Q3 2022 Phoenix New Media Ltd Earnings Call
Good day, and thank you for standing by and welcome to Phoenix, New Media third 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.
To answer questions. During the session you will need to press star one on your telephone.
We'll then hear an automated message advising your hand is raised.
Please be advised that today's conference is being recorded.
And now I'll like to hand, the conference over to Mr. Cool.
Cool from Investor Relations. Thank you. Please go ahead.
Thank you operator, welcome to the Phoenix, New media third quarter 2022 earnings conference call I'm joined here today by our CEO Mr. Tom do.
CFO Mr. Edward Xu.
Today's call management will first provide a review of the quarterly results and then conduct a Q&A session.
Third quarter 2022 financial results and webcast of this conference call are available on our website at IR Dot iPhone dotcom.
Play of the call will be available on the website in a few hours.
Before I move onto the prepared remark.
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 would like to turn the call over to Mr. Sean <unk> our CEO .
Thank you.
Hello, everyone and thank you for joining us.
The third quarter of 2020 to remain a challenging one well.
Due to weak.
Caused by the macroeconomic environment, our Kobe upwards.
While we were eating all monetization opportunities, we continue to build our brand differentiation through content production and distribution.
Elevate our media.
Various industry and communities.
Especially through industry standard and poors.
Yes.
We made significant updates to our products to better connect our users to outcomes.
During this quarter, we continued to demonstrate our media expertise and deliberate in depth news to our user across all platforms.
Cover major national and for new stories, such as the escalation of the Russia, and Ukraine wall, the passion that I want.
Pepe.
The second of the UK.
Destination of the former Prime Minister, Japan Shinzo hobby.
We stay at the top obligate overrunning hot topics.
The heightened passion that I went through I think level.
That is used.
Sending push.
Sending push notifications are more than 75% the key update you bet.
Leading to a higher user rich I'm pleased helix.
Once the bush looking for patients is open.
Our users have been directed to other related highlights on contextualized columns.
Besides penalty life flight tracker.
We're also one of the first media live streaming her London, Taiwan airports following up by live interviews.
Kurt.
In military appears on international relations.
Provided professional opinion I'm sure the interpretation of the situations.
Our top.
Hot topics user up to date throughout the two pairs of events.
Besides the increase and the click through rate.
The most accomplished woman role models.
Also in September we collaborated with Phoenix, TV and help the greater Bay area economic model.
50, senior officials, including John <unk>, Chief Executive of Hong Kong Special.
Administrative region.
And experts.
So printers gathered together.
Exchange ideas outlook for solutions and opportunities.
Economic development of the Greater Bay area in China as a whole.
Both events generated substantial publicity with nearly a 100 media output covering that diverse.
The hashtag topics on the immediate flips of the best while widely reported on social platforms.
Our regional video theories global insight Chenzhou going online.
Consistently proven is commercial value the peers is collaborating with journalism driven.
Influencers located importing countries of acquired competence in Lloyds domestic and overseas social media at Miami distribution channels with the accumulated pumped immediate bars of course older cabinets.
As Charlie Brent continue the efforts to grow their businesses and brands over global insight became effective marketing solution for them to increase the international exposure.
During the quarter.
We collaborated with one of the major electric vehicle brands and feels they are new models to rolling off the production line in Indonesia.
Showcasing their innovative technology and product development.
With our global resources operators as distribution channels will become a reliable partner for Chinese brands to build strong resilient and truly global brands.
We also refined our other regional carbon products.
Such as the micro documentary series the journey.
The theory is presented in the authentic started having file makes withdraw and personal connection.
Apical released in the quarter.
Viewed by nearly 40 million users across the internet and widely shared.
Social media platforms.
From.
Collective cared.
Doctors daily work.
Caring for people living with serious illness to a young men from a remote village changing his life through education, the theories tell sorry about perfection courage.
This resilience dedication and wisdom.
All of which are greatly value by our general audits on.
And by which brand with both like to be indoors.
This type of constant products, not only enhance our offering but also the base long term.
Moving onto our new airport, we rollout several upgrades to improve interactive features specifically with focus on increasing user engagement by improving the common feature.
Allowing users to collect batches soon.
Leaving intriguing comments.
There are more motivated to lead the opinion under the articles.
Common can also be quoted by other users and displayed a cycle.
Which stimulates more discussions and debates.
Results, we have seen the number of common increased by 31%.
We refine our algorithm to improve the distribution of video content.
Analyzing users viewing history perfect preferences at engagements.
Table to refine their profile pages of data based on their interests that points level of education and so on.
Please proceed.
<unk> life to each user profile.
Aside from delivery inflammation, we increased the supply of accountants that fulfill our users' interests and needs for entertainment.
Click through rate of media company increased by 30% year over year.
These joint efforts the average time spent per user increased by 20%.
Next day, and 30 day retention increased by 43% and 44% respectively.
Next I'd like to move on.
Two our program the revenue diversification, we continue to develop our online reading segment during the quarter, we collaborated with online reading platforms.
Mobile monetize our premium IP and further expanded our IP library.
To lay the groundwork for developing bowls driver.
Okay.
From a real estate vertical although they have been rumors.
Numerous.
Numerous cumulus powerful what retail halls, new home sales and the marketing campaigns remain inspectors.
Our team vigorously promote an innovative solution to our clients and further optimize their cost basis. Meanwhile, we are focused on growing our <unk> employees.
Mr collaboration on constant offerings.
When we formed the first ESG aligns with the top five ESG data platforms.
Rather we're going to refine that ESG rating system for real estate developments complement the company profiles and.
Trial healthy and sustainable growth for the industry.
Yes.
For E Commerce product sales and health and wellness category continue to grow as we added the connection of reported.
Good complements to our product.
Our customer service has extended to wasting groups with new product information and coupons are regularly here with our loyal repeat customers and their needs are properly attended to.
Which substantially increased the rate of repurchase.
Phoenix upwards, our digital collection capsule launch last quarter.
<unk> Ah connections featuring the virtual character Jody.
A famous landmarks in celebration of the Chinese leap up in basketball.
Combining julie's orientalist valid model drove image and the forbidden City Highway 101, Tokyo tower at all.
Clarksons San holiday wishes to people all of the world.
Going forward as virtual characters emerged as a new trend in digital marketing Jody will complement our integrated marketing solutions and feature events to our advertising clients reached more younger audiences.
In summary.
Despite the macro headwinds, we remain committed to strengthening our brand influence.
Breaking news coverage and organizing events, while continue to be reached a constant upgrade upwards.
<unk> time, we're working to align resources to problem sharpening focus a clear set of priorities.
Going forward.
It certainly remain prudent in evaluating business initiatives.
Our business with shifting industry dynamics on elevating our brand impulses through consistent delivery of companies with high value.
With that I will now pass the call onto our CFO , Mr. Albert Lou to provide a closer look into our quarterly financials.
Thank you, Joe and Hello, everyone I will now walk you through our financial performance for the third quarter of 2000 temperature.
All figures mentioned, we're obviously R&D.
Our total revenues.
$494 8 million compared to 244, plus six minute with the same period of last year.
Elaborate net advertising revenues or 172 4 million compared to 216 six minute in any period of one year.
The decrease was mainly due to the reduction in <unk>.
With heightened spending.
The hybrid in certain industries.
Intensified industry wide competition.
As an active impact of the COVID-19 outbreak uncertainty regions, China into third quarter.
Paid services revenues.
Or $22 per minute.
<unk> hundred eight minutes in December of last year.
The decrease was mainly due to the reduction in the content spending certain countries.
Loss from operations in the third quarter of 2022 was $36 five minutes.
Compared to 263 minutes in the same period of last year.
Is that mainly because the company recognized $140 4 million of allowance.
Quite a bit lumpy.
In the third quarter of 2021 relating to the <unk>.
Power alone.
<unk> receivable and the notes receivable from ever granted.
And that is not recognized as you La Liga circled her.
2022.
Yes.
The decrease was also attributable to retain strict cost control measures to Germany.
Net income attributable to iPhone.
$24 3 million.
Compared to net loss of 134 million EBIT in periods of last year.
Moving on to our balance sheet.
As of September 30.
Thank you. Thank you to the company's cash and cash equivalent term deposit.
Short term investments.
<unk> cash or RMB, one surgeon billing.
Approximately U S dollar wind with $59 1 million.
Finally, I'd like to provide our business outlook for the fourth quarter of 2022.
We are forecasting total revenues to be.
Between $232 million and 200 chemistry two minutes.
For net advertising revenues, we are forecasting between 107 eight minutes and the 202 eight minutes.
Paid service revenues we are.
Forecasting between 15 and.
These forecasts reflect our current annual embraced imminently.
Subject to change and substantial uncertainties.
In summary.
Our topline came under increased pressure this quarter due to the current macro headwinds.
Well, we remain dedicated to expanding our media presence and.
Diversifying our revenue stream.
We are working to align resources to appropriate.
Japanese government on our clear priority.
As such we believe that our continuous never wells that Tim.
Through this adversity and prepare us to achieve a better margin recovery in the future.
This concludes the prepared portion of our call we're now ready for questions.
Please go ahead.
Thank you we will now begin the question and answer session.
So a question. Please press star one on your telephone please standby, while we compile the Q&A roster once again the star one one for questions.
First question comes from the line of Sharon Zhang from 86 research. Please ask your question.
Thank you good morning merchandise Bob Thank you for taking my question.
101 question regarding <unk>.
Our applebee's.
During the recent quarters, we've seen a slowdown in aftermarket.
While advertisers are cautious with their spending.
I'm wondering what's that in the coming apart from other platform backend.
<unk> de <unk> in the market. Thank you.
Good morning to latest afterwards speaking thank you for your question.
Actually we do face a lot of challenges.
But for brand advertising.
The value of our premium and <unk>.
We initiated the content.
Media assortment.
You replace ball.
These are our key stream and we never stop trying to increase our competitiveness for years.
Eric.
First of all our breaking news coverage.
The creation of high quality have always been our key strategy.
The record high users, having an especially high user engagement.
Wishes issues essential tool.
Active marketing.
News and information.
Carriers significantly implications of the development of the <unk>.
Eric.
And internationally dynamic.
Take to be associated with.
The topic to elevate.
She got greater all these base.
Or are the ramp is also.
Right.
Rating content.
That resonate with users.
Through our content advertisers establish connections with Leer.
<unk> customers and associates.
<unk> with.
Universal values, such as courage resilience persistence and law.
El Nino commentary.
We mentioned earlier.
The journey.
Is there an excellent example of this type of content marketing.
<unk> value share to buy our audience and brands.
Brands alike.
Well, we are committed to provide comprehensive marketing solutions to our key account clients.
Tailoring to middle to small sized advertisers.
It's crazy and combining content marketing solutions.
<unk>.
In general higher gross margin.
Our.
Brand differentiation also helped us to reach niche market.
For example, a growing number of Chinese leisure pricing.
Pending airbnb overseas.
At late tapping into a firm market, they often Egypt complete different marketing strategy to build a bear brand abroad.
With our contracted of things generally.
Well all of the award and our global network.
Resources in the highlights we can.
Can promote Chinese brands and our culture.
More effectively from a global perspective.
We're also able to move.
Our marketing execution our team on their.
Pandemic.
Actually very few media Ken ability in the market.
Another important shifts in Alberta.
Tigers demand that they know spend a larger portion of your barges and social media and even provide protection marketing.
Spending on.
All of your projects, our mainstream media marketing campaign.
In light of these changes mentioned above.
We must break through the barriers of media, we have accumulated a large user base over $130 million.
Third party platforms, including legal issues and building cash and availability et cetera.
The development and monetization of these accounts.
To become one of our strategic priorities.
We have laid out a detailed action plan for our operation on third party platform.
Our team structure and resources are also rely to the monetization target for these accounts.
I believe.
This effort.
We will stay competitive and continue to.
<unk> unique items for our clients.
I hope I have answered your question.
Thank you that's very helpful.
Great. Thank you for your question.
Next question comes from the line of Atlas Tang from first Shanghai. Please ask your question Alex.
Good morning management. Thank you for taking my question. So my question is regarding the balance sheet cash items can.
Can you give us an update on how the cash will be used in the <unk>.
Companies still have a fair amount of cash thank you.
Okay.
Hi, Thank you for the question.
Yes, you are right currently we still have more than 1 billion are losing cash.
Thanks.
Sufficient reserves, we are now in a very strong foundation to interface to either a changing macro environment.
At this point.
So it is very crucial for us to manage our existing capital cautiously.
We have very strict goal to bring down cash for it.
While focusing on returning to profitability.
Participating on our third turnaround.
Our accounts receivable.
The business.
On a container volume.
<unk> generated healthy cash flow from operation.
Another way too.
Reaching that goal is to optimize our cost structure and increase operating efficiency.
However cost management efforts during the first half of the year have paid off during this quarter.
Our sales and marketing expenses decreased by 22% year over year.
Our G&A expenses also decreased.
Substantially.
So overall, we will continue to manage all of our operation the cash position with cautious.
All driving to achieve profit and positive operating cash flow.
Thank you Pat.
Thank you Edward.
Okay.
Great. Thank you.
Final question, So I'll hand back to management team for closing remarks.
Sure.
Thank you we'll have come to the end of our Q&A session and our conference call. Please feel free to contact us. If you have any further questions. Thank you for joining us today on this call.
Have a nice day. Thank you.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Yes.
Yes.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
[music].
[music].
Good day, and thank you for standing by and welcome to Phoenix, New Media third quarter 2022 earnings call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be question and answer session.
To answer your questions. During the session you will need to press star one one on your telephone you will then hear an automated message advising yohan it's raised.
Please be advised that today's conference is being recorded.
And now I'd like to hand, the conference I'll bet you mentioned it was a cool from Investor Relations. Thank you. Please go ahead.
Thank you operator, and welcome to Phoenix, New Media third quarter 2022 earnings Conference call I'm joined here today by our CEO , Mr. Xiao Nu and our CFO Mr. Edward do.
On today's call management will first provide a review of the quarterly results and then conduct a Q&A session.
Third quarter 2022 financial results and webcast of this conference call are available on our website at IR <unk> com.
Replay of the call will be available on the website in a few hours.
Before I move on to the prepared remarks.
For 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 would like to turn the call over to Mr. Phil <unk> our CEO .
Thank you Melissa.
Hello, everyone and thank you for joining our call today.
The third quarter of 2020 to remain a challenging one well at this week.
Caused by the macroeconomic environment and Kobe upwards.
While we were eating all monetization opportunities, we continue to build our brand differentiation through content production and distribution.
Elevate our media influence various industry and communities.
Especially through industry standards and quotes.
Moreover, we made significant updates to our products to better connect our users to outcomes.
This quarter, we continued to demonstrate our media expertise and deliver in depth news to our user across all platforms.
We cover major national employing new stories, such as the escalation of the Russian your paywall potentially in Taiwan.
So it's happening.
Elizabeth the second the UK death.
Destination of the former Prime Minister, Japan Shinzo topic.
We stay at the top obligate overrunning hot topics.
Take the heightened attention that I went through I think level.
<unk> news App.
Is that a push.
Sending push notifications are more than 75% the key update EBIT.
Leading to a high end user rich I'm pleased to six.
Once the bush looking for patients you've opened up yet.
Others have been directed to other related highlights on contextualized comments.
Besides penalty life flight tracker.
We were also one of the first media live streaming her London, Taiwan airports.
Growing up by life Hp's acute expert.
In military our peers and international relations.
Provided the professional component I'm sure the interpretation of the situations.
Our hot topics.
They're up to date throughout the.
And tears of the events.
Besides the decrease in the placement rate and 20% increase.
The average time spent year over year, while news app.
New accounts.
Party vessels also gained substantial popularity.
Eight 3 million new followers during the quarter all awaiting official accounts.
We immediately counts.
A question.
65 article generating over 100000 units and over 100 video generating over 1 million views.
We continue to build our media influence on new partnerships events in.
July we held the first ever woman Corp.
Really voices on promoting gender equality and presented woman influenced awards, where we celebrated the most accomplished what Mary role models.
Also in September we collaborated with BT TV and help the greater Bay area economic Barbara.
However, <unk> seen and especially including John <unk>, Chief Executive of Hong Kong Special.
Administrative regions.
Experts.
So printers gathered together to exchange ideas outlook for solutions and opportunities.
Economic development of the Greater Bay area in China as a whole.
Both events generated substantial publicity.
With nearly 100 media outlets covering the diverse.
The hashtag topics on immediate slips of events, while widely reported on social platforms.
Our original video series Global insights Chenzhou, Netherlands has consistently proven its commercial value.
The theory is collaborating with journalism and the Influencers located in 14 countries worldwide covenants.
Employers domestic and overseas social media at main distribution channels with the accumulated immediate followers across all cabinets.
As Charlie Brent continue the efforts to grow their business and Brian over global.
Global insight became effective marketing solution for them to increase the international exposure.
During the quarter.
We collaborated with one of the major electric vehicle brands and fueled new models to rolling off the production line in Indonesia.
Showcasing their innovative technology and product development.
With our global resources operators and distribution channels will become a reliable partner for Chinese brands to build strong resilient and truly global brands.
We also refined our other.
Our regional carbon particles.
Such as the micro documentary series the journey.
The theory is.
As presented in the authentic having file.
Our strong personal connection.
Therefore, epitope relief in the quarter will be used by nearly 40 million users across the internet and widely shared.
Social media platforms.
From.
Palliative care.
Doctors daily work caring for people living with serious illness to a young men from a remote village changing his life through education. The theory tells sorry about protection courage.
This resilience dedication and wisdom.
All of which are greatly valued by our general audits and.
And by which red both like two doors.
This type of constant products, not only enhance our offerings, but also create long term value.
Moving onto our new airport, we rollout several upgrades to improve our interactive features specifically with focus on increasing user engagement by improving the common feature allowing.
Allowing users to collect batches soon.
Leaving intriguing comments.
There are more motivated to lead the opinion is under the articles.
Comment that also be quoted by other users and displayed our style.
Which stimulates more discussions and debates.
Results, we have seen the number of common increased by 31%.
We refine our algorithm to improve the distribution of video conference.
Analyzing users viewing history.
Preferences at engagements.
<unk> able to refine their profile base of data based on their interests that points level of education and so on and these are typically use personalized to each user profile.
Aside from delivering inflammation, we increased the supply of accountants that fulfill our users' interests and needs for entertainment.
Click through rate of media has.
<unk> increased by 30% year over year.
These door efforts. The average time spent per user increased by 20% and next day and 30 day retention increased by 43% and 44% respectively.
Next I'd like to move.
To our progress in revenue diversification, we continue to develop our online reading segment during the quarter, we collaborated with online reading platforms to mobile.
We'll monetize our premium IP.
And further expanded.
IP library.
To lay the groundwork for developing bowls driver of new revenue.
For our real estate vertical total there have been rumors.
<unk>.
Numerous numerous policy for resale halls, new home sales and the marketing campaigns remain stagnant.
Team vigorously promote an innovative solution to our clients and further optimize their cost basis.
Meanwhile, we are focused on growing our <unk> through industry collaboration and content offerings.
We have formed the first ESG aligns with the top five ESG data.
Together, we are going to refine that ESG rating system for real estate developments complement the company profiles and drive healthy and sustainable growth for the industry.
As for E Commerce product sales and health and wellness category continue to grow as we added the connection of imported.
Good complements to our product selection.
Our customer service has extended to wasting groups with new product information and coupons are regularly here, we are loyal repeat customers.
They need a properly attended to.
Which substantially increased the rate of repurchase.
Phoenix upwards, our digital connection platform launched last quarter.
<unk> Ah connections featuring the virtual character Jody a famous landmarks in celebration of the Chinese meet up in basketball.
Combining julie's our Amp Lasalle Martin drove image and the forbidden City Highway 101, Tokyo tower at all.
Jackson than holiday wishes to people all of the world.
Going forward as virtual characters emerged as a new trend in digital marketing Jody will complement our integrated marketing solutions and feature events too.
Our advertising clients reached more younger audiences.
In summary.
Despite the macro headwinds, we remain committed to strengthening our brand influence.
Breaking news coverage and organizing EBIT.
<unk> continue to be enriched our content offerings upgrading our products.
Same time, we're working to align resources to profile sharpening focus are clear that our arms.
Going forward.
It certainly would remain prudent.
Adding business initiatives.
Our business with shifting industry dynamics, and elevating our impulses through consistent delivery of companies with high value.
With that I will now pass the call onto our CFO , Mr. Albert Lou to provide a closer look.
Into our quarterly financials.
Thank you Rachel and Hello, everyone I will now walk you through our financial performance for the third quarter of 2022.
<unk> mentioned that R&D.
Our total revenues or <unk>.
<unk> hundred $94 8 million compared to $234 six minutes with the same period last year.
Elaborate net under the heightened revenues or 172 4 million compared to 216 six minutes.
Period of one year.
The decrease was mainly due to the reduction.
Advertising spending of the <unk>.
Writers in certain industries.
Intensified industry wide competition and.
And the negative impact of the COVID-19 outbreak in certain regions in China in the third quarter.
Faithfully.
$22 4 million compared to $2 8 million within the period of last year.
The decrease was mainly due to the reduction in <unk>.
Content spending certain customers.
Loss from operations in the third quarter of 2020 tool was $36 5 million.
Compared to 263 minutes in the same period of last year.
This is mainly because the company recognized $114 4 million of allowance for credit losses.
In the third quarter of 2021 relating to the entire alone.
Receivable and the notes receivable from ever Gwen.
And that is not recognized as you walk through the circles her.
2022.
In addition, thank you.
Decrease was also attributable to the strict cost control measures to Jim <unk>.
Net income attributable to iPhone.
$74 3 million.
Compared to a net loss of 134 minutes in the same period last year.
Moving on to our balance sheet.
As of September two.
2020 to become cash and cash equivalents total deposits short term investments and restricted cash or RMB one surgeon.
Approximately $1 one group.
$9 4 million.
Finally, I'd like to provide our business outlook for the fourth quarter of 2022.
We are forecasting total revenues to be.
Between $203 2 million and $223 2 million.
For net advertising revenues, we are forecasting between 107, eight clinics and the $202 eight minutes.
For paid service revenues, we are forecasting between 15 and 20.
$24 million this book.
Our current and preliminary view, which.
Subject to change and substantial uncertainties.
In summary.
Our top line came under increased pressure and its closure due to the current macro headwinds.
Well, we remain dedicated to expanding our media pricing and.
Diversifying our revenue stream.
We are working to align resources to appropriate.
Sharpening focus on our cleared that priority.
As such we believe that our continuous never wells that Tim.
Although revenue and prepare us to achieve a better margin recovery in the future.
This concludes the prepared portion of our call we're now ready for questions.
Please go ahead.
Thank you we will now begin the question and answer session.
So a question. Please press star one on your telephone please standby, while we compile the Q&A roster once again Thats star one one for questions.
First question comes from the line of Sharon Zhang from 86 research. Please ask your question.
Thank you good morning, Matt.
Matt This is Paul Thank you for taking my question.
I have one question regarding <unk>.
Sure.
During the recent quarters, we've seen a slowdown in aftermarket.
While advertisers are cost estimate there are outstanding.
I'm wondering what's the company apart from other platform backing.
To date <unk> achieved.
In the market. Thank you.
Good morning, Hugh This is Edward speaking thank you for your question.
Actually we do see a lot of challenges.
But for brand advertising.
The value of premium.
We initiated is content.
Maybe Eric assortment.
He will replace Paul.
These are our key strengths and we never stop trying to increase our competitiveness.
Eric.
First of all our breaking news coverage.
The creation of high quality have always been our key stream.
This bring on high user traffic and especially a high user engagement.
Wishes mission essential tools.
In marketing.
News and information opening carriers significantly implications.
Development of the <unk>.
Eric.
And the international dynamic.
I think to be associated with.
The topic to elevate the exposure to retail, albeit space.
Or are the vantage also.
Right.
<unk> content.
It resonates with users.
Through our content advertisers is taboo.
Connections with Leer.
Customers and associates newer brands with.
Universal values, such as courage resilience persistence and love.
The many local inventory.
We mentioned earlier.
The journey is.
As an excellent example of this type of content and marketing.
We value shared by our audience.
Brands alike.
Well, we are committed to provide comprehensive marketing solutions to our key account clients.
<unk> generated two needles with small sized advertisers.
It's crazy and combining content marketing solutions.
Which in general are higher gross margin.
Our brand differentiation also.
To reach this market.
For example, a growing number of Chinese enterprises.
Extending airbnb is overseas.
At least tapping into a firm market.
Often.
Completely different.
<unk> strategy to build their brands abroad.
With our contracted I think generally and the Kols All of award and our global network.
And the highlight we can promote Chinese brands and the culture more effectively.
Global perspective.
We are also able to count marketing execution Rfps out there.
Dynamic.
Actually very few media Ken ability in the market.
Another important shifts in <unk>.
Either demand.
They now spend a larger portion of their budget.
Over the years and improvise on pre patient marketing.
<unk> spending.
All projects are mainstream media marketing campaign.
In light of these changes mentioned.
Nation evolves.
We must break through the barriers of media, we have accumulated a large user base over $130 million.
Third party platforms, including legal Asian building agile and.
<unk> <unk> natural.
The development and <unk>.
Monetization of these accounts has become one of our strategic priorities.
We have laid out a detailed action plan for our operation on third party platform.
Our team structure and resources are also rely to the monetization target.
Tom.
I believe with this effort.
We will stay competitive and <unk>.
Continue to.
<unk> unique value for our clients.
I hope I have answered your question.
Thank you that's very helpful.
Great. Thank you for your question.
Next question comes from the line of Alex Tang from first Shanghai. Please ask your question Alex.
Good morning management. Thank you for taking my question.
So my question is regarding the balance sheet cash items.
Can you give us an update on how the cash will be used to the company still has a fair amount of cash.
Q.
Hi, Thank you for the question.
Yes, you are right currently we still have more than one.
1 billion RMB cash.
Such.
Sufficient reserves, we are now very strong.
Nation to receipts to either a changing macro environment.
At this point.
Very crucial for us to manage our existing capital cautiously.
We have very strict goal to bring down cash for it.
Focusing on returning to profitability.
<unk>.
Facilitating faster turnaround of our accounts receivable.
This is.
Only attainable.
Can generate healthy cash flows from operation.
Another way to reach that goal is to optimize our cost structure and increase operating efficiency.
However cost management efforts during the first half of the year have paid off during this quarter.
Our sales and marketing expenses decreased by 72% year over year.
Our G&A.
<unk> also decreased.
Substantially.
So overall, we will continue to manage all of our operation and the cash position with cautious.
Driving to achieve profit and positive operating cash flow.
Thank you.
Okay. Thank you Edwin.
Great. Thank you.
Final question, So I'll hand back to management team for closing remarks.
Okay.
Thank you we'll have come to the end of our Q&A session and our conference call. Please feel free to contact us. If you have any further questions. Thank you for joining us today on this call.
Have a nice day. Thank you.
Yes.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.