have the relevant numbers and therefore a more suitable to develop such big models. In relation to your question of who will use our services and products, I have two main things.
One is that, although the larger technology companies, the technology giants would have their relative advantages, as we mentioned just now, it does not necessarily mean that those models need to be developed, the research and developed by such a giant. OpenAI poses a good example, which is not a technology giant, however, generated the best in class such a model. The second is that, as also as we discussed in the prepared remarks, because of our neutrality, all these venture teams that are in smaller companies, because of the potential conflict interests with major internet giants will also choose the services of us rather than those internet-based, those internet giants based cloud service providers.
The second proposition I would like to say is that although in the short period of time, we do think that it is unlikely that the big language model, the GPT in China will develop to a level similar to that of the GPT 4.0 in the United States. However, it does not necessarily mean that smaller models that do not present real values and applications in the wide industries in China. For example, we're already seeing a lot of small models with parameter number amounting to six to 10 billion having very vivid and concrete applications in various industries. For those application scenarios are basically also our potential business opportunities.
To sum up, two of potential business opportunities that this, the current wave of GPT poses for us. One is the venture teams from smaller companies who work on those models. Secondly is the application of such models and small models, which we might also call industry models. Their application into the traditional companies with relatively underdeveloped IT capabilities, which will help them to apply such models in their day-to-day operations.
Brian. 那 关 于 第 一 个 问 题 ， 就 是 行 业 云 的 相 关 的 一 些 情 况 ， 我 也 做 一 些 补 充 。Hello, Brian. For the first question you're asking about enterprise cloud, probably supplement further information. I think first of all, if you look at our Q on Q growth, right? If you remember last quarter, we created about RMB 600 million revenue for the enterprise cloud from three verticals in total. I probably encourage you to look at it into perspectives, 'cause in Q4, we deliver around 784 million revenue, which is actually on net to net and Q on Q basis is about RMB 180 million increase.
If you remember in December last year in Beijing, what everyone probably remember, people were stationed at home and the city was basically affected by the COVID pandemic in December last year. If you put that into context, you will see that given that we have a solid relationship with our customers and even we have a lot of constraints from operational perspective and we're still increasing on a quarterly basis. That actually proven our capability in a difficult time of execute, deliver, and booking on the revenue on enterprise cloud, which actually demonstrate our technology and the client relationship.
The second point I also want to mention is, while on this quarter we didn't provide a color on the backlog, and I appreciate you did ask me that question, but we are hoping that going forward we'll disclose more information, especially the backlog and the new signing on the contracts on the enterprise cloud revenues. I'm happy to provide some color is if we see the backlog at this moment, at this time, the backlog we have today, will fully cover our potential budget for the enterprise cloud in the year of 2023, for this year.
We're still in Q1, we're hoping with increasing the backlog this year, we do have the confidence that while we're going to moving to the more balancing of the growth and the quality model, the potential and the capability of the growth, we do have that confidence at hand. The third point, we also didn't mention that in the prepared remarks, is given we focus on the vertical and the customers, the percentage of the repeating customers in Q4 and Q3 last year had been increasing quite a lot, which means that even though you see about RMB 700 million revenue on a quarterly basis, you know, the percentage of that number coming from the same customer but on the different phases of projects is increasing quite a lot.
That also give us the base that for next year, and this year, next year, we can have the potential incremental revenue build on a solid basis. Hopefully for the next time in a quarterly earning call, we can help to provide some color on the backlog as well as the percentage on the repeat customers going forward. We have that plan for the budgeting disclosure process going forward. Hopefully it will be helpful. I'll finish up, right?
Thank you. We'll now take our next question. Please stand by. This is from the line of Timothy Zhao from Goldman Sachs. Please go ahead.
Thank you, management, for taking my question. I have two questions. First, could management share your outlook on the public cloud demand in 2023, and between the big enterprise, big internet companies and the small SMEs, which kind of company do you think have a bigger demand on public cloud for this year? Secondly, we saw that last year our company had very good execution on profitability in both gross margin and EBITDA margin. Could management share your updated outlook for the gross margin and EBITDA margin for the next year? Thank you.
Just quickly translate for CEO. In relation to your first question, to be honest, I think the public cloud services and products are really just, you know, centered around some of the core components, including computing, storage and network. I do not necessarily think that demand has to do, like differs and have to do with the size of the enterprise that we serve. Everything really depends on the particular application scenario and the business situation of our customer enterprise. For example, we would have our video company customers with their core demands coming from our CDN and storage business.
We would also have customers, for example, like in the AI industry, that would really demand the computing at their core demand. That is the general response I have for the first question.
Thank you. I'll take on the second one. Before I go in there about the 2023 target, I just want to lay out the three major reasons for 2022. First of all, for the PP&E with book on the balance sheets, we did try our efforts to reduce redundancy and other kind of misallocation of the revenue and the resources. That's actually the efforts has been taken for about two or three quarters since the middle of 2022. I don't think those are going to be the one-time impact, because once you increase the installation ratio for the assets and resources, those benefits on the gross margin will be gradually released over time. That will build first layer of the margin expansion for this year.
Second of all is, given we, you know, as a team, we're together to change the combination of the customer base. As our CEO mentioned, our mid-size client base has been increasing sequentially as a total percentage of total revenue. The pricing and the profitability from those buckets of the customer are definitely much better than we are serving on a single client basis, right? That's going to be two benefits, reduce the co-client concentration risk, but also improving profitability as a whole. Those benefits will build the second layer for the gross margin for 2022. The third obviously is the variable expenses control, as I mentioned in the prepared remarks.
You know, the very basic things, the travel expenses, accommodation, how we pay people, how we change the mix of the incentives, the cash plus the stocks, and a lot of things we are doing in the past year. I would say that only part of the benefits has been reflected in the Q4 number, because we did a lot of things returned in Q4. Hopefully those change on policy, on expenses, including the share-based compensation, including cash bonus, so on so forth, will be reflected in Q1, Q2 going forward in 2023, in the new year. As a result, our operating expenses and operating margin will be better than last year. The reason is gross margin is lifted and the variable cost is reduced.
While I'm sorry I cannot give you a very clear numerical target of the EBITDA margin and operating profits, I will say two things. First of all, we are hoping to increasing our gross margin percentage on a sequential basis quarter-over-quarter, hopefully you can see the expansion very stable, I would say stable relatively, in the next two quarters. That's point number one. Point number two is, given we controlled expenses and the variable cost, hopefully we can be more visible and can be faster to reach the break-even and profitability of the EBITDA margin for this year. I think these are the two major objectives for us. If you're asking about operational margin and the break-even on net margin side, I think we'll obviously will see the balance of the growth.
We also need to very nimble to make investments on our CapEx and also on the growth side to make money and put our investment to serve our high quality customers so we do not prevent the opportunity. Give us a little bit kind of flexibility to balancing on the operational margin and the EBITDA margin. Hopefully we can be more visible to getting to a point that our EBITDA margin could be break-even in a more kind of foreseeable future. Thank you.
Thank you. Henry.
Thank you. We'll now take our next question. Please stand by. This is from Allen Li from JP Morgan. Please go ahead.
Let me quickly translate my question. My question is regarding the CapEx. We pre-invest in CapEx in past few years. Due to all kinds of macro headwinds, our overall utilization rate seems not very high and it also negatively impact our margins. Looking into this year, given the potentially huge opportunity generated by AI industries, how should we think about our CapEx plan in 2023? Will we take a more proactive approach or reactive approach in terms of AI related CapEx investing? Thank you.
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Just to quickly translate. As Henry pointed out, with the new generation AI technology, namely the GPT eruption or disruption, we have had actually already preemptive actions in terms of reserving both technology and resources. However, I would summarize our attitude as cautiously optimistic rather than blindly pursuing this potential opportunity. Because based on our experience with the larger generation of AI industry trajectory, we do think that currently the market tends to be or seems to be overheated, and we expect it to actually enter into more sustainable but slower growth kind of mode. What we will continue to do in this, we will adopt a kind of approach that's like run with small steps and with quick iterations.
I also want to point out that in terms of the hardware, there's also the Moore's Law, which essentially means that the development and upgrade of such hardware will actually going to be fast. We do not think it makes a lot of sense to massively hoarding the larger generation of such chips and servers. Thank you.
Thank you, Allen. 我 也 补 充 一 下 这 个 问 题 啊 。I'll probably put some additional color on this question as well. If you remember on the year of IPO 2020, we spent about RMB 1 billion on the CapEx. First of all, on mentioned point is, as a company, we do have capacity and experience to managing spending RMB 1 billion on whatever good purpose. We do have a very experienced procurement team, we do know the supply chain, also we have a good partnership with our ecosystem partner, including our shareholders of Kingsoft Group as well as Xiaomi, to managing the complexity of buying those big chunk of assets at a reasonable price given the past experience. That's the first point.
The second point is, I think the question is coming from more about investments, not only about CapEx. If you look at investment, I'll put it into two buckets. The team, the technology R&D team, which our senior people as a team managing today, we have, you know, quite a lot of very experienced engineer and programmers. Those expenses is not a CapEx. Expenses are booked on our P&L income statement. As you mentioned, we spend over RMB 1 billion every year on those expenses and R&D investment. I think we do not hesitate to invest into R&D and products. I think that's very clear.
However, if you are looking into the cash flow item on the capital expenditures, which I wanna say, also going to have a different model, because as our CEO Tao Zou mentioned, we see the great potential opportunities were coming from both internet clients as well as implementation and application of the user cases from a lot of diversified and non-internet clients, especially from traditional enterprises. Those business model will not consume Kingsoft Cloud own capital because they will build their own environment and providing their own computing capabilities. We call it as a OPEX model. I think we are not going to waste to see those as good business opportunities, but we will balance out.
We need to spend money ourselves, build our own IDC, or we build a computing environment and help our enterprise cloud clients to use the AI capability and using their money to create a revenue for us. I think those are the two choices we both have on hand, and it's not constraining ourselves on one side. The last point I would put is, I think the question is not really about whether to spend or not, it is about who we spend for. I think selecting the right client is also very important. I think it's our ecosystem partner, including our shareholders, for example, Xiaomi and Kingsoft Cloud, Kingsoft Office to build for the office software, the Xiaomi for the EV cars. We will go 100% to make investment and spend CapEx.
However, for the company and the customers which do not fall into the criteria that our CEO mentioned, the key customers cloud native technology will probably be set back a little bit. I think this last question about who we spend money for are also very important. Allen, hopefully it's helpful for you. Thank you.
Yeah, sure. Thank you, Manuel, for the answer. Yeah, it's very helpful. Thank you.
Thank you. At this point, I would now hand back to Nicole Shan for closing remarks.
Thank you, Operator. Thanks everyone. This concludes our earnings call. Thanks again for joining us today. If you have any further questions, please feel free to contact us. Look forward to speaking with you again next quarter. Have a nice day. Bye bye.
Thank you. This does conclude the conference for today. Thank you for participating. You may now disconnect.