Earnings Call: Q2 2021

Aug 24, 2021

Earnings release

Hello, ladies and gentlemen. Thank you for standing by for 36KR Holdings Inc. 2nd Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. After management's remarks, there will be a question and answer session. Today's conference call is being recorded. I'd now like to turn the call over to your host, Yan Li, IR Manager of the company. Please go ahead, Yan. Thank you very much. Hello, everyone, and welcome to Sixty6 PR Holdings' 2nd quarter 2021 earnings conference call. The company's financial and operational results were released earlier today and have been made available online. You can also view the earnings press release by visiting the IR section of our website at ir.650.6plier.com. Participants on today's call will include our Co Chairman and CEO, Mr. Zha Gang Feng and our Vice President of Finance and Capital Markets, Ms. Lin Wei. Mr. Feng will start the call by providing an overview of the company and performance highlights of the quarter in Chinese, followed by an English translation. Ms. Wei will then provide details on company's financial results before opening the call for questions. Before we continue, please note that this discussion will contain forward looking statements made under the Safe Harbor provisions of the U. S. Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the U. S. Bank. The company does not assume any obligation to update any forward looking statements, except as required under applicable law. Please note that 66 KR's earnings press release and this conference call include discussion of unaudited GAAP financial measures as well as unaudited non GAAP financial measures. 6 KR's press release contains a reconciliation of the unaudited non GAAP measures to the unaudited GAAP measures. Also, please note that all amounts are in RMB. I will now turn the call over to our Co Chairman and CEO, Mr. Zha Gang Huang. Paul, please go ahead. Thank you. Hello, everyone, and thank you for participating in our 2021 Q2 results conference call. In the Q2 of 2021, we continue to enhance common quality and influence while strategically focusing on enterprise services as our growth driver. These efforts broadened our new economy focused content offerings and value added services, further developing our core competencies and spear hiding business innovation. We have made robust progress in content arrangements with diversified presentation formats to meet the needs of varied user groups. We're also exploring possibilities for innovative services. Moreover, our progress in products and technologies is paving the way for us doing positive growth of new economic participants as well as the digitalization of traditional industries, creating a compelling value proposition for more customers, users and investors can give new era of fresh opportunities and challenges. Our 2nd quarter user traffic volume reached a new high of average monthly page views of 846,300,000, up 70% year over year. The Q2 of 2021 marks our 17th consecutive quarter of TV growth, reaffirming our Kona's strong user resonance and our growing brand awareness. The rising popularity and recognition of 66 KR's content and platforms largely stems from our continuing innovation in flexible content formats, omni channel content distribution and our ingenuity in broadening our horizons. Let me walk you through our progress and our strategy in each of these areas. First, with respect to content strategy, we present content in various formats across a wide range of business sectors to address the full spectrum of user demand. Our powerful proprietary platform delivers comprehensive reports and insights across those professional and user generated content or PGC and UGC. In addition to traditional text and image formats, we have expanded our offerings to audio, short video and the live streaming, etcetera, covering diverse user growth. User feedback regarding each of these information, determination channels has been quite positive. We continue to make progress with those traditional and innovative content formats during the Q2. Not only the number of articles published on our primary WeChat account with readership of over 100,000 grew to 180, a new record. Other exciting content initiatives include our audio program, KR Walkman, which provides user with the latest business highlights in short segments that just take just a few minutes to digest. Meanwhile, our short form video covering various topics, including time business, current public affairs, also have a full scale of content metrics that covers different topics. For example, our Kia Pro column targets professional growth with in-depth industrial insights and all use targets the younger audience and covers lighter business and more content like topics, is rapidly becoming popular and gaining growth momentum among younger generations. 2nd, we continue to execute our omni channel distribution strategy. In addition to becoming a top content provider in the finance and economics vertical on WeChat, Weibo, Touhou and other comprehensive traffic platforms. 66KR has also been building business cooperation with top tier short video platforms such as Douyin, Zilibili, Payshout, Zhuhu, Xiaofengshu and WeChat channels. Leveraging our progress in short form video content, these collaborations enable us to reach more diversified individual user communities and provide them with a variety of business insights and analytics content. Our initiatives to promote short video and live streaming content are crucial for us to diversify our C and user base to further tap into B2C service offerings. Now I'd like to talk more specifically about our short form video content. It has been exactly a year since we embarked on our short form video initiative and we've witnessed this rapidly growing popularity across several demographics. We are very pleased to see that we have attracted more than 4,000,000 followers in Douyin and more than 800,000 followers on Bilibili among other platforms. Based on multiple criteria, including follower base, content depth, virtual performance and transcribing, 66 player has been recognized as one of the top tier short form video business verticals across all major social media platforms. We had a notable success in the Q2 with our blockbuster video, the meaning they have changed itself, which we published on Douyin, Zuubu and several other platforms. This current affairs content attract a record sighting viewership of over 30,000,000 total views of Youpaiyun's outlets for 3 consecutive days. We are also excited to share that our recent video clip song interpretation of the augmented games economy set new highs, receiving more than 100,000,000 total views and 1,42,000 likes and adding 2,200,000 new followers. By the middle of the August 2021, 66 KR short form video had already achieved its annual target of gaining 2,000,000 new followers. This astounding number further validates that increasingly broad individual user community is enjoying and consuming our content, which in turn, drops B2C business marketing spend trending our platform. Looking forward, we believe our short video content initiatives will continue to attract a wider range of user communities and boost our commercialization capabilities. 3rd, we continue upgrading our product offerings for public equity markets. Our secondary market products are a natural extension of our rich experience and expertise in serving startup companies over the past 10 years and are quickly gaining traction. For instance, in July, we joined forces with Industrial Securities to host an investor forum covering topics around both the private and secondary markets. We're also collaborating with CICC to co create 56KR Capital Pie, a new program focusing on individual investor education, which greatly enhance our influence and recognition in both institutional and individual investor circles. That were despite our customer base and laid a solid foundation for customer expansion in the secondary market. First, we celebrated the grand opening of our new dual headquarters in Shenzhen, a move to capitalize on opportunities in the Greater Bay Area. The Greater Bay Area is drawing attention as a fast evolving innovation and technology hub that offers exciting opportunities to start ups from around the world. We noticed that a multitude of uncollectible hard and core technology start ups have emerged in Guangdong province. The considerable number of investment institutions have set up branches in Shenzhen. Given that industrial Internet and hot forward technology are extremely popular and valuable tools supported by both the clients and the investment community. Thread digitally selected for its central location, Shenzhen will survive our hometown reach, we can gain access to surrounding start ups and investment institutions in South China's Greater Bay Area. The establishment of our 66 KR South China headquarters will enable us to better meet the needs of local customers and respond to them more efficiently, further contributing to our commercialization capabilities. Last but not least, we are actively building 66 Careers' international presence. We are excited to report that Bloomberg channel began including 66 Careers article in its news space during the Q2, making our latest coverage available to global readers. At the same time, our our latest coverage available to global readers. At the same time, our overseas business is making steady progress and gradually become profitable. We have seen a significant increase in revenue during 2021 and our presence in Japan and Singapore has continued growing. We are pleased that 66 karat's brand influence in streaming traction worked well. Now let's take a look at our commercialization progress. Thanks to our calculation in content and products. In the Q2, all of our 3 business segments achieved strong year over year growth on a comparable basis. Let me walk you through each of them. Our advertising revenue increased by 65% year over year this quarter, with growth in both the number of advertising customers and average revenue per advertising customer. We continue to harness our capability in video content creation to provide customized and innovative short form video marketing solutions for traditional enterprises, improving their brand image and upgrading their marketing. Take the automobile industry, for example, Volkswagen China joined hands with 66 players and launched a short video titled, what will the future car look like to discuss future automobiles from a brand new perspective. This marketing campaign helped Volkswagen exactly reach more potential customers. It was also an important branding and publicity platform for Volkswagen to position itself from a traditional carmaker to a mobility service provider, further validating our efforts to broaden and surpass the boundaries of conventional marketing through seamless content integration. Shoe for Video is also enabling us to develop new marketing solutions and penetrate more into the CN brands and advertising clients. For example, we helped Amber Zhou promote 30th new product, A Max, with a short form video that was well received by younger generations. Amber Zhou took this opportunity to book away from the stereotype of direct marketing and was very satisfied with its public collaboration with 606Kera. We believe that by creatively reshaping marketing programs for the future, we can empower more brands with effective B2C solutions. Our secondary market product has also started initial commercialization this quarter. We have entered into cooperation with Alibaba, Trip.comgroup, Tongshong Yilong and Jihu and will provide in-depth analysis from 66 KR's unique perspective, showcase a holistic corporate image for our customers. Next, I'd like to share with you some updates in the enterprise service business space. Powered by our high quality content, brand influence as well as expansion of innovation verticals, brand transaction value for our enterprise value added services grew by 66% in the Q2 year over year. Of course, we continue to explore various new application scenarios and distribution channels for our financial content. For example, on the audio content front, we collaborated with NIO to broadcast our podcast program, Peer Intelligence, on the NIO radio playlist. We also cooperate with several financial institutions, including China Merchants Bank, serving as an agent to help them operate their app content, covering a range of topics such as finance, financial planning and career related issues. Through this new partnership, we effectively expand our content distribution and commercialization opportunities. In addition, organizing online and offline submissions forum is also an important component of our enterprise value ID services. This quarter, we partnered with Google to create Google's 66 KR.com website, helping Google host multiple online forum on gaming, brand marketing and brand transformation of cross border e commerce. The Dream pack also demonstrates the deep bond between Google and 66 KR, allowing each company's users to better interact with each other and providing a trendy approach for both companies to attract new users and increase user loyalty. Google's global online activities broke geographical barriers and surpassed time differences, giving participants access leading industry pioneers experience and insights at any time from anywhere. On the offline event front, we call hosted an unknown city of tomorrow event with leading real estate enterprises to building a visionary and imaginative art world. The event showcased our capabilities to interact with its user in creative and interesting ways and further strengthened our brand image among the worst audience from younger generations to middle age group as well as other user demographics. Moreover, the continuous progress of our enterprise value added service has laid a solid foundation for 66 Care's regional expansion. We have been working proactively to expand our cooperation with local governments to serve municipalities and regional business. During the Q2, we opened business branches into new province, and Guizhou, bringing our total regional offices to 12. Building on 66 payers for influence and local business presence, we help enterprises and governments build big relationships, connecting both parties needs and solutions. In June, we hosted Quantum Technology Innovation Conference for the government of Jinshui District in Zhengzhou, Hanan Province. The event attracts coverage from more than 100 leading media outlets, including CCTV and greatly improved visibility of the TianXu district's innovative plans and technology sectors as well as 66 care capabilities in the enterprise and government service area. We also recently started commercialization of our 66 Care enterprise account service, a self-service product. 66 Care enterprise account is an efficient introductory window for an enterprise to increase brand awareness, exhibit products, share its business progress with a wider audience and appeal to economy sectors. As success this care has grown with generations of entry premier and enterprises, we are now leveraging our brand influence to build a platform via a wider range of companies can fit their skills, services and accomplishments. In the new company era, we hope to empower more high quality enterprises and help them gain market recognition and acquire customers. We were very pleased to see the 66 tier enterprise account service begin to generate revenue in August. And we believe that with our brand influence, this new service has a promising future. Now, I'd like to particularly introduce our progress in the enterprise service review business. In recent years, the government has been actively advocating for the integration of the economy and the Internet, as well as digital transformation in various industries. At the same time, the investment community is witnessed a slowdown in the end market and declining marginal return of customer acquisition. Therefore, we believe the industrial Internet economy with enterprise service, or its core, will soon offering huge development opportunities as new economy enterprises and traditional enterprises have intrinsic needs for digital upgrades and digital transformation, respectively. With this background, in October 2020, 66KR launched the enterprise Enterprise Service Review Portal, the 1st comprehensive enterprise service procurement decision making platform in China. It's a one stop platform solution aiming to facilitate service providers to acquire customers and demand side to make informed procurement decisions. The platform delivers information emerging from the 3 layers: service, interaction and data. On the service layer, we provide customer with 1 on 1 consultation, self help and learning tools and search community function. On the interaction layer, we help customers search for and filter information in multiple dimensions with high levels comparison services and data making reports. At the data layer, we provide customer with industry data and category information, process, features, real name reviews and commentaries as well as successful case studies and supplier credit information, etcetera. Over the past 10 years, 66 PR has accumulated in-depth expertise and unique advantages in providing enterprise services. For example, supported by proven content capabilities, we have built a database of over 800,000 new economy enterprises and accumulating numerous top export and key opinion leaders, KOLs. We can also help users gain access to relevant industry associations resources and enhance their understanding of the industry. 66 peer enterprise service review portal is the 1st domestic enterprise service platform, providing real name comments and is widely recognized as the of the 2B markets. Our professional grasp of enterprise service software is far more sophisticated than that of our peer providing similar service. Our digital classification of the SaaS industry is sort into a main category and subcategories, which has become the industry benchmark and standard. As the 1st enterprise service review platform in China, 66 peer enterprise service review portal has become the most comprehensive independent enterprise decision making platform. By the end of the Q2, the review portal had showcased over 4,000 enterprise service applications, covering software across 15 industries and 200 categories. Meanwhile, we have received dozens of real user comments and why dozens of industry experts to join the platform offer their opinions to help the demand side make better decisions. Moreover, building on our own in-depth understanding of industry, we are able to further enhance our enterprise service with rich content support. Recently, we start initial commercialization of the renewed portal service. In May, by introducing its products in a more expressive and logical way and improving user interaction, we successfully helped a staff service provider obtain more sales leads. These leads have an estimated conversion rate as high as 20%, while the cost of conversion was greatly reduced. We believe that as we continuously refine our product and formally launch retail mobilization, we believe our enterprise service review portal will become a new driver of the company's future growth and will unlock tremendous value on our way to expand the boundary of medium and tap into more enterprise services. Lastly, turning to our subscription service. In the Q2, we revamped our subscription service model. We missed a revenue growth of 124% year over year. Our subscription membership service are available through both online and offline channels. Online subscription will focus on the care column within our sophisticated care app for paid knowledge products and audit for your training program, helping college students and new recruits to improve their professional skills. For offline subscription service, we offer membership programs such as Entrepreneur Star and Fleetway Star classes, bringing opportunities for practitioners in various fields to engage in deep communication and interaction with industry leaders and and experts face to face. In the second half of this year, we will continue to expand the breadth and depth of our subscription offerings for our users to better satisfy their needs and further improve users' business. In summary, in the Q2 of 2021, 66 Care continued to enhance its influence on new economy centered content offerings, thereby achieving growth in both user track value and the number of total followers on all platforms. We are pleased to have delivered strong financial results in the Q2, exceeding analysts' expectation on all key financial metrics. Led by our steadfast devotion and investment in our enterprise service ReLU business, the company has delivered stellar initial results by innovating and exploring the commercialization opportunities of our new business initiatives. Looking ahead, we believe that 66 KR is well poised to capitalize on the rapid rise of real economy, industrial Internet and hard and core technology to create brand new development opportunities. With that, I will now turn the call over to our VP of Finance at Capital Markets, Ms. Lin Wei, who will discuss our key financial results. Please go ahead, Lin. Thank you, Paul, and hello, everyone. We are pleased to have achieved a set of solid financial results in the Q2 of 2021, with a strong year over year growth across all of our business segments on a comparable basis. Notably, as Paul just mentioned, our advertising revenues increased by 65.1% this quarter compared to the same period of last year, demonstrating sustained user engagement and customer interest in our premium content and service offerings. Also, thanks to our continued efforts to provide customized and innovative services, revenues from our enterprise value added services more than doubled sequentially and its grand transaction value increased by 35.9% year over year. In addition, our commitment to maintaining efficient operations with an increased focus on higher margin businesses is paying off, with our gross margin expanding to 57.4 percent from 29% in the same period of last year, and net loss narrowed by 56.8% year over year. Looking ahead, we believe we are well positioned to continue on this growth trajectory, serving new e commerce participants more effectively and expand our monetization channels to seize the vast opportunities ahead of us. Now I'd like to walk you through more details on our Q2 of 2021 financial results. Online advertising services revenue increased by 65.1 percent to RMB51.7 million in the Q2 of 2021 from RMB31.3 million in the same period of last year. The increase was primarily attributable to the strong recovery of market demand as well as more innovative marketing solutions we provided to our customers. The number of advertising customers and the average revenue per advertising customers both achieved strong growth in the Q2 of 2021. Enterprise value added services revenue were RMB14.3 million in the Q2 of 2021 compared to RMB42.6 million in the same period of last year. The decrease was primarily because we continuously shifted our focus towards higher margin businesses and starting from the Q1 of 2021, we ceased to act as a principal in certain low gross margin businesses and only acted as an agent. As a result, revenues of such businesses were recognized on a net basis from the Q1 onward. To increase comparability of operating results and help investors better understand our business performance and operating trends, we introduced the gross transaction value as a supplemental metric to describe our business. Gross transaction value of enterprise led services was RMB57.9 million in the Q2 of 2021, increased by 35.9 percent from RMB42.6 million in the same period of last year. Subscription services revenues increased by 124.1 percent to RMB6 1,000,000 in the Q2 of 2021 from RMB2.7 million in the same period of last year. The increase was primarily attributable to high quality subscription products we offered to our institutional and individual subscribers. Total revenues were RMB72.1 million in the Q2 of 2021 compared to RMB76.7 million in the same period last year. Taking into consideration of the aforementioned change in revenue recognition for our enterprise value added services, which involves a RMB43.6 million variance between net revenues and gross transaction value, you will actually find that we maintained our overall upward business trend and demonstrated solid year over year growth. Cost of revenues was RMB30.7 million in the Q2 of 2021 compared to RMB54.4 million in the same period of last year. The decrease was primarily due to our continued cost control measures to improve our operational efficiency and our shift of focus towards higher margin businesses as well as the recognition of certain revenues on a net basis, which we discussed earlier in the enterprise value added services section. Gross profit increased by 86.1 percent to RMB41.4 million in the Q2 of 2021 from RMB22.2 million in the same period. Gross profit margin was 57.4% in the Q2 of 2021 compared to 29% in the same period last year. Operating expenses were RMB75.3 million in the Q2 of 2021 compared to RMB99.4 million in the same period last year. Sales and marketing expenses were RMB33.4 million in the Q2 of 2021 compared to RMB39 1,000,000 in the same period last year. The decrease was primarily attributable to the decrease in marketing expenses and share based compensation expenses. G and A expenses were RMB29.9 million in the Q2 of 2021 compared to RMB50.9 million in the same period of last year. The decrease was primarily attributable to the decrease in the allowance for credit losses and share based compensation expenses. Research and development expenses were RMB12 1,000,000 in the Q2 of 2021 compared to RMB9.6 million in the same period of last year. The increase was primarily attributable to the increase in payroll related expenses as we beefed up our research and development capabilities. Share based compensation expenses recognized in cost of revenues, sales and marketing expenses, research and development expenses, as well as G and A expenses, totaled RMB3.3 million in the Q2 of 2021, compared to RMB12.6 million in the same period of last year. Net loss was RMB34.3 million in the Q2 of 2021, compared to RMB79.3 million in the same period of last year. Non GAAP adjusted net loss was RMB31 1,000,000 in the Q2 of 2021, compared to RMB66.7 million in the same period of last year. Net loss attributable to 36 KR Holdings' ordinary shareholders was RMB34.1 million in the same period in the Q2 of 2021 compared to RMB79.5 million in the same period of last year. Basic and diluted net loss per share were both RMB0.03 in the Q2 of 2021 compared to RMB0.78 in the same period last year. As of June 30, 2021, the company had cash, cash equivalents and short term investments of RMB149.6 million compared to RMB174.1 million as of March 31, 2021. The decrease was mainly attributable to the share repurchase as well as cash used in operating activities. Lastly, let me provide some updates on our share repurchase program. On May 6, 2020, the company announced that its Board of Directors authorized a share repurchase program under which the company may repurchase up to a total of 1,000,000 of its American depository shares, each representing 25 Class A ordinary shares. As of June 30, 2021, the company had repurchased approximately 786,000 ADS for approximately RMB17.5 million under this coupon. This concludes our prepared remarks today. We will now open the call for questions. Operator, please go ahead. Thank you. Our first question comes from the line of Vincent Yu from Neehan and Company. Please go ahead. Thanks management for taking my question. I have 3 questions. The first question is, can management help us understand the impact on our client base as a result of regulatory crackdown on sectors such as online education platforms? My second question is in terms of our video content initiative, do we see any potential impact also from reputation on our video that could pose negative impacts on our ability to monetize these content? And third question is, can management help us breakdown our top three customers in terms of their respective industries? Thank you. We embark on our short form video initiative because we create potential in this market. Short form video enable users to acquire massive amounts of information efficiently across scenario in a timely manner. This is better safe and more popular, especially among young people. Short form video as an efficient dissemination channel will empower us to expand our speed end user base, distribute high quality content, improve user mental capabilities. Regulations on short form video are mainly focused on appropriate content themes, While our short form video content focus on our finance, business and personal growth, in line with national guidelines, therefore regulations on short form videos have no impact on us. We believe our content will always be will jealously supported by the contrary in its strict reservation on short form video a rollout in the future. In the Q2, our top 3 customers for our advertising business were in the e commerce and Internet industry, Alibaba, Baidan and Baidu. Revenue generated from each of them didn't reflect a significant proportion of the total advertising revenue. And actually, revenues generated from our top revenue and actually revenues generated from our top 10 customer only accounting for 37% of total ad revenue. In addition to the Internet and e commerce industries, our customer also includes top tier companies in industries such as artificial intelligence, entertainment and media, automobiles and transportation and consumption and lab sales industries. Xiaobin, can you repeat your first question? Okay. The first question is about the in terms of the impact from the regulation write down on online education platforms. So about the education industry impact on our advertising business, revenue from the education industry represents only a small proportion of our total advertising revenue. The education industry contribution to advertising revenue is 0.7% in the Q2 of 2021. And for 2020 quarter 2, it's 1.5%. So therefore, the fluctuations in the education industry have a limited influence on our overall advertising revenue. Okay. Thank you. Thank you. Our next question comes from the line of Sean Jiao from CICC. Please go ahead. Sean, your line is open. Please go ahead. Sean, please unmute and go ahead. All right. We are not getting response. I'll move to the next question from Kei Pei Chu from Industrial Securities. Please go ahead. I will translate for my question. So could you share some of your main strategies or specific approach to improve your ARPU of the online advertising business? And how long should we expect ARPU to return to the pre COVID level? Thank you. Actually, the output of our advertising has increased this quarter compared with the same period last year. For the volume half year, we may improve ARPU through 2 ways. 1st, due to our content influence and brand premium, our publication price is rising slightly every year, which is conducted to improvement of the approval. And therefore, we will continue to improve the quality of content and track more customers from our various industries. 2nd, the rise of full video has greatly increased the growth potential of our pool. For example, our recent technology enterprise customer, a single short video advertisement and cost RMB2.25 million. And last quarter, we only have an advertisement that comes at RMB1 1,000,000. So short form video content has natural advantages that its customer unit price has matched or even exceeds the commercial value of our WeChat facial account in a short time. So in the future, we will continue to use various modes to help customers upgrade and innovate marketing. In that case, the customer approval will wrap accordingly with the brand influence and marketing quality and return to the pre epidemic situation, even higher the level before the epidemic. All right. Thank you. Our next question comes from Shao from CICC. Please go ahead. I will translate myself quickly. What is the potential monetization space for the new products such as corporate service new products? And what's our strategies of this product in this year and in the long term? Thank you. Okay. In October 2020, we launched our undergraduate review portal, the 1st comprehensive SaaS platform in China. As of today, the review portal has showcased 4,000 enterprise service applications covering software across 15 industries and 20 categories. Additionally, we have received dozens of real user comments and invite dozens of industry experts to join the platform, making the industry most comprehensive and standardized enterprise service PCM making platform. We plan to service 3 monetization model. The first one takes commission fees from lead generation, which will account for the most significant part of the overall revenue. We believe our enterprise services review platform will provide our traffic, but funnel that helps acquire customer more profitably. Meanwhile, we expect the cost of customer acquisition to decrease by at least 30 percent. This is now similar to Autohome of the automobile industry and Zohyang of the medical and beauty industry. The second is to provide marketing management services such as helping manage enterprise accounts, ranking lists, analytical reports of all our management tools on our Weibo portal. And the 3rd deals, the membership service system covering buy side and sell side that offers regularly such reports. And this will have a fixed membership fee will be charged. And for this May, we already have a try on the commercialization. So we have a SaaS company that gets some leads and we have a really high conversion rate that is 20%. So this is a really good result for us and it's better than the competitors in the same industry. And also we acquire the customer at least much more cheaper than the others. So we recently will still refine the product system or have some try some better way of the commercialization path. So the real the true commercialization path is finally will be launched at 2022. Our next question comes from Jay Dong from TH Capital. Please go ahead. Okay. So in the second half of the year, we will have a lot of the offline events, but we have already signed some collaboration agreements for offline meetings and the academic will have a certain impact on the holding of offline activities. We will take national policies and academic prevention control as the primary consideration. We will negotiate with our partner for delays. And so this impact of recent epidemic will have a face impact on the Q3 and some activities may be delayed to the Q4, but it's not being canceled. So, however, from the perspective of the 6 months or the next half year, the impact will not be that much great. Also, the epidemic will also have some impact on some real economic entities to a certain extent. So probably the online advertising revenue will fluctuate a little bit. Thank you. As there are no further questions now, I'd like to turn the call back to the company for closing remarks. Thank you once again for joining us today. If you have further questions, please feel free to contact Sysin KR's Investor Relations through the contact information provided on our website. This concludes this conference call. You may disconnect your line now. Thank you.