Q3 2019 Earnings Call
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Ladies and gentlemen, thank you for starting bond book and the way book reports third quarter financial results Conference calls at this time, all participants and listen only mode. After the speakers presentations there would be a question on concessionaire last questions. During the session you will need to press star one on your telephone I wouldn't call back then and the conference which.
He could today trying to assign thank you. Please go ahead.
Thank you all Peter welcome to wave was the quota to southern Nike Earnings Conference call. Joining me today, our 10 overboard child, Oh, the old Golfie Wong Athena could see our full Bonnie job and I'll leave you finance it into yes, we'll see how the common goals, although being broadcast on the Internet.
Most of the with IR website before the mentioning we month I like to receive the seat hobby steaming in connection with today's conference call.
On today's call, we make forward looking statement steaming danowski, He's also sox, including statements about beliefs expectations.
He's feeling Bobby heavily circuit.
A nimble of important factors could cause actual results could differ materially from those continue any forward looking statement, we see no obligation to update before looking seemingly coal and elsewhere.
I think information regarding these and other ways, including Weve with annual report on form 20-F, and other findings, we I see Oh the information provided in this price would eat accruing as of the did Hugo.
People assumes no obligation to I.P., such information, except as required under applicable law.
Finally, I'd like to remind you that our discussion today, who certain non-GAAP measures, which is.
Stock based compensation I, just go to all the items.
We use non-GAAP financial measures to be embeddedness, Daniel was compared to operating performance and the future pulls back.
non-GAAP financial year, two the city seems to be Solarcity and all the items that are not exact between Saudi future cash payments will not be clean nature would not be difficult operating results and outlook. Please refer to a press release will be more information about on non-GAAP measures.
No. He mentioned prepared remarks, the open the lines, what Weve acuity session with it I would like to turn the call over to our C O coffee wall.
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Thank you Hello, everyone and welcome to Weightless support a to southern Nike Inc. earnings Conference call.
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On todays call I've shared with you highlight team we must use the product among position us well its progress we made all key initiatives into southern Nike Synta young people that some people would you say the subject who you goodbye.
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Let me start we sell support a financially doubts ended the quarter on total revenue reached 467.1 million up 2% yield.
We're sitting on a constant currency basis I'd have a tightening unlocking revenue reached 412.5 million up 1% year over year was 5% on a constant currency basis.
7% Gilbert AD revenues came from mobile non-GAAP net income to into supported with 170 to 76.1 million, representing a non-GAAP net margin of 38%.
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On the use of from September we would any you'd be 497 million up 12%.
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Alcoholism and shopping allocation mechanism, we have to ramping I'll, probably fishing season traffic distribution correspondingly seem to be freshman impressions and using production continues to grow double digit.
Meanwhile, we continue to improve Chen and coffee products, which helped in power usage more efficient was discovered chance in hot topics and anticipate discussion. These initiatives continue to drive solid uses fueling station and teach me real.
On the money position from a business continued to deliver solid gross Danny feeding some leave with unique value proposition Buda, honky, where else influenced Brendan and driving performance.
Coupled with the increasing adoption of social mucking solution, we'd be pleased at lucky.
I couldn't be season, she's a generally stabilize the status you'll be here and to double digit quarter over quarter navigating the continued increase platform traffic improved at fulfillment and optimize the sales channel.
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First on used to growth and engagement units. This quarter, we continue to deliver solid usage <unk> use and traffic really are used to base continues to grow double digit year over year, representing a net addition of approximately 51 million any view on annual basis, coupled with our existing channels and that's when we see leverage we with the vintage in China.
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First on how Chen we had been confident that even if he's probably and distribution of trends, we should enable people to solidify leadership area and so that's one of the a key competitors needs to apply Houston has just begun teach me.
If you refer to emphasize on extending the life span of Hodgson assumption and discussion Sweet initiative.
We optimize our topic cotton second the NCCN fusion synergies among healthcare all taken Hutchinson.
In how currency, we further over traffic support to promote original content and accounts around called.
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67% and a number of health around hottie being generated by Topcon agreed has increased to 54% quarter over quarter compared with other media platform with a so focused on news coverage, we will open with a wide range of out even more compact comprehensive inflammation and diversified opinions.
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Moving onto the social features driving social content production interactions happen all the lending focus as we take that would further shopping our long term competitive edge that and for one thing we have introduced more social features to our product for instance, when you build out how to call center and coming.
Products into this quarter and this quarter. We further launched an auction for concrete her two leases and hope to be hsulin exclusive to fans as well as improve sets into <unk> incorrectly functionality.
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$3 redeemed relationship the seat, we so higher efficiency in content distribution, and we said, we activation as well as.
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He could grow double digit year over year.
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So system and improving user stickiness.
Executing well against this initiative traffic to the interest based the feed to continue continued growth double digit.
Responsibly and increased the traffic facility and facilitate vertical Connie Peter took I just real thing that net addition of fans, but these kind of green host people sequentially and hence girls using patient as well there should be bumpy push it on treat you don't seem to maturity date for somebody to do should be intimate humid.
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Competition should lead to institute in the past two years, we took a step back kind to be visits of media product positioning and organization, we centered around three categories, including media PTC and UGC video.
For the medium and media BD chemically has always you know question Nabatian constructive partnership with media Ali and and we.
We had become one of the most important channels for media to release media content and optically. It looks like for instance, doing that celebration of kind of a seventh anniversary nearly 6000 media Oliver Chen generating 280000 videos hopefully maybe.
Media abuse, approximately 8.6 billion.
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In the competitive landscape of PTC medial people identity silicon advantage in traffic comes into production and monetization on top of like leasing strength.
Net income and optimizing our VPG CBD offering and spending the btwob ocean the traffic distribution.
While at the same time, improving the social and interactive features as all of these medium. So for instance, we optimize the recommendation and push function VDEP immunity and enhance hardcore fans and fully chats featured.
He September those that they need to be deemed to be to come and tap and you see engagement on video mean cage grew double digits compared to the number in June as well it seems attachment to the beat the video feed her is trending up nicely with continued to see and maybe to 10 inches UGC.
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And I said lifestyle, so that those kinda leadership and social top ones in terms of differentiation from leap for leases will encourage more new Tc posting particularly from vertical content creators <unk> lifestyle related and mainly teaching filled and MBT format, which complements reports Comping school system.
I know dressed Houston diversified social and a content consumption.
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We back to obtain approval and feature to launch the product seeking this month.
Going forward, we will continue to optimize pot of features and beef up our efforts in the channel marketing in hopes of creating a life social problem. We said these teams could lifestyle like.
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Moving to content fundamental top content creators host generated I split the Clinton viewership has grown double digit for eight consecutive quarters. The increase was primarily driven by a endeavor to improve content creators using ceiling and helping to grow a week, including two constantly optimize cotton recommendation.
Efficiency and supported traffic offering to complete.
As such we couldn't help them to accumulate social assets and money type Oh off one. Additionally, our continued investment might have you shouldn't ecosystem mpower concrete or to further strengthen their capability to monetize for example, our latest collaboration we topped <unk> E Commerce life like broadcasting.
Which is now in comps came out to synchronize <unk> life Baucus income can only for real time manner stimulates real time interaction between kalo sensing.
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Last month had they shouldn't you missed a quarter I'll key AD revenue continues to deliver solid growth, representing a year over year growth of 6% or 10%.
He took a sequential basis, a key AD revenues grew 19% and getting beaten in the past few years, we blacking constantly innovating and optimize people and indeed lots of marketing offerings, such as celebrity marketing I keep Brooklyn, marketing and a customized content marketing. This allows people to continue.
Capture at Wally ship, something out of it HYSYS, such as FMCG and Luckily sector by escalation competition for instance, a top brand advertisers such has estee Lauder and lower yield has increased the annual and at budget by double digit for the past consecutive years as they have treated waypoint.
He just partner and plenty and executing their marketing campaigns and social marketing can you give the injection. We believe we had much more potential to gain additional money. She is something Tyson at the social at budget cannot fishing you have ample room to grow let me give examples celebrity marketing this quarter I PBC.
Oh go go go split became very popular report as well as a leading actually seeing was fan base grew quickly from 5 million to 20 million. These since huge influence on a check that dozens of dozens of brand advertisers to see completion, including human keep and you don't.
Consequently, this led to a new loans of marketing campaigns on wait for that it can be influenced to talk it bought it audience and promote brand image more over our Labick Maki solution, featuring a combination of the lucky celebrity and customize the company as opposed to Houston that endorsement.
To make well we spent out of a Tyson I think example for Adidas marketing campaigns to promote the all should boost to 2009.
The hopped up ran out of the types of to screen out for celebrities, including Justine Justin long and that children team, whose image back match, the new product positioning and then customized she will videos to show different personality of each celebrity the well executed initiative locking multi beatty sense willing.
He needs to create and post content all of their own a lifestyle. The only for athletes out. The total BDC is generally for the customized video supposed to 40 million and the new products brand exposure with maximize social familiar.
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So much more people to how you would think about human human Schuster. So I'll go he shots you from into Twitter to we will keep in touch on.
Moving on the SMB business the updates with you as people liking Chen with an eye revenue growing 1% year over year were 5% Indian would be to on a sequential basis SMB revenue grew 16% quarter over quarter <unk>. Yeah. I mean, he took that said the metal and equity regulatory headwinds I swelling has.
Competition constantly on the gross pulls back of the Overperformance overall overperformance end market to stabilization of our SMB at these things I mean attributable to the solid execution and reinforcement of several key initiatives then elaborate on of course, we make feed to choose from rebook shoulder.
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Finally, let me conclude.
We continue to improve our AD performance and the customers. Our <unk> for instance, we may swipe and driving the adoption of to optimize the beating Mimi optimize the CP acceding model among customers, which enable customers to be according to a specific target.
Just for that facility programmatic buying significantly enhance customized at performance efficiency.
The quarter I sense to Oh, CPM increase over 30% or potential basis, making up a higher percentage of the total ACMI accent.
Second we took steps to for that usually in shape Our act on offerings <unk>.
<unk> for example, we introduced appeal L. mocking solution featuring the switch them Selebi and he will worsen Amy helped out of at high so quickly accumulate social asset reach a lighter community and achieve better conversion all possible.
Product, we've definitely well we sell customer in the test one as example, a custom magic here, a coffee offering English classes for children juvenile initiated appeal L. marketing campaign I'll wait for the lavish influence of kill Ellis from baby and maternity vertical who they are posting of promotional content of magic.
During the campaign.
Magic. He is precisely topic to use this would recognize that the parents of juvenile as without the number of consultation and registration to metric used English classes rental without engagement, increasing by five food and use acquisition costs, we've used the by 50% compared to the promotional campaign when bye.
Magic year itself without the involvement of vertical K L.
We we continue to optimize at agency structure and has to go to market strategies with a focus on developing new customers and diversifying into three social ads to be down as Daniel newly acquired a customer static and improved contributing a higher proportion of the total as I mean, I've asked me with imply a quarter finals.
We will offer more operationally swiftly to nurture the so called native AD customers such itself medium and he can empower them to grow in line type sweeping ecosystem, which will ultimately manufacturing and driving the a future activity and with us.
Well, it's only talk to each of our funded with how would you ever with that let me turn it over to see how her financial octane.
[noise], Thank you Adolfo and Hello, everyone welcome to legal except for the country like <unk> earnings Conference call.
Let's start with user metrics.
We would I mean, you get the 400 Metro seven meeting in September 2019 [noise].
Definitely a lack of Easter.
15 by me they use or are you every year basis.
I would attribute use a 216 meta limits again, that's a vision of how do you buy me they use or are there a year over year basis.
Mobile I mean, you represented approximately 94% of total I mean you.
Turning to financials after the lender.
Had remark would focus on like battery of dark and all the competitors on luxury or basis, unless otherwise noted.
Well, let's start for the country nights, a net revenues were 467.8 meta up 2% Oh precise on constant currency basis.
Operating income reached <unk> hundred 11.2 million, representing our cookie margin of 41%.
Net income attributable to label with 176, plus run with it and the diluted EPS was 77 cents.
Let me give you more color on revenue.
Hi, My whose I've known for the second quarter Putty knives in which the 400 and a 12 on 5 million up 1% or 5% on constant currency basis.
Mobile AD revenues were 316, Ponce meta effect precisely how could build an approximately 87% opcos I'd revenue.
From 18% last year.
Moving on to pay eight.
In the third quarter. He added revenue reached about I love to Southern fund to me that up 6% or 10% on constant currency basis.
From industry perspective, I thought of Cici continued is resilient and lost her the pays on their books.
That also in class of its a solid performance of laughter industry, despite macro having.
I've read Walker <unk> Dunlop treated it's easy to passive or value truck worrying brands. They they say integrated a soaker my two solutions from a learning to partners.
I'll flip that I can't really the sector and I've heard him an industry, how they slowed down for.
Primarily due to industry by state that cyclical issues and the regulations factor respectively.
Turning to I've done.
In the third quarter leave what I suddenly AD revenue reached about either led to the point by meeting a bunch of course that Oh, that's croissant, our constant currency basis.
As I mentioned in prior quarter.
Our team I take a series of matter, who enhance AD performance looks like other events and innovation.
And the bag or repair and acquire customer so that's kind of optimization.
Please maker.
Taking it back on the civilization I I mean at business.
The third quarter.
Annual basis.
They see solidly the pro forma a private race set an app downloads and concentrated sector I.
I'm pleased to raise the money if the recovery of our lending industry [noise].
Nevertheless, we continue to see add deposit cost back from certain large ticket item categories with tough comp last year, I mean, the Mac market competition.
As local survey and the tourist industry.
Overall, we continue to see market dynamics I thought on February , but with supply up inventory over at the moment.
The thing it still takes time, great My kids equivalent Brown and up three box of our Aissami business.
I'm glad knows from Alibaba Foots third quarter was like 1.2 million stuff, but the 3% of 30% on constant currency basis.
Lastly, the cost 50 cents basic plan the marketing strategy of an adequate.
Since the start of the year.
Excluding the AD revenues from Alibaba AD revenues from he and I 70, better for 3% or 7% a constant currency basis.
I'd the ferries that revenue.
Because that's how squarely in the third quarter up 9%.
It was 13% on constant currency basis.
The increase with many attributable to the incremental revenue you love the from the last freemium business acquired in fourth quarter last year.
Turning to cost and expenses.
Total costs and that's it for third quarter was 277 fun fact meeting up 2%.
Operating income in the surface water was that kinda likely punch through media, representing an operating margin of 41%.
Similar level, but it's been period last year.
Turning to income tax.
GAAP magar income taxes fast, but first quarter.
But he bond funds for media compared to 37, Unlike me at last year.
Net income attributable to LIBOR floor in the third quarter was up 7.6 on Monday that represents a nice margin of 38% compared to 37 for philosophy here.
Turning to our balance sheet and the type life.
I'm, a circular and Tonight, and we booked cash cash equivalents and skirt and <unk>.
We'll go to to pause there to set up.
He was therefore cash provided by operating activities with 164.8 meeting capital expenditures totaled 4.4 meeting and depreciation and amortization expenses amounted to six funds for media.
Now, let me turn to business outlook.
You, let out the currency translation risk our business outlook for the financial estimates constant price basis.
We anticipate our fourth quarter I'd like to let them your fourth grade to learn from their footprint for side year over year, a cost and the price basis.
The deceleration of revenue growth outlook is due impart to lacking of less than a business. They started to consolidate into fourth quarter last year.
Well as the relatively conservative I'll leave it meant for the other it hasn't been it I mean, the macro headwinds and the market the competition in the near term.
This forecast reflects lead with current and preliminary view I need support for change.
With that let me know protocol over to the operator for the Playstation.
[noise] definitely ladies and gentlemen, we will now begin the question at home session. After you wish to ask your question. Please press star one on a telephone keypad and wait for your name to be knowledge. If you wish to cancel your request Beast response or hodgkins.
We had the first question from the line Oh, we see up from Citigroup. Please go ahead.
Hi, I'm.
Good evening management. Thanks for taking my questions can you give us some update regarding the new App oases. How are you a positioning the Atlas US you all shuffle at wait for a what other reasons you know the company decided to develop the up and then.
What I know Youre product strategy, and how are you going to balance on the operation and use the acquisition between Oasis and label App, So any qualitative feedback.
From user doing dish attaching pay rate that you could share with US and then lastly, I think on your prepared remarks, you mentioned that are you going to launch the opt to officially once you've got to regulatory approval. So what do you still go to market strategy, all four oases and how do you plan to acquire user.
When you launch a while you're doing a funny how about.
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Sure.
[noise] as I indicated in my prepared script are positioning for Oasis is to develop a platform for people to sharing their.
The stuff on their life, that's would it be supplemental to wait ball ecosystem.
And particularly from a content for successful we believe there's a quite clear distinguishment between these two problems [noise].
No.
We're going to lose you're going to do them.
Hi. This is you leave with action that I saw them could.
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Here's a lot of people show me more seamlessly going maybe.
Could you go onions, you hear me too bullish settlement.
So that which I found that there will be or some way to look at many of them kind of put on media.
Asked you are aware off one of the key features stuff away, but popcorn. It's it's a viral distribution capability asked we asked we bought grow bigger and deeper the we see sockets ability further being strengthened by half being the key reason and.
We are the the primary opened our awkward for those social open social social media platform with that are our platform with strong featured E media in nature and also the the distribution capability will be the key.
Vantages.
So do you feel you received from what you did.
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Hi, just shut down.
With the because of the virus distribution nature for way ball, it's fight de fall, our key or a major content creators and the media accounts.
Attract the most a topic on the off one either last few quarters as I indicated in our Congress in the prepared remarks, we are trying very hard to direct more traffic to verticals area, but unfortunately.
Our non media content on the platform through all these years past showing a be sending trends because of the does the district distribution mechanism we hot.
The three two more quick on them, we will make sometimes when cool, but we'll be she oh Koo Koo today.
Got you here so that anymore.
Sure Bob Lutz visiting some of that.
Sure a number that pinpoint when because you want to lead to like type deals you don't come to you today on the repurchase jump on the Utah increase.
What do you go down.
No no pool pulling the trigger.
Pushing line.
For each vertical area that they're a top content generators and what we found the is they are a rally to share their lifestyle related content on wasteful as a result, Oh, we're providing oasis F. The alternative.
For them to provide more a life style related content as the with that we're hoping these content generators can cross platform to provide differing contents one for away bought and a one for oasis better with low.
Great that's I'm more with more focus on lifestyle and of Virgin <unk> Ariad content in nature.
Surely will lose a little harder because I thought you hear me can be remains urea put a little more.
No that people find me once you sure but.
Good morning, and who knows these.
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Either.
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Yeah.
I know you've got someone gummies, resulting in a hobby.
Yeah, so whatever the border.
If you had to use a waste of deal what a fine there distinguish content content on Jenna generation on the two platforms.
For example for celebrities baby using whiteboard to promote their lease or there are new new new pot and you you caught up but on the oasis they piece or their content will be much more focused on their daily life and.
The lifestyle related autos or video.
You might create value.
John do you feel the appeal touches with the Hilli reading.
Sorry, Julian I know you've got everybody. Thank you maybe boy you're going to somebody that you feel found them on their own.
Convertible debt I'm gonna legal.
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It's really.
Everybody.
Thank you Charles onto.
I'm, taking few vertical area for example, like the all told home furnishing.
Our they see the top content generators.
They are already existing Oh wait ball, but they do very active oasis a one of the reason is under the current on traffic its distribution mechanism. They will there be our ability to obtain large topic allocation on waibel, it's difficult.
But there because their content, it's a much more fits into the old it Oasis set up there there Sanskrit or the entire auction rate outweigh the voice that for a decent vertical big <unk>, it's much anymore.
And what they can't get on wasteful. So this would have serves a very important supplemental.
Supplemental platform to to our vertical areas.
It's already exist and on the wait for platform.
As usual tied to bunker from yet.
He either you're not going to hold your Texas teachers on approval.
Weve when she's going what's your view would come down here.
Oh, you're dropping.
Okay.
Please.
If you go to either.
Excellent.
That you're talking about forgotten.
So when you go to dog Mackenzie here she Josh.
And I want you to bodies older.
For me in a trend nobody can college.
He is back to the the marketing and the channel marketing I assume there, whereas most of the user acquisition I wait for these days are through the pre installation I had a handsets integrate it with our operation of hockey events and the hot topics.
But of course, there's the other channels existing for at wave or use the acquisitions for Oasis, we probably would be using other channels [noise] I'm more in a more frequent in a manner to onto de users.
Okay.
[noise]. Thank you.
[noise]. Thank you we have the next question from the line of Thomas Chong from Jefferies. Please go ahead.
Hi.
Thanks management Baltic in my question Oh from your questions.
First question about a Mac.
Yeah the pricing.
It appears that management comments about hobbies thing about the met coal.
Oh looked.
And my second question about out here.
Okay.
<unk>.
Hi degrees in topic.
The industry categories.
It's hard to talk that performance as well as a supplement as we go into next year.
Final question yourself out of our strategies on a hobby.
Oh, okay.
Okay.
Oh.
So what does your rent or significant Eagle twentys. So when you saw woman sorry Wong.
Oh.
We like.
Oh.
It's warm uncertainty the comp.
I'm sorry.
Do you agree with you.
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When you stop.
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Okay.
Talking about that sometimes.
One moment strategy publicly but as I sit here.
Not to simply documents you might move wouldn't work on them, we've come a huge kids Chicago to people, who do a secret. So obviously it'll go there [laughter].
Even though you know one for funding should that's amazing could easily Oklahoma volume issue yes.
Good food you shouldn't come as your claims that came back on me.
Our harden our email.
Turning to launching than usual.
Opportunities you view would you be often monkeys, we got from Citi.
With the recent guidance as reported by peer group companies, that's why not wait for I think in general in the different marketing area companies being very conservative towards fourth quarter App and more.
Market.
With the and certain uncertainties.
We continue to exist data for the micro situation Oh, we see advertisers are are getting more and more push or on the at absent a marketing dollars.
Interim for 2020, a at this moment, it's very hard for us to give a very good.
But the so called the a clear expectation you interns, how we won't be performing for the year to calm given the current macro situation and the market how does it on the competition.
So two deals incoherent conference here in one change overnight.
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No I put industries.
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Sure on chain snowmobile audio video I forgot Accoona Greenway sums up the.
Vehicle with right I mean, what I told on select committees your p. shortly the one value.
Sorry.
Seat.
On the cycle.
Huh.
Okay.
Okay in terms of the industry performance, a FMCG continued to be the key industry to drive the gross on waibel, what we have seen in the FMCG industry that is one area continue to outperform and the others and there has been mitigate mitigated through a lot of answer.
Our 10 piece existing in the micro situation in particular, what seemed a FMCG person Nokia and personal care and of course matters as well as the apparel received pretty stronger performance pretty strong performance in the last few quarters and a continued to be the larger.
Just a industries backgammon for wasteful and a we foresee that it will.
It will continue to be the largest industry will affect them. After we bought in the quarter the comp as more and more FMCG companies moving their marketing dollar from offline to the online are.
You'd be a you'd be a program running between weight Brenda.
Ali Baba will help us to further taking a marketing shares or the marketing dollars for key accounts not only on the brand side parse partially will be coming from the increase in number of customers who won't be participating in the U.S.
The program, but more importantly, we're going to tap into the AD budgets for the inter greater marketing for brands and the performance.
Uh huh.
There are no Sunoco amazingly show FY 15 locations.
Kind of let me you yet I guess order.
I have seen a few medical school.
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Something so visions, you're looking that she's going to switch silicon, but I've got done that you me Shimon course Museum, which you should she can cope with European Pat I'd say from and she's going to people for blast.
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Yeah I mean.
Citizenship.
The kind of.
Comes water treatment bag.
Okay. Okay.
Another potential upside except for the for our local FMCG brands, which that comes along with the in general consumption upgrade.
For consumers, what we have noted that local FMCG have the strong demand of for their upgrade in their friends and they have oh, yeah. They would that they are they're looking for a integrated marketing with.
Celebrities or IP IP for TV shows there are the online.
Online variety shows and that fits very well with away bought a key event keep advantage with our oh with our user user scale as well as our capability distribution with IP products.
Oh, we believe there would be more growth on the local brands in the near feature some of them all up become very important key accounts off for us never get over time.
He wants to anybody that's.
She true, but you don't quite concerned here at all.
I mean, what until until there's only two sitting here can you tell me if I heard some people are yet that's and she's or some type of 12 cool.
It would be about that.
So I'm not.
You may be boom, which was young children than me.
Okay.
You saw.
From Northern Sheila.
Oh gosh.
I mean.
Anyway.
With <unk> in terms, the autos back and then even though.
The overall market for the auto.
Industry has been rallo relative challenge Oh, we see pretty good performance for our auto clients. This year with both number of customer customer number and I have been increasing.
Throughout the years the reason behind that it goes back to the consumption capability for Waibel, Oh, we bought the user base.
We are talk quite significant auto, but just for hot and auto brands, which that's the key key factors for the revenue growth.
For us this year.
Oh really mothers or do you find that Oh I use this one's got body.
Anyway.
So do you know if you know going as well, but will coordinate should probably be shipping.
Meanwhile.
So with yourself.
Yes.
Right.
On a median.
Okay Karnes convenient shopping.
Now I would imagine freeze huh.
[noise] another big industry stuck in a second for US. It's the handset manufacturers are either transitional period of 42, Fiveg, a we see the relative weak in the net adds to me and for a handset.
This year on top of that we see the local on the domestic brands for for has that actually has been decreasing in in the last two years, which has a lot to two that challenge marketing exposure for for handsets.
Hello marketing dollars.
For next year, a with more fiveg products made available into the market will believe there will be opportunity for their handsets, but just a marketing, but just to pick up in the later part of 2020.
[laughter].
Okay.
[noise] okay.
[noise]. Thank you we will.
The next question. The next question comes from line of Gregory's off from Barclays. Please cohorts.
Hi, My comments about taking my question how quick one all youre out for me I'd retiring.
Definitely did I understand more about took the overall as a market trend out of the competitive landscape. How often asked me advertising and also how we birthmark carbon preservation and they do very helpful. If you can share Scott Hi, Georgia, I Premier advertising revenue grew saltwater and also your strategy to drive to grow.
Oh, Connie Hsu Shahar chairs or what the children are you go farther in Asia as an independent from either phone call all right, you're saying you're already at <unk>.
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What are we portion by the kicker Osher shall we true hi, everyone. You know from challenge on maker has I mean, if you didn't.
Uhhuh, there's some true about when you didn't I think almost totally Oh, we found a bundle occasionally.
[noise] decision. So I mean, I got I was asking there for lucky here.
Thank you to foster children.
The Susana sometimes inquirer casual it can be done on them.
I see what's going on here.
I see on.
Couldn't I don't go from I leave it again.
Assigned indicating in my prepared remarks, the SMB perform at an outperformance for the third quarter was relatively stable.
Delivered a five or 5% a year over year gross 16% Q2 Q grows a most the growth was driven by the increase in a human trade all while the our sell through rate of for inventory has how to some.
Level of increase.
No.
She's looking I don't have.
Finally, I'd heard that chocolate.
Hmm.
It's rather so again.
Okay.
These Kim.
Yes.
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Colombia people tell whose guy social sector younger I feel about that.
Yeah.
Yeah no.
Your commentary from unit Allegheny, Berkshire searching out, but I won't go who's going to kind of venture.
About the sharp accumulate.
Yes, I wasn't easy that means you know it sounds like I don't.
Oh the D. I think the core issue for the F S and needs coming from the price pressure, we have experienced there for a period of time as we talked about in the last few quarters our pipe.
At the asset price for FMC has been in that he sending trend or even though in the third quarter at that that descending Trent. The de same percentage has to be narrowed to about 10% or are you or your basis.
But still it remains quite challenge for us.
Primary comes from the supply and of the EMA train in the marketplace.
No you might not be my Goldman Sachs hours on the.
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Thank you.
I don't.
Oh, so that's what you saw from yet.
Okay go that shows up I mean, if all that that Youve got a little too.
The other part of the I'm, assuming issue come with the measurement challenges we're facing in the past couple years. The way we price are a wave was SMB or at what they're very similar to Facebook.
It's called so call it a cost per engagement, so that look or the the measurement was focused on the interaction between the the apps and the users. So that includes a direct or indirect downloads off the <unk> interacts off the.
That's the that's the ACA related product, but with the emerging of their short video off when we see a quite big changes in the measurement methodology, where they're much more focused focus the on the CPC model. So.
There are only account for the first time click a with a much less concerned about awesome subsequent and conversion and the ARPU can be generated so with that we see a lot of a bit of relaxed and a in the.
Demand side of from different customers with so we have to actually to provide a more service and a more provide a more education related to training to our distributors to address these issues.
So the new out of the physical contact for me if you like a minimal.
She into who does it sort of Apple phone.
So I'm wondering.
On a sequence uses.
Okay.
Sure.
Some of them.
She from different typically element that she she nicole.
John .
Uh huh.
And the two to the other strategy part a way it were pushing for we're pushing very aggressively on the automatic.
Automatic at.
Running that's on a so called Oh CPX model, a we see a very rapid ramp up on that.
On this particular programs with 30% of increase on a sequential basis. We believe the automatic Oh CPX model has substantially decreased or lower the bay area for a new customer to running their app on label.
Roger.
Good.
By the acute care.
Oh please.
C or when available over the transactional.
Okay.
Okay.
My time here, Oh Donegal functions.
Sure.
John curriculum, and then we're talking about.
Oh, sorry, the car each other so that's one telco.
The another area to address the SMB gross issues to pushing for more I T or care, all integrated marketing solution to our SMB customers.
What we found it if a a campaign or marketing.
And can be associated with particular, IP products or IP items or the K L C or cost associated with such campaign can be reduced more than 50%.
I think we that's one area either in the next few quarters, where we will be a.
I'm much more focused now.
Yes.
Okay.
[noise]. Thank you I would not like to have the conference back to a Christian church for any closing remarks.
He set top box conference call today. Thank you for join lines with you next quarter.
[noise], ladies and gentlemen that does conclude your conference for today. Thank you for participating humor all disconnect. So thank you.