Q4 2021 Youdao Inc Earnings Call
Okay.
Good day and welcome to the <unk> 2021 fourth quarter and full year earnings conference call.
Today's conference is being recorded.
At this time I would like to turn the conference Mr.
Mr. Jeffrey one Investor Relations director false Utah. Please go ahead Sir.
Thank you operator. Please note the discussion today will contain forward looking statements related to future performance of the company, which are intended to qualify for the safe Harbor from liability as.
Established by the U S private Securities Litigations Reform Act.
Such statements are now its guarantees of future performance and are subject to certain risks and uncertainties assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion.
A general discussion of the risk factors that could affect <unk> business and its financial results is included in certain filings of the telling me with the Securities and Exchange Commission.
The company does not entertain any obligations to update these forward looking statements are forward looking information, except as required by law.
During today's call management will also discuss certain non-GAAP financial measures for comparison comparable comparison purposefully.
For the definitions of non-GAAP financial measures and recast variations of GAAP to non-GAAP financial results. Please see the 2020 , one fourth quarter and full year financial results news release issued earlier today.
As a reminder, this conference is being recorded beside of that.
That class replay at least conference call will be available on <unk> corporate website at IR <unk> com.
Joining us today on the call from <unk> Senior management is Doctor flung, Joe Our Chief Executive Officer, Mr. Le Qing VP of operations, let me start homes to our VP of strategy and capital markets and Mr. Wayne Lee VP of finance and Lynn.
I will turn the call over to Dr. Joe <unk> to review some of our recent highlights and our strategic direction.
Paul.
Before we begin I would like to remind everyone that the financial information and non-GAAP financial information mentioned in this release is presented on a continuing operations basis and all numbers are based on them and b unless otherwise specifically stated.
We finished the fourth quarter and the whole fiscal year 2021 with strong financial results.
Total net revenue reached RMB 1.0 billing in Q4, 2021, and RMB 4 billion in 2021 whole year, representing an increase of 22, 6% and 58, 9% year over year, respectively.
In Q4.
We achieved positive net income on a non-GAAP basis for the first time since our IPO.
The $31 1 million.
Operating cash flow.
Continuing operations was positive RMB $142 2 million.
Due to strong revenue and lower sales and marketing expenses incurred to.
To be fair, achieving non-GAAP profitability was helped by favorable seasonality in Q4, including the year end shopping season.
Nonetheless, the year over year trend is clear the results demonstrated that our financials are steadily improving.
Business is on the right track to sustained profitability, even under the challenging regulatory environment.
Well, our Q4 results showed that our strategy of doubling down on new growth opportunities is working.
We continue to make good progress on multiple fronts, including the smart devices segment.
These business and steam steam education business in Q4 Euro dollar has also been added to the MSCI, China All shares Smallcap index as the market close on November 30th 'twenty 'twenty. One we're pleased to be part of this widely recognized as the global benchmark.
And recognize our business performance.
And growth potential.
We continue to comply with the updated laws and government policies. We have ceased offering the after school tutoring services all academic subjects.
And China's compulsory education system and completed the disposal of this business.
As a result, they the canine academic I S. T business met the criteria of a discontinued operation.
Retrospective adjustments to the historical.
Statements of operations have also been made for the previous periods, which provides a consistent basis of comparison for the financial results of the continuing operations I would like to thank all former teaching and operation staff for their contribution to the canine academic S tea business in the last several years.
Now, let's let me walk you through some of the details of our fourth quarter.
First our smart devices segment kept strong momentum it generated revenue of RMB $317 million in Q4 up 24.8% quarter over quarter, and 33, 9% a year over year from Q4 2020.
Hi, Beth.
Dictionary pen sales exceeded 500000.
A new record for the full year of 2021 revenue from their smart devices segment reached to RMB 984 million, representing an 81, 6% increase from 2020.
In Q4, we entered into a strategic partnership with the commercial press.
Exclusive inclusion of Shanghai Dictionary in your Dictionary pen.
In addition, many of the well known pictionary as published by the commercial press.
Also be included in your belt smart devices, the integration of Smart AI and classic content that makes the dictionary pen a truly indispensable tools for language learning and usage.
We also kept improving our core technologies.
A new feature called writing guide I was introduced for the pro version of Dictionary pen powered by our proprietary natural language processing technology.
And guys feature provides personalized assessments for students English writing evaluating vocabulary usage grammar correction.
Grandma correctness, and then offer suggestions for improvements.
Another novel application of AI learning technology.
Our new category product you Theyre listening part was released at the end of Q3. So Q4 was the first full quarter of sales. We're happy to say it is off to a strong start the units of Utah listening parts sold in Q4 was double that of Euro Dictionary pen one.
In the same period.
In Q4, we introduced more licensed textbooks and added AI listening comprehension, Mark tests to the device. We believe Euro dictionary pod is a strong product compared with its peers, but other companies in the wheel and Florida popularity in coming quarters.
Then, let's turn to steam causes the gross billings of yields outweighed she argued that go.
Increased by around 130% year over year.
Over 30% quarter over quarter.
Reflecting the sustainable growth and retaining the leading position in the Gulf Coast market. We recently launched you don't Ballgame Academy.
For our learners to play coal and chest matches online with fellow learners and matches players with similar SKU levels supports both human to human and AI matches.
And provide high quality quizzes or even clothing skus.
Our steam courses are also getting more recognition in the sector. We see we received two excellent course awards for our steam causes from Beijing Association for Science and technology.
In terms of the adults in vocational courses. Our current strategy is to drive growth in areas that have a large addressable market and fits our expertise.
Those include graduate school entrance exam preparation and digital skills training courses in 2021, the ministry of Human resources, and social security released a working plan enhancing digital skus focusing on digital skills training such as artificial intelligence.
Big data and cloud computing.
This is a good fit swaps gross billings.
<unk> education courses.
Approximately 170% quarter over quarter in Q4.
Besides your dog was included in a new base of adult education by George Outcroppings Human resources, and Social Security Department, We believe adult Tim vocational training have a bright future and we are patient in this area.
As for Education, Digitization solutions, we kept rolling out new features for our solutions and signing up new customers and partnerships in Q4, we signed a strategic partnership with suitable municipal governments debuted smart education solutions in the city.
So Joe is a large and prosperous city because GDP is number six among all Chinese cities White after Chongqing. So sue Joe's endorsement is a milestone for our education does Digitization Christmas.
We're also dedicated to fulfilling our social responsibilities.
All foreign language reading corner.
Public welfare project benefited over 30000 people. Besides you thought was awarded as the annual model enterprise of CSR for its special contribution to helping the disabled and CSR, China Top 100 best brand also trailing CSR after year.
As we close our books on 2020 one.
We had an eventful year, which I believe will still be special when we look back a couple of years from now.
Despite the challenges our teams were able to drive significant growth of our business, that's 58, 9% of revenue growth and.
And likely more importantly, our diversified investment investments in smart devices steam courses.
And others in the last couple of years and long term support from our parent company and that Ts has.
Allowed us to navigate the changing environment relatively smoothly and to build a stronger position for us in the market.
Looking ahead.
We're committed to compliance and the focus on our growth areas.
Including smart devices theme courses adult and vocational courses and education Digitization solutions.
Education technology is still in its early days and.
And we firmly believe that.
Has it by future I'd like to thank our investors for your continued support and we look forward to the protocol to schools.
With that I will turn the call over to Paul to give you more details on our financial performance.
Yeah.
Thank you talked at all and Hello, everyone. Today, I will be presenting some financial highlights from our 'twenty, you're talking about in fourth quarter and full year.
We encourage you to read through our press release issued earlier today for further detail.
Of course meeting increased by three 7.3% year over year to RMB, $854 5 million or U S dollar, but 100 and sorry for putting by minute in Q4.
18, 9% of our core of course, speeding Kim from adult and our vocational courses.
Given the current regulatory environment and the completion of our <unk>.
Disposal Cainite academic assay business.
My focus will be concentrated in the technology driven business, such as smart devices and the education utilization solution.
It's a key matrix that could be flat because the business performance.
Therefore, we would not treat the course meeting of our tutoring services as our key financial matters.
Going forward our basics.
For the fourth quarter total net revenue were RMB 1 billion.
Our U S dollar by 164.6 minute.
This represents an increase of 22, 6% from the fourth quarter of 2020 looking.
Looking at this growth by segment now.
And that revenue from our lending affirmative were RMB 517, nine points of it made it or U S. Dollar 90.9 million up 26% for all of US impure in 2020.
We attribute this growth to the increase the revenue generated from our learning services, which was further driven by the growth in pace to begin enrollment during that period in 2021 .
Net revenue from our smart devices were RMB 317.7 minute.
Our U S dollar $49 9 million up three 9% from the same periodic in 'twenty 'twenty.
Driven by the substantial substantial increase in the sales volume of your dictionary pen in the first quarter of 2021 .
Net revenue from our online marketing services were RMB 151.8 minutes or U S dollar 23.8 million.
Representing a 10, 2% in Chris process impurity in tiny tiny.
For the first quarter. Our total gross profit reached RMB 445 planes for a million or U S dollar $69 9 million.
Up 11, 5% compared with the fourth quarter of tiny tiny.
Of course, Margaret following purposes was 51, 4%, but first quarter of 2021 compared with 55, 9% for the same period in 2019.
Gross margin for smart devices, what's the 38% plus courthouse plenty funny, one compared with 39, 5%.
For the same humira in 'twenty time frame.
Gross margin for online marketing services was 32, 6% for the quarter after a tiny tiny watt compared with 26, 9% for the same period of Internet banking.
For the first quarter total operating expenses were RMB 693.6 minutes.
S dollar boundary and eight 8 million up five 8% from RMB $655 7 million for the same period last year.
With that but first quarter, our sell some marketing expense.
$420 4 million compared with RMB 500, and the 11 point about a million in the fourth quarter of plenty of money.
Research and development expenses were RMB 170.2 minute.
Compared with RMB $109 million in the fourth quarter of 'twenty or 'twenty.
Our operating loss margin was 23 point something percent in the first quarter of 2021 .
Paris circumstance for the same period of last year.
But the first quarter of 2021 oh in that loss from our continuing operations attributable to ordinary shareholders was RMB $215 9 million or U S.
Dollar $33 9 million compared with RMB $251 2 million for the same period of last year.
non-GAAP net loss from continuing operation attributable to ordinary shareholders for the fourth quarter was RMB $568 2 million or U S. Dollar 26 point for a minute.
Compared with RMB 238.1 million for the same period of last year.
Basic and diluted net loss per ads from continuing operations attributable to ordinary shareholders for the fourth quarter of 'twenty 'twenty, what was RMB 175 O U S dollar zero point to sell it.
non-GAAP basic and diluted net loss from continuing operations for the fourth quarter was RMB 137, or U S. Dollar 0.1.
Our net cash provided by the continuing operating activities was RMB 142.2 minute or U S. Dollar 22 points of a minute for the first quarter.
Turning to our full year results. Our total revenue for 2021 increased by 58, 9% to RMB 4 billion or U S. Dollar 600, and the starting point for a minute.
Net revenue from our learning services for 2021 were RMB, two 4 billion or U S dollar 383 million.
Up 61, 3% from the 20th century now.
And that revenue from our smart devices for 2021 grew by 81, 6% year over year to RMB 984 million or U S dollar by $153 9 million.
Net revenue from online marketing services for 2021 were up 25, 6% year over year to RMB, $593 9 million or U S. Dollar 93.2 minute.
Total gross profit was RMB 2 billion compared with RMB, one 1 billion in a tiny tiny.
Total operating expense for the 2021 increased to RMB, two 9 billion or U S. Dollar.
460.1 million compared with RMB 2 billion in 'twenty or 'twenty.
Net loss from <unk>.
Continuing operations attributable to your adult oriented shareholders for a tiny tiny what was RMB 895 point for a minute.
945 minutes.
And the basic and diluting net loss pay yes from continuing operation attributable to ordinary shareholders was 27, he what was RMB 7.36, or U S dollar, but I'm putting about five.
Looking at our balance sheet as of December 31st plenty of Honeywell, our contract liabilities, which mainly consist of 34 revenue.
For our tutoring courses.
RMB 121 billion or U S dollar by $167 2 million.
Compared with RMB $894 2 million as of December 31st plenty of money.
At the end of the period, all the cache caching Cook equivalents.
Restricts cash term deposit and short term investment totaled RMB, one 6 billion or U S dollar $247 4 million.
This conclude our prepared remarks, thank you for your attention.
I'd now like to open the call to your questions. Operator. Please go ahead.
Thank you very much and ladies and gentlemen, we will now begin the question and answer session.
To ask a question you May press Star and then one on your Touchtone phone.
If you are using a speakerphone, please pick up the handset before pressing the keys.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star and then two.
Okay.
Our first question is from Xinjiang off of Morgan Stanley . Please go ahead.
Hey, good evening. Thank you for taking my question. So could you. Please provide an outlook oh, you're not going to deny this graph.
In 2022, and if you can break down to your kind of products and our new product pipeline that would be great. Thank you.
Okay.
Yeah, I think as Sean Yeah. This is Joe.
I believe that this is going to be in.
Inflection year.
In terms of smart devices.
A lot of exciting work underway and we.
We will not only drive growth.
But also lay the foundation for next year and Oh next next year's gross.
Now first we are going to release, a new generations of our dictionary pen and listen impart products in <unk> and 2022 .
There's a lot to do there for example, we have just added English riding related features to the dictionary pen.
So.
It was made possible by use of our R&D.
And users really like them so.
So expect us to to add more hardware capabilities and more advanced AI technologies to to help users in.
New scenarios on your new learning cases.
In the new dictionary pins and listened in Pos this year.
Second.
So we expect to release more new categories of devices. This year.
We're going to bring to these new products are our strengths like our attention to detail.
Great design.
Seamless.
Hi.
And.
That really works yeah. So.
All the strengths that we have a building a dictionary pen to be a really popular learning product, we will bring them too.
Our new categories of devices.
Oh actually Theres one.
That's pretty close to launch.
So next month, we will.
We will launch the you without smart learning lap.
Yeah, we think.
Our smart tabletop device like the a learning lab.
It's a very intriguing device so it's.
It's very interesting device to help learners in multiple ways.
And we have a quite.
Quite a few new ideas there and are we are we really liked the idea is and do we want to introduce them to our users.
In general Yeah, what Fascinates me is that the fact that our we have only really scratched the surface and using AI to help learners learn better.
So with new sensors are more computing power more data, yeah, we see a future, where hey, I really understands the learner and makes learning orders of magnitude better smarter.
Smart devices or are we like to call him a Iot devices AI.
Plus Iot Internet.
The internet of things so the Iot devices are the best of vehicle, we believe for helping.
As to get the AI to the user.
Because they they allow us to really deploy these sensors.
This industry.
Industrial designs and the.
The exact user interface that we want.
That works best for this for any particular learnings scenarios.
And I want to assure you that we think the trend is becoming more and more clear. According to 2021 China education Smart devices trend insights report.
Tencent research institutes.
The education and smart devices market is expected to be close to RMB.
100 billion.
In 2024.
So we intend to be a leading player in this market. So since our 2019, we have already achieved three consecutive years of.
Triple digit or high double digit growth for smart devices in 2021 the growth was.
82%.
And revenue reached about RMB 1 billion. So I believe we have demonstrated a fast growth.
For us in this and this.
Syria and sustainable growth.
Uh huh.
As I talked about in our.
Earlier calls compared to our peers has deep knowledge in both the technologies and content.
Required for the success of smart devices.
And compared to many of our peers. We have also a head start in terms of.
Hi chain build up and also sales channel construction. So we are in a very good position here as we compete for customers. So.
Yeah.
So far I believe to the results have agreed with our view.
We believe we could achieve good growth in 2022 as well.
Thank you.
Thank you very much Joe that's all I've got a quick question.
I remember it and at that point.
And then I'm sorry, the Nixon Peabody, Yeah, I had that right.
Oh can you quickly comment on momentum Ah lisanti.
Uh huh.
Correct.
Okay.
Okay.
So I didn't get your last question.
The last sentence.
Uh huh.
Yeah.
Yes sure.
Goodbye.
You remember in that type of investment I, just yes I was.
Could you get us.
Would you comment about the recent momentum after a 90 day basis, which actually was a new product for you.
Right right right yeah. So so recently a recent trend.
Yeah, I didn't know the.
D D.
The seasonality of the Oh hardware products learning devices.
So we have actually multiple months.
Months in the year that are that are kind of key drivers of our sales. So double 11 is one of that and.
And also December the <unk>.
Jumping festival.
In December . He is also is also pretty good and.
Oh the sales there was also good for us and.
The one after that so it would be a the beginning of this semester that is.
Oh that is basically.
This months and next month, so February and.
March it are normally the Oh Gee the strong strong months so.
<unk>.
So after Q2, yeah. So so we are looking at.
Yeah, it's doing it's doing pretty well for us right now and in.
And you can expect that to be the beginning of the new semester is.
Is the one that we are looking at right now and its not finished yet yeah. So so that's and yeah. Let me let me say.
A few words about the general who your trend so normally normally so it could be.
Oh did the sales actually.
Our strong and in February and March and also one of the key K.
<unk> months is.
The beginning of the whole hold school year, that's a that would be our August and September .
That's normally the the.
Uh huh.
Stronger in February and March and.
Because our products are sold.
More online so the the e-commerce shopping shopping festivals are a very important so Q4 tends to be also a pretty strong yeah. So that's the normal seasonality.
Yeah.
Thank you very much.
Thank you. The next question is from Brian Gong of Citigroup. Please go ahead.
Cause the Union Doctor, Joe a Switzerland with Jefferies. Thanks for taking my question. So my question is regarding a related strategies and then watchman plan on staying courses, especially considering you know the list it they take the recommendation.
Literary environment, and there's a process from M O E J.
January thank you.
So the central Brian This is football and yeah I will take this question sad for the I suppose the Tim Cortes right now, yes, there is.
Currently no more or the regulations that impact us too.
They've developed a same quarters.
And so you know all time, maybe all smoothly enhanced investment on a same quarter all business segments.
And you would all your systems are you know empowering the same quarter, especially innovative technology and commit to always come into the offering the high quality and caused us to our users.
And the purpose the purpose for us too.
To produce those out high quality clauses. If for example, you talk too much and that's the goal and that's what I saw a chessboard chest chest program.
And it's not only to teach the ER to keep something to students but also.
We expect our student accrued understood about the history and the culture of the go Okay, and that's why I spoke test chess game.
And they know how to play the game and they can play with their family friends and families.
And are we.
Further we hope we hope they can make a new friend through the playing the games with the other.
And we think about that that's the really the something related with the fundamental they know Alicia educations.
That's the what do you think about an hour now subject of in process in the at least at this moment and as Doug mentioned and.
And we have built up our go apps to to organize all the to celebrate that too with the whole sub.
About Oh my game. Unlike online game play our best play our fall students basically others. So I think that's what we expect to be able to I cannot ask all my family for students to play with the others.
So and also go back to the.
I think of all the information of all the regulation yourself definitely we all have been.
Close attention to the latest regulatory requirement and then even for running the business. It seems that scope outside I live in the law and regulation.
Oh directly.
We will keep our eye open and watch closely to lob also update about the reputation issues.
I hope that answer your question. Thank you Brian .
Thank you that's very helpful.
Thank you. The next question is from Thomas Chong of Jefferies. Please go ahead.
Hi, good evening.
Management.
May I ask about how we should think about the compare.
And one element of our long E. S. P clauses, such as not thousands of patients.
Clauses are going forward.
But.
The competition will be that's fine. Thank you.
Yeah, some people come off and these are small and because of competition or the competitive landscape. You see also regarding adult vocational courses and I believe you have already read out all the information all the news from the public channels regarding arms or there are some several of yours has been.
Our entry into this area and that's definitely there'll be the.
Good news for this sector because they are also being supported by the central government, we got two.
It really is in several policies to support the broad softness in the development of this vocational education business.
And the problem businesses. The first is about the.
Don't you think of all the new business, we will think about the what's the fundamental you feel say sub all the call. It helps all the products. We think that that's what will be the fundamental things underfunded in Nevada, which we can provide to our users and our students and second thinks about the as we all we own all of that kind of experience that users cool and we always try.
Elaborate at all about the vantage with all Oh only users although without the extraordinary two paths that are part of the product imports were always in the past.
That's a pass that trial services through all without swamp, Apple and to help them to understood our business and we can help them in the different sectors.
And the third thing is volatile right now it's because of the also in the it and the <unk> with the support of the separate with different policies on the books no training more and more people.
It's a note here about the progress on our growth in this area. So we think about the total number of users who are potentially close the number of users for the vocational training it'll be a growth year over year and that's what we think of all that we can beat that part of the Oh, sorry, that's the top players in this area.
I hope that answer your question on second homes.
Thank you.
Okay.
Yeah.
Thank you very much. The next question is from Linda Huang of Macquarie. Please go ahead.
Hi management. Thank you very much for taking my question either one I regarding for them I want to know my life.
And can you share with us how should we expected normalized growth rate and how should we look at the profit margin for the remaining business, especially for 2022 and 219. Thank you.
Hi, Linda has they save the wings are likely picking up question.
As I mentioned is the cleanup.
And this was stopped in the end though.
And we've already been actively disclosed our financial fever, you know.
Earnings for the remaining business.
They continue operations goodness.
<unk>.
2020 annual growth rate of that.
New from continuing operations to be close to 50%.
Overall gross profit margin for continuing operations is around 50%.
Going forward.
We will concentrate more on the settlement of mathematics education digital validation pollution and the theme and adopt.
Although we will not provide specific guidance on the revenue rate.
And as their profit margin.
To listen to or <unk>.
Three however, I would like to add some color.
Going forward basis.
It's been well that.
That can be.
But for snack bracket.
Good that opinion.
Already have us jump.
Including but not limited to blending technology and channel interest when comparing those peers.
Okay.
And we are committed to invest more with us.
And a new category on your pipeline.
As mentioned by dumping so you've kept clients that had to be launched.
The new near future we believe.
Have a great nobody give growth rates.
Our revenue.
Oh.
However revenue basis.
Maybe a bit high we also spent a better profit margin would you be.
It's mainly contributed from the human and economic.
Sure.
Second the Caribbean.
They educational Digitalized solutions.
We have gone to that.
Milestone in 2021 for example sequence journey to partnerships with the Gem Sophie salmon and recently so to provide schools and teachers teachers with our Youre not learning terminal and the solutions.
Which empowers them to efficiently shop student learning programs.
Optimize teaching God good lines.
We killed wood basket.
To enlarge we believe we will achieve over 100%.
Sure.
Relatively low basis.
You're welcome.
Lastly, we also plan to invest in more R&D and marketing resources to update.
Could not the person.
Therefore.
Great grocery as well as more losses.
It means you.
I'm asking this sentiment.
And finally, both dean and it.
And it is planned by my Congo.
Segments are supported by the.
Paid consult and we will strictly follow the.
Regulators guidance.
In addition, we have multiple products in Spain.
Such as the T sand.
Which have increased.
Increase quickly.
I hand back to lunch and more competitive.
He used to achieve faster growth.
Considering the increasing user demand and the loss of economic scale.
Better profit margin its better to achieve for this settlement.
Above all we are very common in the revenue.
Profit margin for the Romanian business.
Going forward.
Rich this is helpful. Thank you.
Yeah.
Thank you very much very clear.
Yeah.
Thank you.
Question is from Holy Cow of C. ICC. Please go ahead.
Okay.
Thanks for taking my questions first congratulations on a great financial performance. My question is can you give us more color on strep, a scratch jeez, well vacation and everything.
Sure.
So I think there is a part of encouraging the location of education.
Any chance.
Upgrades with government either occasion.
Okay.
Yeah. This is a functional so.
Yeah of course, we all know that the critical training.
Training.
Our services are they these are really encouraged by the government right now and.
It's a very very interesting area. So.
We combine that Oh, so you thought would combine that with the adult courses like English training courses into a segment that we called out to adults and vocational tutoring services.
And.
Yeah, Let me, let me share with you a few points regarding the overall segment now. So so this is traditionally a strong area for us for you without a we had.
A very successful classes like the.
Uh huh.
Logic English classes in the last couple of years. So we have quite quite some experience in this area and.
The business is a change.
Changing because of Covid because of other other factors. So so we had some challenges in Uh huh.
Last year recent quarters and right now we are Oh, we were looking at several growth areas for this sector.
So one important area is.
Along the similar lines of the successful close as we have and.
But one very interesting area, we think is a as graduate school entrance exam.
Tutoring for graduate school interest exams. So this is interesting for us because.
We all know that.
This example is becoming more and more popular over 4 million students are expected to take take this exam.
This year and.
Last year was a $3 7 million in 2021 and so Uh huh.
Because it's such a popular.
Exam and Oh, we have a few years of our.
Experience in it and Oh, we found out also we find that it's a it's exam that students invest a lot of time and energy, which Oh, which we can really help.
Hum.
With the vast experience we have in Uh huh.
In designing courses and also using AI to improve the learning process. So we are Oh, we have with our team looking really.
Seriously at this this exam.
Graduate school entrance exam, and Oh, we have already updated the course studying.
Recent recently and also we will continue to update it throughout the coming quarters. So that's what we think.
We think it's a very promising area.
So.
Other areas that we think are.
Really interesting are Oh, what we call the digital skills training yeah. So.
Things like.
Big data and artificial intelligence application are these kind of subjects and also digital art design.
And.
And a similar a similar similar subjects.
These are.
Really.
Really helpful of course this for adults to take him.
Potentially have a much much better chance of getting higher paid so and also it's something that our teams are really familiar with and good at teaching yeah. So so we are.
Investing a lot in these courses and so far the progress.
It had been a really really well.
So.
Going further we are also working with a different local governments. So recently, we have cooperated with the Beijing municipal human resources, and social Security Department and also okay.
As I just talked about in the prepared remarks.
So signed it.
Collaboration in Q4 with the Georgia.
Okay, meta social and social security Department, so or working on providing.
Vocational.
Training and closest to two two.
Two two adults and.
Workers Yeah. So overall, we think it's a it's a very.
Very very good area and right now we are focusing our efforts on the on doing this online.
Instead of actually operating offline schools are where we are doing this online because we think online is oh.
It is a.
It's great for us and.
Hmm.
Any thoughts on online is also has the benefit of our that we can use our software and artificial intelligence skus in designing their learning experience.
And we will see so.
When it comes online and we will of course.
Hum.
Right.
Okay.
Thank you.
Thank you. The next question is from Qantas Chen of Taiwan. Please go ahead.
Thank you for taking my question. My question is about your customer acquisition strategies for our various fits exactly and also your key investment areas in 2022 and.
Hollywood that.
Cause I'm not acquisition strategy would be different from what we've seen in the prior year and are we further expand our.
Studios or hiring more teachers are in this year. Thank you.
Yeah.
A central tenet.
This is.
I will oh like Hudson and the time up in time with all of our customer because we know how to integrate.
Me too.
Maybe I'll answer your question from Doug who perspective, so that's great for smart devices.
Got them out because we tried to do will speak to a multichannel.
Oh, I am kind of car types that you come out of them on the short video platforms.
Good ball around the pool slides I'll play off.
Of our commodity basket.
The more efforts into.
In Q4, and the two that we will do this up.
The part of the potential of alkaline tunnel at the same time.
They called me the list of Costco Sam's club they take on that.
You'll score and the other offline channels, probably because of the pen and the lithium hard.
So along with our product awareness.
All right well, we do a lot of impossible.
So Peter in the Utica are willing to sell them on social media.
It's about your kind of crazy they should come out of the 500006 independent in Q4.
Secondly, it's about customer was in a totally for steam cooking.
We're excited to open more offline send her BDO costs as our processing center established in Beijing proof what that's about.
The appropriately without Stimson her honeymoon last November .
Welcome to our children.
Total development largely with Hulu.
The strategic thinking.
We already offer you know what all I called a program in coffee.
Oh I'm sorry.
Thanks Colby.
I know you would all be to call.
Most of them cost it will be all our offline centers. So that our users will have a closer in a more comprehensive interaction with that.
In terms of it isn't it.
We will continue to invest and are focused on smart devices.
Beam causes.
What we didn't know coffers and the other you know collision type of sensor loosen in plenty of time at home.
Yeah.
Okay.
Okay.
Thank you.
Thank you very much ladies and gentlemen that concludes the question and answer session and I would not to turn the conference back to management for any additional or closing comments.
Yeah.
Thank you once again for joining us today, if you have any further questions. Please feel free to contact us at you doubt directly reach out to TPG Investor relations in China, or the U S have a great day.
Thank you very much ladies and gentlemen that concludes this event and you may now disconnect.
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