Q3 2019 Earnings Call
Ladies and gentlemen, thank you for standing by for Fiomi Technology Co Ltd earnings Conference call for the third quarter of 2019.
Time, all participants are any listen only mode. Today's conference call is being recorded.
I will now turn the call over to your host Cecilia only up the piece and take group the company's Investor Relations Partners. Please go ahead Cecilia.
Take care.
Welcome to technology called Limited earnings conference call for the third quarter. Two so wondering liking as a reminder, this conference is being recorded the California turned out pretty weak outboard <unk> press release earlier today and that puts did.
You can download the earnings press release in after the Companys email the tradition like the visiting the IRS actually got the company's website at <unk> <unk>.
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Got it hurts and a chief Executive Officer, Mr. can jump to Chief Financial Officer campus based management will begin with repair remark and that all weekend 'cause it must be Q and a session.
Before we can you. Please note today's discussion will contain forward looking statements made in there just safe Harbor provisions that these are the Securities Litigation Reform Act like Nike side.
A couple Worthing there in Baltimore every risks and the Ericsson.
For the company after was down may be materially different from the views expressed today.
Well the information regarding the into other risks and uncertainties and included in accommodates the registration statement on phone I want and other filings.
With that you asked the gerken and they tend to commission.
The company does not assume any obligation to update any forward looking statements, except as required by law.
Please also note no earnings press release, and this conference call because it's got built.
GAAP financial information as well as it's called <unk> non-GAAP financial measure.
[laughter] Saumen trust for like hometown every conversation at the end no GAAP measure to the air already most directly comparable GAAP measures.
I will now turn the call upward to Obama older M.C.O. Mystery shopping chairman Mr. town loved delivered his remarks in Chinese.
Definitely English translation Mr. Kim Please go ahead.
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Thank you Choppiness in the show a bar you see a ultimately translate trends the mark will provide the operational update and discuss our financial performance for the third quarter 2009.
Well everyone. Thanks for joining todays earnings conference call, where again pleased to announce that we continued robust growth momentum for the first call 2019, and again achieved strong and healthy top and bottom on core with revenues increasing by 8% to 9.2%. One question George said between R&D and non-GAAP net income increase.
By 116.4% to approximately 83.9 million I'd be a third quarter of 2019.
<unk> ongoing macro industry wide on certain.
Oh sustain quite solid results underscore how exceptional innovation capability [laughter] as well as demonstrating the ever increasing consumer interest and demand for the Barbie brand you know portal.
As part of the cost strategy for this year, we continue to introduce additional product lines and SK used to strengthen l. equal product portfolio in offerings. In addition to new born free branded products. We have also continued to increase our cooperation with shell on Xiaomi branded products over the past several months because the introduction of additional product category.
Including Raincoats report, but more recently refrigerators, we took all going well received by the boxes.
But we also recently launched a new pretty premium I always focus coaching Brad starting first with a series of air conditioning products. This brand focus is on the mid to high end market and we expect coating to further complement our acute horton product portfolio addressed the need to more consumer segments opened up.
New markets and most importantly enriched your enriched the overall user experience, where we'll share more updates on the development of this brand and related products and HR and conferences.
In accordance with <unk>.
Our two point Fiveg strategy to continue the theme of preparing for the upcoming Fiveg hero and establish our leading position in this space. We also recently do you sell in Fiveg customer premise equipment or TV products to facilitate well on.
Fiveg coverage.
Yeah, but the developed with industry, leading specifications, we expect this product to raise.
I have to get her experience to a high level.
In addition, we believe it will continue to be more opportunities to enhance and expand user experiences.
Really going away from part scenarios in September we officially reached an agreement with China's leading automotive Brian W. best cheering for a strategic cooperation with the Iraqi connectivity space.
[laughter] Civic series of cars under the best you Brad will be it will be in April .
I have to get harsh connectivity system, breaking the physical boundaries of Iraqi on products and building a large as larger and more comprehensive smartphones ecosystem.
Oh Boy, we will continue to engage additional partners to broaden the sector into the Archie capabilities attract more users and apply out systems diverse usage environments.
The rapid and successful developments about business reflects out outstanding R&D and they had to deal with.
Oh, along without ever increasing market presence of brand recognition. The recent high profile double 11 Orthodoxy online shopping festival in China was extremely successful for us with many of our products among the top 10 within their respective categories. This is a truly remarkable achievement for being asked to generate such levels the brand awareness.
Consumer interest with you know.
With only a few short years I'm really a testament to the markets the bad for such next generation our products.
It's now be more than once you have since our IPO on NASDAQ looking back over the past yeah. We're proud to say that we had been able to successfully demonstrates the market the strength of our business management capabilities and its execution.
We were ranked as one of the top you less the Chinese company, but the most investment value, which was recently closed published by bearings hygiene and hydro brokers.
We're also pleased to see that we were ranked as one of the cumulative Iraqi.
A recent recent publication by 36 carry out.
These developments once again, a testament to our increasing visibility strong core competencies in future growth potential.
Before we will remain consistent and well aligned with our long term strategy and continue to focus on delivering healthy revenue and profitability what.
We're also confident that we can maintain our leading position charters Iraqi at home industry and contribute to.
Sustainable development.
So that concludes our founder statements I will now provide an operational updates and discuss our financial performance for the third quarter 2090. So first quickly summarize some of the key operational updates first in terms of sales channels for barmy branded products, we saw very strong growth in online channels, including all create a major.
E Commerce platform, such as joking JB a T mall.
As well as assuming et cetera, we have also been stepping up Oh, that's it's in developing our proprietary E. Commerce platform, you sound too as well as Oh, and social Columbus platform Pardon me lifestyle center or you're using for.
Platforms have experienced significant growth of the Pos yet providing us additional rewards enhance user stickiness and create better monetization opportunities going forward.
With regard to a appliance store network, we continued to see strong interest and support from franchisees the virus Brett.
Hi, Bob we like the prevailing industry conditions, we have shifted their focus in the second half two dozen 19 more towards further enhancing and optimizing our store performance in productivity, including the closure of underperforming stores.
The number of army offline experience stores are approximately 1600 as of the ended the third quarter of 2019 compared to 19 Hunter I saw you ended the second quarter, although there's a number of stores decreased revenues generated from helpline sales channels still increased on sequential basis as a reflection of the.
Shifting now offline kind of focus.
Looking ahead into 2020 , we'll continue to diversify our sales channels, including the opening up additional vitamin extreme stores as well increasing our presence on other mainstream hurdles to further bordering on market access and increased brand awareness.
In terms of use the penetration as of the ended the third quarter of 2019. The number of a household users grew to more than 2.6 million compared to approximately 2.3 million as at the end of the second quarter like shark and approximately 1.4 meeting as at the end of the third quarter Peter.
In addition to potentially about household uses or do you at least [laughter] about you products increased to 17.1% from 16.1% in the prior quarter further demonstrating increasing trend of uses adult multiple barmy.
Okay.
I'll now provide a brief overview about third quarter two nights in financial results and the third quarter, we again realized significant top line growth exceeding our previous guidance and showing acceleration on sequential basis.
In addition, we achieved an even higher level of watermark for.
Shopping discuss <unk> revenues increased by 89.2% to 1.7 billion RMB from 565.3 million R&D for the third quarter two dozen gene primarily due to continued successful rollout and significant increase in body branded products together with a successful launch of new shopping branded portal.
Revenues from Iraqi enabled smart home products increased by 71.9 cents to AG 829.2 meeting RMB from 482.5 million RMB for the third quarter of 2018, primarily due to successful rollout about smart kitchen, and other smart products together with the successful launch of new.
A series of Shelby branded products.
Within this category.
We are pleased to report the revenues from smart water purification systems increased by 1.2% year over year to 214.5 million R&D compared to 212 million R&D for the third quarter to seven they.
This increase was driven by healthy double digit growth sales volumes, which were partially offset by declines in average selling price.
Revenues from Smart kitchen products increased by 74.3 percents to 342.1 million RMB from 196.3 million RMB for the third quarter of 2018. The rapid growth was primarily driven by significant increases in sales volumes across many about smart kitchen product categories in Peru.
Hello, Barbie branded refrigerated products as well as the successful launch of Shelby branded products, such as range goods and that's those.
Revenues from other smart products increased by 267.8%.
Increased by 267.8% to 200 to 272.7 million RMB 74.1 billion I'd be for the third quarter of 2018 rapid growth was primarily driven by significant increases in sales volumes of Albuquerque branded washing machine a water.
As well as you categories sweeper robot portal.
Separately revenues from consumable products increased by 333.3%.
3.7 billion RMB from 12.4 million, our R&D for the third quarter of 218, primarily due to decreased demand for our water.
Water purifier field.
Revenues from value added businesses increased by 164.85 by 164.8 percents to 180.
6.5 million RMB from 70.4 million there I'd be for the third quarter of 2018, primarily primarily due to new product introductions together with increased demand for our value added products.
Including the successful launch a new series or shall be better products.
Gross profit increased by 40% to 40.2% to 238.1 billion from 169.
<unk> point 9 million R&D for the third quarter 2018, gross margin was 22.3% compared to 30% third quarter of 2018. The decrease in gross margin was.
Primarily due to the continued shifts in the company.
Business and product mix.
Total operating expenses decreased by 26.5% to 169.2, nearly nine be from 230.2 million R&D for the third quarter 2018, primarily due to a significant decrease in share based compensation expenses.
One all share based compensation expenses 90 to 90.2 million RMB working card in the third quarter, three or 18 that will no longer a core no longer occurred in the third quarter. Two that's 90. Additionally, we continue to achieve greater economies of scale and improve operational efficiencies.
R&D expenses increased by 29.3% to 43 point.
2 million RMB from 33.4 million in R&D for the third quarter 2018, primarily due to an increase in personnel related expenses selling and marketing expenses increased by 16.4 percents to 113.4 million R&D of 97.4 million R&D for the third quarter 2018, primarily due to any.
Increases in relation to the color to that business offset by a decrease in advertising and promotional related expenses as a result of achieving positive economies of scale and improve operational efficiencies.
General and admin expenses decreased by 7.3% to 12.6 million R&D from 99 point formulary RMB for the third quarter 2018, or again the decline was primarily due to us maybe decreasing SBC expenses as mentioned on a one off the SBC expense.
9.2% 90.2 million R&D was incorrect or third quarter, 2018 that would no longer and could this quarter.
Net income was 73.3 million RMB compared to a net loss of 59.8 million RMB for the third quarter, 2018, and Dan, but net loss into the third quarter 2018 was primarily attributable to the one off share based compensation.
Expense.
Net margin was 6.9% for the third quarter 2019, non-GAAP net income, which excludes the impact of share based compensation expenses was 83.9 million RMB.
An increase of 116.
<unk>, 4% from 38.7 million RMB for the third quarter 2018 on non-GAAP net margin remained at a solid level, 7.8% compared to 6.9% for the third quarter of 2018.
Additionally, our balance sheet remain healthy adults September 32019, we had cash and equivalents of 727.1 billion R&D restricted cash of 4.8 million R&D short term investments.
So short term deposits of 112 million on B and short term.
Best Min 269.8 million R&D.
For the third quarter of 2019.
Net cash provided by operating activities was positive 116.7 million RMB.
Now, let's turn to our outlook for the fourth quarter 2019 recount you expect net revenues to be to be between 1.4, and 1.44, feeling I'm being represent year over year growth of approximately 46.5% to 50.7%.
For the full year of 2019, we currently expect net revenues to be between 4.31 billion RMB and 4.5 billion R&D, representing a year <unk> year over year growth of approximately 68.1% to 66% to 9.7%.
9.7%.
Please note that the above outlook is based on the current market conditions and reflects our current and preliminary estimates of market and operating conditions and customer demand, which of course are all subject to change.
So that concludes our prepared remarks, we'll now open the call for QNX operator. Please go ahead.
Thank you we will now begin question and answer session to ask your question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then too for the benefit of all participants on today's call. If you wish to ask a question.
To the company's management in Chinese please immediately repeat your question in English.
Time, we will positively to assemble our roster.
Okay.
The first question today comes from Lilly in lieu of Morgan Stanley . Please go ahead.
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That's an equal.
So I have three questions of course is about you'll start opening.
So by quarter.
The total number 1600, there was a decrease what's been done but how good bye.
That's a company steel a stick to the original target.
2000 stores by the year end and the second it's on the marching what's the guidance for.
Fourth quarter, and 20 Twond deal in terms of across lodging and oki, marking and the so question is on the breakdown office sales guidance for fourth quarter by product and you any color Ken mentioned in for white to us. Thank you.
Hey.
Thanks, Libyan saw just take them one by one firstly on the on the store expansion rate so as we mentioned.
There was a shifting now strategy with regards to the expansion of the offline store now working in the second Hopper.
This year, maybe taking into consideration that the prevailing industry conditions as we may know the home appliances industry, particularly I'm being offline channels.
Has had some some challenges for for this year and we have adjusted accordingly.
The focus in the second half of this year has very much on being towards further enhancing and optimize store performance and productivity as well as raising the bar for potential franchisees wanting.
To a partner required.
So and also to date the closure of some underperforming stores and elimination of some underperforming franchisees.
So.
As we discussed the number of army offline stores were approximately 1600 eyes at the end of the third quarter up.
Compared to 1500 as of that started to young.
And as we also noted all goes the number of stores decrease I'm on a sequential basis quarter on quarter revenues generated from the offline channels were still increasing so highlighting the increased productivity per school.
Sort of till the fourth quarter out why we're continuing to open new stores and have largely completed outlays school closures.
We probably don't expect a significant increase in net store count as compared to to the end of the third quarter. So still around the say between 700 stores is probably what you should expect by the end of this year.
Looking ahead to 2020 and I think there are some uncertainties here as well rights or a main strategy is to.
Continue to diversify our sales channels, including the opening of additional.
Stores.
As well as increasing presence on other mainstream channels, including potentially some of the mainstream pay a offline channels. That's the kind of brought in a market access and increased brand awareness.
Over the long, but we do see the potential to open many more of our new stores.
The pace of store openings will of course depend on Mako Boucher.
I think it's also worth highlighting that as we continue to develop out Britain business and our brand and more recognition, we see be applying store more and more as I'm not shown rins and experience going bother then channels to facilitate sales without.
Hi, So I think thats.
The first question.
The second question in terms of the margin now margin profile right. So as you would've seen there's been a I would say a shift in our margin profile as well as our expense profile now I would say this is largely contributed particularly this quarter.
And.
Becoming a court house.
With regards to the introduction of several new Shami branded products and Shelby branded products. These new shami bundled products, although some may have lower gross margin they're now.
Then out overall gross margin.
It may not necessarily have Lola operating margins and somebody that high operating margins so the trend.
You need you to less expense contribution as well.
The shall be better products. So we garnered a.
Hey, Revlon relevant sales and marketing expenses.
So what do you have seen here is a declining gross margin, but also because of material decline.
Selling expenses sensitive sales, which has provided us with relatively stable or even increasing operating and net margins on a year over year basis.
So I think we need to fourth quarter, you probably expect similar margin profile.
After the third quarter.
Oh Brown the.
The VIP, that's evident hopped, 8% I met margin levels.
So going forward I'm happy with it we're still in the process of finalizing the compared with about budget for 2020.
And what will be able to provide more clarity on that aggregate injury 2020 I'm using our next earnings call.
So your last question was on the.
The fourth quarter by segment twice, so fourth quarter by segment I think if you look cuts or water purifiers.
I'll be around 10%.
And your gross.
The other.
Oh Gee smartphone categories. They should continue to see a very robust a core so between say, 60% to 100% on the smart kitchen and and other product categories.
Well consumable nothing I'm also a robust growth, 50% to 100% how it will look next outflow for that particular business and value added close to 100% growth there as well so that should get you to out guidance of around say of around 50% overall growth.
It does that answer the question.
Oh, Thank you that's very clear.
Okay.
The next question today comes from Q.
See I see see please go ahead.
Shopping so going into a thanks for taking my question I have two questions. The first place Rami did a really great youre seeing double 11 at home appliances industry declining for top did you see some recovery in the second a second hub and what's the outlook for 2020.
That's the first question. The second one is as you and the show me have student relationship Io T. home appliances, and the show me has put a five cheap philosophy I O T to be the next maybe five to 10 year thing on some strategy what can we expect about let me throw in show me.
Yes.
Thank you.
Yes.
Thanks, you don't.
Oh, no first question on industry outlooks Cody.
Good day.
There's still some ongoing uses and go on Brazil home appliances market industry, particularly onetime items.
It's fair to say that the industry as a whole has not performed as well as I had expected at say as the stock.
Started this year.
Nevertheless, we believe this does provide exciting opportunities for for Newell brands and car companies such as Barton and as you can see we've been able to deliver wrote Boston healthy growth, despite such industry conditions, which we believe it can be attributed to our unique positioning and execution capabilities I think.
The overall industry outlook is still quite uncertain.
These quite difficult to predict given the ongoing.
Macro issues and we hope to provide more clarity on this again going into 2020 on their own ondecks during this call.
The second question on the cooperation we.
Show me so it wouldnt be appropriate for me to comment on Shelby's or you just tried it and where they see army as well, but from our perspective, given the evidence that you can see this year or you can clearly see that we've been a one of the you show me could system companies I would say to materially expanded our relationship with Xiaomi.
Bordering out product Corporation, a usually from on the water purifiers and some what it should products.
Turning now including market finds products such as a range would starts in refrigerators.
Well as very core small point products, such as sweeper robots and blend.
So we do see ourselves as an important.
Partner full four chowmi.
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Okay. Thank you very <unk> and congratulation on the strong growth. Thank you.
Thank you.
The next question today comes from Robert caliber of 86 research. Please go ahead.
Hi management. Thank you for taking my question.
Actually up through the first is about.
The New brand you you recently launched coking.
My I'd like to hear you all's thoughts on the.
Logic of launching a second brand at this time.
Particularly given the fact that.
Vial me itself and still a relatively new brand to a lot of consumers.
And then my second question is maybe a little bit broader.
I think this year you all have done a very good job of moving quickly and expanding the product portfolio, but I'm.
Thinking longer term, what what are you all core competitive advantages how do you see that.
Those how do you see your core competitive advantages and what's the capex need in the longer term too.
Defend and extend the.
The strength of those competitive advantages.
Particularly outdoor looking into 2020, Oh on Capex.
Yeah Okay.
I'll take them one by one Kim so on the new a premium coaching Brad. So we recently launched the sprang recovery Theres a series of air conditioning products.
So the idea of this brand was twos and this is a co branded pretty great color coaching and apply barmy Brad.
Is that we wanted to essentially set the foundation or or say a premium brand. So we really one borrow need to be position as you make recall and say a more.
Accessible mass market or meet TIOPREM put the middle class.
But.
Going forward, we also want the opportunity to pretend lives out product and then have.
Well the categories with higher ASP products.
All put a more premium consumer to ready mix, the brand portfolio and potentially margins going forward as well. So that's why we chose to launch the I'm quoting grant this stage initially or acquisition, which are complete.
Your turn now RG product portfolio so.
As you may have seen these conditioning are very much physician towards into the mid to high end market with innovative AI plus higher to pick a good.
So I think that's the that's the rationale or launching this new branded at this time and given the size of the addressable market, we see a significant room for gord for a variety as well as the coaching Buybuy baby Brad on how.
So your second question on core advantages so.
The bottom concept right is founded on the idea of brand positioning out brand.
As a unique.
Hi Tech our next generation urgent Brent or the middle class consumers in China. So this demographic is a is very important to us or the largest demographic and very much growing demographic characteristics.
Our that they have a nuclear or their phone controllable expenses. Good amounted disposable income a like a smart products and a high tech products, but also on how the degree of pricing.
So given our business model.
Which incorporates this concept of bomb bundled sales I'm old backend monetization of.
I mean, the sales channels.
As well as being very attractive in terms of being marketed towards high tech rather than purely a value for money put up we see out brand and product is very attractive.
Two.
Our key demographic and also being able to two mockups to this demographic effectively.
And I think a as you can see by results over the past five quarters, now and even simply being this isn't even before that is very clear that there is the market here for a brands such as ours, and we've really been able to leverage our.
Management capabilities and experience as well as this.
Brand focus to penetrate.
So I do demographics as well as leverage the opportune time, when just so I wouldn't a home appliances in the street is giant home appliance industry in China, it's going through this transformation phase from traditional hardware aspect.
And business model to this next generation I do next generation RTL products as well as onboard user centric business model.
So in terms of Capex required so as you know we.
Could be asset life business. So the our core competencies R&D R&D design software and services aspect or we outsource or the vast majority of them then factor in two to OEM suppliers and on the downstream channels, we reported that with franchisees to operate the stores. So.
Capex has been very limited who are Alkar history now going forward, we don't expect to be incurring significant capex in the near term to build manufacturing facility.
New manufacturing facilities and whatnot, but as we had I mentioned in your perspective, as well and consistently onto their earnings call. We are constantly on the looking out for potential investment opportunities in value chain investments I'm These could potentially increase.
Some of our core suppliers, but components men suppliers or OEM required to be able to control, the quality and and timing and quantity of supply that.
Thank you very much variance, though.
Again, if you think.
Ken If you have a question. Please press Star then one.
The next question today comes from Vincent Yu of Needham and company. Please go ahead.
Hi management. Thank you for taking my question. So I have a few questions and quite a lot about says coking.
Bookings. So one is on the investments in new product lines looking brands and the other new initiatives to where we think about R&D expenses going forward. It's on the second questions on the Randy contribution from cooking this new grinstein Foursquare and the twinkly ended can we share some arm.
Margin profile for this part of that.
And so question is on the competition like a on October one look like a meeting he has showed the progress in Fiveg Aiotv space.
In October so can we do so our view on the condition.
Thanks.
Things out there so whether when Hutchison my nice windows are getting this income had could yield range. That's needed usual will eventually go well could you do can hygiene here with GE doesn't attending the toll yes, we do a majority of western management values on the Yamal LNG should worry you could you do a pending acquisition due to a decent either already will ninja that had a nickel.
Ethan and doing that shows certainly sounds like you took the tension does he can do go money to anytime that you feel shoes Anyones. These unusual shoes and then the Hebrew fatigue.
Tom season, we're probably not woman thanks.
We went to build China, which I'll do the to give them in a woman's about kinda vision.
Okay. Thanks, Jason I'll take your first two questions and.
C or Shelby will answer the last one so in terms of R&D expenses.
So we will obviously continue to invest in R&D about products as well as technology and services. R&D is are they are important positive about.
Because.
R&D expenses will continue to increase spots.
As you can see a.
Revenues also continuing to increase or a very rapid rate. So if you think about operating expenses as a percentage of sales you roughly expect operating expenses vintage cells to be around say, 14% to 16%.
The next several quarters, we're selling and marketing being around say 10 to 12.
R&D being around three to four engine a being around once 2%.
Right, so thats the R&D aspect.
With regards to unit economics and margin profile the of the coating brand I think it's still very early stage right. This was only launched I'm a few weeks ago in the fourth quarter. So there was no revenue contribution third caught up and we'll probably only be or.
In significant revenue contribution as a whole in the fourth quarter. Although 2019 now going into 2020, I think there we will need to more time to see the sued the performance of the cooking the suit.
Alex.
So Papa may condition will also be launching new product categories under the coach brand as well fall for the premium the high end market. So I think we just need to do it a bit more patients.
In terms of providing specific guidance for core back.
In terms of marching contribution.
I think you should at least for the short term think about it this way so at least for air conditioning over the next several quarters.
You probably should not expect used to be a margin up with driver it will be or should be a at least a break you de products will contribute to quoted easy to operating profits and welcome to lie.
As a whole bought likely in the near term north a margin opposite driver.
In an open so.
And.
And so I'll pass over to shopping.
To discuss the the fire TV and contribution but.
Well, let me say soundly it you sell credit either would see there probably.
Due to.
We'll see the CP to Lincoln.
Thank you.
Oh, we young but to me so.
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Hi, This is Jim Tisch, Yeah, you signed it looks like it's a woman to help I'm not sure sure Santa Cruz Bolzoni together trying to come even gen bulk water should trend into that you'd high when close to one that you don't they don't see the CP would you CPM.
Thank you, Dan I'm still going to want to congratulate no money like your shopping so with other I Miss it's shocking sort of how many new do mbps IDH tier, but it should go to heighten sand defender you see what I'd like to the time equal the job being Topshop and she will mean you Josh yes.
Turning to diminish.
Yes, I think I'm, if you're not going back on what we'll Miss you try and Chen chief sort of coming interesting if I should say they don't woman so that when it scan yet to should be.
And we'll go home in hundreds a woman designing women property, just having quarterbacks usually solely with us.
Wanted to dive in all four LTV or Tim good track, how we get it.
But would that have Oh, I make sure Domingo trimming that we have adequate supercom bucket number sheetal paid on body and its mission is to have you want me to go comes on so full of competing for young they killed so.
So we can Toshiba and soon I think.
It's either you make a comment electronic hides Sheila woman I see the when means young he says that it can lead to tell me that.
He's looking at you want me, Jason I want men, who are kind of conversions, but we've seen no team.
Hey, John out you to me that seem to should that trend. It's usually they don't need to communicate actions and where do we compete on kind of incoming interest in that so you take instead of it you, Michigan in there well MCO, where dr. dependent at cheat sheet, it's what's happening to Keith I would mean that seasonal.
Okay. All that's critically translate that so as we mentioned you do the you know fiveg product launch and currency product launch.
Few weeks ago.
We met we very much see our role as well as out position you snakes, fiveg generation Iraqi generation to be quite differentiated.
So first thought Fiveg, we think is very important fall will aiotv higher, especially in the home scenario as it will be able to provide full an uninterrupted hum coverage no matter. How large are the hard news or to really increase the user experience too.
Due to the next level.
And oil and obviously increase you need and ER and levels of connectivity.
So.
Secondly, all about Fiveg, R&D, especially including the development of that you product who it was developed in house and proprietary over one year create a dedicated R&D as well as dedicated five gene.
Thirdly fight GCB discourse actually has very advanced and industry, leading specifications again around 256 products to be connected to it has 3.6, but and 3.66 MPS and bps.
Downward and connectivity speed.
So this is very much a high tech.
Products not just run a mere we'll see can you put up.
Costly so do you mean.
Based on our understanding we don't believe that any of the traditional I'm quoting appliances brand have dedicated fiveg capabilities or dedicated Fiveg focus.
So we very much I think that at all first mover advantage space will be able to provide a.
Leadership position when the technology does come online and when the next generation products do come to market.
Basically I think if we look around the industry.
More than related industries, and particularly the traditional home appliances industries.
Trying to learn from from BARDA right. So.
We have really what was what we have done by.
Focusing on our five including the launch of this even put our company we have really.
Transformed itself from say or small little more smart appliances on Aiotv company into a high Tech company right. I think this transition will be very important to future brand positioning as a as well as how.
She moves are either Barbie brand, so going forward or in the future.
Perhaps consumers will no longer a city.
When you say you just another home appliances brand or or even on our key home appliance brand, but really a high tech.
Technology, Brad that does that happens to make these desired or I user experiences.
Board I think that this will be a key point of differentiation between us and some of the traditional unplanned Brent.
And lastly, and I think our stated Fiveg Jose I put Archie I do this.
Okay because.
This will really ushered in a new generation quite so we believe this will essentially.
Or in some ways, what the state wipe the slate clean.
As of the competitive dynamics as well as the the incumbent strength of some of the traditional company, which is why we very much and made a push towards we didnt have the early move up as well that that who chose ourselves as a critical leader in this space.
Thank you.
[noise].
And no further questions now I'd like to turn the call back over to the company for closing remarks.
Thank you want to gamble going after day.
Okay, great and clinical value Investor relations.
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Ted and go ahead go one.
This concludes this conference call you may now disconnect your lines. Thank you.