Q2 2022 Phoenix New Media Ltd Earnings Call
Okay.
[music].
Yeah.
Thank you all for standing by and welcome to the Phoenix, New Media second quarter 2022 earnings call.
At this time all participants are in a listen only mode.
After the Speakers' presentation, there'll be a question and answer session.
Ask a question at that time, so I need to press Star then one one on your telephone keypad.
Please be advised that today's conference is being recorded.
I'd now like to hand, the conference over to your Speaker Lucy Guo from Investor Relations.
Please go ahead.
Thank you operator, and Hello, everyone.
Phoenix, New media second quarter 2022 earnings conference call I'm joined here today by our CEO Mr. Sean.
Mr Edwards.
On today's call.
I will first provide a review of the quarterly results and then conduct a Q&A session.
Quarter of 2022 financial results and webcast of this conference call are available on our website at IR Dot Dot com.
A replay of the call will be available on the website in a few hours.
Before we move on to the prepared remarks I'd like to refer you to our safe Harbor statement in our earnings press release, which applies to this call as we will make forward looking statements.
Finally, please note that unless otherwise stated all figures mentioned during the conference call are in RMB.
And now I'd like to turn the call over to Mr. Sean <unk> our CEO .
Thank you Melissa Hello, everyone and thank you for joining our call today.
In the second quarter of 2022, the nationwide Covid resurgence continued to exert pressure all business, while some of our marketing executions, what postponed or canceled many of our advertisers choose to tighten the fronting budget the highly uncertain macro environment.
Regardless, we remain resilient during challenging times, we concentrated on expanding our media presence. So upfront premium calls made significant upgrades to our core.
And continue to explore new business opportunities to diversify our revenue streams.
This year marks the 11th anniversary about Phoenix Finance summit we.
We took this signature events online.
The challenges are holding offline events.
This year. This is Carrie Lam, former chief executive of Hong Kong Special for the Ministration region.
Nearly 50 other political signatories on business tycoons gathers all.
I don't like to change on the ship insights and ideas on the global and Chinese economy.
The summit generated immense number of who use our discussions on social platforms with 300 million views on Weibo and what's reported by more than 60 media outlets, making it one of the most high profile events during the quarter.
In terms of news events coverage, we jointly plan for two days special coverage with Hispanic television on the 25th anniversary of the establishment Hong Kong as they are.
Scholars and actors to participate in future interviews and discussions focusing on hot topics, such as the opportunities and challenges faced by the region.
Areas of politics, finance innovation and agitation.
In addition.
We added 10 memorable moments.
Five years of Hong Kong is a our history into digital collectibles.
Which will not only sought after in the digital marketplace, but also attracted more younger generations to our event coverage.
This is in the continent continued to deliver value to our users and society.
David column eye of the storm.
Focus.
Bidding and exposing relevant facts behind controversial topics and a social phenomenon.
Ranging from financial scam targeted at seniors.
To the pollution caused by electric car.
Many factors.
Colin.
Received widespread praise for raising public awareness of seeking answers to typical pressures.
<unk> opinion column.
Messages function explore topics with a focus ordinary individuals on the life storage, especially on the pandemic prevention and control.
It covered the topics from different angles, such as laws and regulations industry standards social economy.
<unk> policy, using an authoritative irrational and constructive style.
Assistant with our constant strategy and differentiation.
The message attracted a group of loyal followers with a considerable number of articles each generating over 100000 views on wechat.
On the video content from.
Newly launched original series the journey.
The tool with viral across all social platforms. The journey is a micro video documentary that Rec horse people regardless.
Yes.
Fitness and witness in their lives.
Paul Butler.
Spotlight was a tech company executive.
Suffering from AOS.
But as resilient and persistence.
Our restaurant owner struggling to support this business under the pandemic and the meat H Coder REIT navigating.
His life after losing his jobs.
These stories resonated well from our agents audiences.
Each theories episodes received 10 million views across the Internet and generated over 100000 new followers.
On the availability.
In terms of our product we continue to be the final iPhone during the quarter.
The newly developed page.
Integrating all news articles in the ATP with audio functions allow users to listen to the uninterrupted latest update of the preferred news while performing other tasks.
We can now also choose to listen to me to Phoenix TV light programs instead of watching.
This has resulted.
Noticeable improved user engagement.
<unk> time spent by users using the audit function has increased by 26%.
While we continue to refine our accountant.
The recent status.
On the other hand.
Augurs, then distribute content based on nearly 60 user profiles to fulfill the Sop news on interest rates coupled needs.
On the other hand, we're adding their own captions.
Editors carefully choose are presented information to publish.
Census of two of their own source or calling out the court held.
Highlight the company.
These fees, which leads to more clicks on a few interactions and discussions.
These enhancements have greatly improved our user experiences.
As we continue to optimize our traffic acquisition costs, our user traffic remained stable.
Now our user engagement has improved.
The average click through rate has increased by 22% year over year.
Average time spent by users increased by 13%.
Net retention rate increased by 15%.
Lastly, I would like to share our progress and revenue diversification.
Online reading, we continue to monetize from our collection of premium IP literature audio book wouldn't be.
Jointly produced.
<unk> reached 9 million views with two months since it released.
Meanwhile, six of our self produce audiobooks ranked in the heme a line of new hubs.
<unk> audio books also made a significant progress as we enter into a copyright sales agreement with Netease cloud music.
For our real estate vertical.
The aftershock of the industry regulations and liquidity concerns lingered on.
And the macro environment remain uncertain.
While driving growth in real estate advertising was challenging.
Team vigorously promote innovative solutions to our clients.
Including setting customized appliance packages.
On the content side, we focus our reporting issues concerned by D and homebuyers.
Such as the quality of construction and renovation.
In the meantime at.
The index released in the second quarter.
It became the first comprehensive ESG ranking in the real estate industry.
They recognize that investors on the property in Nevada.
To be on the seat inflows were both growing.
Thanks to these efforts.
In addition, the team optimized the sales team structure and eliminated certain safety divisions that did not meet expectations for profitability.
To improve operational efficiency.
As for E Commerce, we launched our digital collect collectible platform Phoenix artworks.
One <unk> during the quarter as previously noted with published.
<unk> digital his darker moments in honor of the 20 <unk> anniversary of the establishment of Hong Kong is there.
What set us apart from the other platforms is Jonathan art and culture at all.
Partnerships with world, leading museums and our institutions.
The first collection launched.
Solve the lead of rivers and mountains.
Ah <unk> century painting in the collection of the Palace Museum.
Filled out we see $1 or communities.
West interactions such as AR Impressionist world feels quite Mongol Saddam on Gorgon.
Likewise extremely popular and quickly sold out.
Okay.
The digital collectible can generate considerable discussion and enthusiasm.
This is especially important for events emerging IP and brand.
One to increase the recognition and exposure quickly.
As such we believe that.
<unk> to the sale of digital collectibles.
They can complement our future events and marketing solutions.
In summary, despite the macro headwinds we remain committed to strengthening our brand influence so breaking news coverage.
Nature events.
Well continue to enrich our content offerings and upgrade our product.
The same time, we cautiously evaluated and invested in new business initiatives to diversify our revenue streams.
The future will.
Uh huh.
Accordingly, manage our business operations, while focusing our business development and emerging growth areas.
With that I will now turn the core to our CFO .
To provide a closer look into our quarterly financials.
Thank you, Tom and Hello, everyone I will now walk you through our financial performance for the second quarter of 2000.
Our total revenues or RMB 191, six minutes as compared to RMB $256 seven minutes in the same period of last year.
To elaborate net advertising revenues were RMB $160 5 million compared to RMB $233 million in the same period of last year.
This was mainly due to a reduction in advertising spending of advertiser industries.
Countries.
Intensified industry wide competition and the negative impact of the COVID-19 outbreak in certain regions in China in the second quarter.
Services revenues were RMB 31, one minute compared to <unk> $23 seven minutes in same period of last year the.
The increase was primarily driven by increased content sales to certain customers.
Loss from operations in the second quarter of 2022.
RMB $94 eight minutes compared to RMB.
$34 $8 million in the same period of last year.
Net loss attributable to iPhone was RMB $95 8 million compared to RMB seven 1 million in the same period of last year.
Moving out to all of our balance sheet.
After June 32022, the company's cash and cash equivalents term deposits short term investments and restricted cash or RMB 173 billion or approximately U S. Dollar 198 five minutes.
Finally, I'd like to provide our business outlook for the third quarter of 2022.
We are forecasting total revenues to be between RMB, $197 2 million and RMB $217 2 million.
For net advertising revenues, we are forecasting between RMB $179 six minute and RMB $194 6 million.
For paid service revenues, we are forecasting between RMB 17, 6 million and RMB 22 six minute.
This forecast reflects our current and preliminary view.
Which are subject to change and the substantial uncertainties.
In summary, all of our advertising business experienced continued pressure due to the impact of the COVID-19 outbreak during the second quarter of 2022.
In response, we proactively manage at all of our expenses streamline our operations and optimize our team structure to improve operating efficiency.
Going forward, we will continue to investigating new business initiatives to improve our revenue stream mix.
Despite the short term setbacks, we believe all of our endeavor will sustain us through this adversity and prepare us to achieve a better margin recovery in the future.
This concludes the prepared portion of our call. We are now ready for questions.
Please go ahead.
Thank you we will now begin the question and answer session.
As a reminder, if you wish to ask a question. Please press Star then one one on your telephone keypad and wait for your name to be announced.
Please standby, while we compile the Q&A roster.
Our first question comes from Sugar Zhang from 86 research. Please go ahead.
Good morning management. Thank you for taking my question I have one question about the App business.
So the first half of this year was tough with App market.
As we have into the second half I Wonder does management opposite of Ami recovery trend also could you share some color on the growth outlook for the second half. Thank you.
Thank you.
Uh huh.
Excellent.
Yes.
Many many companies and a suffered a fund.
Macro headwinds during the last quarter.
We were no exception all of our teams.
In Shanghai, and Beijing had to work remotely from home for some time and so many of our major clients.
With the economy growth slowing down.
And so much uncertainties.
Advertiser demand softened.
36 showed that from.
January to May the total marketing spending decreased by over.
10% year over year.
Certain industries or affecting that even more.
For example, the auto industry, one of our major client industries their marketing spend.
Spending chopra to buy.
Around 25% from.
January to make them.
<unk>.
From June however, as the economy gradually recovers from Covid impact.
Business is once again, starting to to invest in branding and marketing to.
Healthcare sales growth.
<unk> for the rest of the year given this trend continues.
Our advertising revenue will pick up.
Having said that we have to admit that the competition is.
Intense.
Advertisers' tightened here.
Budget their demand for comprehensive marketing solutions.
I have are growing.
We have two quickly responded to that.
Fund out fond of our own differentiation.
First our brand image and.
Media influence our advantages.
Extra in the first half of this year through our breaking news coverage and original content.
Not only did we.
Increased user engagement.
Our iPhone ATP, but also our user base on the third party platforms increased by 30%.
Reaching nearly.
$430 million.
Well, we help advertisers to convey Leer brand stories and escalate their brand exposure, we can help them reach a broader customer base.
At the same time.
Introducing creative marketing truth.
Such as digital collectibles, and virtual characters to fulfill advertisers' need for creative marketing.
Also.
Utilizing our international backgrounds and perspectives, we have created a series of products, helping advertisers to expand your international exposure and the conduct more overseas branding activity.
Our global Observer service for example was well received by our advertisers.
With all these joint efforts, we are holding to see growth recovery in all of our our hygiene and revenue in the second half of the year.
Thank you.
Sure.
Thank you that's very helpful.
Okay.
Yeah.
Okay.
Our next question comes from Alex Chang Ellis Cheng from first Shanghai. Please go ahead.
Good morning management. Thank you for taking my question.
So my question is regarding the cost side. It was mentioned earlier that the company was implementing cost control measures. So will this be a continuing trend in the future and could you. Please disclose the company's long term cost strategy. Thank you.
Hi, Thank you for your question.
As mentioned on our last call our goal is to return to.
Profitability in the next two to three years.
As such optimizing our resource allocation and.
Increasing efficiency is our.
Top of priority and release will continue to be our focus in the near future.
During the second quarter, we continue to drive efficiency in all areas.
To date project execution level, we closely review the cost structure of each project.
Demanding a higher gross margin.
In terms of business lines.
Especially the new initiatives.
We set clear goals and performance measurement and.
Conductor frequently reviews.
With limited resources.
We have two cautious with our pilot project.
If Lee has note Matt Premier expectations, we respond quickly as to whether or not they how to be scaled down.
Uh huh.
Been closed also.
Higher level.
<unk> deep sorrow analysis on bandwidth marketing.
Labor costs and so on.
To drive overall cost optimization.
Which should pay off with better results in the following quarters.
I hope I have answered your question.
Okay. Thank you that's very helpful.
Thank you that was our final question, so I will hand back to management for closing comments.
Okay.
Thank you we have now come to the end of our Q&A session and our conference call. Your time is very much I. Appreciate it if you have any further questions feel free to contact us. Thank you for joining us today on this call and have a good day.
Okay.
Thank you. So much. This does conclude today's conference call. Thank you all for joining you may now disconnect.
The conference will begin shortly.
As Johan during Q&A, you can dial star one one.
[music].
[music].
[music].
Thank you all for standing by and welcome to the Phoenix, New Media second quarter 2022 earnings call.
At this time all participants are in a listen only mode.
After the Speakers' presentation, there'll be a question and answer session.
I'll ask a question at that time, so need to press Star then one one on your telephone keypad. Please.
Please be advised that today's conference is being recorded.
And I'd now like to hand, the conference over to your Speaker Lucy Guo from Investor Relations. Thank you. Please go ahead.
Thank you operator, and Hello, everyone welcome to Phoenix, New media second quarter 2022 earnings conference call I'm joined here today by our CEO, Mr Sean and al.
Mr Edwards.
On today's call management will first provide a review of the quarterly results and then conduct a Q&A session.
Second quarter of 2022 financial results and webcast of this conference call are available on our website at IR, though iPhone dot com.
A replay of the call will be available on the website in a few hours.
Before we move on to the prepared remarks I'd like to refer you to our safe Harbor statement in our earnings press release, which applies to this call as we will make forward looking statements.
Finally, please note that unless otherwise stated all figures mentioned during the conference call are in RMB.
And now I'd like to turn the call over to Mr. Shuang Liu our CEO .
Thank you Melissa Hello, everyone and thank you for joining our call today.
In the second quarter of 2022, the nationwide Covid resurgence continued to exert pressure all business, while some of our marketing executions will postpone the castles many of our advertisers choose to tighten the fronting budget the highly uncertain macro environment.
Nevertheless, we remain resilient during challenging times, we concentrated on expanding our media presence so offering premium content made significant upgrades to our core and continue to explore new business opportunities to diversify our revenue streams.
This year marks the 11th anniversary about Phoenix Finance summit.
We took the signature events online in light of the challenges are holding offline events.
This year. This is Carrie Lam, former chief executive of Hong Kong Special over the Ministration region and nearly 50 other political signatories on fitness tycoon gathers all.
All of my stomach tweak change on the ship insights and ideas on the global and Chinese economy.
The summit generated immense number of who use our discussions on social platforms with 300 million views on Weibo and what's reported by more than 60 media outlets, making it one of the most high profile events during the quarter.
In terms of news events coverage, we jointly planned for two days natural coverage with Phoenix TV on the 20 <unk> anniversary of the establishment Hong Kong as they are we invited scholars and actors to participate features interviews and discussions focusing our hot topics.
Such as the opportunities and challenges faced by the region in areas of politics Finance innovation and education.
In addition, we.
The assets.
Memorable moments in the 25 years of Hong Kong is a our history into digital collectible.
Which would not only sought after in the digital marketplace, but also attracted more younger generations two hour event coverage.
Our original content continue to deliver value to our users and society.
Advocated column eye of the storm.
Oh, Yeah focus.
Bidding and exposing relevant facts behind controversial topics and a social phenomenon.
<unk> from financial scam targeted at seniors.
Two the pollution caused by electric car.
Many factors.
Colin.
Received widespread praise for raising public awareness and seeking answers to difficult pressures.
In past opinion column the messages function.
Floor cutting topics with a focus on ordinary individuals on the life stories, especially on the pandemic prevention and control.
We've covered these topics from different angles, such as laws and regulations industry standards, social economy public policy, using an authoritative rational and constructive style.
System with our content strategy and differentiation.
The message attracted a group of loyal followers with a considerable number of articles each generating over 100000 views on wechat.
On the video content from.
Newly launched original series the journey.
The tool with viral across all social platforms. The journey is the micro video documentary that recourse people or others.
Sure.
Fitness and witness in their lives.
Bob Spotlight was a tech company executive.
Suffering from AOS.
But it is resilient and persistent.
Our restaurant owner struggling to support this business under the pandemic.
H Coder REIT navigating.
His life Apple, losing these jobs.
These stories resonated well from our agents audiences.
Each theories episode received 10 million views across the Internet and generated over 100000 new followers.
On the availability.
In terms of our product we continue to be a final iPhone ATP during the quarter.
The newly developed page integrating.
Integrating all news articles in the ATP with audio functions allow user to listen to the uninterrupted latest update of the preferred news while performing other tasks. They can now also choose to listen to me to Phoenix TV light programs instead of watching.
This has resulted in.
Noticeable improved user engagement. The average time spent by users using the audit function has increased by 26%.
While we continue to refine our accountant.
A recent status on.
On the other hand.
Augurs them distribute content based on nearly 60 user profiles to fulfill the Sop news and interest based companies.
On the other hand by adding their own captions are editors carefully choose are presented information to publish.
Census of two of their own source or calling out the quote help highlight the comp in the newsfeed, which leads to more clicks and a few interactions and discussions.
These enhancements have greatly improved our using your bad experiences.
As we continue to optimize our traffic acquisition cost our user traffic remained stable.
Now our user engagement has improved.
The average click through rate has increased by 22%.
Year over year average time spent by users increased by 15%.
<unk> retention rate increased by 15%.
Luckily I would like to share our progress and revenue diversification.
Well online reading, we continue to monetize from our collection of cleanup IP literature audio book.
King.
Jointly produced in my life reached 9 million views with two months since its release.
Meanwhile, six of our self produce audiobooks ranked in the hemophilia a new hubs.
Monetization audio books also made a significant progress as we enter into a copyright sales agreement with Nat is cloud music.
Well, our real estate vertical.
The after shock the industry regulation liquidity concerns lingered.
And the macro environment remain uncertain.
While driving growth in real estate advertising was challenging.
Team vigorously promote innovative solutions to our clients, including setting customized appliance packages.
On the content side with Blake focus our reporting issues concerned by the and homebuyers.
Such as the quality of construction and renovation.
In the meantime SCE.
The index released in the second quarter.
<unk> became the first comprehensive ESG ranking in the real estate industry.
Recognizing that mobsters on the property in Nevada.
To be on the seat inflows were both growing.
Thanks to these efforts.
Additionally, the team optimize the 13th structure and eliminated certain 30 divisions that did not meet expectations for profitability.
To improve operational efficiency.
As for E Commerce, we launched our digital collect collectible platform Phoenix artworks.
One <unk> during the quarter as previously noted with published.
<unk> digital his darker moments in honor of the 20 <unk> anniversary of the establishment of Hong Kong as they are.
What set us apart from the other platforms is Jonathan art and culture.
Partnerships with world, leading museums and our institutions.
The first collection launched.
Solve the lead of rivers and mountains.
A 12 century painting in the collection of the pallets music was filled out we think $1 or release.
West interactions such as AR Impressionist World series quite Mangal <unk> zone on the garden will likewise extremely popular on quickly filled out.
Okay.
The digital collectible can generate considerable discussion.
Due to the asset.
Especially important for <unk> emerging IP and brand.
One to increase the recognition and exposure quickly.
Such we believe that in addition to the sale of digital collectibles.
It can complement our future events on marketing solutions.
In summary.
Despite the macro headwinds, we remain committed to strengthening our brand influence.
Breaking news coverage.
The nature of events.
Well continue to enrich our content offerings and upgrade our product.
The same time, we cautiously evaluated as invested in new business initiatives to diversify our revenue streams and the.
In future we will.
Currently manage our business operations, while focusing our business development and emerging growth areas.
With that I will now.
And the core to our CFO .
To provide a closer look into our quarterly financials.
Yes.
Thank you, Tom and Hello, everyone I will now walk you through our financial performance for the second quarter of 2016.
Our total revenues or RMB $191 six minutes as compared to RMB $256 7 million in the same period of last year.
To elaborate net advertising revenues were RMB 165 million compared to RMB $233 million in the same period of last year.
The decrease was mainly due to the reduction in advertising spending of advertisers.
Countries that in.
Intensified industry wide competition.
And the negative impact of the COVID-19 outbreak in certain regions in China in the second quarter.
Services revenues were RMB 31, one minute compared to <unk> $23 seven minutes in same period of last year.
The increase was primarily driven by increased content sales to certain customers.
Loss from operations in the second quarter of 2022.
RMB $94 eight minutes compared to RMB.
$34 8 million in the same period of last year.
Net loss attributable to iPhone was RMB $95 8 million compared to RMB seven 1 million in the same period of last year.
Moving on to all of our balance sheet.
After June 32022, the Companys cash and cash equivalents term deposits short term investments and restricted cash or RMB 173 billion or approximately U S. Dollar 198 5 million.
Finally, I'd like to provide our business outlook for the third quarter of 2022.
We are forecasting total revenues to be between RMB, $197 2 million and RMB $217 2 million.
For net advertising revenues, we are forecasting between RMB $179 six minutes and the RMB $194 6 million.
For paid service revenues, we are forecasting between RMB 17, six minutes and RMB 22 6 million.
This forecast reflects our current and preliminary view, which are subject to change and the substantial uncertainties.
In summary, all of our advertising business experienced continued pressure due to the impact of the COVID-19 outbreak during the second quarter of 2022.
In response.
Proactively manage at all of our expenses streamline our operations and optimize our team structure to improve operating efficiency.
Going forward, we will continue to investigating new business initiatives to improve our revenue stream mix.
Despite the short term setbacks, we believe all of our endeavors will sustain us through this adversity and prepare us to achieve a better margin recovery in the future.
This concludes the prepared portion of our call. We are now ready for questions. Operator. Please go ahead.
Thank you we will now begin the question and answer session.
As a reminder, if you wish to ask a question. Please press Star then one on your telephone keypad and wait for your name to be announced.
Please standby, while we compile the Q&A roster.
Our first question comes from Sherry Zhang from 86 Research. Please go ahead.
Good morning management. Thank you for taking my question I have one question about the App business.
So the first half of this year was tough with the App market.
As we have into the second half I Wonder does management officer and the recovery trend also could you share some color on the growth outlook for the second half. Thank you.
Thank you.
Uh huh.
Actually the answer is yes.
Many many companies and a suffered a fund.
Macro headwinds during the last quarter and we were no exception.
All of our teams.
In Shanghai, and Beijing had to work remotely from home for some time and so many of our major clients.
With the economy growth slowing down.
And so much uncertainties advertiser.
Advertiser demand softened.
Statistics show that from.
January to May the total marketing spending decreased by over 10.
10% year over year surgeons.
Certain industries or effective even more for example, the auto industry one of our major client industries.
Lear marketing spending dropped by.
Around 25% from January .
January to May.
Sure.
From June however, as the economy gradually recovers from Covid impact.
Business is once again, starting to to invest in branding and marketing to.
<unk> sales growth.
For the rest of the year given this trend continues.
Our advertising revenue will pick up.
Having said that we have to admit that the competition is.
Intense.
Advertisers' tightened their budget near demand for our comprehensive marketing solutions.
I have are growing we have two quickly responded to that.
Our funding our own differentiation.
First our brand image and.
Media influence our advantages.
Extra in the first half of this year, so our breaking news coverage and original content.
Not only did we.
Increased user engagement.
Our iPhone.
But also our user base on the third party platforms increased by 30%.
Reaching nearly.
$430 million.
We help advertisers to convey leer brand stories and escalate.
<unk> exposure, we can help them reach a broader customer base.
At the same time.
Introducing creative marketing tools.
Such as digital collectibles, and virtual characters to fulfill advertisers' need for creative marketing.
Also.
Utilizing all of our international backgrounds and perspectives, we have created a series of product, helping advertisers to expand your international exposure and conduct more overseas branding activities.
Our global Observer service for example was well received by our advertisers.
With all this joint effort, we are hoping to see growth recovery in all of our our housing revenue in the second half of the year.
Thank you.
Thank you that's very helpful.
Okay.
Yes.
Yeah.
Okay.
Okay.
Our next question comes from Alex Chang, Alex Chang from first Shanghai. Please go ahead.
Good morning management. Thank you for taking my question.
So my question is regarding the cost guidance and was mentioned earlier that the company was implementing cost control measures. So will this be a continuing trend in the future and could you. Please disclose the company's long term cost strategy. Thank you.
Hi, Thank you for your question.
As mentioned on our last call our goal is to return to her.
Profitability in the next two to three years.
Let's touch optimizing our resource allocation and.
Increasing efficiency is our.
Top priority and we will continue to be our focus in the near future.
During the second quarter, we continue to drive efficiency in all areas.
To date project execution level.
Closely review the cost structure of each project.
Demand.
Higher gross margins.
In terms of business lines.
Especially the new initiatives, we set clear goals and performance measurement and.
Conductor frequently reviews.
With limited resources, we have to cautious with all of our pilot project.
If Lee has note Matt Premier expectations.
Quickly as to whether or not they how to be scaled down.
Uh huh.
Being closed also.
The higher level.
<unk> deep soil analysis on bandwidth marketing.
Labor costs and so on.
To drive overall cost optimization.
Which should pay off with better results.
In the following quarter.
I hope I have answered your question.
Thank you that's very helpful.
Thank you.
Our final question, so I will hand back to management for closing comments.
Okay.
We have now come to the end of our Q&A session and our conference call. Your time is very much I. Appreciate it if you have any further questions feel free to contact us.
Thank you for joining us today on this call and have a good day.
Thank you. So much. This does conclude today's conference call. Thank you all for joining you may now disconnect.