Q4 2019 Earnings Call
Ladies and gentlemen, today's conference is are scheduled to begin shortly please go de standby for patients.
Today's conference is scheduled to begin shortly.
Cookie to standby.
[music].
Ladies and gentlemen, thank you the standing by and welcome to the yet so young fourth quarter and full year earnings.
Thanks Conference calls.
This time off which is a surgeon listen only mode now that the speakers presentation. There will be question answer session.
Ask a question during the session you'll be sufficient Taiwan so.
Please be advised securities. Please proceed accordingly.
I had the constant school with roughly speaking for today.
She's thinking skills.
Thank you operator like the one and you think you for joining us today.
Fourth quarter 2019 on Sweeties competed adient today, and it's about about I always said I honestly on dot com.
On the call today from so we have Mr. <unk> co founder and Chief Executive Officer, Undiminished, Dimming <unk> Chief Financial Officer. They will both be amenable to answer. Your question is doing the police it should definitely management's prepared remarks.
Please note that discussion today will contain forward looking statements made under the Safe Harbor publishing I'll tell you, it's probably too greedy and litigation Reform Act up 1995.
Forward looking statements centrifuges risks and uncertainties that may cause actual results to be clear maturity from our current expectations.
Yeah sure risks and uncertainties include but not limited to those are like no public filings, we say cc.
Including <unk> annual report on form 20-F.
So young does not undertake any obligation to update any forward looking statement, except actually quite a big boy.
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Revenues exceeded the high.
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Increasing NIGC person year over year.
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Net income.
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Over the past here, well actually eat deployment of Pcs, we the foothold optimizing the overall user experience.
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In closing I'd like to thank all our employees.
Indication and how to work during these difficult hi caused by the <unk> nitrogen offering.
Well also mindful of anti.
Capiq medical service provider during these times.
We are confident did how're you.
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He very happy people services, while we continue to attenuate not.
That's great Bogo for all shareholders.
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I'd now.
During the call over to me I'll go through the financials for the called her.
Good.
Yes, so to speak for money, that's all amounts quoted here.
Being on unbeaten. Please also refer to our earnings release for detailed information of our comparative financial performance all year over year basis for the fourth quarter 2019, total revenues were RMB 358.2 million up 96% year over year.
As indicated earlier this exceeded the high end of our previous guidance.
[noise] within total revenues information services revenue was RMB 264.5 million up 108% year over year, driven primarily by increase in average revenue per medical service provider as they increasingly allocates a larger proportion of there must be budgets to all the platform based.
Being turned completes the value chain, which allows us to offer a more diversified and the optimized portfolio.
<unk> products.
Renovation services revenue was RMB 93.7 million up 67% year over year, driven by increasing the number of purchasing uses.
Cost of revenues were RMB 58.5 million up 85% year over year, due primarily to content related to a related expenses.
Total operating expenses were RMB 222.9 million up 90% year over year.
Sales and marketing expenses were RMB 132.2 million up well why do the 7% year over year due primarily to increase.
<unk> expenses associated with marketing campaigns and they use acquisition initiatives.
General and admin and administration expenses was RMB six fees up 36 million up 30% year over yet due primarily to any increase in personal related expenses.
Research and develop month expenses were RMB 54.7 million, a 411% year over year. This increase was primarily attributed to bear fruit vote to costs associated with increased hiring to support product development, which is in line with our strategy of strengthening.
<unk> technology and big data analysis capabilities.
Income tax expense is well on B 29 million compared with income tax expense of RMB 2.8 million during the same period last year.
The change was primarily due to increased in taxable income during the fourth quarter of 2019.
Net income was RMB 69.9 million up 71% year over year compared with RMB 40.8 million during the same period last year.
Non-GAAP net income was RMB 86.4 million up 87% year over year compared to two RMB 60, 46.3 million during the same period as far as yet.
Basic and diluted earnings per Ats attributable to ordinary shareholders well on be zero point of 68.
Dollars.
Zero point, 68, and a compare and on be zero point 65, respectively, compared with RMB zero point of 17, and the zero point fifteens, respectively. During the fourth quarter 2018.
The interest of time I would not go through the full year financials ings simulate detail.
For the full year 2019, total revenues well I'm be one.
One point 15 billing.
Up 87.
Essentially year over year within total revenues information services revenue was RMB 833.4 million up 101% he over yet [noise].
Reservations services revenue was RMB 318.2 million up 57% year over year.
[noise] cost of revenues will be.
Well, I mean 98.6 million up 117% year over year due primarily to an increase in personnel related costs.
Total operating expenses were RMB 807.8 million up 70% year over year net income was RMB 176.7 million up 221% of year over year compared with RMB 50, 155.1 million in fiscal year 2018 now.
GAAP net income was RMB 280.9 million.
247% year over year compared to RMB 80.9 million in fiscal year 2018.
Basic and diluted earnings per alias attribute a boat to ordinary shareholders, while on B 1.6, before and the RMB one point 54, respectively.
Paired with basic and diluted loss per Ats executable to audiences shareholders while of RMB, One point 54 in fiscal year 2015 2018.
Now moving on to the balance sheet.
As of December 31st the 2019, we had total cash cash equivalents restricted cash and term deposits and the short term investments of RMB 2.8 Philly.
Compared with RMB 1.2 billion as of December 31st the 2018.
The increase was primarily due to net proceeds from our IPO in May 2019.
No no onto guidance it has been a challenging start for 2020.
As we closely monitor the evolving in parts of a coffee 19, we have prioritized the health and safety of all employees and half in place elaborate.
Contingency preparedness Plas tweaking sure business continuing to me.
No the fundamentals and the long term drivers of all business remains strong.
We are cognizant that there are many on those relating to the duration.
Severe right, so severity and overall micro economic impact of the outbreak.
With that being mined for the first of course of 2020, we expect total revenues to be between.
RMB 160 to 118 million.
We currently have very limited visibility surrounding the epidemics long term impact on our business.
And the markets in which we operate therefore this forecast reflects the company's current and preliminary views on markets an operation conditions, we should we see which are subject to change.
This concludes our prepared remarks, I don't know tend the core to the operator and open the call for today, operator, we're ready to take questions.
Thank you, ladies and gentlemen, I'll begin to question answer session and if you wish to ask your question. Please press star wanting to tell the cells.
We need to be announced.
I wish to cancel your request please press the pound.
And for the benefit of auto business, if you're asking your questions in Chinese please follow them up with an English translation.
Once again that is star one.
So question.
My first question comes from that I know, it's almost <unk> of Jefferies. Please go ahead.
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Management about that Q1.
He says.
This trend has been rising and how we should think about that business momentum.
And the second hop off of it.
Thank you.
Okay. Thanks Thomas.
I will address your question Uh Huh. So first of all for the first quarter 2020, as I said embedded remarks.
It has been fairly challenging the key reason use because of the called the 90 all break all the offline Oh the service providers.
They are they are not able to operate so they need to shut down the business for the full February.
Let's start from the Chinese new year wishes 20, I think stuff from 2024th.
Generally until.
The end of February and the in March we do see the service providers, it's hard to come back to the business.
They need to apply for opening to the local government and the if they get permitted then they will start to accept.
Customers and start to carry all services.
From a <unk>, that's that's basically the market condition, a impacted by the called igniting.
And the from my platform as a soils platform Oh of course, a the traffic has been done during touching Chinese new year as usual.
And we start to see the D or the active users coming back to a the platform.
During the second week of February.
ER and during the second we could have February they use a active users start to reached the level prior to the <unk> Chinese new year [noise].
And a much right now we do see uses go but Oh go to a the offline service providers for taking treatments and services.
And that's the chance currently resuming the normal.
Resuming stuck to ER to come back and we do see a the business activities coming back as well.
And.
We have.
As a as a community based platform.
The service provider even.
During February they steel.
Invest.
On a platform to acquire customers and the trying to maintain the.
The exposure a in in front of the dedicated medical aesthetics customers all sales platform.
So what's the trend going forward as I said.
It's very although interest me mainland China, you can see the.
The coping 19 has been.
Changed pretty well.
And the there's no new Casey speeding being carry out a in the past almost a week time.
And we do see the business activities, Oh offline business activities coming back gradually.
Not only from like restaurants, and the shopping malls and also a set of services.
So if the trend.
Oh going on well.
We expect a probably in the mid and late May.
The business.
Oh activity level crudes.
Possibly reach to the level of Ah fourth quarter two is on the 19.
So it means.
The Oh, a traffic and all those.
Service providers activity on the CMNC will go back to the normal level [noise].
And the for the topic point of view.
As I said active users are coming back and the we probably we will have seen the active users for much.
We will be.
Quite similar to what what is hub or what are your speech before a the Chinese new year, which is generally a chat generally level.
And the we're also seeing users are coming back pretty fast and then come back to the community using all the services.
Start from a much so.
Stuff from February So that's current point of view, but if you go to fund that shows.
As I said Oh, we.
As a company policy and the boards.
Decides to only.
Have a formal guidance for the next quarter's revenue.
Which is 162 on an 18 million RMB.
For the full year, we will it be very obvious the business has been impacted by the.
Coping 19, I'll break a Israel, having pets to all the topline.
Got it thank you.
Our next question just on the nine as Ryan Gong Citigroup. Please ask your question.
Oh, that's your question, Tom Oh, well down once you do go into those are going to.
Cool she goes a bit on your mill can volumes really took off a responses in Goldman.
And Tony your meal occasion, youre jewelry or go won't be that you quantify where you are the ones you got some department stores.
So do you go into downloads your harsher woman to grow genius, the reinsurance coverage from core since you've spoken sandal.
I've got some sold on color you could be targets you called.
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So I've got translates myself, so full grown a little impact on.
Benjamin to see and aging old small clinic school bankruptcy because all.
And those especially after the operation doors and go according to carrier.
And if so what's the percentage of all our total.
Hi.
And then my second question is important monetization efforts this year, what kind of improvement or monetization recently expects policy year.
And on our call Boston did his could progress thanks.
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And for your second question about monetization and ease of past few mountain, we and keeping upgrade our monetization strategy.
And our sand.
Yeah, Hey, that's access Oh, hi.
Cool idea or.
We are stretching our monetization fun to certain won't magical I said, he institutions and consumers.
We see <unk> E Commerce model is a mono and focusing on not operation.
And so we feel.
Hi, time and magical assets east.
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Allows you to teach you he is a country <unk> E commerce automation capabilities.
That's why we're designing nightmare for.
Got you specialty pharmacy.
And so these two he will be age.
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The view of consumer.
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Lastly, I heard you any information on our platform.
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How are you.
And for city I know transactions is also part of our monetization I agree.
So our monetization.
Okay.
I realize I sleep, well oriel toward that men are painful.
We see that he's a very big.
And if no under development and the progress These high school.
I find them and I'm not to mention lead who.
Leading them use.
In the fourth quarter.
We have no lead related.
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Oh, sorry, Oh, well Tusa you could just in the other one peters.
Well no more muted jinyan.
Suncor shuffle chance or most whitestone Buck I of course I'll go to go. So so just a full a follow up question. So for this quarter for this year or watch kind of revenue contribution, we expect fours or sell states to try to rich. Thanks.
Yeah.
Let me also question.
We will start to see some of the leads generated revenue a stuff from second quarter this year, but it won't be.
Taking majority of our or being a very large portion of our revenue by that time and we hopefully it will grow in the second half of this year, so, but if you say Oh wassa upsell, there's a month or what is that number or.
We Cogs gave you the number.
Okay got it thank you.
Thank you.
Next question discipline denied a budget and we can see I see see please go ahead.
I think there Brian Coleman Oh Neely.
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For taking my question is it simply represent.
We haven't had turned on.
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But typically like Holman physician owned.
Oh, that's feature Carney wasn't successful connected and whats simply from one position for this feature.
Sales and marketing how much budget.
Ben Andrew Thank you.
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And next question is from that I know Vincent Yu of Needham and company.
Yes go ahead.
Sure. So my question is that hold off on constitution. So we basically providing a platform for use in this and institutions to engage directory. So that's how are we going to ensure so young [laughter] preferably lobbies gets wouldn't transaction is about to happen and also who comes.
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Thanks, a lot.
Thank you next question is from the nine.
Robert Council of 86 research. Please go ahead.
Hi management. Thanks for taking my question the questions about the inner information services business.
In the fourth quarter, we saw pretty good pick up and spend per institution or spend per organization on information services I'm wondering if there's anything specific you all can call out that's driving a that increasing in the fourth quarter.
[noise] right, Oh, I think Oh address your question Robert So a information service, it's mainly driven by the traffic on the platform. So.
I think the key driver for the information service growth and especially for it individual oh the up for individual so this problem.
Well, it's mainly because the fourth quarter our.
Our traffic has been increased quite substantially but quite fast.
And the the other reason is fourth quarter, we have couple of 11, Gepetrol and the those ecommerce shopping festivals and trying to actually brings extra service providers, usually allocates more budget player and we didn't the festival period. So it helps.
It's helped our service provider ARPU growth in the fourth quarter.
Alright, thank you.
Thanks.
Question, it's from the line.
Uh huh.
Austin model of Canaccord. Please go ahead.
Hi, Thanks for taking my question and congratulations on the revenue growth acceleration as a few questions about questions about sales and marketing the total sales and marketing expense in the quarter experience.
De leverage year over year. So can you talk about what marketing decisions you made in the quarter that drove that and if you can can you also get the marketing and user acquisition figures for the quarter. So.
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Well 2019, we have total.
130 million long being sales marketing, we think that [noise].
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And for the full year Susana 18, 2019, we have four hungry and 69 million RMB in terms of shows marketing and then within the pop we didn't that's 300, plus 47 million is actually used for customer acquisition.
Okay are you able to give the split between.
Traffic acquisition and brand marketing.
Yes and.
So brand marketing in the fourth quarter, we actually invested on folks media.
Branding or sell a major investment activity I think we think the fourth quarter, 70%, 60%.
60% is for branding and around 40% for traffic I was just.
Got it.
And have you adjusted sales and marketing and Q1, given the Kobin 19 outbreak and.
How are you adapting the rest of 2020 years sales and marketing spending are you.
Pulling it back or are you getting more aggressive related to the.
Comments, you gave about some users and service provider are starting to return the platform.
Yes, it's very good question and the for the first a part of your question for the Coke igniting period fun and did we actually pulled back a bit on the so smoking at 50, yes. They also users.
So because usually we will start to invest after Chinese new year, and ER for the but no because Chinese TV yeah.
Finished basically in the beginning of February but there's a whole February has being closed off for business for for the service providers. We did a cut a bit will stay with a building sales marketing and the for sale for the future investment.
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For the whole 220.
As you can see for 2019.
Compared to two cells and.
And the 18, so interest or 18, 49.5%.
For the revenue has been investing sales marketing and the answers on 19, we have 40%.
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Which means our effectiveness and efficiency.
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Well in 2019 and the so that's I have to say that's the.
Ah that's the case scenario for the operating fall it says marketing team.
Going forward or as we always said to the putting vestas.
We are the key.
Strategy of so young is to acquire customers and a improve the penetration rates within medical aesthetics, Paul population.
So we will still invest.
Heavily in sales marketing and branding.
And then we're not going to or.
To say if a much going forward for 2020 in cell smoking customer acquisition is our key KBR.
So.
Hopefully it's also the question.
Thank you ladies and gentleman that concludes a conference for today and thank you for participating.
Disconnect.
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