Q1 2021 Zhihu Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the two who incorporated first quarter 2021 financial results conference call.
At this time all participants are in listen only mode. After the speaker's presentation. There will be a Q&A session. Today's conference is being recorded at this time I would like to turn the conference over to MS. Changing do head of Investor Relations. Please go ahead ma'am.
Thank you operator, Hello, everyone and welcome to our first quarter of 2020, one and financial results conference call joining us today on Mr. Gil Yang Chairman and CEO of <unk> and Mr. So anyway I was CFO.
Before we start we would like to remind you that today's discussion may contain forward looking statements, which involve a number of risks and uncertainties.
And our results and I'll come and May differ materially from those mentioned in today's announcement and this discussion.
Company does not undertake any obligation to update this forward looking information except as required by law.
During today's call management, and well also discuss certain non-GAAP financial measures will comparison purposes only.
Information on non-GAAP financial measures and a reconciliation of non-GAAP to non.
GAAP to non-GAAP financial results. Please see the earnings release, we issued earlier today and.
A reminder, this conference is being recorded.
In addition, a webcast replay on its conference call will be available on our website and I are doctors, who don't come on.
And now I'll turn the call over to Mr. Certainly I was CFO.
Okay. Thank.
Thank you Denise on.
I'm pleased to deliver today's opening remarks on behalf on thought Mr. Julien founder and CEO of Tripoli.
Thank you everyone for joining our and first earnings call I'm pleased to report that <unk> delivered a strong set of results and the.
First quarter on 2021.
Our user base and the revenue both experience.
Second growth during the period.
And Q1, our user base continued to grow rapidly.
Average I mean, you've reached 85 million representing a year over year gross up from 38% net.
This is on impressive gross momentum.
Separately managed and managed with dementia and Chad.
I'll start the significant gross we realized in Q1 2020.
Most of them there and spend more time on line due to the COVID-19 pandemic.
From a revenue increased significantly well and 154% year over year to RMB 478, one free milling.
And that's growth was largely attributable to our commitment to the execution of our content centric monetization capabilities.
Now I will elaborate a little bit about our revenue growth and visits lie.
Most impressively.
And I called them from a solution also knock on the triple.
And you should deliver expectation and became result on sales.
And you can RMB 121 million and revenue during the first quarter.
And this compares with the annual revenue of RMB 136, and nearly from the life in 2020.
The strong growth momentum to block was reflective of the market recognition and marketing efficiency.
On merchants and brands.
The number on customers all the business lines experience a tenfold increase.
Compared with Q1 last year.
And that they shouldn't and William merchants and brand portfolio.
And that's why also represent a much broader industry coverage, such as fast moving consumer goods and infusion beauty and personal care and.
And well daily life services.
But equally we see great gross momentum is a big slot delivering often low marketing efficiency to our customers and the country duty and what are your commercial content to our users.
And you hold the advertising business continued its rapid growth in Q1, 2021.
And actually overcoming the negative impact from COVID-19 on the Internet advertising sector.
Border.
Advertising revenue reached RMB 214 million, representing a year over year equally on 70%.
Increase was mainly due to the gross upfront advertising, which was driven by our wound and user base and the brand recognition as low as a strong capability and offering tailored marketing solutions to our brand customers.
We also saw a steady increase in performance based advertising revenue.
We expect the advertising sector will experience a prolonged recovery.
The implications of COVID-19, pandemic continue to weaken and we.
And we'll continue to benefit from both a favorable industry trend as well as our strong reputation among advertisers Hardy audience is unique.
Uniquely from product offering and execution capabilities.
The rapid growth of two who.
Paying member is another important engine driving the development of <unk>.
And centric business model.
And the first quarter on 2021 revenue from membership was RMB 127 million.
Representing a year over year increase of 127%.
The average quarterly paying members reached 398 million, representing a 138% increase.
Year over year visit.
The paying ratio reached 4.7% quarter on.
Paid membership program and the white oak components from our community with great growth potential and.
And it'll continue to invest either flow through offering more premium content and improving on paying members and user experience.
And the first quarter and convenient to expand the coverage and the depth of jumbo type content library.
By the end of Q1 and kind of one I jumped on paid content and increased by 190% on a year over year visit with a broader range of critically ultra.
And the fourth quarter, we continued to fine tune and executed or other content centric monetization channel and initiatives.
Such as a recommended foodies.
And the first quarter, so Jim we generated by recommending a goody reached RMB, one I'm feeling representing a year over year, usually about 214%.
Without business benefiting from ongoing and cooperation with our strategic shareholder.
Just hold on and J D.
We expect to make further breakthrough and the e-commerce space.
We continue to deepen our monetization and the education sector as we all to enhance the quality and depth of our education on the operating.
Including our self operating worked before and which has expanded from examination to now also cover and sports and finance on the business.
We have also expanded offerings to cover more pardon me Audi to eat with Iot partnership with offline and third party vendors.
We will continue to seek a strategic partner and the education sector offer great growth potential and.
Synergy with Google and depending on offerings.
Now, let's take a little bit into the deeper you too.
And to review our operation across a couple of our key operating perspective.
Content concentration user growth and monetization capabilities.
As a a comprehensive online content community and we are dedicated to addressing the needs of people.
Seek information on solution and make decisions or how fun.
And Q1, we have maintained lifestyle and consumer accounts and critically as all most active on the popular category on OCA.
Paul.
This was closely followed by the interchange on Pittsburgh, and the Trucost cornerstone, particularly including Naturals on engineering oncology and the politics and central.
Which form the bedrock of our content library.
Actual content creation, especially those focusing on high quality content and the Y two factor in driving strong growth, although the user base and monetization capabilities.
So at least and we continuously strive to enhance the breadth and depth of our content offering with flow product development and the refined operational initiative.
During Q1, we also concentrated on be visiting the timeliness of content creators even EBIT.
After a training event and that you're reaching the format of our content offering to include more lead you pairing from concert featured and south.
Turning topics and Triple community are also attracting and increasing number of feet.
And that discussion on Chinese colleagues have generated significant organic traffic and word of mouth recommendations.
So who tried and copied it.
Chinese Shaw and become a fever and sleep and therefore in depth discussion following the current major even.
And the first quarter more than 23020 topic, even where he thought uncle <expletive>.
Discussions of these topics increased user activities and the interactions on our platform.
And it was further strengthened whose brand.
Brand and reputation, but encouraging users and participation in both on opinions contemplation and and in depth discussions.
So our 10 yourself on operation, we have successfully developed a comprehensive system or attracting users and increasing their interactions on our platform.
In order to cater to the whereas demand from users, we encourage our content creators to generate and diverse spectrum on it.
Making full use of the reach media from it.
And to offer.
We also launched Egypt al on campaign, where targeted demographics.
Highlights from these included content creation workshop.
Organized for younger and amateur users.
And open forum, focusing on search and specialized area or a certain group of users.
All of these even were well received by users and have generated a great wall and contemplation and ink.
And those activities.
We are focusing on operating on water range on specialty line, two of which has a lot of it and pedigree.
And have received a satisfactory result.
By the end of the first quarter on a constant library measured by the accumulation of content pieces on simple platform grew about 60% year over year.
Now I will spend a little bit on time on the regionalization initiative, which is rapidly becoming a core part of our business.
Three times, a day and all we do buy video viewers and increased by one six times and the border.
Compared to the same period of last year.
It's all very impressive well low volume upload and me for medium and low floor.
Equating 17 times on a year over year basis.
We believe that leveraging our rich content pool to who is well placed to capitalize immediately increasing dominance and all that.
On content consumption.
By adopting a regionalization strategy for a puzzle.
Cumulated library of premium content will be consumed on ever larger groups of users.
Those are accelerating our user growth and.
Part of our regionalization strategy, we launched whereas the video creation utilities and toolkit.
And we do content per eater.
And have also introduced a dedicated we do tab on the homepage.
And going forward, we believe our premium video content will differentiate through who you know market and.
And that'll be a key driver on the segment.
To facilitate our strategy.
And it'll continue what you're investing product innovation and and introduce more monetization channel for a leading content and services.
And that's where most of the next page we are committed to providing more me from video content was the differentiating central fulfillment from users.
Our content creator and continue to be highly active on our platform.
And the first quarter.
And three 4 million active content creators per month on average.
Representing and inquiries about.
100000 from the fourth quarter on 2020.
Our creator community contributed more than 12 on 8 million pieces of content in March 2021 alone.
These achievements reflect our continuous effort in improving the ecosystem for all continental eater.
We provide our creators with the sophisticated and dedicated platform.
Income passing.
And I could create protiviti and toolkit.
And the utility.
Especially on the AI powered and video creation and functionality, that's virtually simplifies the process, making video content.
We also offer full service assistance to the video content creators.
Through a project called project high and.
Which include training courses on video creation.
And to support cash incentive plan and the connectivity business.
And partners, where it comes and monetization.
We are excited to see that these efforts have led to a rapid inquiry and video creation and volume over the past 12 months and.
And I just mentioned maybe from video and inquiries increased 17 times and the quarter on a year over year visit.
Notably we are seeing more and more video content created not only by our talk on the greater but also from a medium level and the new content creators and.
Compassion and inquiries and coverage ratio among our comes on later.
Our continuously solidifying partnerships with a growing group of new talented creator will help us further accelerate the visualization of a visit.
In addition to supporting accretion and the concentration we have also provided our content creator community and the multiple channel for recognition and a way to monetize their contribution.
And example of this is our Rebids and new generation of annoying, Germany, and Chinese changes and yet that way.
Fear, we are recognized and awarded and owner 187 outstanding Young people.
Weighted premium answers to high quality the topic on.
And on platform.
By continuously building partnerships with younger generation and.
And new content creators.
We are fortifying our ecosystem by building a pipeline of future premium content and the benefits of an entire community.
Yeah.
So who hasnt maintained its industry, leading position in terms of the user acquisition efficiency.
By adopting and content and technology driven growth strategy.
The acquisition cost per new I mean, you for Q1 was RMB 37.
Which represents an optimal level of cost efficiency among other players.
You know all of them come to community and industry.
Going forward we.
We will continue to grow our user base, while maintaining and user acquisition efficiency.
Hello, and 10th anniversary in January this year.
We launched a series of branding campaigns to further improve Zhu who is the brand awareness and the market.
And place centered around a new tagline.
There's a question there will be on there.
And Chinese.
You wouldn't you Toyota on.
We believe this brand and called that clearly reflects Zhu whose values and our mission and will enable us to attract a wider range on users and.
Content community.
And the border, we launched even such as AR and the winter evening with answers and G. A weight and online new generation of annoying, Germany, it's interesting it that way.
And the other encouraging accident answered and recognizing them for their contribution to our communities.
These branding campaign and he has to do with the brand identity and a recognized recognition among on the community of users.
In future, we will continue to invest and cover brand, which is a key assets.
Driving long term user growth.
The foundation of our closed loop ecosystem and trial.
Foster and our community and husband the partnership a long comment from heaters rent and the merchant.
Encouraging and integrated approach on certain user acquisition and fulfilling their need.
In the first quarter.
Number of content creators that received income all digital platform increased by 296% compared to the same period of last year.
And so it's only evident all day William on maturity and.
Access of our content monetization approach has he incentive wise from a content creators.
In conclusion, we are very pleased with triple and solid growth and the first quarter.
In the past few years, we haven't become Chinas largest Q&A inspired all on content community.
Going forward.
And and user base and.
Reaching premium content.
Expanding content creator base and.
I want to fight monetization channel.
And we'll continue to make to who are well positioned to capitalize opportunities and China's rapidly expanding online content and sector.
Yeah.
Okay. This concludes our remarks remarks from Mr. Julien on phone and field.
Oh, No Star Wars, and financial performance with you for the first quarter 2021.
And as a quick review in the first quarter of 2021 and total revenues ex tier and Holy Grail.
I went total revenues amounted to RMB 478 3 million.
Eventually 154% year over year equally comparatively.
Comparatively the same peer of 2020.
This was driven by our strong user growth and and fast evolving content centric and monetization models.
And the first quarter.
And your monetization channel continued to do well and the country beauty and the more balance proportionate to our total revenue.
For example, clothes and Commerce solutions represented 25, 3% of our total revenue.
In the quarter.
Comparatively zone zero, one and 6% and Q1 2020.
And 10% and plenty plenty full fiscal year.
Well the contribution on advertising revenues equate to what and 4% reported one 7% from.
Six day 64, 8% and the same period of last year.
Okay and membership income people 26, 5% of our total revenue.
Compared to 29, 6% and Q1 2020.
And other revenue accounted for the remaining three 6% for the first quarter 2021.
Gross profit for the quarter was RMB $272 7 million.
240, 248% year over year.
Our gross margin was also significantly he has to get to 7% in the quarter.
Compare to.
42% in Q1 of last year.
Benefiting mainly from our changed and revenue mix with higher contributions from business contributing significantly higher margin such as our call newcomer solution.
Moving on to the cost and expenses.
Are called inquiries and life was outgrowth of Apis and skill.
So at a relatively lower and paid delivering a higher gross margin.
And in particular and increased advertising execution and culture and related costs.
Well I'm not sure if I wrote it is 7% year over year inquiry and cost of revenue.
Which were RMB 200, and there were $5 6 million for the quarter.
We also saw increases in cloud services and bandwidth costs incurred in support of the and significantly equally and user traffic and activity on our platform.
And illustration of average on that you increased by 38% and a quarter on a year over year visit.
And we hear and C, 138% year over year increase in average monthly paying members.
Our total operating expenses also increased and stuff.
Part of the public World.
What's the total expenses amounting to RMB 615 1 billion.
As a percentage of total revenue it equates to 129% and of course.
Hum.
Comparatively what I'm going to pick 154% during the same period of last year.
This shows and continuously enhancing operational efficiency, which.
Which we focused a lot and they're supposed to Asia is driving on a quote.
The main driver of operating expense well in the quarter.
Selling and marketing expenses.
Reflecting on where its marketing and branding.
Moving on a campaign, we launched during the same period.
We also experienced higher personnel and share based compensation costs.
As we continue to invest and talent to support our growth.
Loss from operations was RMB 342.
Oh and $5 million.
Compared to RMB 210 on 9 million for Q1, 2020 and <unk>.
Net loss for the quarter was RMB 324, four and 7 million.
Compared to RMB 200, and they were $1 3 million for the same period of last year.
Our adjusted net loss, which is a non-GAAP measure that includes share based compensation expenses.
With RMB $193 6 million for the first quarter of 2021.
Proceeds from our IPO continue to enhance our balance sheet.
That's helpful.
And all the end of March 2021.
And our cash and cash equivalents.
Total deposits and short term investments on.
And B.
7961 4 million.
Okay.
Yeah, I will make brief remarks on our financial outlook.
Looking into the second quarter of kind of what the company expects that are and where total revenue will be and the range of RMB six times on 'twenty, and 'twenty 622 million and RMB 627 million.
This only reflects our current and the preliminary estimate and is subject to any change due to factors, including those that are beyond our control.
This concludes our earnings remarks, we will take questions from the audience.
Operator, please open the line and left on.
And that's a commenced our Q&A session.
We will now begin the question and answer session. Jessica Good question and you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Piyush.
Piyush <unk> from Goldman Sachs. Please go ahead.
Okay.
Good evening and congratulations on your numbers as well as the listing a couple of weeks ago.
And my first question centers around you and me your progression, which we note has done very well.
I'll ask you to talk to them.
B M and you guys at the end of the quarter, and where you're seeing that growth come through and if possible could you reflect on a day.
And the tragic tree observing at the end of the quarter and whether that quarter that tried to treat can be maintained at that pace through the rest of the year potentially.
That's my first question and my second question at the time of the IPO you talked about you disclosed what the total visitor and number was and I Wonder if we could go back and and get a feel for how that visit and number how it's changed potentially since the last time, we saw that number.
On a reported and the findings thank you.
Yeah.
Turning to life and she has been with us and got them.
And you show them and kind of all along.
Once you are done.
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Or something along those lines and.
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And he always young.
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How should reach and to the yield on this issue is that a woman I P. O portion comes from Nike.
On the women's already on corner. She would you yes, you push on call with us.
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But you saw like co issue okay.
Yeah.
And then you from <unk>.
Who has only made them public.
We have from very high percentage deviation.
And I coming from <unk>.
Hum and craighead Okay.
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On slide following our new year's day, we noted that they are pretty simple.
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And no new year's and giving us a higher percentage on a year on year basis.
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From a woman does Nielsen kind on <unk>.
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Tony you either nasal high flow.
Could you help out on my tool.
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We wanted to and just yet.
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What about low steel.
Okay.
Yeah.
In terms of its all on cotton and.
And I think Ryan and I believe.
And we are well penetrated and.
On a wider range on topic area and.
And different scenarios, where he feels the need and.
The demand on various skus and wait.
And what's the best in class content and snow and ice.
I'm, calling from Clayton.
And knowledge area, and we have been maintaining oh and sensors and all industry. All the time I can give you. Some example, winston.
Oh Uniques sensitizing members increased by.
By 220% and material science, and <unk>, 560% and my economics young yet.
Okay.
From a push and all.
And then a good zone hsinchu and didn't really.
The rule.
Yeah.
Sure Marty.
Claude you Sidney.
And you yourself women the needle on Charles on the change.
Hello.
So it all women and simple truth, Russia, do you see them and I was gonna daughter and channel.
Oswald C zone, and senior and Tempe, Toby to inkjet to send them.
And.
Yeah.
Whereas at the same time, we are also well positioned and I thought your topic areas such as home financing.
And E G E.
And in gaming and cold.
And and content creators are also very active these help on to attract more younger users.
And what percentage depends on.
Vintage of users on that 25 years old and also on the rise.
Yeah.
How about your total should all flow fun, just really cool cool. Thank you Joel.
And so what I phone Toyo, who just said Gee wouldn't she doesn't yourself.
Yes, I, probably should come down.
And all that's all really Utah call Yeah.
A long time and you should look at that that shows that May challenge, the Toyota and Youll on calling on new and New York.
And judging right.
Total youll she says so watching them done nationally.
Hi, all play to our total just mentioned on cold weather just honey.
So some of you saw on appeal with boundary on who put ginger and should that message.
Joel I know St. Jude, yet simple called Guido good lunch okay.
And.
In terms of and on top of knowledge sharing and interest discussion. We are also helping our users can solve their actual problem.
And this kind of content and also on the rise.
And we have the very popular topic that is about preparation for and he gets them well Congratulation school and China right now every day and I'm more than one Neely and Houston.
Looking at those information and we're also helping all your system and.
Life skills, such as cooking and we are also providing solutions and you'll be and their workplace.
And these will help all users not only to share his views about their interest.
And I also saw the net.
They are actual problem and the award and Mike.
Okay.
Yeah.
And what kind of on a.
And as Sundar, there's only meet what else should lose on price.
And by yourself.
Total sales.
Swinging and women don't sushi job and so I'm going on.
Cool okay.
Okay.
Okay.
We see that in both retention rate and and pack me Naeem content on teasing out some very nice numbers in terms of users that we have and we will continue to invest and gaining more and more use it. This way. Thank you.
Yeah.
What are your total once you implement a monthly viewer and tens either sure sure.
Sure.
And at noon.
So on casual so I'm sure that Dino.
And that's to your second question, mostly viewing yeah, having right now is 416 million and maintain a stable level.
Okay.
Yeah.
Oh, Yeah, well man I'm on your tweet, mostly view on the B, Shanghai and it turns out when.
She's uncles from tool.
Yeah.
Yeah.
And also the percentage of and then.
And you two monthly viewers and also on if they don't and on a stable off price and trajectory. Thank you.
Yeah.
Okay.
The next question comes from Alex <unk>.
And from Credit Suisse. Please go ahead.
Alright, Thank you very much for taking my questions and congratulations on very good and results Oh I'll ask my question on sports and Chinese and sensors on them.
And by myself.
And the Gucci and take.
And since I know you said it wasn't I wouldn't and bumping and when do you do just quite used to be part of it from.
Oh and then.
And we'll finish on this year go out and you take.
Sure and the sulfate and cause some kind of free more of a fruit juice decided on.
And then you know on someone's going to come and shouldn't pull that you can call out.
Hold on just a hot and.
And your hydro I put you on that.
And our claims and the things on that huge G, which is something that should be the xinjiang cooler and celebrate.
And Thiago wouldn't use and sound, where you saw about a huge leap on me and penalties and can do them. All you do see some pick up and bought a minimum sometimes and I could go grew up with home robot and quiet time, Aldi Lidl and you got a gene quantity and show all come from commercial the Bhushan Claudio and Doug Young.
Yeah I'll take that.
And we went from my car and volume do we like these and people would think of Chartwell and my first question will be about our progress and are in the video communication strategy.
Michele some more figures about the scale of video consumption and and.
Production and also what will be the key and shapes.
And that's why and.
Hum and penetration of our video.
And you and pumping creatures.
And then my second question is about the GP margin I'll break down and loved working with you.
You can show us Oh about and segments.
And the segment excuse me margins and such as for example interest margins for our company from a solution and the membership thickness and also how should we think about the GP margin trend and the recipes from here. Thank you.
Okay.
Hello, guys and you don't want your well I hope it all eat them and she did.
Interest as you're bringing your ships.
Come on.
Sure.
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She told.
And Tony I'll go switch on board.
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Shellfish, though total.
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You're from Tony Sheldon and it's also team to do it as of June some time ago, Tobey China shipping.
Vinci shellfish and those shows.
And boy it will dwindle from Joan Tong.
Tagalog and Jewish.
Okay.
Well. Thank you Mr. Joey and I will address your first question about video and strategy well video content is a very important part and our ecosystem and in the past a couple of months and see that our Bali is all from BDO, both in terms of low creation and.
Function increased significantly.
And those videos that Oh for one minute long Beach daily up loading a volume increased 17 times on the past quarter and.
Average consumption on video and also increased by over 60%.
Yeah.
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The total.
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Assumption that you don't college, a whole childhood zone.
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Hello, and Nathan so hold on.
And you've got things on shipping.
Two of them are ships, social and they don't shoot up.
Okay.
Oh and beautiful community is very open and highly accommodating to deeper and kinds of content creators keep and kinds of media formats and different kinds of user groups.
Right now you see video penetrated the au is now over 30%.
We'll do enjoying watching video on day one.
And also and you went public and and our product and technology.
Technology innovation and video is going to be a very important and to content creators and one off their creation tools and.
And we believe that every answer on coupon and should have a video version text and image and video I, just part and parcel of all of it and try out content library.
Yes.
Yeah.
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Ships, and so to try and shut it off.
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And how far down.
I believe and why even from here.
Yeah Joe.
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Childhood school lunch and dinner.
It's just how that plays and so if you're talking about.
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Sure Neil jump at that sort of course, such as touch them.
Yeah.
Yeah.
And if we can't see and all community Medio.
And it works.
And at present, and very nice gross rate and also the cotton and detach.
Actually it's all looking very healthy on the.
Other him and the entire industry of video.
From BDO and still at a very early stage.
If you look at and any other similar accounts include content community and we put all the uploading volume from here.
Altogether. These daily uploading volume is owned by hundreds of thousands.
And we believe that going forward these volume.
Hello, and bid to about a two by helium on on a daily basis. So we believe that this sector still has enormous potential and we believe that we won't be able to see more and more quality video content and video content creators and the community.
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Sure Jim.
Yeah.
Thank you and I also wanted to mention the ecosystem that might be.
And for video people on them. Unlike many other spots on our company and maybe a video strategy and it's driven by how ecosystem, which is very healthy that promotes the good quality and come out on for Rob.
And.
And there's low again, it wouldn't force and healthy and this year that we are enjoying and our community and.
And Q1, we actively taking some measures to.
Controlling the low quality content, meaning that it would be more exposure opportunity.
Sure.
And our quality our video and also at the same time on content creators and better quality video are enjoying and why that space or the equation and and the second quarter. We spent and we hope to make some structural changes to be content videos I.
Well I thought that I'd be wrong on Alka.
And my system, so that as an entire day, our video business well continue to grow very fast.
Yeah.
Okay.
Yeah. This is our CFO of the company Sumit I'll try to answer the second question from Alex with regarding the gross profit margin I'll speak in Chinese and of course, it will help on translation.
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And from the Alex wasn't the Shiga Graeme I'll leave you with him and T O.
And say, our union and Q1 on the gross margin and sure that all of that and she was cheap.
Goes from two Sunday.
Chicken and family, which you know something between you and the Q1 and she goes shouldn't do that yourself.
Sure, particularly from me.
And like she was she can touch on them.
And I'm sure, they're showing some downtown attitude and we'll show you how well their job and you'll see that the fishes solution from if we don't have all of them and you're back.
Oh gosh over yet from food toggle on foundry tissue, Patricia Coastal's and don't let you go here when I said I don't think and we'll show you should own pneumonia or somebody from the Yale quite okay.
Yeah.
Yeah.
Thank you and this is so from C and so some layoffs.
And Oh, the answer to the gross margin and it's up by 2021 our Q1 gross.
Gross margin stood at 15, 7% and Chicago presented a very significant increase over the same period last year.
That's the reason for that is the economy of scale that we are enjoying as a result of increased rapidly here that we are seeing from a business Oh Gee plus and paid membership business represented over 100% increase when you raise how advertisement grew by over 17%.
Yes.
And if they are they're not sure on the food you go and that fashion.
And on top of being alive and well see.
Income on either to go to church out and you try and show the P D zone.
Already hurting you on the Q1.
On the so you're talking about and D. Excuse from dollar hurting our union and Q1 up and Oh.
Oh, no one got hopefully I'm not sure that shouldn't be net but tell me that I supposed to touch on it.
And Orange, Armenia, and kill and up and really with the chiefs and dispenser.
John D at all on our Union QM, those I'm sure because our sleep.
And what's your childhood and took a year with a gross margin and so if you don't call them clean on chicken parallel and don't feel actual cheap commodity leader showing them the children.
Okay.
Because the reason is the significant mix change that you're seeing and all our brother and U.
And for a chip business in 2020 first quarter accounted for only 1% of our total revenue, whereas by the Q1, 2020, one it's accounting for 25%.
And our revenue contribution from paid and membership and advertising and stood at 16, 7% and 30%, respectively, and the first quarter of 2020, whereas the percentage has now dropped to 45% and 26% respectively.
And so therefore, you see that our higher margin business that is G. Plus is contributing more to our gross margin as a whole.
Yeah.
Yeah.
And so what are you there and not sure when they tell me I don't know and she had to go to them and challenge supposedly there's food from Josh pumping and gather people shouldnt that that clinical food. She that you go to them but.
If somebody like short term sooner so yeah and deal muscle was also the centrality of general them and don't she told from downhole Pallidofugal and we'll.
Showing no shortage of them done and female with Eli Lilly and Telemundo, beating the top on Sunday.
Did you do on this will mitigate gross margin from donlin to the other day.
And then the reason is that we right we keep a very good control on our fixed cost items for instance.
And that's where our brand bandwidth as well as before and steppers or not and treating and that's the one place we are intrigued and I'll, usually a day and all of the business. Therefore due to the economy of scale that we're getting from the sixth item of course, we are also registering a higher gross margin.
You mentioned three reasons, all contributing to a higher gross margin this quarter.
Thank you.
Oh, and you do the gross margin without it being on a woman.
You know women and so he took on some of those are there don't use shipping box filled with particular teaching and which I doubt you altered the shooting and tons of all pushing and tonnage on let's say on the.
A greener should be and told them, though teaching and shifting up without not.
Shying away from Gaza and it went from being a tool.
She got no gross margin on the show me that this will be on golf and so scalable and Michelle on the luxury to take a price.
And I shouldn't need loans were shifting from you and so we're showing the book here and see well I thought that you could see two youll come and I'll leave you alone showing them that you got to weigh the children.
Okay.
Mhm.
Going forward I think and the next couple of quarters, we might see some slight changes and our gross margin level and we are seeing very nice perspective in terms of the video content that we have therefore, we were investing a little bit more encouraging the video creation and content creators.
My condensate and been more on their content creation and video format and Q.
Okay.
The next question is from bin bin Ding from JP Morgan. Please go ahead.
Yeah.
Oh, gosh, you're going and send it over to you and Oh gosh, its almost always on a school into the BB and BBB.
I'll take on telling you don't see really on the.
Lindsay on Eagle and he was going and selling into the new I'm, telling you why did you fall and such.
And so I'm going to go do with telling me and I've got you and hope to build you ought to use music a matrix that will drive without maybe with what he's done and get that got pushed out and some are beautiful volume.
And you all on the to go to the ones where to go on volume for this Oh.
You have to go on.
Yeah, So who would be good judgment and all the operating matrix and the click through.
And because the ECP and Oh.
And you're going to see the Douglas Israel and home and local country. Good Oney, all union and see how to continue to be on censorship.
The other ones and squamous.
Sales and marketing.
Two good dog and then she needs to be a fun and jumping on a whole what was on the I'll do so it's a big hole Gerardo just hold them and use in Asia, and the Horton and what happens to go and see how did you get people to choose from I would translate myself. So my question on two questions. My first question and installed the call them and how much dilution.
Can management share some colors in terms of the drivers behind the strong growth in the first quarter and for example, what are the key indices on notable business customers, who have contributed to the gross and how does the operating metrics such as click through rates you see P. M look like and the first quarter and how should we look at the channel and the arrest uptime and 91.
And my second question is volume set sales and marketing expenses, which nearly triple that in and of course quota and pending one and badly August and lost you can management elaborate on the key and match than ever yourself. The investment Oh, all of the sales and marketing investment and how should we look on the trend and the following quarters. Thank you very much.
Yeah.
Okay, shaping oh, well, that's actually not moving too.
He when he took on any woman does Jacob coming from resolution to me you know that our junior and the Q1 that you decided on what Tricia TOEFL on the cheap and cheerful sure that all of the U R E.
Although the junior and Shenyang and shoulder and the basket and shelter between ages and somewhat familiar talk what are you back Bay and its usual fun be doubtful that kind of you to go talk all about and Jewish Violet and milk and beat off from some dumping and Tricia sure Jacob No qinhuangdao okay.
Thank you and let me address the first question on content on their solution first and well.
Well actually in Q1 content and solutions, Inc. Our expectations buyback, which we just started a revenue of 121 million accounting for about 89% of students and Oh and numbers that we got from last year entirely income.
Leasing by over 100 per cent and even on a quarter on quarter.
Cool.
Hum.
Hum.
Something balance sheet on the driver like kind of low to Usher, let me and food and I thought from the Dino sure check out of a toll on the pin Tai who are sound out of shutdown and Fisher from food, but on top and I'll take a somebody junior notes Hugo.
Each of collateral and that you who should go should as well that'd be helpful.
And English.
And you May some day out at some donuts and I'd say.
The other day because on the other don't touch on that day, she got a tiny and that you'd be looking down from intelligent you'll actually so you can see those don't killer T cells and soundly between yeah, Yeah, you've got to go to go FID on sizable that you got from them and see if you figure out the actual like somehow and I kind of sugar and I'm sure you're telling me on John Chisholm I wish that you don't congratulate forgot you're allergic to pets with them down.
Awesome.
And as far as and the drivers behind that content commerce, and others and I would say that we are very happy to see that both the number of friends and margin on our platform on the device as well are increased by about 10 times. If you compare the number in Q1 2020.
And because they are larger volumes of our merch and working on our community and the platform. We are seeing very nice price out of the beaten them from the margin. Therefore, we have very nice to see you can see members and small so in conclusion, I think I would say that both the volume as well as.
The price all the drivers behind our balance sheet.
Right content on like a loose.
Thank you.
Okay don't forget the hydro one or you may figure out who attend and being Talladega based on Monday.
Maybe I shouldn't be check out on Hollywood and so you talked about L. A Sunday hockey and basketball and final point on channel.
I don't forget the Huntington and Baja and I'm quite sure I'll tell you. They don't go to church, and you'll antisense eat them, though.
And so you could be all totaling two chicken lunch and they'll take a told on the key Madison and gather.
And I kind of on kind of price shell Joey and they don't go home, especially with somebody that you all called out to go to debt to getting okay.
Mhm.
In terms of the industry concentration, we see very nice and popularity of its from B and factors such as F. M. C. G education beauty our prior guidance.
CS and automobiles, whereas we've seen very nice Congress and conversion rate from the Ccs that we're having and I would say barring a F. N C D education and beauty they have been on the biggest contributors to our merchant base.
And then Brent base.
Okay and so this should go.
And what are you, reaching a two day out here what are you going to go with that claims you can't hedge it all Garland and she she got selling and the marketing sales now that you have a feeling and I say trigger digitalized with shandy, which again, if you want and Tricia on Eagle and sometimes.
And it's something that's really interesting and actually you may want that you finish on a particular travel and triple dose English Sedonia film and so like usually about 10 biological and well do our boss and Hugo South I'm sure you have a way she interest and you talked with Sunbelt and Jacob you should have seen that hold on most of these on sure.
The shale, which and I you know.
And so I'm sure you gotta niche and they've got bunch of them.
When we get really nice low description about hold.
I don't know if it was that you go to Chicago Congress and wait till Tonight and for atrial flutter and that's all.
Really appreciate the ship I sound like what illness and surety telephone day. Please.
He asked you to hold that of course, we take a young and so it was again and you saw Toyota Tinyurl and council of Australia to a pull it basically on hold on.
Okay.
And to your second question on the increase of net sales and marketing expenses and molecule one well I should say that in generally and we were celebrating the 10th anniversary on June 10, we need and that's why we have launched a number on a brand campaign.
Heavily in the country such as on my part D adventure as well and saw the award ceremony for a new generation of knowing which is a very welcomed by the community as a whole and that's helped US a lot and building our brand.
Commission and that is why we see a jump in terms of ourselves and marketing expenses, especially in this Q1.
And as I turned out so long as the trigger shopping on a portion of them and feet on when to take Oh, what she does Shelly and what kind of on the coupon and showed me. She was on the Guy and he was talking about yeah, I shouldn't chico's and that's quite yet so that you can fit on.
And Peter fitting.
Okay.
Okay. That's sad I should say that Wednesday on a very I think and in terms of forward on sales and marketing expenses and booking on the efficiency on our money and our marketing dollars and B pack of all and they use our sales through that.
37, RMB per and they view and therefore, I still keeping at a very low level.
Yeah.
Yeah.
Although two of them and they put out and beat.
Thank you I'll pause on your Banca and Susan.
The next question is from the.
The key Guy from C. I C. C. Please go ahead.
Okay.
And here with him and he and I hope I'm going to touch on.
One of them and he can answer Glenn do you want to call you know whether you can drive on to Chicago on you teed up to go out and call. It two should be on him.
And our whole childhood and signs if you are trying to go sell walk on and golf on me and say I blow down and C. P. M. The balance answers from you on their home and I used to say he goes down and so what I'm sure I didn't do it. They go Oh go on and comes with actual well show you and they want men on tour that you know T. S. M and you know go on go to school and so I think that pad on accounting and you'll come on.
And when they go from Oh, I'll briefly translate my myself, Thanks management for taking my question and.
Congrats on a scale and financial performance and my question is regarding the drivers of the advertising business since eating sat that brand and have strong performance and how do you view and a project and the growth of performance and low ratio and didn't see P. M and they would be in terms of advertisers are is it because that you have gained more.
Sure in their accounts and why they are more pay or S and Oh some of your clients. Thank you.
Yeah.
Okay. So you don't look on what's wrong with them down and so it shouldn't be on Schumann, what juniors and dealt with on the T shirt, a tick or two.
And I'll show you the other to go to get you don't usually with him and I won't go all the questions on that item.
Well not to go along on them, which and so they can partner and shovel and of course, Eugenio allergic to peanuts won't go on their children and champion she'd be talk all day question on the P&L College and go through some flow.
And what was asking about it from me and lets you seem like you're telling me that day that that's a logical technologically.
Do you live and I'm going to go and I. Thank all of them and how would you need on reach and pay phone. She wanted to control and show the judge you on chicken.
Yeah, that'd be narrowed from quarter to go and just you bumped it up on and translate it a keen eye on.
Due to the kitchen and damage on on how needle and they took a shape, we owe them and saying what should you you got to do it and I won't go to go from sort of beat on quite a because you're moving on.
Pachinko and look to another one and you saw that you all should likely be okay. If you look on large what does he got shiga chewed up on GAAP.
Okay.
Thank you and final question well, our advertisement business revenue increased by 17% compared with the previous year and that was and then we come to bid and buy our brand advertisement and Houston accounted for the majority part of our advertisement income.
That is because we have launched and move toward us and so on and so helping our brand advertisers beauty more values on a community by giving them better on high quality content that would accumulate and I'll comment on them and our advertisement and Continentally comes from cash.
Hey.
Yeah.
Oh and Michelle It's also and I said D team and I won't go on the trigger for Hawaii Electric light on it.
And we put out last one on Romania Shimon. So your interest what are they going on with some golf watch and paid digital that you show on me on the lean and I don't control does it get you back on the particular, well I guess, what youll, just realizing and Kate and Luckily and stuff.
Okay.
Our performance as and accounting or unless I got the percentage person and brands ads, which is pretty much in line with our development strategy and we hope to work even harder for the brand advertisement and trying to get more out of their budget on average.
Tyson.
Hum.
What are you going on in T. The other day good.
Oh, my God that and do that your opinion on the way like southern tide on she can't wait and wait to hear to the L. O day, you're gonna Newsweek and without it you got a ticket that debt.
She's from L O and Willow and Narwhal and gosh from Dallas to other fishing shouldn't be useful actually woman and you'll put up on job EQM and then see the chipotle chicken pies and generally that you got to show up and show them those are going the dish and pay the full barbell I bet you got.
Ooh chicken, and then shellfish and build up and down but you don't squishy and so that you don't walk out from Dell.
Yeah.
As for the AD load going forward, we will keep on AD load on change.
Instead, it well and rely on the increase on our user base are the better and higher recognition and how about Q4 as a community and also diversifying our format. So that there will be more informed on what consumption on now.
Also advertise and then on all come from thank you.
And they do have and you don't wait out of a day on tissue.
Due to time constraint that concludes today's question and answer session. At this time and I'll turn the conference back to changing for any additional or closing remarks.
Thank you once again and for joining after day did you have any further questions. Please contact our IR team directly on TPG and Massimo relationship. Thank you.
Thank you once again for joining us today, if you have any further questions. Please contact our IR team directly or TPG Investor relations. Thank you.
Yeah.
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