Full Year 2020 Kingsoft Cloud Holdings Ltd Earnings Call

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Ladies and gentlemen, thank you for standing by and welcome to King soft cloud fourth quarter and fiscal year 'twenty 'twenty earnings Conference call I would like to turn the call over to your host today Ms. Nicole Shannon. Thank you. Please go ahead Nicole.

Thank you operator, Hello, everyone and thank you for joining us today, he himself, while fourth quarter and fiscal year 'twenty 'twenty earnings release was due to COVID-19.

He was here earlier today and is available on our IR web.

But I I R K.

Right.

They'll come as well as our global Newswire services on the call today for all kinds of cloud we have all of our CEO. Mr. Union Law and simple. These are heads down hole, Mr. Wang will review our business operations and the company highlights followed by Mr. Ho, who will discuss the financials and the guidance.

They'll be available to answer your question during the Q&A session that follows.

Third Party trust her blood to come definitely do translation all translation uncle Commingling public only because all I need is great to see management that they must you know all regional language Roku Bill before we begin I'd like to remind you that this conference call contains forward looking statements within the meaning of U S.

So clarity litigation Reform Act open 1995. These forward looking statements are based upon.

Currently expect Asia, and current market and operating conditions and relate to events that you're well known unknown risks uncertainties and other factors all of which are difficult to predict and Emmanuel wish up beyond the company's control, which may cause the company's actual results performance or achievements.

Steve Burke materially from those in the forward looking statements further information regarding these and other risks are included in the Companys filings with the U S. S E C.

Company doesn't undertake any obligation to update any forward looking statement as a result of new information future events or otherwise except as required under applicable law. Finally, please note that unless otherwise stated all figures mentioned during this conference call I, even be it is now my pleasure to introduce our CEO.

And so we're getting long. Please go ahead.

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Thank you Nicole and thank you all for joining our fourth quarter and fiscal year 'twenty 'twenty earnings call. We are pleased to have closed the year with a solid performance.

In the fourth quarter, we generated so one potent lend to beating Chinese intuitive revenues, representing 63, 8% increase from the same quarter of 2019 for school year 2020, net revenues reached a.

Six points for the eighth beating China to Glenn and an increase of 66 point, a 2% year over year, we grew faster than the industry average as a result of the continued successful execution of our strategy as a leading dependent to cloud services provide.

We used the our dedication to a cloud business that we are able to avoid the potential conflicts of interest with our premium customers and hence our neutral position, which in turn brings us additional trough to from our customers. We continue to explore growth opportunities across a stretch.

Typically selected vertical sectors eight include the inside the puppets up these financial services and health care sectors.

We have for improved hence refunds out key technologies and deeply dove into this sector to meet our customer demand over the past year, we not only expanded our revenue from existing customers, but also cooperating with the many new premium customers. This includes inside the company.

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Education companies such as a new.

And so we have to teach and to us as well as financial institutions, such as the Citic Bank Watch out Bank My son in consumer Finance the company and its on both the bank and the backbone that supports the infrastructure developments and cloud computing has been growing rapidly we would.

So opportunity to further extend our businesses scheme and enhance our market position as the first choice in terms of the independents that cloud service provider.

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Firstly, let me talk about it's a public cloud according to IDC, China quarterly public cloud subsea the Trek reports for the third quarter of 2020, we again ranked among the top three for the insight to cloud service provider in China, We continued to focus on serving our print.

Customers with safe stable and comprehensive products and technical expertise ended the Cortez pause caught Sam T protection for example for a month towards life annual Gala, we just jointly organized a leading social media platform and our regional television station, we have the ability to compete.

<unk> says pump system and emergency resources scheduling plan to quickly respond to changes in customers' needs and ensure a grease live streaming experience. In addition, we also provide subsidies to two Chinese new year's Eve party jointly organized about beta BD and the youngsters.

That is a new media platform for China's top TV station CCTV. The peak number of concurrent users of the land before costing party reached 215 meeting we worked with a customer one month ahead of the event can substitute Majeste resorts are scaling and redundancy to provide stable clock.

The delivery and the network security accepted to ensure the smooth operation of the party in terms of new customers. We are engaging some insight a conglomerate to further explore their cloud demand, but deeply digging into and understanding customer needs. We have later.

Solid foundation for reliable revenue group this year.

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Move to product upgrades, we continues to improve our cloud to 19th proud of itself put a photo we launched a band metal service to provide high performance infrastructure. Some states do customers. For example in December not even the same sharing platform Zhou who completed the migration of its entire online.

Links to our cloud. These included the deployment itself Bob's into bare metal servers, which makes it one of the largest coubertin not eight clusters in China. In addition, we continue to upgrade our storage of subsidies, we are able to deliver hungry.

But our cloud storage as a stand at seven we also launched a high performance storage product.

Including final stories archive storage and others in terms of coding and including technology development, we continue to enhance our technical advantages and December 2021.

One we do in Kita encoder technology ranks number one in that UGC video category as the leading global video algorithm comparison Denny.

Demonstrating our team's technical experience and innovation looking forward, we will continue to leverage the advantages of our cloud native products portfolio.

Our software capabilities and to provide our customers with high performance secure stable and scalable cloud the seventies.

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Okay.

Now, let me talk about the enterprise cloud China's the enterprise cloud subs market is growing rapidly and the public to say that sector with songs small proceed prudently suites 22 regions across more than 10 provinces in China.

<unk> like to talk for <unk> Suisse.

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Conduct the computer and the West China and support the data from the Eastern China, which is the national programs at Hain tends to better than that.

Computing resources between the eastern and Western regions of China. In addition, we also plan to protect for loading health met would be the data technology company limited to help them build a cloud platform for some typical research and testing.

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For the financial services sector and more enterprises are gradually turning to distributed databases on cloud most of them cloud deployment models currently fragile received than the traditional or conventional deployment models.

Company has the upgraded a striking basis is going to lead to.

To go into a theater room and this supports our distributor transactions distributed computing and it features high visibility flexibility scalability security audits and so many other important capabilities. We have already started cooperating with many customers in that sector for example.

We have signed an agreement with China. The C. T. K band debuted a cutting edge data Lake, which will have some store and presents a massive amount of data and the power. The next generation of efficient and intelligent data to a financial subsidies. We also provided highly stable and easily scalable public cloud.

<unk> two our largest state owned bank and it helps them connect with their networks to cloud the servers and to deploy public cloud storage.

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So the health care sector. We are officially kicked off a new coach had set forth that Wuhan municipal helped us amazing so happy to abuse and integrate as a public health information platform.

And important to ceiling fight against the COVID-19.

Dominica Wuhan has received the states with pools in terms of states Treasury bonds. Even then it will kind of played play. It has played a pivotal role in the early fight against COVID-19 down it kind of gets them.

Our health care infrastructure.

But we believe that it's unpredictable Vietnam, especially with flex site infrastructure benchmark and we will have commission we'd set for Peacock. The first is to help you with some medical subject to supervision systems and to strengthen civic Coty, the Sutton needs to be with a regional data center for <unk>.

Z authority and some medical in pets to see our resources and improve overall medical service capabilities and third is to divert the citywide health care related.

Electronic I said Pete system, the fourth attributes deeds to emergency system in 16 pilot hospitals in the meantime, our cooperation with the C. C is well on the trial and so we are jointly promote in the second phase of.

A picture archiving and communication system for P. C N protecting Chongqing and other cities.

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Power tools about long haul kind of attitude.

Going forward, we will continue to execute our proven strategy and the focus on the third.

Since I just walked you through in addition to digging deeper into customer needs that we will actively broaden our customer base prudence expense into southeast Asia markets and did fall off of investment opportunities and that will also improve our overall technical capabilities too.

Catch us a huge growth opportunities and submitted stuff the current wave of digital transformation.

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Lastly, I'd like to very briefly touch on our E. S. T F N b.

Keep focusing on corporate governance human type two data surety incremental protection and other social responsibility we have.

Working on our internal state initiatives and expect to publish the first E. S. T reports in the near future.

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Hi.

I will now pass call over to Henry to Google for our financials of the quarter. Thank you.

Hello, everyone I went out of costs, often actual performance for the fourth quarter and our full year 2020. Please be reminded that all numbers quoted here I RMB. Please also refer to our earnings release for a detailed financial results.

So to begin with I would like to highlight several points.

First of all we are pleased to report that our total revenue of 20.

One point I'm sure you'll get RMB this quarter, representing a year over year growth of 63, 8% total revenue often actually I'm trying to trying to EUR 6.58 billion RMB up 60 points, 66.2% from 2019, which was well above the growth of the cloud in Australia, and China, how about you.

The increasing demand for enterprise cloud services drive our revenue growth.

Our enterprise cloud services revenue this quarter were $535 9 million RMB, an increase of 143, 1% year over year.

Antibodies cross out with its revenue up 2021 1.37 billion RMB up 182, 3% year over year, and now accounting for 29% of our total revenue compared with 12, 3% and nausea.

Great.

Benefiting from our premium Kosmos strategy, we are very pleased to see that many large customers have been making multiyear commitments with us well.

We are hearing the feedback of our shareholders and in order to let the market a better understanding our project pause, where they're happy to share all the backlog with you.

Even a large number of products having started the bidding process on the client side or have not finalized the agreement yet at the very beginning of each year.

Months of our existing project orders of enterprise cloud revenue already reached $2 8 billion RMB, including a certain part of orders from recurring revenues.

We believe that existing orders will form a solid foundation of our revenue base in 2021.

Therefore, our customer diversification of our revenue mix has been improving continuously for example revenue from our top 10 printed Kosmos contributed around 65% of total revenue this quarter compared with 73% in the same period last year.

We are seeing in their trend of diversification across our major premium customers yeah.

In addition, our cloud delivered services, which include VAT.

Adding services, such as coding and coding and our image enhancement of functions et cetera contribute it below 50% of our total revenue for two straight quarters last year the.

A contribution of the cloud computing services has also increased.

Number five.

Adjusted EBITDA margin and what's also approaching single mouse breakeven in this quarter adjusted EBITDA margin for the fourth quarter. It wasn't activity, 0.9% compared with negative seven 6% in the same period last year.

That means that your improvement of six 7% two percentage points.

Adjusted EBITDA margin also have been seeing improvement for 10 consecutive quarters.

The last module also narrowed to negative five 5% this quarter, which was a significant improvement from negative 24% in the same period last year our earnings per share EPS.

EPS this quarter was negative three cents per share improving significantly from negative 32 cents in the same period last year.

Our business is sufficient until they found out at this moment as of December end 2020, our cash position was 6.12 billion RMB.

Lastly, we were included in two major indices at the end of last year, the MSCI, China in November and FTSE Russell Global launch cutting that December respectively.

Now I will go through the details of our financial results.

Our private cloud services revenue increased by 44, 1% year over year to 1.36 bid out and B. We are committed to our Permian Kosmos strategy. The net dollar retention rate of our printer customers. In 2020 was 147%. Meanwhile, we are engaging with sort of internet conglomerate to a <unk>.

To explore new opportunities.

During the fourth quarter enterprise cloud revenue increased by 143, 1% to $535 9 million RMB. Our total number of premium customers in 2020 reached 322 up 79 accounts.

The our pool of premium Cutlass also increased from $15 9 million RMB in 2019 to 20 million RMB in 2020.

Cost of revenue increased by 63, 5% year over year to $1 eight three build out and B. How do you see cost increased by 49, 6% year over year to $1 1 billion RMB.

Total revenue decreased from 62, 7% in Q4 last year to 57, 2% this quarter.

We are achieving great economic of scale and improving resource efficiency depreciation and amortization costs remain relatively stable at around $167 5 million RMB.

Other cost concept of third party software purchases are sourcing cost in channel costs associate with both public and private cloud as well as other equipment costs related to enterprise cloud services at a cost of about $552 3 million RMB.

And the staffing costs were $10 3 million RMB.

Adjusted gross profit was $94 9 million increased from $56 7 million in Q4 last year.

Gross margin was four 9% this quarter, our adjusted gross margin benefited from our continued leverage on economies of scale and cost savings offsetting by the investment into new business opportunities of strategical verticals, such as health care financial services and incur costs for ongoing.

Yes.

Total operating expenses decreased to $337 9 million RMB down five 4% from Q4 last year, excluding share based compensation adjusted R&D expenses were $161 3 million RMB.

As a percentage of total revenue decreased from 13, 6% in Q4 last year to eight 4% this quarter.

Adjusted selling and marketing expenses as a percentage of revenue decreased from seven 3% in Q4 last year to five 6% this quarter adjusted G&A expenses as a percentage of revenue decreased from six 4% in Q4 last year to 0.8% this quarter, our adjusted EBITDA were RMB.

Next year with $70 5 million RMB compared with $89 3 million RMB in Q3 last year.

Adjusted EBITDA margin was also approaching single mouse breakeven and it was not one wasn't active 0.9% for the fourth quarter.

That's all December at 'twenty, 'twenty, we had a cash and cash equivalents.

6.11 billion RMB during this quarter.

Capital expenditures was 400 zero $4 7 million on B cells.

<unk> com is scale and improving our efficiency capex as a percentage of total revenue decreased from 26, 6% in 2019% to 21% in 2020.

Moving towards the outlook for.

For the first quarter of 2020, what the company expects total revenue to be between $1 83 billion RMB 193 billion RMB. It is based on the company's current and preliminary views of the market and operational conditions, which are subject to change.

To add the forecast reflects the relatively late timing of Chinese lunar new year holiday in the first quarter of 2021 compared with last year and also the typical pattern of the procurement and implementation process of major enterprises and public sector clients.

China in the first quarter of each year.

Meanwhile, we believe our public cloud revenue. We also expect continued growth in question.

This concludes our prepared remarks.

Well no I'm happy to take out.

Please go ahead.

Ladies and gentlemen, well now begin the question and answer session. If you wish to ask a question. Please press star.

One on your telephone and wait for him to be.

M a C.

You wish to cancel your glass please.

Please press the pound or hashmi.

Once again if you.

Wish to ask a question at Star and the number one on your telephone keypad.

Your first question comes from the line of Kinda Wong of Credit Suisse. Please ask your question.

Thanks for taking my questions.

Hum.

Sally, especially that EBITDAR margin.

And I wanted to chat with my two questions.

Our first quarter guidance.

The new growth is actually like you know, what you've been saying over here and from Hollywood Besides separately like.

Chinese new year holiday and also at some point going to be pushed out.

Can we now have more color on what kind of pointed that actually pushed out into maybe two.

<unk> for some time.

No near term.

Thanks, Andy.

Like issue that caused by like competition that all of the things well I think you're right.

Oh original expectation.

And because like my second question is actually related to the competition that Scott because he noticed that.

The address my giant cloud service provider in Dallas are moving.

For the enterprise cloud are quite carefully and we do see that.

Every year I find them.

But maybe on the paper side, they will compete with you Oh second PNM customer offering.

Pricing all the things on the other hand, there apply enterprise cloud, we also see more competition in this area.

I think that's my two questions.

Thanks.

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It sounds like you know I would take the first question and I'll, let <unk> answer the second one.

Okay now I think it probably is not going to be very important question and I definitely want to share more color.

Through the prepared remarks early I think the first point I just wanted to kind of recap on what happened and backing up <unk> I think that's what lay out a assumption of my house if at all.

For 'twenty or 'twenty. It out three major factors that are affecting the pattern in 2020, which actually whether you need to you. Obviously, we all know that was a COVID-19 happened in Q1 2020 that actually increase the pace of the usage on the public cloud side and is that accurate or carry over for a few quarters last year and also what kind of outlook for this year I think that's going to get positive factor.

For the for our form based off the revenue and also as we mentioned last year.

The Chinese lunar new year holiday.

Pretty much earlier that what actually did it affect too much on the <unk> implementation.

And also typically in a Q1 was also a relatively low season for all the major public sector clients.

The commutation of a bidding processes and also to share a few numbers in Q1 2020.

If you remember our total revenue is about a $1 39 billion. So as a percentage of the total revenue in 2020 up six six is roughly about 20% of kilowatts and if you look at it.

First half in the second half of the revenue split off the last year. It was around about a 43%, 45% and the later part of second half is around 55% or around that range. So if you look at the guidance for this year. So assuming west you around the same target for this year, the first half and the second half of the revenue split is actually.

Very similar to the mathematical effect of last year, which is around the first half about 40% or 43% in the second half is around 55% to 60%. So I think that's.

Kind of laid out the comparison from analytical perspective, however, as we mentioned before this year.

EBIT right now will stay just finished a two sessions are the meetings <unk> met in China, and all the kind of major projects, especially the bidding process is about to start even without those considerations that current backlog as we shut off the enterprise called a revenue only excluding the public cloud revenue, we already have $2 8 billion.

RMB of the backlog all had I think that will form a foundation for that.

For the revenue to carry off and.

Some of that backlog, we already see in the recurring revenue nature, especially from high quality accounts example from health care financial services at a certain major cities at the public.

Sector clients. So overall, we think that the revenue trend and a pattern across the quarters actually year over year White very similar and for Q1, if Kerry on the potential very same pattern and unique feature for this year given the two of them after we measure it.

And it will take the second question.

Alright.

Okay and also for the for the second question I think for the major competitions.

I think a few things we haven't seen any changes I think the premium customer strategy and our key focus on the neutrality will give us more around the opportunities and we understand that in the market. There are maybe other.

The players are still thinking still making great efforts to getting into the market last we know that the total addressable market of the tank car market you are adding rapidly and.

And also we are seeing a trend that the clients are actually are willing to use more cloud vendors. That's actually also the same opportunities not only for us but also for other peers in the market as well so in some situations as we imagine here in a few cases that will become important multi cloud vendor for all clients, even though maybe out of.

Company May also have a lot of shop, I think that doesn't prevent us to earn even more dollar value from the same client because the market itself is also going to give you a more two data points as we mentioned in the third party expert IDC stats that were clearly Iraq as a number three all things that are public cloud vendors and also.

We are making a great.

Our progress, especially for the key.

Accounts, and our clients, who have a deep water and the budget spending and who have more.

Concern on a concert ratios when they want to slap a neutral player where they will more trusted and well never getting any potential conflict of interest with our clients.

Okay.

Okay.

Your next question comes from the line of Alex Yao of Jpmorgan. Please ask your question.

Oh, you mean Henry.

Yeah.

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And then what your findings.

So my first question is regarding 2000 ton Q1 revenue growth on the would you be able to share with us your preliminary.

The 2021 and revenue growth, although particularly.

What are the growth outlook so Paul.

Uh Huh enterprise cloud as well as a public cloud.

Secondly, I would like to ask a one on one what would be the key industry drivers to that.

Public cloud business would you be able to share with us your revenue exposure from a video based.

Those trees in 2000 22020, including long form video mute phone video short form video and live streaming.

If you guys are incremental diversification strategy what are the other industries.

Potentially become the new growth driver to your.

Public cloud business in the next one to two years. Thank you.

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Thank you.

So for 2021 we have already have done.

Uh huh.

And compared to at least to 'twenty to 'twenty. Two we also have good expectations for 'twenty.

'twenty one as Henry has mentioned, we also have world class I pick a number of older.

Hans and with regard to the cloud computing I think of 'twenty, one to 'twenty to 'twenty.

22 that the steel located they better than sell through in that sounds computing and so we have strong confidence in these and with regard to the three sectors Hopkins surf system.

Our financial services and medical.

Health care subsidies that they have developed a full printout here so.

Quest Amelia outweighs them.

C.

Clouds.

Business and I think that the regulatory climate and slow regulatory matters also.

Maturing and so we can see the continued group.

Bruce you can see that.

Three sectors and also with regarded shoes.

We do.

This needs and the public.

Cloud.

In 2021 are we seeing cut there.

Due to developments in the solids.

BD, you said there'll be not a big change, but with regard to trend.

<unk> trying to be too narrow before that'll be probably even further development in the HD business and also in the immersion video business and.

The share of the video business in the public cloud.

<unk> settlements.

A stable.

Big change based on our expectation.

Expectation and those are.

Uh huh.

And it was not that shows our customers are.

For example, as a educational sectors.

Uh huh.

I think it also ecommerce exercise.

Also stopped so are you seeing some videos in their applications.

Generally speaking.

<unk>.

Our business, though we do not expect any big change if we describe that as soon as the prospect for 'twenty 'twenty, two we do need to we and obsess. The further development of relevant technologies.

Fair enough.

Thank you.

Your next question comes from the line of Thompson, who of UBS. Please ask your question.

One song how long is on Henry.

T D D.

Susan Mcgee choose.

Quarter on quarter.

People so many challenges.

Michelle.

Juggling teachers.

Q G&A.

She says Chumby.

Year on year, now, where she has been with G.

G E.

G&A deal.

Do you have the ones, we just probably to E.

E Mail.

Hum.

Hum.

And like you mean, Honeywell, even in an industry cloud smoke when comes to the channels. So any color you can share.

Yeah.

Can take home to somebody else.

Plenty.

My my two sets of questions. The first is regarding.

Our fourth quarter results, just the margin trend in the fourth quarter, a little bit of a decline sequentially can you walk us through.

The impact there.

So on the fourth quarter G&A expense.

Seems to have declined quite a bit year on year, how should we think about G&A expense going into 2021 and the other question is about.

Just the health care cloud this.

This seems to be quite an important.

For both China and.

And also in my view the company.

Can you just talk a little bit about the outlook for our health care cloud.

And keep saw some changes there.

Sure.

Yeah, I think he would tell me that they're happy to do it it's not a question. So I'll take the first one at all or are you all get anywhere I'll answer the second question.

For around the gross margin for Q4.

So I think the first point I want to mention that.

Co pay on an annual basis from 2019, our gross margin was there a playful sense.

On the 20th annual basis, our gross margin was five 7%, so which is actually already there isn't anything to improve on a year old.

Yeah.

No.

Going to be a faster pacing, even compared with other major peers in the cloud industry in China. So I think that's got cut off and lay out the first part.

And especially for the company and budgeting process perspective internally, we actually need to look at how we invest.

And to a technology to the clients. So if everyone I remember for example in Q3 in September and October with.

We just entered as you mentioned.

The health care industry, and vertical and we signed a partnership with Cez group and also in Q4 will make a few a major breakthrough and also introduce a few new clients, especially in the banking sector. For example, aesthetics and I'm not sure. So as you know those are the new area of high quality clients, who are willing to receive all the hype.

Quality technologies bought the initial especially the baseball kind of some of our customer solutions that we need to tailor into those clients as you know on a health care financial services cloud search and optimizing implementation off the call Native technology. So that's why in Q4, we have incurred certain costs and.

Hello.

Baffling to him, there's new business areas that were actually incurred the costs on the gross margin line and affecting all of that so if you compare with absolute dollar number from Q to Q4. The number itself is actually not widen a lot. It's about 20 to 30 million RMB in the ranch and that actually reflecting.

The dollar value investing into those new areas.

So for the long term I would say my third point is for the long term, we still believe that our gross margin improving.

In the long term, obviously on a quarter basis, maybe you have a little bit cut off.

Changes in the long term.

The mental forces support our computers improvement.

Gross margin going forward and then sort of second question on the G&A expenses.

So the last year 2021 so we have all of our IPO and it did our IPO in Q1 and Q2 and in Q3. We also completed a follow on offerings and so that's why that was incurred some part of the transaction related external and internal expenses and for Q4, assuming all whereby dedicated.

Our new business and you know where we're at.

Cut off we're working with existing clients. So the G&A expenses actually reflecting a reduced space at all.

<unk> needs for those client relationships out of the business. So going forward I think especially for 2020 one as a percentage of the total revenue I think last year SG&A expenses as a total revenue velocity will continue to decline on an annual basis, but again, because you have a quarter over quarter basis at world color related for example for the employee.

Bonus S episode trying you know incentive payments and the search engine project on an external basis may have a little fluctuation, but we believe on the annual basis.

Our G&A expenses from 19 to 'twenty to 'twenty to 'twenty, one we're continuing to.

Gradually.

Thank you Thomas and now you're getting were introduced in response to the second question.

Oh.

No that's not entirely but you know.

Yes.

So you wanted to you know yeah sure.

When you go to a home yet.

So you just wont divest unions will madhu cash or to do thanks for your time.

She Fisher Hugo.

Put out.

Topics.

Ooh Ooh.

Sure Duane.

They're all small class Ultra high school sure boggy bogged down with Juno when talking to them about either Tc.

But you know I don't have to argue are linear in the east.

Hum Pat Fogarty to his home cohort, our Suzhou Dalian Wanda there comes a little bit about that.

Jim do you want to count, what's either couldn't get easier.

When she normal channel, what we're going to be a woman sorry, you don't you do go into a lot of CMT muscle Gentlewoman's I'd seen in Q2, two tranches of Wuxi.

Yeah.

Which in fact home too.

Hmm.

All four lines.

Uh huh.

Total Tac wondering toshi.

Sure.

And I'm going to do with the art not only.

So in the high two and beyond.

Honda.

And Oh Shamble.

So does that help a woman.

She'd Hachiko Latuda shambles.

And I will Miss you sure hits home.

Sean to eat all should it all bulk without people so good I E.

Don Diego Tqm's inaccurate.

Not until you got my Sweet or T cell the T D.

But we see no ones.

<unk> when it comes out quite soon.

I don't see that down.

He told me a woman, but we're not doing a good content.

During the year with them down for sure there are some jobs Tokyo.

Susan.

So thinking globally.

We've got it to the health care sector.

Actually it is a.

So that's the whole 0.1 of them.

So.

Paul Casey and we actually entered into with the health care sector things four years ago and so we also started so our study was a health care sector. Since four years ago. It's quite some complicated dates are set.

Substantially towards health care settings at home health aides them.

Governments have good surveys. It also involves the health care and the Ah.

And we sell until health care subsea and surface coating sepsis. So basically is that clients are huge complex.

Our system and often since each fund teams.

Or that they are changing things that health care sector.

The state has provided strong support shoes M D.

Each time, a patient of the health care sector, we have actually gained.

Games are the advantages because we have the time needed in providing cloud of substance to the health care.

As you know in September 2020, we signed on Vascepa women with a C C.

And we had for them.

<unk> provided a subsidy to clients or customers in Chongqing sounds too and our Sichuan we are actually the first.

It's off to a service provider that.

<unk> to start to substitute that health Canada.

Sector in China until pull some projects that are already in phase two.

For example, recently we also.

However, once they except for the integrated health care information our system and we have all we also think that the project stuff from author Cte adult content include both province, So basically we have with copper to the whole spectrum from the program.

Seat heater county, and even into medical institutions.

And I should say the.

The health care sector is growing very quickly.

Quickly and I think in future <unk>.

<unk> played an important role in contributing to the office.

The gross adds by that dollar revenue or income group.

Oh yeah.

Okay.

Your next question comes from the line of.

Now I'll see ICC. Please ask your question.

Yeah.

And even though hearing call him.

Yeah.

Yeah.

You're going to want more.

That concludes your call.

Bob.

Of course, sometimes.

Now how do you guys want to keep a tenant retention rate.

To conclude that Covid.

Oh, Yeah, yeah yeah.

Yeah exactly.

Capex.

Okay.

Gotcha.

Okay.

Thank you.

Hum.

Two questions for you.

One is related to the premium customer strategy.

Can the management team members prudent pension in 2020 and donor.

I don't have a retention rate of.

Cruising has too much.

Second question is related to the Capex.

And he comes to me okay.

Thank you.

Thank you.

Yeah.

Yeah, I think in Alberta, I'm happy to take all of those crusher.

So regarding the clients would you see that Oh execution quality.

Much on track and in 2020.

We have increased the number of the premium customers.

Two 322, which is an improvement of 79 T O.

Counts.

And also in addition to the <unk>.

Of the total pool of the premium customers.

Average revenue contribution a K a R pool after premium customers has also increased.

50, $15 9 million RMB in 2020 in 2019 to about 20 million RMB in 2020, which is also a significant at a decent improvement and also as we mentioned that the diversification around that.

The premium customer we have also seen that trend as well I think these are the two kind of key indicators.

Only kind of indicating.

So the universe of dollar of premium customers, but also the quality and the diversification of that.

So to your second question on the tax.

Our execution has been able to cut back where well much odd crore kind of happening within our budget for 2020 at about a 1.5 billion RMB and for 'twenty 'twenty. One I think we're relatively well keep on the same same rates after capex, even though we're well stocked and highly likely.

Fleet, our second data center in Tianjin as I mentioned, so I think our total capex for 2020, one will be still around about one five maybe cut off 1.5 months depends on holiday or the price points have moved around.

But overall as you probably can notice that the capex as a percentage of total revenue has declined from about 50% a few years ago to about 20% last year and it will further go down as a percentage of revenue for this year.

The construction of the changing datacenters do or wherever else much on truck, we may seek additional financing sources and the potential leverage or leasing of the changing data center, which will not.

For our cash flow from that perspective, and the changing data center will also serve important IDC center for the region near Beijing, and it will continue it yourself a better quality of services for the major economy around the same region.

Thank you Brenda.

Thank you.

Operator next question please.

Your next question comes from the line of Thomas Chong of Jefferies. Please ask your question.

Okay.

Can you comment about.

So all of a piece of it is about.

About the tension between.

Right.

And how it impacts at all.

Thank you.

Yeah, Tom will tell me, if you're a woman kanthal.

Two major general he said when he decided to go home yet.

Okay cool.

Cool cool.

No tenant behind me with Dominion South system.

So up to now we have no to since the impact of some problems like U S. China relations same our sense is that it doesn't matter, whether it's a cloud computing all al Cochran necessities that no impact.

Next question please.

Your next question comes from the line of.

Hello.

Jack.

To your question.

Oh, Hi unions, all hands on deck College, I forgot that Hey, you know what's wrong with you Scott.

Uh huh.

Describe for you J P and Glenn it's H L.

She knows who.

So who showed you don't do that so we have nowadays.

How are you doing push or Shiga sushi laugh, when my Washington cohort keeping eagle.

Which one do you wish them to be the cloud T J.

Sure.

You can fool Georgetown pension that you hear about.

Yeah.

Yeah, Hi.

I'm, Joe chanting somebody that kind of hot tea Sun Central Hall, or trying to shoot a chunky fashion it's bill.

Yeah, good nutrition.

Often she has in her go.

Yeah, Jamie Cook with essentially.

Having something.

And let's say Dashon come cheap I'll, let you go I didn't buy the opinion of backlog I know you said that.

Sure sure.

She.

So we would the injunction.

Yeah, Josh I don't think that it's usually about Oh, what did you say yeah.

Thank you management for taking my questions and I have a few follow up questions on.

First one is.

On the public cloud side, just now we mentioned that we actually have a secured a lot of new customers from the internet companies and with the continued decline in November concentration.

So my question is more about so apart from the multi cloud penetration as industry trend Kelly sure I look at more on our new customer acquisition strategy and what is the competitive edge that we do have that led to it.

Our success in England, and then the second one is falling to the public cloud question, Oh, well, we think about byproduct product. So what are the some of the new products, we're providing and the new customers and then looking into 2021 together with <unk> and other opportunities.

Opportunities in the industry.

Are we looking at computing storage and.

Every well there actually be a change in the revenue mix here and then the second.

Question is more about the.

Enterprise cloud so can we have a little bit more understanding into what is the growth rates by enterprise and public cloud into the first quarter guidance.

And then following up on the seasonality, we just explained plus the $2 8 billion backlog into the second quarter or second half of 2021 can actually expect an accelerated revenue growth trend.

Thank you.

Oh no.

How do you go into the supply they do.

Cohort.

She says that we tend to the point of origin.

What type of I tunes.

Tcf potential.

As you could keep it down.

Sure.

The usual time shipping.

And I hope you always want to know that children are doing shop visits.

No woman City battalion, you'll shoot ourselves trips.

He should stop when they're due to Covid do Shaw Subaru guns are kind of going back through the cool pool.

Food and that you do like a whole time window to go.

So rude articulate sometime neutrolin.

People come to us.

I thought I was telling people. They do that's the why behind I'd, just repeat hot cool pseudo time of human disease.

But sometimes you come.

Come in the door with a T shirt and jacket women's dozens of times you go up the social but I'll tell you what that product can do the sunoco convenience and now you're doing some dollars on a group.

Well I think our Vigo socal vocals, and don't fall back in queue.

Got it.

Over in Ohio.

In the bathroom cohort that product or do.

Awesome content.

But why shouldn't you behind him into that channel.

She's a digestion side the tons you don't do that.

Your daughter, Tucson, usually ships in Nebraska.

None of our ships and labor content.

I spoke with Gulf War torn down.

Drew some you pay the I always have to do similar type a and B watchman cool people would do something with the Gulf War you're always.

Richard some job. So he said a woman tons hit the take a shroom dog, who can you depend on the timing.

Peter I don't know.

Well I'm, sorry to jump back to them.

Sure.

It'll be like also that you've got to.

Cause upheaval in that yard once you don't have them dollar for two.

Or does it go.

Oh no no.

Dr. Crawford Tusa, no woman Silicon I haven't seen all of them in the social thing done this we're not done.

By Israel literature, which in Q1, the gym chain called I think a shamble.

Oh, that's right yeah.

But you shouldn't the sure sure don't see somebody tell me there I don't know.

You can vote up with Philadelphia Tejas.

Tejas and views about what each of millions out but without that.

Sleep.

Women's with people that are trending in the same line won't really cannot comment he can't feed the hungry here too you quantified that the telling you look I'm not a meal you buy you quantified the heartworm in Germany, it's already like QR to sample the tools to do so.

That sounds cool.

Yeah quite.

As you can with him when it comes to the financing question I'm going to yes.

I should say.

Okay.

Or do you have the opinion.

Hi, Susan.

Yeah.

So if you ask a question.

From.

So most of the holidays.

Caught with the premier of the businesses.

From the Internet a fixed time, they announced today in like the video games educational and E Commerce are icons and.

The marketed dose with.

The medium customers and.

We have four.

And when's the.

Uh huh.

Premium customer that's it from the media and gaming sectors and we have learned most of them and then now we can hear more about it as a customer satisfaction and those with the retention.

Revenue retention rate from these things 15 premium customers and also cruise things that revenue from these customers. Please route audits to Asa sectors.

We are with that.

And some of the cloud and data centers and also our efforts in.

In <unk>. We believe there is also a growth engine. We are also expanding our new launch.

Guns, and Wisconsin to shoes.

On a product.

Meaning are you seeing the video products.

And.

There will be an HEICO affirm the leesville, Los Angeles Knutsen ads story, so computing in a heartbeat.

Network and.

I think those are scared of.

Are they do you that's needs are met.

That's a decrease to generate that growth rate remains high and a third of them until the bads.

Public cloud business as Kevin.

Kevin had mentioned.

We in the first quarter, we had those ready.

When the order was for 2.8 beginning.

And.

And so I think see implementation of seats of prudence that could be affected by seasonal factors all COVID-19.

COVID-19 and dominate handbags.

So we have some.

Considered the.

Uhuh situations throughout the year and are.

Looking forward into Q2, Q3, and Q4, we think that that would be.

Rotate so.

Growth in the enterprise the carload.

It says the.

Of course right of.

Was it in the price of college of businesses that are higher than the.

Growth rates of the public cloud spend as is the industry average and also with regard to the new customers, we have a quite a cause.

Kosmos had had that you who acura bingo Segal.

So Citi Bank.

Thank them.

Children, a bank and a milestone consumer finance to finance the company.

Okay.

Your last question comes from the line of Nelson Cheung of Citi. Please.

You asked your question.

Hi management. Thank you for taking my question. This is asking on behalf of Brian Gong from Citi. So I have one quick follow up question, how does management see the possibility of tuck ins.

Into the infrastructure cloud area, considering the large consumption on CDN really strong accumulation of video cloud technologies. Thank you.

Yeah.

Yeah.

Yes.

Oh no.

We're going to do some for you Joe.

They'll finish vulnerable to them since August one.

Yeah, sure so I'm going to sleep.

Sure.

I think it was actually about one of them, that's usually what can be done.

Since two of them, sometimes they order it although it's in cloud.

So not to go too far to them.

From a particular juncture partisan.

As I said last time that our analysts have already asked questions with regard to.

The purchase whether our resources by Bernstein.

Our knowledge of the many use of them both their internal team that is they use for their internal technology and our product development. So there is no impact on our business. It was back then.

Okay.

And we are now approaching the end of the conference call I will now turn the call over to propulsion for the closing remarks.

Thank you operator.

The interest of time.

Our earnings call today.

Also joining us today.

Great.

Sure.

So again, that's what they're telling us today.

Thank you. Thank you everyone.

Ladies and gentlemen, thank you for your participation in today's conference you May now disconnect good day.

[music].

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Yeah.

[music].

[music].

Ladies and gentlemen, thank you for standing by and welcome kick things off cloud fourth quarter and fiscal year 'twenty 'twenty earnings Conference call I would like to turn the call over to your host today Ms. Nicole Shannon. Thank you. Please go ahead Nicole.

Thank you operator, Hello, everyone and thank you for joining US today 10000 was fourth quarter and fiscal year 'twenty 'twenty earnings release was due to COVID-19.

He was here earlier today and is available on our IR website at IR Kate.

<unk> dot com as well as globally as well so it is on the call today is wrong things up while we have our CEO, Mr. Wang and CFO, Mr. Hydrogel for Mr. Wang will review, our business operations and the company highlights followed by Mr. Ho, who will discuss the financial and the Guy that.

She will be available to answer your question during the Q&A session that follows.

Third Party trust her blood comes exiting translation also inflation of all khomeini's propose only because of I mean, it's great to see much much they must in the original language with who will be both.

We begin I'd like to remind you that this conference call contains forward looking statements within the meaning of U S. Probably Securities Litigation Reform Act overlapping Nike fly. These forward looking statements are based upon management's current expectations and current market and operating conditions and relate to events that.

Well known or unknown risks uncertainties and other factors all of which are difficult to predict and Emmanuel English are beyond the company's control, which may cause the company's actual results performance or achievements.

He broke materially from those in the forward looking statements.

Further information regarding these and other risks.

Included in the Companys filings with the U S E C.

Company doesn't undertake any obligation to update any forward looking statements as a result of new information future events or otherwise except as required under applicable law. Finally, please note that unless otherwise stated all figures mentioned during this conference call I M D.

My pleasure to introduce our CEO and sort of getting law. Please go ahead.

So as an equal.

Gotcha Gotcha.

He already deferred you towards each union I bought it.

Well my gosh, yes.

I'm not sure what it showed was that also due to argue maybe Toby thumbs down $500 for Thunder.

If you have already already <unk> that all new food, our bayou either can be summed up by 100, who flew the op.

Like what do you mean, yet well make sure you can acquire.

Well done guys.

Sure. Thank you both.

Jen Driscoll Tv's got it shouldn't go.

The.

General, but could you just hired to find out to what.

Jody you almost look into Egypt.

Jay.

Katrina NGO will not put in bulk yogurt with a showroom and Samsung.

I'm sure all our goodwill in the electrical bulk quadruple somewhat we are equal.

<unk> you.

She knows all that'd be Keith and John If you can say well I got a handful marschalk don't think zero drawn by continuing to grow.

Wondering if you can send that to me is for sure when they're going to use this to us here at element opinion yoder to cope with the agenda, we're going to keep with that account going to they're going to cope with the future of our sugar you thought so.

Listen diesel crusher filling towards the Gulf with them not to the well known by our hiring you finance it with tissue quite actual windmill.

So it shows to me is how much crude how do you.

Thank you Nicole and thank you all for joining our fourth quarter and fiscal year 2020 earnings call. We are pleased to have closed the year with a solid performance and in the fourth quarter, we generated <unk>, one potent lend to leading Chinese Yuan intuitive revenues represented.

63, 8% increase from the same quarter of 2019 for the full year 2020, net revenues reached a six points for the eighth beet in China, It's Glenn.

Inquiries for 66, 2% year over year, we grew faster than the industry average as a result of the continued successful execution of our strategy as a leading dependent to cloud service provider.

Our dedication to cloud business that we are able to avoid the potential conflicts of interest with our premium customers and hence our neutral position, which in turn gains additional trust from our customers, we continue to explore growth opportunities across our strategically.

<unk> vertical sectors eight include the inside the pub <unk> financial services and healthcare sectors.

We have improved and refined our key technologies and deeply into this sector to meet our customer demand over the past year, we know so and expanding our revenue from existing customers, but also corporate takeaways.

New premium customers. This includes inside the companies such as a Jew Agra.

Yeah.

We Beagle Sogo, <unk> digital and the others.

Education companies, such as a new role.

And until we advocate and the office as well as financial institutions, such as the Citic Bank, One bank markdown consumer Finance company and a tube pump the bank as a backbone.

So the infrastructure developments and cloud computing has been growing rapidly we will take the opportunity to further extends our businesses scheme and enhance our market position as the first choice in terms of the independents that cloud service provider.

So I apologize if I.

Could you I D three five with Docomo <unk>.

Our <unk> sand control Nabokov, west flu, but due to walk with Foshan taxonomy.

<unk> ultra cohort.

But the sheer amount.

They're trying to.

<unk> <unk>, one day modality to assure pivoting that beauty foundation here.

<unk> will now be Covid, what's your general bias.

<unk> five <unk>.

Without an <unk>.

<unk> come to yet so that when they are full up you got youngster ge's accelerated impact Yonks repeatedly uncle <unk> zone.

Meanwhile, Triple from drew quantifiers without <unk>.

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100, <unk> homegoods were equipped with <unk>.

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<unk> global packaging plants.

Sure.

Sure worldwide Yokokohji.

I think all of them down.

Firstly, let me talk about it's a public cloud according to IDC, China quarterly public cloud subsea the trade reports for the third quarter of 2020, we again ranked among the top three for the insight cloud.

Cloud service provider in China, we continued to focus on serving our premium customers with safe stable and comprehensive products and the technical and <unk> ended the quarter at Port <unk> tea products. For example for a month slight annual gala, we just jointly organized a leading solar.

Video platform and our regional television station. We have developed is a complete system and emergency resources scheduling plan to quickly respond to changes in customers' needs and ensure a grease live streaming experience. In addition, we also provided a subsidy to China.

It's a new year's Eve party jointly organized about <unk> and the young shipping that is a new media platform for China's top TV station CCTV. The peak number of concurrent users of the land brokers being potty reached 215 meeting we worked with a customer one month ahead of the event to concern.

Security measures resort scaling and redundancy to provide stable cloud delivery and network security services to ensure the smooth operation of the party in terms of new customers. We are engaging some insight a conglomerate to further explore their cloud demand that deeply.

Digging into and understanding customer needs, we have laid a solid foundation for reliable revenue group this year.

In fact <unk>.

I'll provide shallow your exon 20 in future calls the Buffalo, New additional fucci boutique and co tenancy from short term sheet.

So you don't drill Kodak Sharga Wang Cheng Cheng.

<unk> with tissue, if you didn't win what actual Shanghai, Singapore, what digital Fuji shook when they will be higher we mostly that cover nasty tissue injury to Youll build garden <unk> the tissue from the.

So you can't build a <unk> hotel. They include will go human when Janssen.

Great answer and prototyping <unk>.

The tissue constituted closure already already near Charlotte <unk>.

Yeah, Jimmy <unk> tradition and BMI.

Utc's bottled Holdco you got going on at 134, 34, tangentially wait well modalities you comfort about where your actual tissue. The Yorkshire genre generally were equipped with you can call. What do you see coaching them equally useful now lets move to product upgrades, we continue to improve our cloud native products.

Port Folio, we launched a band metal service to provide high performance infrastructure. Some states to customers. For example in December noting to same sharing platform Zhou who completed the migration of its entire online business to our cloud. This included the deployment itself thousands of them.

Bare metal servers, which makes it one of the largest proven not eight clusters in China. In addition, we continued to upgrade to our storage of subsidies, we are able to deliver hundreds of petabytes of cloud storage as a standard service. We also launched a high performance storage product.

Including final stories archive storage and others in terms of coding and including technology development. We continue to enhance our technical advances in December 2020, our EV one leader in Kita encoder technology ranked number one in the UGC video category.

The leading global video algorithm comparison.

Demonstrating our team's technical experience and innovation looking forward, we will continue to leverage the advantages of our cloud native product portfolio spanning our software capabilities and to provide our customers with high performance secure stable and scalable cloud.

<unk>.

Tier two westward onto your question about <unk>.

Of.

Constantly with each with Shanghai electric, which I'm sure some forecast revision seaborne bulk cologuard two <unk> flexible orchard in some countries.

<unk> tried to introduce Johan <unk> and international.

So that hopefully a compelling content.

<unk> gone through Covid and to assure we can pack sale turns out cohort.

It enabled towards your kind of high yield now let me talk about the enterprise cloud businesses. China's enterprise cloud service market is growing rapidly in deposit service sector with signs smart prudent suites 22 regions across more than 10 provinces in China. For example, we could offer.

<unk> first pilot project, Linda don't shoe Sissonne, so what it means.

Conduct the computer in the West China and for the data farms, the eastern China, which is the national programs at Hain tends to balance the computing resources between the eastern and Western regions of China. In addition, we also when a project for loading health met with bigger data technology company limited to have them build.

Our cloud platform for scientific research and testing.

So <unk> brought us here going forward, we're going to drive some promotion should you put anti upward from Washington.

And how you're trying to push through more attributed Congress youre talking about and also.

Also the Dragon basis, some are hurting the future from Bush's true symbol <unk>.

Khartoum quarter unchanged crude walk you.

<unk> towards acting on cohort <unk>.

Right, but it will continue.

Continue to hop back on.

People should take care of.

Sure I mean, Andrew for you or should we look for into hotel room fully fully cohorts return call shop period I'm not sure.

Are you more targeting oil and Johan <unk> 71 of all the engine, which is formula product.

We won't go what you put at the Orleans.

For the financial services sector and more enterprises are gradually turning to distributed databases on cloud modules cloud deployment models are currently better received than the traditional or conventional deployment models.

Hence the upgraded a striking base a testament to lead.

Two point.

Zero and this supports the strip take transactions distributed computing and it features high availability flexibility scalability security audits and other important capabilities. We have already started cooperating with many customers in that sector. For example, we have signed on a grim.

And with China. The city could band debuted a cutting edge data Lake, which will have some store and presents a man.

If the amount of data and power the next generation of efficient and intelligent digital financial services. We also provided highly stable and easily scalable public cloud <unk> to a lot of state owned bank and to help them connect with their networks 70 to cloud servers and to deploy public cloud.

Storage.

Sorry.

Sure <unk>.

<unk> will be neutral.

So it <unk> show car, you could be able to drive the future.

<unk> gone through the job recruiting cohorts expert of Amanda can handle essentially you should see eye to eye.

We generated <unk>.

<unk> 100 on the agenda are so important to you in some cases Cynthia in tungsten <unk>.

These outcomes.

Trying to Cogent why shall agency in California to actually.

Constructive.

<unk>.

<unk> potential.

Well, maybe you can get an affordable it's actually pretty.

Pretty consistent.

Telling you arent as Armando.

For the health care sector. We are officially kicked off a new code set forth that Wuhan units will help the commission so half of abuse and integrated public health information platform and its important to ceiling fight against the.

COVID-19.

In done acre has received favorably towards in terms of states Treasury bonds. Even then it will hand played places and has played a pivotal role in the early part against that will be the main tamped down and candy.

Health care infrastructure.

Backed by these we believe that our project will.

Vietnam, especially flex site infrastructure benchmark and we will have commission.

Four key topics. The first is to help you with the medical services supervision systems and to strengthen service Coty. The second is debuted a regional data center for ECC authority and some medical in pets to see our resources and improve overall medical service capabilities.

As to divert the citywide healthcare related electronic said Peter system. The fourth distribute these two emergency system in <unk> pilot hospitals in the meantime, our cooperation with the CEC is while on the trial and so we are jointly promote in the second phase.

Uh huh.

Picture archiving and communication system or PCN protects in Chongqing and other cities.

Alright, thanks to the Delta introducing seeding Italia drug locally our Congress.

Zero.

So I feel like yokokohji towards <unk> as well.

Well, maybe I shouldn't toward a highlight on the Africa, we've conducted households.

Once the constitution.

Our schools have a lockout attitude about that going forward, we will continue to execute our proven strategy and the focus.

The third.

<unk> I just walked you through in addition to digging deeper into customer needs that we will actively broaden our customer base prudence expense into southeast Asia markets and did fall off of investment opportunities and also improve our overall technical capabilities too.

<unk> is a huge growth opportunities and the minister of the current wave of digital transformation.

So the whole playbook for the Guangzhou <unk> quadrupling, the dirty Rinse high patient truly onshore one jumbo <unk> with <unk>.

<unk> Shanghai.

She shopped with us in Chicago Shopper, Yes debacle.

Lastly, I'd like to very briefly touch on our ESG efforts.

Keep focusing on corporate governance human capital data security environmental protection and other social responsibility. We are working on our internal state initiatives and expect to publish our first ESG report in the near future.

I said that I also wonder Saf O'hara of.

<unk>.

Yeah.

I'll now pass call over to Henri to global for our financials.

Thank you.

Thank you Julie Hello, everyone I will now discuss our financial performance for the fourth quarter and our full year 2020, please be reminded that all numbers quoted her RMB. Please also refer to our earnings release for detailed financial results.

So to begin with I would like to highlight.

Several plants.

First of all we are pleased to report that our total revenue of 2021.

190 beta RMB this quarter, representing a year over year growth of 63, 8% total revenue of <unk> six.

<unk> five 8 billion RMB up 60 points 66, 2% from 2019, Westwood well above the growth of the cloud in Australia and China now.

Number two the increasing demand for enterprise cloud services drive our revenue growth our enterprise cloud services revenue. This quarter were $535 9 million RMB, an increase of 143, 1% year over year.

Broadcast hours is revenue of 2020 was 137 billion RMB up 182, 3% year over year and now accounting for 29% of our total revenue compared with 12, 3% nausea.

Number three.

Benefiting from our training Kosmos strategy, we are very pleased to see that many of our customers have been making multiyear commitments with us we.

We are hearing the feedback of our shareholders and in order to let the market a better understanding our project pause we are very happy to share our backlog with you.

Even a large number of products haven't started the bidding process on our client side or have not finalized agreement yet at the very beginning of each year.

<unk> of our existing project orders of enterprise cloud revenue already reached $2 8 billion RMB.

Including a certain part of orders from recurring revenues.

We believe that existing orders will form a solid foundation of our revenue base in 2021.

Therefore, our customer diversification of our revenue mix has been improving continuously for example.

Revenue from our top 10 printing customers contributed around 65% of total revenue this quarter compared with 73% in the same period last year.

We are seeing in their trend of diversification across our major premium cosmos.

Our cloud delivered services, which include value, adding services, such as coding and coding and image enhancement functions et cetera contributed below 50% of our total revenue for two straight quarters last year a.

The contribution of the cloud computing services has also increased.

Number five.

Adjusted EBITDA margin was also approaching single months breakeven in this quarter adjusted EBITDA margin for the fourth quarter. It was <unk>, 9% compared with negative seven 6% in the same period of last year.

Is that your improvement of six 7% percentage points.

The EBITDA margin also have been seeing improvement for 10 consecutive quarters.

Net loss margin also narrowed to negative five 5% this quarter, which was a significant improvement from negative 24% in the same period last year our earnings per share.

EPS this quarter was negative three.

Improving significantly from negative 32 in the same period last year.

<unk> our business.

Sufficiently funded at this moment as of December end 2020, our cash position was 612 billion RMB.

We were included in two major indices at the end of last year, the MSCI, China in November and FTSE Russell Global large cabin Endoscopy December respectively.

Now I will go through the details of our financial results.

Our private cloud services revenue increased by 44, 1% year over year to $1 36 billion RMB, we're committed to our premium Kosmos strategy.

The net dollar retention rate of our premier customers in 2020 was 147%. Meanwhile, we are engaging with certain internet conglomerate to further explore new opportunities.

During the fourth quarter enterprise cloud revenue increased by 143, 1% to $535 9 million RMB. Our total number of premium customers in 2020 reached 322.

Up 79 accounts.

The our pool of premium Cutlass also increased from $15 9 million RMB in 2019 to 20 million RMB in 2020.

Cost of revenue increased by 63, 5% year over year to $1 eight 3 billion RMB IDC cost increased by 49, 6% year over year to $1 1 billion RMB as a percentage of total revenue decreased from 62, 7% in Q4 last year to 57, 2% this quarter.

We are achieving great economic of scale and improving resource efficiency.

Depreciation and amortization costs remain relatively stable at around $167 5 million RMB.

Other club concept of third party software purchases are sourcing cost in channel costs associate with both public cloud as well as other equipment costs related to enterprise cloud services and other costs were $552 3 million RMB and the staffing costs were $10 3 million RMB.

Adjusted gross profit was $94 9 million RMB increased from $56 7 million in Q4 last year.

The adjusted gross margin was four 9% this quarter, our adjusted gross margin benefit from our continued leverage on economies of scale and cost savings.

Offsetting by the investment into new business opportunities of strategic verticals, such as health care financial services and incur costs for ongoing projects.

Total operating expenses decreased to $337 9 million RMB down five 4% from Q4 last year, excluding share based compensation adjusted R&D expenses were $161 3 million.

A million RMB.

As a percentage of total revenue decreased from 13, 6% in Q4 last year to eight 4% this quarter.

Adjusted selling and marketing expenses as a percentage of revenue decreased from seven 3% in Q4 last year to five 6% this quarter adjusted G&A expenses as a percentage of revenue decreased from six 4% in Q4 last year to <unk>, 8% this quarter, our adjusted EBITDA were RMB.

Next year with $70 5 million RMB compared with negative $89 3 million RMB in Q3 last year.

Adjusted EBITDA margin was also approaching single months breakeven and it was not tier one was negative <unk>, 9% for the fourth quarter.

As of December end, 2020, we had cash and cash equivalents.

611 billion RMB during this quarter.

Capital expenditures was 400 zero $4 7 million RMB.

<unk> scale and improving our efficiency capex as a percentage of total revenue decreased from 26, 6% in 2019% to 21% in 2020.

Moving to the outlook.

For the first quarter of 2021, the company expects total revenue to be between $1 83 billion RMB 193 billion RMB. It is based on the company's current and preliminary views of the market and operational conditions, which are subject to change.

To add the forecast reflects the relatively late timing of Chinese lunar new year holiday in the first quarter of 2021 compared with last year and also the typical pattern of the procurement and implementation process of major enterprises and public sector clients in mainland China in the first quarter of each year.

Meanwhile, we believe our public cloud revenue. We're also expecting continued growth in question.

This concludes our prepared remarks.

Cloud.

We are now happy to take it out.

Please go ahead. Thank you.

Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question. Please press star one on your telephone and wait screening.

If you wish to cancel your request.

Press, the pound or hash key.

Once again, if you wish to ask a question at Star and the number one on your telephone keypad.

Your first question comes from the line of kind of Wong of Credit Suisse. Please ask your question.

Thanks for taking my questions.

Okay.

Hum.

Especially the EBITDAR margin.

And I wanted to tell you. Thanks, two questions first is about the.

Our first quarter guidance.

The new growth is actually like a 40% year over year and from Hollywood VSAT satellite.

In past Chinese new year's holiday and also at some point going to be pushed out.

You can really have more color on what kind of pointed that actually push out into maybe.

Two kilo in some time.

The near term.

And if there's any like issue that caused by like competition that all of the things well I bet you are.

Our original expectation.

And because like my second question is actually related to the competition. Thanks, Scott because we noticed that.

The address my giant cloud service provider in Dallas are moving.

Two the enterprise cloud.

And we do see that beside wherever you're quite that much.

But maybe on the paper side, they will compete with you on 17 of them customer offering.

Pricing is one of the things on the other hand, there applied enterprise cloud. We also see more competition in this area. So I think that's my two questions.

Yes.

When he does it depend on just the holiday <unk>.

Does it go to guarantee to the monthly this year certainly under some of your kind of danone unfamiliar for them long term.

And then it's all day, so someday they go through them one at a time interval.

Ladies he wants you to go through.

<unk> hundred 40, <unk>, formerly <unk> shared with syndrome.

Okay I will take the first question on <unk>.

I'll answer the second one.

I think it probably is there going to be very important question and I definitely want to share more color. In addition to the prepared remarks early I think the first point I just want to kind of recap what happened back in <unk> I think that will lay out the assumption of my answer.

I think for 2020 is out three major factors that affect in the pattern in 2020, which actually was a unique year. Obviously, we all know there was a COVID-19 happened in Q1 2020 that actually increase the base of the usage on the public cloud side and that accurate carryover for few quarters last year in auto we're careful about for this year I think thats going to be positive.

<unk> for the fourth.

From a base of their revenue and also as we mentioned last year.

The Chinese lunar new year holiday was pretty much earlier that what's actually going to affect too much on our <unk> implementation.

And also typically at a Q1 was also a relatively low season for all the major.

This sector clients.

And commutation of bidding processes and also to share a few numbers in Q1 2020. If you remember our total revenue is about a $1 39 billion. So as a percentage of the total revenue in 2020 of $6. Six is roughly about 20% of kilowatts 10. If you look at the first half in the second half of the revenue split.

Our philosophy here is was around about a 43% of 45% and the later part of second half is around 55% or around that range. So if you look at the guidance for this year. So assuming rescue around the same target for this year, the first half and the second half of the revenue split is actually very similar to the mathematical lots of last year.

Which is around first half about 40% of 43% in the second half is around 55% to 60%. So I think thats.

<unk> laid out the comparison from analytical perspective.

However, as we mentioned for this year.

EBIT right now will stay just finished a two sessions the meetings <unk> met in China, and all the kind of major projects, especially the bidding process is about to start even without those considerations that current backlog as we shed of enterprise cloud revenue only excluding the public cloud revenue, we already have $2 8 billion.

RMB of the backlog all ahead, I think that will form a foundation for the <unk>.

New to Carryout and.

Some of that backlog, we already see in the recurring revenue nature, especially from high quality accounts example, from health care and financial services at a certain major cities of the public.

Sector clients. So overall, we think that the revenue trend and a pattern across the quarters actual year over year White very similar and for Q1, if Kerry on the potential very same pattern and unique feature for this year given the two of them after we measure it.

And it will take the second question.

All right.

Okay and also for the second question I think for the major competitions.

I think a few things we haven't seen any changes I think the premium customer strategy and our key focus on the neutrality will give us more around the opportunities that we understand that in the market. There are maybe other players are still thinking still making great efforts to getting to the mall.

And last we know that at a total addressable market of the tank car market drove a rapidly and.

And also we are seeing a trend that the clients are actually are willing to use more cloud vendors. That's actually also the same opportunities not only for us but also for other peers in the market as well so in some situations as we mentioned in the in the few cases that will become important multi cloud vendor for our clients, even though maybe other <unk>.

You May also have a one shop I think that doesn't prevent us to earn a more dollar value from the same client because the market itself is also going to give you a more two data points as we mentioned in the third party expert IDC steps that were clearly Iraq as a number three on the internet.

Our public cloud vendors and also we are making a great.

Progress, especially for the key.

Accounts, and our clients, who have a deep water and the budget and the spending and who have more.

Sure.

On a comparable ratios when they want to slap a neutral player where they will more trusted and.

Well never getting any potential conflicts of interest with our clients.

So I'm talking about.

Okay.

Yeah.

Your next question comes from the line of Alex Yao of Jpmorgan. Please ask your question.

Uh huh.

Henry.

Consumer tissue.

Sure.

Yeah.

Morning.

Sure sure woman.

The army.

<unk> two trials one in terms of the earnings.

Sure sure sure you're worried about a function on the part of Nokia.

Sugar criticized.

And it hurts.

So you got them done infusion of these Youtube Pandora.

And I hope you all have a winning team sure Jake.

According to your hockey and she doesn't need.

Number one for you John So Harley, earning in Shenyang, Hangzhou cloud from a Gonyo jpn light.

Brokaw Commscope team commercial team by shipping to God. This year showcasing longhorn, yes, I'm go time.

Bush hog a whole suite of women.

So the agenda.

In the North Sea.

Some of the world.

Our R&D and to acquire ships.

And your wife.

On a year kind of what you're trying to wait for Michael Mueller.

Because you are charging their <unk> syndrome.

No you're fine.

So my first question is regarding 2020 Q1 revenue growth outlook.

Would you be able to share with us your preliminary thought.

The 2021 and revenue growth outlook.

Particularly.

What are the growth outlook so for.

And her enterprise cloud as well as the public cloud secondly, I would like to ask what are wondering what will be the key industry drivers to the.

Public cloud business would you be able to share with us your revenue exposure from a venue based in there.

Those trees in 2000 22020, including long form video mute phone video short form video and live streaming.

A few guys are incremental diversification strategy what are the other industries.

Potentially become the new growth driver to your <unk>.

Public cloud business in the next one to two years. Thank you.

Oh Susannah.

The diesel as you know hard to assure more churn.

<unk>, yes.

No.

<unk> media in the room, where do you see a sluggish on the shoulder.

Sure.

I'm sure we will.

Yes.

300 <unk>.

So is that just that you got you're doomed.

And this will be one to one through the roof.

Zero.

But this vascular Hong yes, yes.

And when you saw the fact that you're gonna suggests which isn't that different than you thought.

Sure.

On the.

Keith will now meet I'm ashamed.

You can do all of those are somewhat huh.

You can fool timberland.

So did you hire that's also without going off what you usually don't quite slow. So it comes I'll make a general appeal or you want to know the.

These are the people that you could factor in banner.

Our <unk> yield a cohort you Didnt I don't know if you could tell me.

How about it.

So dealer Gary little hanging out another <unk> 1 million.

We regularly.

It's all our Indiana and Ohio.

Only two more there should be high 100, <unk> <unk> shifted our good and really I assure you go Congress.

Yes.

We will cover that.

With all of our R&D in Newark, Hornung secretive about Congo, and the order trend is restricted.

Oh, my gosh someone that can sheet knowhow.

What does your loyalty data.

Two other Javier the accrual.

Welcome to the Sunoco for the Giro of Sudan.

Sure sure.

Time will tell on the backs of nature carbon black ships.

Sure Yes.

We wanted to be workable.

Wilson Hydro Joe.

Yossi.

David a cohort of food effect on GAAP or comment actually on country.

Yeah sure sure.

Come on.

Im not sure.

If you can drive it down.

With accuracy.

So all the time.

Sure.

If you're a little time to you.

<unk> <unk> <unk>.

Our Union Hall, our R&M Auckland, Nobody was important to go with Mayo Clinic Pankaj. This is due to the Union Lesotho.

Got it.

Thank you.

Uh huh.

So for 2021, we have already have.

Uh huh.

And <unk>.

<unk>, We said 2020, we also have good expectations for 2020.

'twenty one as a Henry has mentioned we also have four plants.

Pick a number of orders in hand, and with regard to the <unk>.

The computing I think of 'twenty, one to 'twenty turned it in.

In 2010.

22 that the steel rapid development until through the aims at Sally beauty and so we have strong confidence in <unk> and with regard to the three sectors hub to serve system.

Financial services and medical.

Healthcare subsidies that they have developed a full plant period. So.

Quest anemia outweighed.

The.

Clouds.

Business and I think that the regulatory climate and slow regulatory madness also.

Maturing and so we can see the continued group.

<unk> <unk>.

Three sectors and also with regarded shoes.

We do.

Business and politics.

Cloud.

In 2021, we've seen cut there.

The two developments in the solids.

The new there'll be not a big change, but with regard to two.

2022 narrow before that.

There'll be probably further dependency in center HD business and also in the immersion.

Immersion video business and.

The share of the video business in the public cloud.

Second liens.

If the plant is stable.

It could change based on our own.

<unk> and <unk>.

And we've got the two customers.

Customers are.

For example in the educational sector.

The end.

We ended the game.

Also e-commerce sector Z also stars.

<unk> seen some <unk> in their applications.

So generally speaking.

<unk>.

The video business. So we do not expect any big change or withdrawn that ensues.

For 2020 season, we do need to we and obsess the further development of relevant technologies.

Next question please.

Your next question comes from the line of Thompson.

Please ask your question.

One somehow lungs on Henry.

T D D to C U E.

Susan Mcgee.

On quarter business.

People still need Chargers.

Michelle.

Juggling teachers.

The Q E.

G&A.

She is the chumby.

Year on year, now where she has somehow.

G E.

You can see them.

Do you are going to be just fine.

E Mail.

The decline.

Pardon me.

On the industry come close.

Most of the channels.

Sure Lindsay.

The Union psychosis team.

Plenty going on.

Thank you Jussi my two sets of questions. The first is regarding.

Our fourth quarter results, just the margin trend in the fourth quarter, a little bit of it.

The decline sequentially can you walk us through.

The impact there also on in fourth quarter G&A expense.

It seems to have declined quite a bit year on year, how should we think about G&A expense going into 2021 and the other question is about.

Just the health care cloud.

This seems to be quite an important.

Our initiatives.

For both China.

And also in my view the company can you just talk a little bit about the outlook for our healthcare cloud.

And Teamstaff J D here.

Chip.

Yeah. Thanks for the comments, we're happy to do it it's not a question. So I'll take the first one at all.

I'll answer the second question.

For around the gross margin for Q4.

So I think the first one I want to mention that if you compare on an annual basis from 2019, our gross margin was there a puzzle.

On the 20th annual basis, our gross margin was five 7%, so which is actually already there isn't anything to improve on a year over year basis, and also it's going to be a faster pacing, even compared with other major peers in the cloud industry in China.

So I think that's kind of lay out the first part.

Especially for the company and budgeting.

If I start to internally, we actually need to look at how we invest in our business.

Inkjet technology to the clients. So if everyone remember for example in Q3 in September and October adjusted.

We just entered as we mentioned.

The health care industry, and vertical and we signed a partnership with Cez group and also in Q4 will make a few a major breakthrough and also introduce a few new clients, especially in the banking sector. For example, Fedex and hotshot. So as you know those are the new area of high quality clients, who are willing to receive our high.

Quality technologies, but the initial especially the baseball kind of some of our customer solutions, we need to tailor into those clients as youll know in our healthcare financial services. They require certain optimizing implementation of the cloud native technology. So that's why in Q4, we have incur startup cost and.

Kind of the investment into new business areas that were actually incurred.

Cause on the gross margin line that affecting on that so if you compare with absolute dollar number from Q3 Q4. The number itself is actually not widen a lot. It's about 20 to 30 million RMB in that range and that actually reflecting that.

The dollar value of investing into those new areas.

So for the long term I would say my third point is for the long term, we still believe that our gross margin while improving.

In the long term, obviously on a quarter basis, maybe you have a little bit cut off.

Kind of changes in long term fundamental forces support our computers improvement of the gross margin going forward and into a second question on the G&A expenses. So.

Over the last year, 2020, one so we have our IPO and it did our IPO in Q1 and Q2 and in Q3. We also completed a follow on offerings. So that's why there was incurred some part of the transaction related external and internal expenses and for Q4.

Our dedicated.

Into our new business and we would cut off we're working with existing clients. So the G&A expenses actually reflecting a reduced based off the underlying need for those client relationships and our business as well going forward I think especially for 2020 one as a percentage of the total revenue I think last year SG&A expenses.

Total revenue for last year will continue to decline on an annual basis, but again.

The cost you on a quarter over quarter basis at World color related for example for the employee bonuses in <unk>.

Incentive payments and the search engine project on internal external basis may have a little fluctuation, but we believe on the annual basis.

The percentage of G&A expenses from 19 to 'twenty to 'twenty to 'twenty, one will continue to decline gradually thank.

Thank you Tom with the analogy of getting were introduced in response to the second question.

Mike I'll, let John talk to you, but you know.

Yeah.

So you can E mail your Schulman Sendai, one quarter you go to Javier.

So you just wont divest minions Madhu Kaiser to Judy.

Thanks for your Tiger Woods, or talk geology, Fisher, Hugo and put out a hot topic.

Ooh Ooh.

Plenty of that.

Well Quinn.

Hi.

Sure Boggy bogged down in the genome.

Got it.

No.

Our R&D and <unk>.

Rafi, Tom Pat Fogarty to his home cohort a CTO talks I'm wondering you're talking about.

Yes.

Second quarter other tools.

I also didn't know when to normal channel what Mary on the Woman's side, you don't you do that.

<unk>.

A woman that union.

Okay.

<unk> with Citi.

Toward that Johan yet.

Which in fact home too.

Sure.

<unk>.

Okay.

So our total Tac wondering toshi.

Okay.

Number two with the art now towards your taste on the hydrant.

Honda jet.

Hum.

Shampoo now so you've got kind of a woman who pay that she'd hockey.

Yeah, sure Shlomo, so and which will materially hits home.

So it all should it all bulk without equal.

Goodbye.

We don't do the Tqm's inaccurate.

Not until.

<unk>, what we see no one <unk> times.

When it comes out quite soon.

I don't see that.

Our pathway to only a woman with either your content.

The year will come down for sure there are some gaps.

Tokyo.

Susan.

Yes.

So thank you good evening.

Got it.

Care sector.

Actually <unk>.

Important or one of the <unk>.

For PC, and we actually entered into the <unk>.

Okay.

Things full year skills and so we also started our study.

Health care sector since the full year ago quite some cough.

Substantially towards health care services at the Palisades.

Governments will have to observe it also involves the healthcare and <unk>.

And so until it's in healthcare <unk> and <unk>.

So basically the clients are huge complex.

<unk> and <unk>.

That changes.

Changing things that health care sector.

The state has provided to us going forward.

<unk> edition of the health care sector, we have actually.

<unk> D a.

<unk>, because we as a pioneer in providing cloud services to the health care.

As you know in September 2020, with us on Vascepa agreements are with the CEC.

And we have for them.

<unk> provided.

Subsea two clients or customers in Chongqing and Sichuan trades.

<unk>.

The SaaS service provider that.

Provides it's not accepted to the health Canada.

Sector in China until Paulson program, So we already in FIFA too.

For example, recently we also.

Had one state except for the one.

Integrated health care information.

System and we have we also are going to protect itself from author Cte adult content include book Province that basically we have a copper to the whole spectrum from the provinces to <unk> county, and even into medical institutions and so.

I should say.

The health care sector is Corie Barry.

Quickly.

I think in future each will still play an important role in <unk>.

<unk>.

Fitness gross adds but as our revenue or income growth.

Oh yeah.

Your next question comes from the line of listings out of the ICC. Please ask your question.

Yeah.

And even though he can call him.

Yeah.

Yeah.

Yes, youre going to look like.

That concludes your call.

Uh huh.

Cushing syndrome.

Thank you guys.

Now how do you guys want to keep it down any attention.

So to conclude that.

Can you hear me.

Yes.

Yeah.

Just back to the Capex with Dupont.

Okay.

Oh gosh.

Okay.

Thanks.

I.

Two questions for you.

One is related to the premium strategy Kansas.

Can the management share the number of premium customers in 2020 and donor.

We don't have a retention rate of cruising has too much.

Second question is related to the Capex.

If you come to me okay.

If you do see Jim Thank you.

Yes.

Yeah happy to take on that question.

So regarding the clients reducing that our execution quality is very high.

Much on track.

In 2020.

We have increased the number of the premium customers.

Two 322, which is an improvement of 79 key accounts.

And also in addition to the increase of the total pool of the premium customers.

Average revenue contribution AK, our pool of the premium customers has also increased.

<unk>.

50, $15 9 million RMB in 2020 in 2019 to about 20 million RMB in 2020, which is also a significant at a decent improvement and also as we mentioned that the diversification around and we think the premium customer. We have also seen that trend as well I think these are.

Are the two kind of key indicators.

The only kind of indicating that.

So the universe of our premium customers, but also the quality and the diversification of that.

So to your second question on the Capex.

Our execution, our spaniel at Capex, we're well much on track and are happening within our budget for 2020 at about a $1 5 billion RMB and for 'twenty 'twenty. One I think we're relatively well keep on the same same rates after capex, even though we're well stocked and highly likely.

Our second data center in Tianjin as you mentioned, so I think our total capex for 2020, one will be still around about one five maybe cut off 1516 depends on how the pricing point to move around.

But overall as you probably can notice that the capex as a percentage of total revenue has declined from about 50% a few years ago to about 20% last year and it will further go down as a percentage of revenue for this year and the construction of the changing data centers tier where we have much on truck where may seek.

Financing sources, and the potential leverage or leasing of the changing data center, which will not incur for our cash flow from that perspective, and the changing data center will also serve important IDC center for the region near Beijing, and it will continue to sell a better quality of <unk>.

Process for the major economy around the same region.

You bet.

Yeah.

Thank you operator next question please.

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