Q4 2021 Jianpu Technology Inc Earnings Call
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Good day and welcome to the Jiangpu Technology Incorporated second six months and full year 2021 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I'd now like to turn the conference over to Colin Cheung, Head of Corporate Development and IR. Please go ahead.
Good day and welcome to the Jiangsu Technology incorporated second six months and full year 2021 earnings conference call.
All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation there'll be an opportunity to ask questions. Please note. This event is being recorded I would now like to turn the conference over to Colin Chung head of corporate development and IR. Please go ahead.
Thank you operator.
Hello, everyone and thank you for joining us today.
Coland: Our second half in fiscal year 2021 earnings release were distributed earlier today and is available on our IR website at IR.JIANPU.AI As well as on PRU-
Second half in fiscal year, 2020 one earnings release distributed earlier today and is available on our IR website at IR Dot J I, a N P U Doc AI.
As well as on PR Newswire services.
On the call today from Jetblue technology, we have the day to day co founder Chairman and Chief Executive Officer.
Coland: On the call today from Genku Technology, we have Mr. David Yeh, co-founder, chairman, and chief executive officer, and Mr. Oscar Chen, chief financial officer.
And Mr. Oscar Chen Chief Financial Officer.
Mr. Iain will talk about operations and company highlights followed by Mr. Chen who will discuss the financials and guidance.
Speaker Change: Mr. Ye will talk about operations and company highlights followed by Mr. Chen, who will discuss the financials and guidance.
Speaker Change: They will all be available to answer your questions during the Q&A session that follows.
I'll be available to answer your questions during the Q&A session that follows.
Speaker Change: Before we begin, I'd like to remind you that this conference call contains forward-looking statements as defined in Section 21e of the Securities Exchange Act of 1934 and the U.S. Private Security
Before we begin I'd like to remind you that this conference call contains forward looking statements as defined in section 21 E of the Securities Exchange Act of 1934 in the U S. Private Securities Litigation Reform Act of 95.
Speaker Change: These forward-looking statements are based on management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control.
These forward looking statements are based on management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks uncertainties and other factors all of which are difficult to predict and many of which are beyond the company's control.
These risks may cause the company's actual results or performance to differ materially but information regarding these and other risks uncertainties or factors is included in the company's filings with the U S. S. C C.
Speaker Change: These risks may cause the company's actual results or performance to differ materially. Further information regarding these and other risks, uncertainties, or factors is included in the company's filings with the USSC.
The company does not 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.
Speaker Change: The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable rules.
Speaker Change: Finally, please note that I'm not following the likes of the old figures mentioned during this conference call.
Finally, please note that unless otherwise stated all figures mentioned during this conference call.
Speaker Change: It is now my pleasure to introduce our co-founder chairman and chief executive officer, Mr. David Yeh.
It is now my pleasure to introduce our co founder Chairman and Chief Executive Officer, Mr. David J D.
David Please go ahead.
Okay.
Yeah.
David Ye: Thank you, Colin. Hello everyone and thank you for joining us today.
Thank you Colin Hello, everyone and thank you for joining us today.
David Ye: It has been a while since we have last spoken with some of you. And for those of you who are new to our story, I would like to give a quick overview of our company.
It's been a while since we have not woken.
And for those of you who are new to our story.
I'd like to give a quick overview of our company.
David Ye: can pool technology with a leading independent open platform for the discovery and the recommendation of financial products in China. We connect consumers, SMEs, with the financial service providers in convenient, efficient, and secure ways.
Yeah, and who will take knowledge is that.
Leading independent open platform.
The discovery on the recommendation of a final.
So our products in China.
We connect consumers and Smes.
Financial statements provided in a convenient and secure way.
David Ye: providing consumers SMEs with customized search results and the recommendation.
Providing consumers.
Customized search results.
Sure.
David Ye: tailored to each user's particular financial need and profile through our proprietary technology.
Tailored to each user's particular financial need and the profile through our proprietary <unk> technology.
David Ye: We also provide financial institutions with digital sales and marketing solutions to reach and serve their customers more effectively and efficiently, and enhance their competitiveness by providing them with tailored data with management services and solutions.
We also provided financial institution with digital sales and the marketing solutions to reach and to the customer.
Well your factory and efficiently and it enhances our competitive with me.
I think that can be paid at a data management services and solutions.
Is that independent of a third party platform.
David Ye: We depreciate ourselves as being an asset-lite, and take company. This is a highly scalable business model that allows us to be nimble and low-risk fundamentals, where we do not take on credit risk, liquidity, and all market risk.
Appreciate our self as being asset light.
The company does that.
How do you scalable business model.
Now for us to be nimble and it's fundamental that we have we do not take on credit risk liquidity or market risk <unk>.
David Ye: Our vision is to become everyone's financial partner.
<unk> is to become everyone's financial partner.
David Ye: I will now walk through some key business highlights and takeaways for 2021 before diving into further details on the business settlement and the new strategy initiatives that we have undertaken.
And then I'll walk through some key business highlights and takeaways for 'twenty or 'twenty, one before diving into the details on the business segment.
And the new strategy strategic initiatives, we have undertaken.
David Ye: I will then pass the call to Oscar to discuss our financial
Then pass the call to Oscar to discuss our financial.
Yeah, So I'll keep takeaways that you would like to highlight for 2020 one.
Oscar Cen: There are four key takeaways that we would like to highlight for 2021 first and perhaps
First and perhaps the most important.
Is that our business has resumed growth in 2021 with the revenue up 37, 24% year over year.
Oscar Cen: is that our business has resumed growth in 2021 with the revenue up 37.4 percent year over year and we developed a more diversified and balanced business and revenue structure.
And we developed a more diversified and balanced business and the revenue structure.
There's no recommendation.
Oscar Cen: There's a non-recommendation revenue accounting for 28% of the mix.
Revenue accounting for 28% of the mix.
Second leveraging our integrated marketing and enhancing the operating and technical capabilities we have.
Oscar Cen: Second, through leveraging our integrated marketing and enhancing operating and technical capabilities, we have improved our business efficiency.
We improve our business efficiency.
Oscar Cen: We also expanded our business into other non-financial categories.
We also expanded our business into other along financial categories.
Yeah.
Oscar Cen: Third, we continue to expand our efforts in empowering financial institutions digital transformation.
Third we continued to expand our empower.
Empowering financial institution's digital transformation.
Oscar Cen: We now cooperate with 46, which account for 80% of all non-credit card issuing bank in China, enabling issuing over 23, meaning credit card, cumulative.
We now operate 46, which accounted for 80% of our own credit card issuing bank in China and neighboring issuing over 23, meaning credit card cumulatively.
Oscar Cen: We also achieve significant wins in our big data and the system-based risk management service.
We also achieved and he's going to win you know.
Our big data and it's been paid at least for management services.
Oscar Cen: Finally, our cost optimization initiatives continue to provide effective driving margin improvement and better cost performance leading to a narrowing of operating loss by 44%.
Finally, our cost optimization initiatives continue to provide effective.
Driving margin improvement and the burden of cost of performing but he didn't do a narrowing of operating loss by 44%.
Oscar Cen: These results were primarily driven by our experience navigating through turbulence. Our readiness to make changes and execute well in a dynamic environment.
These results were primarily driven by our experience navigating through it.
Our readiness to make changes and executed well in a dynamic world.
Oscar Cen: and the effective execution of our omnichannel strategies and solid technological capability.
And the effective execution of our Omnichannel strategy.
Solid technological capabilities.
Oscar Cen: as part of a vision to become everyone's financial partner.
That's part of our vision to become everyone's financial partner.
Oscar Cen: We are continuously innovating our technology and exploring new growth drivers as we push forth our mission to empowering users and enabling digital transformation of financial service providers to better serve them.
We are continuously innovating, our tech knowledge and exploring new growth drivers to it.
Who supports our mission to empower users and enabling digital transformation and financial service providers to better serve them.
Now let me go through our operations in plenty of time do you want you in greater detail.
Oscar Cen: Now, let me go through our operations in 2021 in greater detail. I will begin with our recommendation services, built upon one of our core digital transformation capabilities, which is digital marketing.
The game with our recommendation service.
Paul one of our core digital transformation capabilities, such as digital marketing.
Oscar Cen: Throughout the years, we have successfully expanded our Traffic Acquisition Channel to cover all my offline
Yes.
We successfully expanded our traffic acquisition channel to cover all my offline.
Oscar Cen: and across mainstream media, social media, and private traffic sources based on social and demographic.
And across main mainstream media social media on a privately pardon me to traffic sources based on social and demographic.
And then you can have a strong technical capability. We have you create financial service providers, Oh, I'll pass it along with a suite of products and solutions, allowing them to do digitally marketed that product.
Oscar Cen: By leveraging our strong technical capability, we have equipped financial service providers on our platform with a suite of product and solutions, allowing them to digitally market their products through an only channel strategy. We have also been recognized by the media and other key traffic channel partners, bringing more opportunities for us to move forward.
An omni channel strategy, we have.
<unk> also being recognized by the media and other key traffic channel partners Green more opportunities for us to move forward.
Oscar Cen: As a result of our persistent efforts, our recommendation services business returned to a growth to their revenue up 71.4% year over year and 25 or 7% sequentially versus the first half of 2021.
As a result of our persistent efforts.
Our recommendation service as students.
Return to a growth is that revenue up 71% to 4% year over year, and 25 or 7% sequentially.
Sequentially versus the first half of 'twenty or 'twenty one.
Our credit card recommendation business routes.
Oscar Cen: our credit card recommendation business to attend its industry leading position as we maintain strong relationships with 46 credit card issuers. We're presenting over 80% of banks that issue credit cards online in China.
And its industry, leading position as we maintained our strong relationships with 46, what do you call ishares representing over 80%.
Banks that issue credit cards online in China.
Oscar Cen: As part of our omnichannel strategy, our social media and the partnership program continue to deliver growth and improve efficiency, contributing 54.9% of the recommendation service revenue.
As a part of all of our Omnichannel strategy, our social media and the partnership program continued to deliver growth and to improve the efficiency contributing 54 point by all the recommendation service ragen.
Oscar Cen: We have also successfully expanded the program into other product verticals, which we'll talk more later.
We have also successfully extended the program into other product verticals.
Well talk more later.
Yeah.
I will now move to our enterprise ought to be product and solutions I E Big data and it system base.
Oscar Cen: I will now move to our Enterprise O2B product and solutions, i.e. big data and a system-based risk management service.
Management services.
Oscar Cen: catering to financial institutions, increasing demand for digital transformation, we continue to invest in our enterprise business and to develop more products and the solution.
Catering to a financial institution, increasing demand for digital transformation, we continue to invest in our end.
No I didn't.
And to develop more products and solutions.
To enhance the risk management capabilities and financial ecosystem.
Oscar Cen: to enhance the risk management capabilities of the financial ecosystem.
Oscar Cen: including financial service providers, regulators, and other ecosystem partners.
Including financial service provider regulators and other ecosystem partners.
Oscar Cen: Our tech-driven solutions allow us to utilize AI big data to optimize risk control models according to the changing marketing environment and the consumer needs.
Our tech driven solutions allow us to utilize AI big data to optimize risk control models. According to the changing.
Cutting environment.
The consumer need.
Oscar Cen: which is one of the key driving force of helping financial institutions with authorities to achieve their digital transformation initiative.
Which is one of the key got imports of helping financial institutions regulatory authority to achieve their digital transformation initiatives.
Yes.
Oscar Cen: Our product institutions are highly recognized by financial institutions, regulators, and industry.
Our products and solutions are highly recognized by financial institutions regulators and industry.
Oscar Cen: we received a national certification in recognition of our work in data security.
We received the national certification.
Munition of our work and data security.
I'll watch human and digital transformation in the financial sector landed us.
Oscar Cen: our achievements in digital transformation in the financial sector, landed us the top 10 FinTech innovation.
Top 10 Fintech innovation.
Oscar Cen: awarded by the Banker Magazine and outstanding partners by leading Chinese financial institutions, such as the Ping An Bank, Credit Card Center, and Everbright Bank.
Worried by the banker magazine and.
Outstanding partners, a leading Chinese financial institutions, such as Ping, an bank credit cards into and Everbright Bank.
Oscar Cen: we entered into strategic partnership agreements with our top government backed credit bureaus to incorporate on data credit scoring and risk management initiative.
We entered into strategic partnership agreement with a top government backed credit Bureau, so of cooperating on data credit, scoring and risk management initiatives.
Oscar Cen: In addition, we supplied a new suite of financial regulatory technology, such as service-based products to provincial governments and financial regulatory authorities, helping them to assess, monitor, and react to regulatory risks of financial institutions in their jurisdiction.
In addition.
We supply a new suite of financial regulatory Tech knowledge.
The service space.
Our products took a ratio of government.
The financial regulatory authorities, helping them then to access monitor and react to regulatory with a financial institution.
No restriction.
Oscar Cen: we believe these products and services could potentially be a big area of growth for us in the future, especially as current regulatory policies are supportive of the digital transformation of financial institutions.
We believe these product and services could it potentially be a big area of growth for us in the future.
Especially as Carrington.
We haven't heard policy.
Party of the digital transformation of financial institutions.
Now I'd like to discuss our new growth engines.
Oscar Cen: Now I would like to discuss our new growth and
Oscar Cen: to expand and diversify our revenue structure.
Expand and diversify out of our revenue structure.
Oscar Cen: The company has applied its omni-channel digital marketing solution.
The company has applied is omni channel digital marketing solutions, social media and the partnership program in particular.
Oscar Cen: social media and the partnership program in particular and our recommendation capabilities toward adjacent categories.
And our recommendation capabilities toward the edges towards adjacent categories.
Oscar Cen: And the sectors with large data-rich user base find a great financial need.
And the sectors is it large data rich user they find a great financial need.
Oscar Cen: The result of such expansion seems to be very promising.
The result of such expansion needs to be very promising.
Oscar Cen: revenue from the new business segment has more than doubled compared to 2020.
Revenue from the new business segment.
More than doubled.
Compared to 'twenty 'twenty.
Oscar Cen: currently accounted for 12.3% of the total revenue.
Currently a carnivore 12, 43% over the total revenue.
Oscar Cen: We are now extending this customer acquisition model together with our credit card business partners to help financial institutions develop other financial products and services.
We are now expanding these customer acquisition model together with our credit card business partners to help financial institutions, you've heard other financial products and services.
Oscar Cen: We are also adopting the social media and the partner program for the development into a non-financial sector.
We are also adopting the social media and upon the program towards the development of known financial sectors.
Oscar Cen: In 2021, the revenue contributed by social media and partner program account for 46.6% of our total revenue, validating our initial success of applying an omni-channel strategy across different financial and non-financial categories.
And Tony Tony One the revenue contributed by social media and the Panic program accounted for 46, 6% of our total revenue 90 dating.
Our mutual success.
Flying and Omnichannel strategy across different financial I don't know if any financial categories.
Oscar Cen: We have also seen development opportunities to apply
We have also seen.
Development opportunities to apply.
Our proven business model and the knowledge to exciting oversea market.
We applied and successfully obtained.
Oscar Cen: we applied and successfully obtained financial marketplace, credit scoring, and EKYC licenses in Indonesia, the largest country in terms of population in Southeast Asia.
Financial marketplace credit scoring.
And the U K by the licensees.
Indonesia.
Just.
Country in terms of population in southeast Asia.
And going forward, Jen, who will continue to try it.
Inclusive finance services, Oh, let's see.
To benefit our more consumers.
And as the needs around the world.
Finally, we have further advanced our cost reduction and efficiency optimization initiatives, which include closely assessing existing business lines consolidating and the cost cutting.
Oscar Cen: Finally, we have further advanced our cost reduction and efficiency optimization initiatives, which include closely assessing existing business lines, consolidating and cutting overlapping resources. Our strategy has already seen some initial results from these initiatives. As known gaps and net loss were further narrowed by 44 percent of year over year.
Overlapping resources.
<unk> has already seen initial without some of these initiatives.
non-GAAP net loss.
They narrowed by 44% year over year.
Let me also give you a bit of a background also China's macro economy macroeconomic all your involvement and the Lady regulatory dynamics the business environment that we're operating with.
Speaker Change: Let me also give a bit of a background out to China's macroeconomical environment under the latest regulatory dynamics. The business environment that we're operating, we saw a raft of policy change.
So a raft of policy change is there.
Speaker Change: with the Chinese government implementing new rules and measures affecting the consumer finance industry.
Chinese government implemented new rules and measures affecting that.
Schumer finance industry.
Speaker Change: such as requesting all internet platforms to ensure data security and data protection for their users. New restrictions on direct transfer of borrowing information to financial institutions by internet platforms. As the window guidelines issued to financial institutions for the lowering of interest rates on consumer finance products.
She is.
Requesting or internet platform to ensure data security and data protection for the users.
What's your take on directly transfer Oh for BARDA inclination to financial institutions by Internet platform.
Window guidelines issued two financial institution.
The lowering of the interest rate on consumer finance products.
Speaker Change: the level of which has prompted some financial institutions to adjusting their parting portfolio and credit policy.
The latter of which has prompted some financial institutions to adjusting their product portfolio and credit policy.
Speaker Change: which has moderated the growth in consumer finance product provided by the financial institution.
It has moderated the growth in consumer finance.
Provided by their financial institutions.
In addition to affecting the consumer finance industry. The Chinese government has also rolled out other broader based policies tied to new rules and regulations across multiple sectors and industries in particular in fact, many internet companies the Titan.
Speaker Change: In addition to rules affecting the consumer financial industry, the Chinese government has also rolled out other broader-based policies.
Speaker Change: tightening rules and regulations across multiple factors and industries, in particular, affecting internet companies. The tightening regulatory environment, in conjunction with strict COVID control measures and overall macro weaknesses, have dampened the general business sentiment.
I mean, the regulatory environment in conjunction with strict koby to control measures and overall macro the connectors and dumped into the general sentiment.
To summarize 2021 , but the year well, we made continuous progress.
Speaker Change: To summarize, 2021 was a year where we made a continuous progress. We are a firm believer in when there is a challenge.
We are a firm believer in west Windsor is a challenge.
There are always opportunities.
Speaker Change: despite the ongoing regulatory and economic headwinds.
Despite the ongoing regulatory and economic headwinds.
Speaker Change: We have worked extremely hard throughout the year to navigating through this dynamic.
We have worked extremely hard throughout the year to navigating through these dynamics.
Speaker Change: Despite the ongoing pandemic and the volatile macroeconomic environment, our businesses returned to growth, became more diversified and more efficient, and we have set a strong foundation for further growth in 2022.
Scott is the ongoing pandemic and the volatile macroeconomic environment.
The business has returned to you.
You can more diversified and more efficient and we have set a strong foundation for further growth in 'twenty to 'twenty two.
As for long term.
Speaker Change: As for long term, we remain positive about the economic outlook in China.
We remain positive about the economic outlook in China.
Speaker Change: And the recent rhetoric from Vice Premier Liu He contained strong messages supporting the development of China's economy, especially relating to us. Premier Liu mentioned that
And is the reason.
The turret from why is familiar to you.
Contained strong message is supporting the development of China.
Economy is.
Naturally relating to us Premier you mention to that.
Speaker Change: Concrete actions must be taken to bolster the economy in the first quarter, including administrating appropriate monetary policy and promoting new loans.
Concrete action must be taken to bolster the economy in the first quarter, including administrating appropriated a monetary policy and promoting the new loans.
Speaker Change: for consumers, especially SMEs, to facilitate economic growth.
What consumers, especially Smes.
To facilitate economic growth.
Speaker Change: Furthermore, authorities will promote the steady and healthy development of the platform economy and improve its international competitiveness.
Furthermore, authority as well promote it as steady and healthy development of the Powerpoint economy and improved international compared to name.
Speaker Change: Premier Liu also suggested the importance of introducing market-friendly policies, and any policy that has a significant impact on the capital market should be coordinated with the financial regulatory authorities to smoothen the market's expectations.
Premier you also suggest that the importance of introducing.
Market family policy and I named policy that has a significant impact on the capital market should it be caught in negative financial regulatory authorities to smoothen the market expectations.
Speaker Change: In addition, the government has more recently issued guidelines supporting consumers and SME credit loans, COVID-related loans, and promoting and awaiting financial service products.
The government has more recently issued guidelines supporting consumers and the SME credit loans, Kobe, KD launch I and promoting in a way to try and that you'll see with Cox.
Speaker Change: We believe that it's the overarching theme of this policy.
We believe that is the overarching theme of these policies.
Speaker Change: is to provide a more sustainable economic growth and a healthier development of financial and capital markets.
To provide a more sustainable economic growth.
The healthier development all financial on the capital market.
Speaker Change: we are beginning to see a more supportive environment.
We are beginning to see a more supportive environment.
Speaker Change: for the development of consumer finance, where additional measures shall be introduced to drive private consumption through the potential loosening of the monetary policy and the strong long growth, giving a positive tailwind for the industry in 2022.
So the development of consumer finance, where additional major shelter you introduce to drive high rates of consumption through the <unk>.
Retention of loosening of the monetary policy on this.
Strong loan growth given a positive a tailwind for the industry in 2022 there.
Speaker Change: There should also be a tremendous opportunity for financial institutions and tech companies like us to work together and accelerate the financial sector's digital transformation.
It should also be a tremendous opportunity for us.
Institutions and Tech company.
Like us to work together and accelerates the financial sector digital transformation.
Yeah.
Speaker Change: Naturally, in the short term, the resurgence of the Omicron variant in China recently has posted some challenges to our businesses due to the large-scale lockdown in cities where we are operating in.
Naturally in the short term the resurgence of the army Chrome Barents in China recently posted.
Some challenges to our businesses due to the largest scale locked down in city, whereas the operating.
Speaker Change: We have C partial and four lockdowns in cities such as Shenzhen, Changchun, and of course more recently in Shanghai, where the lockdown is still ongoing.
We havent see partial and full lockdowns in cities, such as <unk> syndrome, chartering and of course more recently in Shanghai, whereas the lockdown and still ongoing.
Speaker Change: We expect a challenging first half in 2022.
We expect a challenging first half in 'twenty to 'twenty two.
Speaker Change: But these will not stop us from pressing forward.
These will not stop us from pressing forward.
We will actively explore new product innovation.
Speaker Change: we will actively explore new product innovation applications and services. We will embrace regulation, continue to deepen our cooperation with licensed financial institutions, support the digital transformation of financial service industry, and further enhance operating efficiency.
<unk> in the seventies.
Embrace regulation continues with people now you come to our corporation.
Licensed financial institutions supporting the digital transformation of financial services industry and the further you Hans.
Operating efficiency.
Speaker Change: we remain hopeful that once the latest wave of the pandemic subsides, our business will resume a moderate growth trend once more.
We remain hopeful that wants the latest the wave of the pandemic stop side, our business will resume a moderate growth trend once more.
With that I'll now turn the call over to our table that's catch him.
Speaker Change: With that, I now turn the call over to our faithful Oscar Chen, who will discuss our financial results. Thank you.
I'll discuss our financial results.
Thank you.
Yeah.
Thank you, David and Hello, everyone.
Speaker Change: Thank you, David, and hello, everyone. Our performance in the second half and the full year 2021 reflects our continuous efforts in business development and optimization as we continue to capitalize on the ongoing digitalization of the financial industry.
Our performance in the second half and the full year 221 reflects our continuous efforts in business development and optimization as we continue to capitalize on the ongoing digital utilization off the financial industry.
Speaker Change: Despite the tightening micro-environment and ongoing pandemic, our business made a turn around with second half total revenue of 62.7% year-on-year to RMB 461.5 million and fiscal year 2021 revenue of 37.4% to RMB 805 million. More importantly, along with the
Despite the heightened need micro environment and ongoing pandemic, our business made a ton of wrong with second half total revenue up 627% year on year to RMB 400.
$61 5 million and the physical fiscal year 'twenty to 'twenty, one revenue up 30.
So it is around 24% to RMB $805 million.
More importantly, along with the resumption of growth.
Speaker Change: We are pleased to see a more diversified and balanced revenue structure.
We are pleased to see a more diversified and balanced the revenue structure.
Speaker Change: 51% contribution from our credit card recommendation service, 21% from loan recommendation, 16 from big data and system-based risk commandment services, and 12% from our new business initiatives.
51 of those and the contribution from our credit card recommendation service, 21% from loan recommendation 16 from big data in the system base the risk management services.
The 12% from our new business initiatives, which proves the scalability and the resilience of our business model as well as our team's capability to navigate through and adapt to adapt to.
Speaker Change: which proves the scalability and the resilience of our business model as well as our team's capability to navigate through and adapt to financial challenges.
Dynamic environments.
Speaker Change: Total recommendation services revenues increased by 71.4% year over year to R&B 320.3 million in the second half and 42.2% to R&B 575.2 million for the full year 2021. On the back of R&B 375.2 million for the full year 2021.
Total recommendation services revenues increased by 71, 4% year over year to RMB $328 3 million in the second half and 42, 2% to RMB 500.
$75 2 million for the full year of 2021.
On the backhaul.
Speaker Change: 38.4 percent and the 52.6 percent annual increase in credit card and the long recommendation service revenues respectively as we continue to refine our business model and strengthen our digital marketing efforts to acquire new customers.
38, 4% and 52.
6% annual increase in credit card and the long recommendation.
Service revenues, respectively, as we continue to refine our business model.
Strengthen our digital marketing efforts to acquire new customers.
Speaker Change: Revenue from this data in a system-based risk management service decreased by 10.4 percent.
Revenue from Big data in our system based on our risk management services decreased by 10, 4% to RMB.
Speaker Change: to R&B 67.3 million in the second half and 9.6 percent to R&B 130.4 million for the full year 2021.
$67 3 million in the second half and nine 6% to RMB $130 4 million for the full year of 221.
Speaker Change: Despite the unfavorable pressure from the ongoing pandemic and credit tightening in the past year, our continuous efforts on technology development, product innovation, and data compliance have won certain industry-wide awards. And we believe such efforts will benefit us in the long run.
Despite the unfavorable pressure from the ongoing pandemic and credit tightening in the past a year our continuous efforts on technology development product product innovation and data compliance have one certain industry wide awards and we believe such efforts will benefit us in the long run.
Speaker Change: Revenue from advertising and marketing services and other services increased by 240.6 percent to R&B 70.
Revenue from advertising and marketing services and other services increased by 246% to RMB 73.
Speaker Change: 3.9 million in the second half and 167.2 percent to R&B 99.4 million for the full year 2021. Primarily due to the growth of insurance brokerage service and successful category expansion of the social media and partner program into non-financial service areas as David outlined.
$3 9 million in the second half and the 100.
Six or seven 2% to RMB 19, $9 4 million for the full year 2021 .
Primarily due to the growth of insurance brokerage service and a successful category expansion of the social media and our partner program into a non financial service areas as David outlined.
Speaker Change: In light of the business development, we newly added a line item, mainly cost of promotion and acquisition, which mainly consists of the expenditures relating to our marketing efforts and activities.
In light of the business development with newly added a line items, namely cost of promotion and acquisition, which mainly consist of the expenditures relating to our marketing efforts and activities.
Speaker Change: Cost of promotion and acquisition increased by 72.5% year-on-year to IMB 334.9 million in the second half, and 48.2% increased to IMB 562.1 million for the full year of 2021, which was in line with the growth of our revenues from recommendation services, advertising, and marketing services, and other services.
Cost of promotion of an acquisition increased by 72, 5% year on year to RMB $334 9 million in the second half and 48, 2% increased to RMB 560 to $2 1 million for the full year 2021.
Which was in line with the growth of our revenues from recommendation services advertising and marketing services and other services.
Speaker Change: Due to our continued cost optimization measures, cost of operation decreased by 11.4 percent year to RMB 45.1 million in the second half of 2021 and 4.2 percent to
Due to our continued cost optimization measures cost of operations decreased by 11, 4% year on year to RMB 45.
One 1 million in the second half of Congress in tier one and four 2% to RMB 88, 8 million for the full year of transition until one also the cost optimization efforts led to the reduction of sales and marketing R&D and G&A expenses measured as well.
Speaker Change: R&B 88 million for the full year 2021. Also, the cost optimization efforts lead to the reduction of sales and marketing, R&B and the GMA expenses measured as percentage of total revenue to 45% in the second half of 2021, compared with 76% in the prior period.
Yeah.
Total revenue to 45% in the second half of 'twenty or 'twenty, one compared with 76% in the prior period and a decrease of 20 percentage points for the full year of 221.
Speaker Change: and the decrease of 20 percentage points for the full year 2021.
Income at 91, we divested.
Speaker Change: the investment in a decentralized application blockchain solution provider, and the realized investment gain of RMB 51.2 million.
The investment in a centralized application blockchain solution provider.
The realized investment gain of <unk>.
RMB $51 2 million.
Speaker Change: As a result, our non-gap adjustment net loss continued to narrow sequentially, decreasing by 55 percent to R&B 96.7 million from R&B 215.1 million in the second half of 2020, and decreasing by 44 percent to R&B 186.7 million for the full year 2021.
As a result of.
Our non-GAAP adjusted net loss continued to narrow sequentially.
Decreasing by 55% to RMB 96.7 million from RMB $215 1 million in the second half of 2020 and.
And the decreasing by 44% to RMB $186 7 million for the full year, our country's countrywide.
As of December 31st 2021, we maintained a strong balance sheet with cash cash equivalents and short term liquidity of RMB $762 8 million.
Speaker Change: As of December 31, 2021, we maintained a strong balance sheet with cash equivalent and short-term liquidity of R&B 762.8 million.
With that I will conclude our prepared remarks, we will now open the call to questions. Operator. Please go ahead.
Speaker Change: With that, I will conclude our prepared remarks. We will now open the call to questions. Operator, please go ahead.
Thank you we will now begin the question and answer session.
Speaker Change: Thank you. We'll now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone.
That's a question you May press Star then one on your Touchtone phone.
Speaker Change: If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we'll pause momentarily to assemble our roster.
If youre using a speakerphone please pick up your handset before pressing the keys to.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Yeah.
Again, if you have a question. Please press Star then one.
Our first question from Brian Lee from Spica Capital. Please go ahead.
Speaker Change: Our first question is from Brian Lee from Spica Capital. Please go ahead.
Hey, David Thanks, a lot for taking my questions and congrats on all the progress made first.
Brian Lee: Hey, David, hey, Oscar, thanks a lot for taking my questions and congrats on all the progress made. First of all, you guys mentioned quite a bit your digital marketing capabilities and how it seems to be a key competitive advantage. So I wanted to first of all get some more color on what exactly are these competitive advantages in terms of your digital marketing capabilities and how are you using these to drive value to the financial institution customers?
First of all you guys mentioned quite a bit.
Little marketing capabilities and in how it seems to be a key competitive advantage. So so I wanted to first of all give some more color on what exactly are these competitive advantages in terms of your digital marketing capabilities and how are you using these tools to drive value to the financial institution customers.
Brian Lee: And then related to these capabilities, you mentioned that you were leveraging these capabilities to expand in the other categories, categories or growth engines. So how exactly are you guys doing that? And what are your future strategies and kind of outlook on that segment?
And then related to these capabilities you mentioned that you were are leveraging these capabilities to expand into other categories categories or our growth engines. So how exactly are you guys doing that and what are your future strategies and kind of outlook on that segment and then secondly, my question is related to sort of cost optimization.
Brian Lee: And then secondly, my question is related to the cost optimization program. And so, I mean, you guys have any specific targets that you're trying to achieve, or how should we be looking at your cost based on the road? And then for these, you know, initiatives, how do you guys perceive the costs and resources being allocated between the existing businesses and the new growth engines and initiatives? Thank you.
<unk> program and so I mean, you guys have any specific targets that you're trying to achieve or or how should we be looking at your cost based on the road and then for these you know our initiatives. How do you guys perceive it costs and resources are being allocated between the existing businesses and the new growth initiatives. Thank you.
Yeah.
Speaker Change: Thank you, Ryan. I will go ahead and start the first question, so Oscar can answer the second question related to the cost optimization.
Thank you Ryan I would I would go ahead to start the first question, so Scott or canceled the second country and related to the cost optimization.
Speaker Change: Okay, yes, your first question about the digital marketing capability, also the value provided to financial institutions and also expansion to other sectors.
Yes. Your first question about the digital marketing capability also the value provided the tools and institutionally and also expansion tuned to two others.
So so I mean.
Speaker Change: So I mean, there's two or three questions that they are connected. So let me start with what we have done in the last 18 months, it's two years. I mean, I started with the recommendation service.
Two or three questions in there.
Connecticut, So let me start with the what.
What we have done in the last Ah.
18 months two years.
No.
Starting with the recommendation services. So basically as an example, we are well positioned.
Speaker Change: So basically, as an example, we are well positioned as a leader in the area of financial institutions, digital marketing transformation. So we continue to be, the recommendation services continue to be our most important revenue line with the contribution of 70% in 2021. And in terms of the digital marketing services,
Either in the area.
Financial institutions.
Digital marketing transformation.
So where are we.
It's a country it would be it.
It says the recommendation service continue to be a lot.
Most important revenue line that'd be their contribution.
Presenting in 2021 and then in terms of the digital digital marketing services.
Speaker Change: for our credit card businesses, which is a country beautiful, around 51% of our revenues.
Our credit card businesses, which is a country beautiful around 51% of.
All of our revenues.
Speaker Change: We combined the omni-channel digital marketing capability with our big data and system-based risk management solutions.
Combined the Omnichannel did.
Oh marketing capability and with our big data and it system based risk management.
Solutions.
Speaker Change: So in the past two years, we have some efforts and initiatives in our recommendation engine in our product.
I think the past two years, we have so efforts.
Initiatives in our email.
Our recommendation engine.
Got it.
Speaker Change: in our technical knowledge and also we have also streamed to compliance.
You know it takes knowledge and also we had more since then.
And it's a compliance so your thunder in terms of the state of security It was apparent that.
Speaker Change: for example, in terms of the data security, user privacy, and also we have developed a strategic partnership with one of the leading government-backed credit bureaus.
Privacy and also we have developed a strategic partnership.
This is one of the.
Leading government backed credit bureaus, and we hope you have also received a industry wide a walk in the recommendations so all of those initiatives.
Speaker Change: and we have also received an industry-wide award and the recognition.
Speaker Change: So, all those initiatives, we are helping our financial service providers, including 46 of the largest online credit car issuers, other licensed financial institutions, such as banks.
We have been helping our financial service providers, including 46 of the.
Largest online credit card issuers.
Other licensed financial institutions, such as banks.
Banks non bank finance companies consumer finance companies.
Speaker Change: non-bank finance companies, consumer finance companies, and the fintech companies.
And the Fintech companies.
Speaker Change: So they are better able to acquire a customer in this turbulent market. And they are also able to manage their credit and manage their risk better in this challenging economic environment.
They are better able to acquire.
Acquire customer in this turbulent market and.
They are also able to manage credit and managing our risks are better in this.
Challenging economic environment.
The moment.
Speaker Change: So, so as a result, we have seen our overall for unit economics or our efficiency, we have improved year over year.
So so as a result.
I'm seeing a lot of Oh, Oh, well, you need to economics or the Oh.
Efficiency, we have improved our year over year and also Oh, okay.
Speaker Change: and also the OmniChannel, the partnership program, we have developed, we have seen tremendous growth. We have expanded that to other sectors, such as e-commerce.
Also the Omnichannel the partnership program, we have we have developed.
We haven't seen a tremendous growth we have expanded that 2222 to two other other sectors, such as <unk> and <unk>.
E Commerce.
Speaker Change: So, basically, we extended our social media or partnership program into new sectors, including other financial and no financial categories.
So basically we've extended our social media or punishing programming.
Two into.
You knew you Tonight, new sectors, including other.
Financial and no no financial.
Categories. So these are new.
Speaker Change: So this new sector we use for the growth in 2021 was 160% quarter over quarter and we also see our total revenue given by our social media and the partnership program now count for about 47% of our total revenue.
You saw the growth in 2021 .
160%.
At quarter end.
We also see Oh total revenue driven by our social media and the partnership co program.
Now comfortable about 47% of our total revenue.
Speaker Change: So in the end, we believe the digital transformation of financial institutions is a big trend in the financial sector and other known financial sector.
So in the end.
We believe that digital transformation, a financial institution is a big trend.
The financial sector, and other known finish what sectors.
Speaker Change: So our investment in the past two years we have seen a huge payoff will put us in a much better competitive position enabling our financial service providers and e-commerce and other providers to better serve their customers in these growths by the challenging environment.
So I'll, let you mentioned in the past.
Two years, we have seen.
Pay offs will put us in a much better competitive position are enabling our financial.
With providers and our e-commerce and other providers to better serve their customers use these are gross the challenging environment.
So does that answer your question right. The first one.
Speaker Change: So if I answer your question right, the first one, if yes, I will turn it over to Oscar too.
I will turn it over to our country.
Speaker Change: Okay, so Oscar for the for the second part of the question.
Okay.
Scott.
Second part of the question.
Yeah sure David.
Speaker Change: Yeah, sure, David. Brian , thank you for the questions and for the second question about the cost of optimization. Firstly, I want to emphasize that the growing scale and efficiency gain plays a more important role than cost optimization to our business.
Brian Thanks for the questions and for the.
Well it took him a question about the cost optimization are firstly I want to.
Emphasized that the growing scale and efficiency gain.
The more important erode and cost optimization to all business leveraging the power of digital.
Speaker Change: you know, leveraging our digital marketing capability, we definitely see an improvement of the ROI of our recommendation service, advertising, and the marketing service and other services.
Marketing capability, we see we definitely see an improvement after all I hope our recommendation service advertising and marketing services and other service.
Speaker Change: The improvement is 4% points for the full year and 11% points in the second half.
The improvement is a four percentage points for the full year and 11 at any point in the second half.
Speaker Change: At the same time, considering the uncertainties and the challenges around the ongoing pandemic and the regulatory change.
At the same time.
Considering the uncertainties and the challenges around the ongoing pandemic and the regulatory change are we.
Speaker Change: We have continued to execute cost optimization initiative in the past two years.
We have continued to execute cost optimization initiatives in the past two years.
Speaker Change: That means we are closely monitoring and evaluating the resources allocated among the existing business.
That means we are closely monitoring and evaluating the resources allocate allocated among the existing business.
Speaker Change: lines and new business initiatives and consolidating overlapping resources to enhance operating efficiency and optimize the cost of structure. That resulted in a reduction of operating expenses. So, yeah, the total operating expenses of percentage of revenue in 2021 decreased by, you know, 20 percentage points compared with the same percentage of 2020.
Our lives and our new business initiatives and are consolidating overlapping resources to enhance operating efficiency and optimize the cost structure Ah that resolving.
That resulted in a reduction of operating expenses. So yeah. The total operating expenses as a percentage of revenue in 2021 decreased by 20 percentage points compared with the same standard golf hunting.
Speaker Change: That includes, you know, our efforts in fixed cost reduction and headcount optimization and the resources, you know, allocation and balance between the existing business lines and the new initiatives.
That doesn't include all our efforts in fixed cost reduction and headcount optimization and the resources allocation and the balance between.
Between the existing business lines and the new initiatives.
But I want to emphasize that at the same time, we continue to explore and invest in new built into any new business to find new growth engine.
Speaker Change: But I want to emphasize that at the same time, we continue to explore and invest in new business to find new growth engine. A significant part of our loss are attributable to the upfront investment in the new business.
A significant part of our loss attributable to the upfront investment in the in the new business.
Speaker Change: So down the road, we will continue to closely monitor and evaluate our cost of structure and the resources allocation. Along with the gross recovery, we expect our operating efficiency will further improve. The cost optimization measure adopted in the past two years, and we also expect that we will continuously benefit our operations in 2022.
So down the road, we will continue to closely monitor and evaluate our cost structure and the resource allocation.
Along with the growth of recovery, we expect our operating efficiency will further improve the.
Cost optimization measures adopted during the past two years and.
And we also expect that that will continuously benefit our operations being in 'twenty to 'twenty two.
Hopefully I have a call on the whole I hope that answers your question Brian .
Speaker Change: I hope that answers your question, Brian . Yeah, thanks.
Yeah, Thanks, David Thanks Oscar.
Okay. Thank you.
Our next question comes from Alex Zhou from UBS. Please go ahead.
Speaker Change: Our next question comes from Alex Yee from UBS. Please go ahead.
Yeah.
Alex E: Hi, management. Thanks for taking my question. I guess I have two questions here. Number one is on your credit card and loan recommendation business. So I guess the lockdown will surely cause some wind through your growth in the first half. But I'm wondering if you could
Hi management. Thanks for taking my question I guess I can I have two country here number one is on your own.
Credit card and loan recommendation opinions. So I guess then the lockdown will surely caused some headwinds to your growth in the first half, but I'm wondering if you could.
Alex E: share with us some more general trends that you have seen on customer demand over the past year or so, so that's before the lockdown, so because we have seen different moving fractures on the one hand.
Share with us some more.
On general trends that you have seen on our customer demand demand over the past year or so.
Before the lockdown and so on so because we have seen a different moving factors if only one had.
Alex E: You might call data on consumption has remained quite weak, and on the other hand, there has been multiple rounds of industry titanine, so many small players may have asset market, and then some bigger players, they may face some constraint on growth. So have you also seen the sovereign demand from the loan products and credit cards, or is it the other way round?
They told him consumption has remained quite weak and on the other hand, there has been multiple wrong. So by industry trying to mean, so many small players might have ethic to market and then some bigger play yesterday on them. They may face some kind of constrained on Hong Kong.
So have you also seem to suffer and demand from the old products.
In credit cards or is it the other way round that you are seeing stronger demand at the moment because people just find it hard to borrow.
Speaker Change: you are seeing strong demand from customers because people just find it hard to follow.
Elsewhere. So yeah, that's the first one and then secondly on.
Speaker Change: So yeah, that's the first one and secondly on the regulation from so given the ongoing
When the regulation from itself given the ongoing.
Speaker Change: on the credit bureau so you know FinTech platform they are not allowed to directly transfer the customer data to the bank so I'm wondering
Reservation on the on the credit bureaus. So you know fintech platform. They are not allowed to therani transfer because my data to the bank. So I'm wondering.
Speaker Change: how has that affect your thesis model and what kind of changes you need to make in order to stay compliant. Thanks.
How has that affected your business model and what kind of changes you need to meet.
The combined thanks.
Okay. Thank you Alex that I understand that you have to kind of two part of the question I'm going to take that.
Speaker Change: Okay, thank you, Alex. I understand you have two parts of the question. I'm going to take a stab if anything Oscar can pull up. So the first question about the overall low markets, the impacts about the COVID situation or lockdowns, right? So you saw the data, last year we had growth.
And you can ask him.
And kind of cutting 10 can pull up so the first question about the mobile alone market, Oh Gee impacts about.
Toby situations unlocked on strike.
So you saw the data and last year, we had growth.
Speaker Change: we turn around and we manage growth. I think it's a dynamic market. I mean the demand is strong. Consumers need to borrow.
Maybe if you turned around and be managed growth I think.
It's a dynamic market.
Demand is strong consumers.
Need to borrow you need money.
Speaker Change: right? I mean, SMEs also need liquidity, need to borrow, so demand is strong. No question about it, right? On the other hand,
Right.
And I suddenly east also need liquidity to borrow so demand is strong no question no question about it right on the other hand.
Speaker Change: We actually have found out like it was a for the for the for the retail side of the business of the banking business That's that's consumer the finance company credit card issuers Non-secret credit type of products or even some of the FinTech Companies, I mean, and we are actually we have been the whole year last year. There are enough I think there are sufficient liquidity or credit available
We actually have found out like it towards the to the retail side of the business the banking business and that's that's a consumer finance company credit card issuers.
And the North Dakota Prairie.
The type of products or even some of the fintech.
Companies I mean, and we are actually we have seen the whole year last year and there are enough I think we've got sufficient liquidity already available pool for fulfill those financial institutions.
Speaker Change: for those financial institutions, but we do see some shifts.
But if we do see some shift.
Speaker Change: because of the lockdown, because of the COVID, financial institutions are shifting their line of credit, their credit, their available credit from our friend branch, from traditional direct sales channel, toward online.
Because of the lockdown because of the Kobe and financial institutions, that's shifting their line of credit and they'll crowded the available credit from a friend branch during traditional director.
Channel towards online and.
Speaker Change: So that's why I would say the supply of the online credit, the light assets or the loans offered through the internet or through mobile form through, like, reach out to a micro program, they are planning. So that's getting interesting. Demand is strong. Also, supply of SME consumer online is not weak, right? So what's the problem?
So that's why that's what I can say that the supply of the own uncrowded Tonight as yet.
Or are there loans also distribute through internet through mobile mobile mobile form through like reach out to them.
Macro micro program they are pending.
Okay.
So that's getting interest and demand demand has shrunk most will supply all consumer online.
Right now what's the garden.
Speaker Change: But we do see there is a huge information asymmetry.
But we do see is there is a huge like like our Infosys information that's immediate.
Oh, you mean efficiency.
Speaker Change: between the demand side and the supply side. I mean, as we know, the financial institutions, they are adjusting the credit policies. They are tightening the credit policy overall. They have more stringent underwriting or fraud detection or risk management criteria. They are also shifting their marketing channel.
Between the demand side and the supply side I mean, as you know the the.
Financial institutions, Justin the credit policies that tightening liquidity per policy overall.
Are they are they have the more stringent underwriting or fraud detection and risk management.
Criteria.
I think I also shifting their marketing.
In that channel.
Speaker Change: So that's why our only channel strategy combined with our strong recommendation capabilities.
So that's why our omni channel strategy combined with our strong recommendation capabilities are also combined with our experience and expertise.
Speaker Change: also combined with our experience and expertise, they're cultivating risk management and credit. And also, even like red tech and also collection tech technology, our whole suite solution really helped to enable the finance institutions to accomplish growth.
Cultivating and risk management and the crowded and also even like that Tech and also Oh, Oh collection Tech technology.
Our whole suite solution really helped.
To enable the financial solutions 2222 to accomplish quotes and also increased marketing efficiency and also enhancing our risk management capability I just wanted to give you. One example.
Speaker Change: and also increase the marketing efficiency and also enhancing the risk management capability.
Speaker Change: I just want to give one example. Our largest customer in the critical digital marketing
Our largest customer are in.
What do you call a digital marketing.
Speaker Change: and also recommendation business we had, we saw the exponential growth of the revenue from this credit card bank, the exponential growth. It's increased from below top five to top number one in just 12 months. And we also, the
And they're also recommendation business behalf.
We saw exponential growth.
Well the revenue from these credit card a credit.
Credit card bank as expense growth.
It's increase there from below top 522 to two topics number one.
Yes.
12 months.
The real answer to that.
Speaker Change: the qualified recommendation or the new card issued by this credit card bank, we are the largest
To quantify the recommendation or the new cards issued a bally's.
Credit card Bank Oh, we are the largest.
Speaker Change: recommendation service provider, owner recommendation service provider for this company.
Like our recommendation service provider I own an owner if he's on a service.
Service provider for this for this company. So that's not that's a reality that so of course. This year. This quarter. We definitely you will see is more and more impact of lockdown, especially for a long time on that and I like like like Shanghai and so the demand.
Speaker Change: So that's, that's, that's the reality. So, of course, this year, this quarter, we definitely will see is the more, more impact of lockdown, especially for lockdown, like, like, like, like, like, like Shanghai.
Speaker Change: And so the management has been very cautious in terms of our strategy, our growth strategy. We are optimizing our marketing spend. We also closely monitoring our costs and all aspects.
Demand has been and there is a cautious in turns out for Oh, Oh, well all all all of our strategy and our growth strategy, we have been optimizing our all of our marketing spend and we also closely monitoring our all our all in cost.
And snacks.
And.
Speaker Change: We are also working even closer with financial institutions in terms of the dynamic change acquisition and marketing policies, the credit risk management policies, and strategies to further optimize our omnichannel digital marketing capabilities also with our recommendation capability.
They almost feel well look even closer.
Financial institutions are in turns off.
Yeah, Yeah dynamics changed Oh acquisition.
On the marketing policies, no credit risk management policies and the strategy is there.
Two to further optimize our omni channel digital marketing capabilities.
Without these our recommendation capabilities.
So that's that's that's the first part of the question. Let me maybe go ahead to two two times to two to answer the second part.
Speaker Change: So that's the first part of the question. Let me go ahead to answer the second part. And second part, you asked about the regulation. And specifically, you also mentioned about the direct transfer of data or the credit bureau would have impacted to the industry or to us in general.
And Oh, Okay, and secondly, how are you asking about regulation and specifically you also mentioned about Uh huh.
The transfer of data or the credit Bureau would have.
The impact into the industry to us in general So so last year, we entered a strategic partnership that'd be that'd be the leading and credit Bureau.
Speaker Change: So last year, we entered a strategic partnership with the leading credit bureau. Let's go.
Moving to.
Speaker Change: back the building in China in terms of risk management and data initiative.
That's the beauty of Bureau in China.
Turns out well Uh huh.
The risk management and data Nisha teams. So we oh, so basically this is credit Bureau.
Speaker Change: So basically this credit bureau would work directly with the financial institutions in terms of credit scoring data and other issue tips. And we are a strategic partner providing risk, analytical and digital marketing services with this government backed credit bureau.
We work directly with a financial institution in terms of our credit scoring data and other initiatives and we are a strategic partner, providing providing reads Uh huh analytical and digital marketing services with the visit.
Come on the backs credit bureaus, we are also well what can be the other belongs.
Speaker Change: We are also working with other billboards.
Speaker Change: together. I think for this type of strategic partnership, our goals or vision are the same to become
Together, I think I think that as well.
How about strategic partnership.
Oh, all goes well, Oh, blah blah blah Blah Blah, Oh goes our vision to become financial institutions pardon. So that's why the division I mean, they did Oh, Wow visualization I really truly aligned.
Speaker Change: financial institutions partner. So that's why the vision, I mean, our vision and mission are really truly aligned.
Speaker Change: So with destiny, you have seen this part of the business has been stable. And we also like to see, we also love the fully transparent or more clear.
We definitely have seen and this is part of the business has been has seen stable and as he also likes to see and we also love the fully transparent or more clear.
Speaker Change: regulatory environment or guidance. Let's make financial institutions, make partners like us, also authorize the government-backed credit bureau to grow the business forward.
The regulatory environment our guidance now.
I did not make a sending institutions.
Uh Huh partners like Us also.
Make what's also authorized.
Backed credit Bureau to grow the business forward.
No. That's my Merrimack retained some schools, where you Alex.
Speaker Change: So that's my three cents for you, Alex.
Oscar you you you want you have anything to add in terms of regulation in terms of the Covid impact.
Speaker Change: So, Oscar, you have anything to add in terms of regulation and in terms of the COVID impact?
Yeah.
Oscar Cen: Yeah, I think maybe you are well-covered. Yeah, I don't have any further comments. OK, Alex, turn it over to you.
I think I don't think that we are well covered.
I don't have any further comments okay.
Okay.
With you.
Yeah.
Okay, Thanks, very much well I kind of things.
Thank you Alex.
Speaker Change: Again, if you have a question, please press star, then 1.
Again, if you have a question. Please press Star then one.
Speaker Change: Our next question comes from Peter Lau from Bloomberg. Please go ahead.
Our next question comes from Peter low from Bloomberg. Please go ahead.
Peter L: Thanks, management, for the introduction and congrats again for your sales.
Oh, Thanks management for the introduction.
And congrats scan for your sales results just.
Speaker Change: Just a quick question on the gross margins. I'm very glad to see there's a slight improvement in the gross margin of different business lines. Do you mind sharing what's the big driver behind the margin improvement?
Just a quick question on <unk>.
Our gross margin.
And very glad to see there's a slight improve.
And the gross margin of a differing b compliance do you mind sharing a what's the big driver behind the margin improvement.
Jimmy: For example, is it coming from loans or credit card condition? We'd love to hear more on that, Franks.
Picking up or is it coming from our loans, our credit card conditional love to share more on both fronts.
And second question is.
Jimmy: Obviously, we have the 20-year-old regulatory curve coming in. Obviously, I think Tiempo has done pretty well in countering this regulatory headwind. I just wanted to know if there is any impact on the fee rates front.
Obviously, we have a.
Once you have it on a regulatory curve coming in obviously, I think <unk> done pretty well I'm counting against a regulatory headwind just wanted to know if there's any impact on the fee rates are fronts.
Jimmy: For example, would these regulations change the pricing dynamics? And would that pose any benefits or pose a hot one to campus?
Cancel.
These regulation.
<unk>, the pricing dynamics and with.
With that Ah Ah, you know pose any benefits or or close them. Once you do channels our fee rates on.
Jimmy: fee rates, say, the loaned commissions rates. We'll have to hear more on that.
The loans.
Commission splits.
Prefer more on top of them.
Yes.
Two questions. Thank you.
Okay. Thank you Peter and says Oh, Scott go ahead Uh huh.
Speaker Change: Okay. Thank you, Peter. So Oscar, go ahead with the margin, with some financials, and I will add if needed.
Is there marching with some financials and then well at it.
You did.
Oscar Cen: Okay, yeah, I will take the first part to discuss about the margin.
Okay Yeah.
Oh I'll take the first part.
To discuss about the margins.
Oscar Cen: For the second part, I think it's still about the regulatory something. So I will answer the first part, yeah. So thank you, Peter, for your questions. Yeah, I think, you know, the overall, the modeling improvement.
Second part I think is still about the regulatory something so I'll answer the first for Chris.
Yeah.
So thank.
Thank you Peter for your questions. Yeah, I think you know the overall tomorrow in 12 months as Satish.
Oscar Cen: is, as I said, also in the last questions, I think it's a growing scale. You can see, you know, our top line have close to 40% year-over-year growth for the full year and more stronger growth for the second half of 2021.
Yeah.
And in the last two questions I think it's a it's a growing scale.
You can see you know our topline have a close to 40% a year over year growth for the full year.
And a more stronger growth for the second half of the.
All countries into one so.
Oscar Cen: So it's a, you know, our business is still, you know, if you have larger scale, you can have better, you have better, you know, you still can have, you know, better bargaining power to discuss the price, to negotiate the price and the terms with the financial institution.
So it's a you know all.
I'll I'll benefits do you know if you have larger scale you can have better.
You have better.
You still can have.
Better bargaining power to discuss the prize is to negotiate the price and the terms with the financial institutions. So we are seeing the price increasing trend fall credit credit card business, but for the loan recommendation business. We are seeing a declining a pricing trend, but that's mainly.
Oscar Cen: So we are seeing the price increasing trend for credit card business. But for the loan recommendation business, we are seeing a declining pricing trend. And that's mainly because the credit tightening limited to the loan products available on our platform. And at the same time, when the scale grows, we achieve the efficiency gain from our core marketing
Of course, you know the prototyping they limited to the the loan products available on our platform and at the same time.
When the when the scale growth are we can you know what.
We achieved the efficiency gains from the from our core marketing capabilities.
Oscar Cen: Mainly from the omnichannel marketing strategy, the social media and the partner program. That part accounts for almost more than 50% of our traffic source for the recommendation services.
Mainly from the omni channel marketing strategy, the social media and upon the program.
That part of the Council.
Uh huh, almost more than 50% of our of our traffic source for the recommendation services.
Oscar Cen: And also, leveraging that, we enter into the new business.
And also leveraging that we enter into the new business.
Oscar Cen: So with that, you know, we are seeing an improvement.
That's sort of a tight eye on the marketing services and other services so with that.
We are seeing.
An improvement if you divide the revenue deferred revenue.
Oscar Cen: If you divide the revenue by the cost of promotion and acquisition, we can see a higher margin. We can see an efficiency gain that is 4% points for the full year and 11% points in the second half.
By the close off promotion and acquisition.
We can see a higher margin so we can see an.
Inefficiency game that is full percentage points for the full year and 11 percentage points.
Hum.
Speaker Change: So, I hope that answers your questions about modern improvement.
So I hope that answers your.
Questions about the about margin improvement.
Yeah.
Yeah. It does.
Speaker Change: it does. Thanks. Thanks a lot. Okay. Yeah, Peter, I'm going to go about your second part about the regulation, about the fee rate.
Thanks, a lot.
Okay, Yeah, Peter I'm going to go about it was taking the part about the regulation, but the fee rate.
He's a he's a regulatory.
Speaker Change: Here's the regulatory dynamic overall. We have some headwinds. We also have strong tailwinds. And I mentioned earlier that there are restrictions in terms of direct transfer of foreign data.
Dynamic overall, we had some headwinds.
When we also had strong tailwind and I mentioned the early Oh, there are restrictions in turns out well a direct transfer of power and data and also we have a COVID-19 related lockdown right about the tailwind I mentioned earlier.
Speaker Change: And also, we have COVID-related lockdown, right? But the tailwind I mentioned earlier, the digital transformation of the overall financial sectors, financial institutions actually are shifting more up there.
The digital transformation of the overall financial sectors.
Financial institutions actually in shifting more of their apps.
Speaker Change: acquisition or marketing or risk management capability for online channel for online channel and also we have we have seen in banks large large and also even meeting size the like a shareholder owned bank or even some of the regional banks the ruler commercial banks they have been really
Acquisition, we're marketing our risk management capability for our own end channel partner and channel.
Also we had a we haven't seen him and banks are allowed to get larger and also even medium size that Ah Ah Ah Ah is shareholder on the banks or even some of the regional banks commercial banks they have been really truly be.
Speaker Change: beefing up their own and decisioning capabilities. And so the way we price our product is based on
They are known and Decisioning capabilities.
Capabilities and so the way we price our product is based on call it in himself or a marketing quality and our risk caught it. So it's always a technically really it'd be priced our oh, wow like say long recommendation or even credit card approvals based on.
Speaker Change: quality in terms of for a marketing quality and risk quality.
Speaker Change: So technically, it really reprises our, say, long recommendation or even credit card pools based on its strong proxy, strongly correlated with the pool rate.
It's it's it's a it's drawn proxy Johnny quoted it'd be the poorest.
And.
Speaker Change: charge of rate or the risk rate. So banks are willing to pay more in terms of if they see a higher pro rate from us versus a lower
Charge off rate towards the risk rate change so banks are willing to pay more in tuned out for you today, Yeah, hi approval rate from us versus the lower application fraud or age and a and a lower delinquency rate that's how.
Speaker Change: application fraud rates and lower delinquency rates. That's how we, as AI driven, data driven, analytical driven recommendation platform, we truly optimized the on the channel acquisition stage digital marketing capability with the recommendation engine which we optimized both approval
Uh huh.
Oh, Yeah, driven data driven analytical driven.
Recommendation platform, we truly like optimized at that Omnichannel acquisition.
Stage digital marketing capability.
It was vis a vis vis the recommendation engine, which we optimize post approval.
Yes.
Speaker Change: with a poor rate, with a risk management rate, and of course, lockdowns, regional lockdowns, lockdowns are original, cause some trouble.
We did beat it.
Approval rates vis vis the risk of managing rate and of course Lockdowns original lockdowns right up against the original cost on travel was on National Bank, because they may have temporarily suspended some of the.
Speaker Change: For some national bank, they may have to temporarily suspend some of the user application in Shanghai area, for example, right? So we were truly able to
Usually application you're in Shanghai area for example, right and so we are truly able to.
Speaker Change: dynamically adjust our national-based recommendation into Kugletonova to our regional-based optimization engine to shifting our warnings based on different regions or different banks' product.
Dynamically.
First our Oh Oh at National.
Basically recommendation into to get to know what your original base the optimization engine to shifting.
Oh Wow, what is based on a different region or deepen the bank and deepen the banks.
Product and also the dynamic that a credit that.
Speaker Change: and also the dynamic credit policy and the marketing policy and the budget. That's how we are able to actually change
Policy and their marketing policies under the budget. That's how we are able to actually achieve the the better pricing. We haven't seen you in better pricing I mean, I just use credit cards.
Speaker Change: the better prices. We have seen in better pricing, I mean, I just use credit card, like recommendation fee as an example. We, if you look at the quarter over quarter, or in some cases, if you look at a specific credit card issue, a quarter over quarter, we were able to last year, we were able to see our recommendation, like credit card recommendation fee per,
Oh recommendation P. As example, I'll be.
If you look at the quarter over quarter, well or in some cases, a beauty. If you look at the typical credit card issuer Chordoma quota, we were able to last year.
Uh huh.
Our recommendation.
Critical condition feed per per well.
Speaker Change: per pool or actually be able to see a medium to long term increase trend.
Oh, excuse me were able to see a medium to long term and increase trend.
Speaker Change: So that's why, just to summary, the regulatory dynamic really has less or little impacts in terms of our pricing or our fee.
So that's why I just in summary, though to the regulatory dynamic.
It really is less a little impact in terms of how Oh, Wow, what pricing well see yeah, I think you need to economics, it's more driven by our.
Speaker Change: I think you need economics. It's more driven by our capability, our dynamic insight, adopting the market change, and also our relationship, our strong partnership with our financial institutions, and also our customer insight.
Capability, our dynamic dynamic.
Uh huh.
Adopting the market change and also Oh Wow relationship a strong partnership with our.
The financial institutions, and also Oh, Wow Wow customer insights for our consumers.
Speaker Change: for our consumers and SME customers.
Consumers and SME customers.
I think that's very good banking I think Spanish them.
Yeah. Thank you Peter.
Speaker Change: There are no more questions in the queue. This concludes our question and answer session. I'd like to turn the conference back over to Colin Chung for any closing remarks.
There are no more questions in the queue. This concludes our question and answer session I'd like to turn the conference back over to Colin chunk for any closing remarks.
Okay.
That's right.
Jyoung: That's right. Thank you for everyone for joining the call today. Thank you David, Oscar for presenting our remarks. So there are no further questions with that. I will conclude the call. Thank you for your support. I appreciate your interest and look forward to speaking to you again in the future. Thank you and good night.
Thank you for everyone for joining the call today.
Thank you David Oscar.
Oh.
We're sending out of the box.
So there are no further questions with that I will conclude the call.
Thanks for your support and appreciate your interest and look forward to speaking to you again.
Future.
Thank you and good night.
Okay.
Hum.
The conference.
Conference is now concluded.
Thank you for attending today's presentation you may now disconnect.
Okay.
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Jyoung: You
Jyoung: You
Jyoung: You