Q3 2023 36Kr Holdings Inc Earnings Call
Hello, ladies and gentlemen.
Speaker 1: Hello, ladies and gentlemen. Thank you for standing by for 36KR Holdings, Inc.'s third quarter 2023 earnings conference call.
Thank you for standing by for 30, 6K, our holdings Inc's third quarter 2023 earnings Conference call.
Speaker 1: At this time, all participants are in listen-only mode.
At this time, all participants are in listen only mode.
Speaker 1: After management's remarks, there will be a question and answer session. Today's conference call
After management's remarks, there will be a question and answer session.
Today's conference call is being recorded.
I will now turn the call over to your host Jonathan Day, IR manager of the company.
Please go ahead gentlemen.
Thank you very much Hello.
I'll come to say this is K R Holdings third quarter earnings conference call the company's financial and operational results were released earlier today and have been made available online.
Alcohol.
That's really is that they're getting in the IR section.
That said I adult or to just pay our dotcom.
On today's call will include our co chairman Mr. Yahoo setbacks.
Our Chief Financial Officer, Mr. Wei.
Well the other call providing an automobile off the top of my uncles women's highlights of the car in Chinese followed by English interpretation. He's way will then provide details on the company's financial results before opening the call for your questions.
Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S covered so kudos to the Education Reform Act of 1995 forward looking statements involve inherent risks and uncertainties as such the company's results may be materially different from the views.
So today.
Further information regarding these and other risks and uncertainties is included in the company's protectors and other public filings as filed with the way the U S. After you see the company does not assume any obligation to update any forward looking statements, except as required under applicable law. Please note that services PR.
Earnings Press release, and this conference call include discussions of unaudited God financial measures as well as all of these non-GAAP financial measures such as this chaos earnings press release contains a reconciliation of the audience now got measures. So they are all measures.
Please note that all amounts members.
I will now turn the call.
Our co chairman and CEO of <unk>.
Please go ahead.
Yes.
And now I'll.
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Thank you Hello, everyone. Thank you for joining our third quarter 'twenty earnings Conference call.
Thank you to all those will go away.
Sure Kevin.
So it's a little confusing.
Because if I'm hopeful.
Sometimes that's not.
How many before that are all household that congestion Jose what have you I'm looking at them and engage with our financing.
Sure Hi, it's usually you withdraw your meal for all of them, they're trying them. How project team would you hope you can tell you Tom.
Yeah, She's got a lot of time with Michelle.
That's not called out 'twenty to 'twenty, three Wheeler chip solid progress across all of our business segments propelling our year over year increase of two 5% in total and now I'm very conscious.
Our content ecosystem, and so to diversifying and bathroom service offerings, we also dependent and publishing of AI applications across our business and that evolution also generated yeah and large language models. The synchronized endeavors have empowered great strides in our commercialization and further elevate.
Operating advocacy.
Effectively we deal with all of the cost of whom did you see a company wide I'd like to begin with a discussion of this quarter's content into caves and advanced nodes followed by a more detailed look at our commercialization progress across each of our business segments.
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Plenty of idle machine.
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<unk> core competitive edge liking, our exceptional content creation colonies.
Years of dedicated effort, we have calculated an extensive portfolio of premiums that vertical media I'm, a multi dimensional contact matrix covers a broad array of training topics and fields to connect with diverse user demographics offering deep insights into industry trends and market dynamics for Neely.
Company participants doing just that.
10, a continuous flow of high quality content with blockbuster articles emerging back to back more than 110 articles achieved over 100000 page views. We also continue to expand our footprint across the various channels crafting a multi platform Cross media center.
Malaysian matrix as off the end of the first half or the number of other followers surpassed the 32 million rising 20% year over year. This achievement in fact services per substantial market, England and set the stage for greater business development.
Total enrollment happens at all tissues sugar land banking you at what was that that should be in touch screen sensors on the part of that.
Two part question can you help me out on both Antidumping I Gotcha.
Cause you guys to somebody who would enable the needle when someone's age, which as you know most of the hollander.
The old councillor, Paul just asking by the entities opening through the hotel and Jay So why don't you.
They are talking about is that relevant messages and it sounded like you saw.
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Sure Jim.
Tom Fischer consistently and she was I'll call it.
Unusual among hydro cogent, Josh anyone anytime at one o'clock.
And you don't want to hit and Jonathan you talked about probably I wish a lot she won't be the emphasis to walk down my usual way in addition to the solid performance.
That's an image based.
We also achieved a new breakthroughs in content a variety of doing this quarter standing short videos long videos and podcasts that is Darwin short videos, we have constantly enhance the value of our short video lineup, creating trend setting and the pioneering content that drives development industry wide.
Conor we launched an all new shop they don't.
The pioneers that debuted acts on it literally comes in right.
Tend to come back.
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James.
No no no shares than.
Our vertical medium 20, 6K, our auto also continue to thrive gaining momentum in content quality and engagement with growth in the number of both what that follow US all are all shortly doing the pivotal for broadening our customer reach and enhancing user engagement and stickiness as of the end of the quarter, we had over 800.
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So I just wonder if you have them yeah, that's what I don't want anybody who comes out and says that you don't have a guarantee that highball.
Well gentlemen, again congratulations.
I'm also sure that needs for Shinhan Manhattan towards him.
So what I thought would happen.
John portals, just hungry and I'm kind of NGO doesn't yet have all else even though.
Well I'm, putting us at all and God knows what Johan do you want to talk to you anytime, but actually I was answering meeting she didn't you didn't touch it and I didn't know if you go along through time and Oh did you mean to me and I'll tell you actually when we all came in daycare Saturday.
Saturday sponsored golf, yet haven't changed I know they'd had towards your vision and how youre thinking about without putting a hypothetical so everything from Goldman Sachs hosted in Pennsylvania constant debate is able to handle with Honeywell.
Hi, Matt.
Moving onto long videos, our first long video shows being 2033 returned for its second season.
Lake funded each episode from 30 to 40 minutes.
And that really came in with greater detail across five segments, including a deep dive into the justice profile reveal off the historical backdrop, a thought provoking a message of the aero shaping their business success pay takeaways.
And engaging Q&A session, we hosted a stimulating conversations with chop D sounds yeah.
The former Chief Executive of Hong Kong Exchange, Unformed or off Michael come back with M. D been fond of Neil James Liang Truth, they'll Congo, and Xinjiang shrink chairman of BLE. We also had the privilege.
The founding executive editor of Wired magazine, who is widely recognized as the father of the Silicon Valley is the right funding. They're in session. This flagship initiative was streamed across various platforms, including wechat channels pool, and the Beijing radio and television station.
It not only seven however, sending either you know later you along they don't production, but also showcases services task Oh about the brand influence across the industry.
Yeah.
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He sounds like engineering, while they're trying to you I mean, the short answer global hooking up more so why not use it also handle all day right.
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No more question preamble Chinese homology Cushing that you can do is that somebody how could you be notable virtual <unk> hopefully I mean, when she doesn't you don't go down somehow people would have all I know in English.
In addition, like continues to broaden the horizons of our innovative audio content lineup.
First the fly podcast got off work have fun fully leveraged our high quality content assets and delighted Auburn listeners with a more diverse and our personnel all do experience. Additionally, several of our audio content programs were featured on Shemale ice pack channel, including news Flash.
The roofing business intelligent top and the surface is breaking news that driving user growth through our innovation content experience well made solid progress in crafting our comprehensive closed loop content ecosystem.
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Just given the apparent viewed <unk> as usual.
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The hotel Chicago Hotel <unk>, because you don't need a form yet keeping with historical so that they won't show in Calgary. So that we've got people with somebody else like Outwear and Macy's, Yes, you should.
It has a lot of times you probably.
Most of the Union qualified yet.
So vibrant innovation your AI technology is creating trading goes opportunities for statistics K R. As we diligently integrity AI technologies, our ecosystem, we further enhanced our content production efficiency through AI applications.
Next generation video creation, Chris auditing and data collection.
Finally, we launched the subjective peer median that instead he can body. Our first in man initiative to further explore the innovative application and development of large language models in the financial industry.
Oh sure Yeah, hope idle shantou connecting to Paydown in genital warts or how's the peso agitated I shouldn't meal.
Hey, Hey, guys, how about your door you shop at all though.
He was with that vehicle.
How does she had chemo can chime in on quite yet you holger, because we cannot beat up although they so that.
It means that some of the causes them yet Jamie.
Okay. So I'll take them to the food and Washington D. C for N P M club cobbled together.
You've got Saudi Furthermore, we're trying times with top tier industrial players, including Baidu, Some time and I fled tax deepen aig's of applications, including power deep dive into financial report and order.
Dynamic after primary market.
Our amazing AI powered technical tools, we have to deliver more comprehensive a gel hire plenty offerings to a broader spectrum of companies well optimizing I've already plus value for money. Similarly, we also implemented a comprehensive AI driven.
Transformation companywide launching AI driven upgrades for a wide array of services and products such as that starts to disappear and Christopher.
Kathryn and I have a venture capital platform further reducing operating costs and elevating his secrecy.
Congratulations there sure.
And it also I didn't I thought you had launched a guy.
And Paul just a general counsel of Amphenol.
Sure.
So having only a proposal.
Potential water handling.
You saw people you know that.
You then can do it.
I'd also like to specifically highlight I'm, a verizon to AI impairment during the quarter, followed our pioneering AI powered ecommerce golf there. This year, it's called her real applied AI technology to create a virtual blogger for the Asian games on shelf.
We've gone out of significant visibility and engagement in just one month initiatives like this then as a responding testament to our leadership and consciousness accidents.
And application testing.
It's also the name sometimes Iraqis, whether it's actually tell when they need it.
Hi, Judy.
Are you calling for Cogent is we didn't go down below.
The Nino to the coast to antigen also kind of how that's playing out.
It also gives you that breakeven do you know at all unusual.
Is that what you're kind of putting them together with us.
Hygiene.
Well I'll tell you when you were talking about talking to you. Thanks to our new route content ecosystem.
And I'm, a content and product matrix remained robust, but without ever broadening array of offerings. Furthermore, we continue to diversify our customer dynamics, our stable high quality customer base not only was lapped at the Companys substantial market difference, but also labor.
Yes.
Thank you.
People.
Next I'd like to share a more detailed.
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Okay.
Yeah applications.
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Across the various scenarios.
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So the sheer force on hindered the keto credentials homebase or not I'm not sure.
And if I had to kind of like did you have a ballpark empty shelf at CIT hostage has changed at all.
Until behind your forward look on how fortinet local mines opening high volatile how you whether you can actually show you all the hires you know space public without China. When you come on so we can see that you don't like ball <unk> plus you have all the way the teams are triple hockey that change at all from we'll jump on them.
So that torture, Ohio factory was the only thing that I'll tell you why this isn't a needle towards holding usually schedule. She had have akshay sure timna as.
Do you tend to young children born.
Hum.
So call it up on volume.
Oh sure Youll touch on did you say.
How do you put your TV seemed module.
Over the long haul you want to keep watching longer.
First let's look at advertising, where our revenue increased by 11% year over year.
Leveraging our strength in content and distribution channels.
Engage the target audience is and actually the high marketing conversion rates. Furthermore, our continuous to service innovations.
Paul up by 20% a year on year during the quarter through yourself development services CR has cooled extensive advertising service experience spanning multiple industries, including TMT consumer goods automotive real estate advanced the manufacturing and new energy.
We are well positioned to accommodate the distinct market per se.
First off advertisers across a broad spectrum of industries. For example, they provided a full service integrated marketing campaign for the launch event of higher so what drives the smart robot vacuum cleaner from prevent either posters and IV they use to customize offerings and lives.
Doing so your banks.
Hello choreography of only channel content information and created Telmex and resulted in total online exposure of over seven point 94 million viewers. We also crafted a variety of marketing materials of Baidu AI cloud localizing info graphics and videos of onside tours to really.
And they present is capabilities, we brought cockpit is content across our new media metrics to efficient they reach their target audience, receiving widespread acclaim gave an oven premium content profound insight into user interface and the preferences and the high conversion rate of commercialized the content.
We expect it to attract an increasing number of advertisers for content promotion going forward as well as achieve sustained revenue growth in advertising.
Hi, its actually been Columbia zero and they didn't want to have the.
So don't even able to employ over here and I'm going to open on P&L of a hurdle for catching on because your TV or Ohio.
As well, which is just your Toyota <expletive>, how do you think that ourselves.
Shifting to the human capital have you didn't point out that all of you back I'm sorry about that.
Essentially.
So we're gonna have social or was that for sure. It's in 18 and as a teacher can how do you specify if I'm off interest any of that will go to the truth I don't yet see wholesale.
Sure what we tell them when you say control kudos on Twitter it wasn't actually being she wasn't the only thing that you'll hold that unusual charge on change issue.
Also the trees that are considering if you could talk about it.
Sure.
In terms of short video advertising as I will call them continues to gain traction on platforms that CBD and so I'm sure. We have a draft pick a more diverse range of advertisers spending intelligent technology consumer lifestyle, Ultra and entertainment and other sectors. This quarter, we build on our track record of producing.
Platinum compounded by crafting a compounding data in collaboration with Alibaba cloud.
Driving Asia games blogger ourself.
He feels the with unique perspective, the video garnered a 162 million of it was on BD BT, Ireland studies on Weibo's trending topics list also as I mentioned previously our sub vertical mediums. So does this payout auto continue to amplify Brian useless filtering, new partnerships with well known.
On the auto manufacturers, including BMW and Mercedes Benz.
Torture anymore, well attended or 'twenty, two 'twenty three I E mobility event in an.
And also show spanning major cities, including Guangzhou, and Chengdu Delighting users was firsthand insight into the latest algo market dynamics. There was a wide variety of content display formats, including images taxes short videos and live streaming.
Now further expanding our reach and partnerships.
Okay.
So she was ads as well as after sale.
Usually I mean, how do you view that.
Got into Kimball, he or she bought Apple J, you're talking if you find out where youre going to Asia.
Or does that take away is just without doing a hot honey.
Utilities unusuals essentially to shovel the osha they call what you're going to play out whether you can calculate on suitable for your cost of hydro. Meanwhile, empowered by AI technology was that turns in digital human lives by pioneering laughs dreaming sales sessions featuring digital humans.
Tabasco and you always have initiative that has attracted the interest of many clients. In addition.
Cooperation. In addition, we continue to expand and deepen applications across adverse scenario.
A rising on our underlying technologies advantages in real time interaction. These really fast trade tariff graphics and other features to offer our users diversified Amazon solutions propelling the companys efficiency and a sustainable growth.
Yeah, It's Andrew who I mean.
So therefore, even though we see at each of our cohorts agricultural LNG Sheila generally version 10.
Could you just touch it that way.
But your LNG is towards the choices you don't instead, it will take a hiatus, although you don't sell any of them signed over time questions you've touched that chemical in anyway change. Your go to Nonscheduled told him. How you could ask Albert to talk with you about how well a long time now.
Hum Shelby financing tissue.
If you can because you get a chance to longwall top I came up to me to Jonathan cultivation, nearly 14 digital financial it seems like catcher Chantal.
Let's not wait.
Thank you me I don't know exactly so we're taking a closer to an.
And as usual that's another handful packaging material.
China, Oh, excuse me because that might go away.
She is apples to go that way.
In India.
No not really.
In total bottles, you're really starting to draw.
So what are you trying to tie it all forget all change only.
So we'll keep it took a while some delay from the time you put in for Tim.
You want to go down China should go.
So long long out and tell us if there's any.
People were talking and I'm trying to recall.
With respect to enterprise value added services in the third quarter, we remain committed to providing high quality services, leading to collaborations with additional corporate declines and government.
The hostess.
The three specific centers.
Including this <unk> carbon from AIDS sustainable value for Green Horizons, and a data digital innovation tour deepening our engagement in the sub verticals multiple they are ever. So this is a carbon so much sustainable value for green horizons experts scholars and our stakeholders representing professional institutions.
Top tier platform at leading consumer goods companies from China on that along with all gathered together to dive into the latest trends of shading low carbon consumption, obviously dynamics in the pioneer in practices. The sunlight achieved total online exposure exceeding 80 need Anvils underscoring services care.
Pivotal role in fostering valuable connections amongst the quarters continue economic sector. Another recent highlight was our annual flagship wide conference, which successfully concluded last week in Beijing. This year same centered on commercialization and cutting edge AI technologies, well why is it was pretty.
It isn't a focus solely on new economic participants this year, we broadened the conference race to cover the entire sector and updated as title accordingly to what 2023 cancer goodness, we hosted over 300, English commercials and economic experts scholars business.
And then your vectors, including high food to eat and drink and Tyndall one stocking ideas, you've thought provoking discussion quite a few of China traditional industry icons also joined us at a wife plenty 23, including ebay drawing one in the south Eddy, reaching like events diversity and offer.
In fresh industrial perspectives like 'twenty, two 'twenty three amassed over 1.13 billion views further showcasing logistics players black difference.
Pulling out all the way because you don't see I don't know if war is FMC to ultra we've added San Jose anywhere in Ts Yamaha and you don't have Amit Kumar Hi, Angela walk up ticket you don't call date.
You control towards him Hangzhou, which almost annuity don't forget what is your names young people don't you call heading out until the afternoon here.
Yeah offline events other consulting services and other enterprise value added services continued to gain momentum during the quarter. So the 6K, a research institute for dependents industry insights and innovating our reputation through the publication of industrial recent reports on the commercialization.
Funds with floors of collaborative consulting partnerships with government institutions and permanent cities, such as Guangzhou, Chongqing, Hangzhou and illegal among others as well as was industry clients, including Lenovo Crow Holdings, Inc. The only contact and possess a insurance among others.
Oh sure sure.
Sure Yeah, well toward that tells you can always argue huddle here what you don't know how would you plan it won't do I'm trying to find and government.
Trade has all edges, where they're trying to survive.
You hear a lot more done on a handful of cause you to Andrew who.
I cannot hear claims here that they didn't get it to reach you came in but in transportation and handling costs go down.
Over here in a couple of handful of bundle. Furthermore, we have made consistent meaningful progressing our original business expansion. We co hosted a industrial development summit titled Yeah, West Lake with the government of Civil District, Hangzhou and the Spa conference plenty upon entry to further explore.
They test applications. Additionally, we launched connecting the dots along investment trails, a strategic initiative capitalizing on average terrorists and resources across the large scale traditional and innovative companies. This program aimed to strengthen regional industry actions address relevant shortfall.
S paid the integration of industrial ecosystems, our production of high quality content for this program has significantly increased user retention and engagement.
Sure.
Kind of a mid teens.
Hopefully not even the fact that the recognition that he wanted to lose Enzo Sandy hook. It gets how long do you think that you'll share with us.
And what you didn't ask also potential choosers, how political lucky as usual shortly that will that should all of us at synergy or Chicago.
You should need to millennium abandoned it.
Okay Recourses achieved additional hurdles as Hugo you trying as you go or do you see that.
Juliet do you want a signature T K.
With an idea.
It's also worth mentioning that with the rise of RMB phones, and the evolution of the guided phones stakeholders in the new economic sector enjoying a plethora of investment options maximizing the benefits of our robots brand advantages and adapt our resource alignment capabilities before partnership with some of the funds.
Any aberration to regional markets to identify optimal financing channels and approaches for a broader spectrum of anti presses. In addition, I'd like to highlight that our management a subsidiary was recently successfully registered as a fund manager.
Strategic move unleash the fresh opportunities for us to facilitate deeper connections among industry stakeholders and investment institutions, while exploring involving possibilities for industrial wide cooperation steering the company towards a new phase of growth.
Yes.
So I think it will move the.
When you do that.
What day, Ohio, Castaldo, who put a tariff or shows that Oh, Gee I wish I knew the.
Television online video shot towards efficiently, who absolutely and I'm trying to put on for you at all that you're taking in country down what's your vision there.
Since you already know we didn't actually 80 person yet although it will approach a whole year to go back to that whole agenda.
People don't know.
So what's your old synchrotron excuse me if you can talk with each museum for chemicals.
That's all going to have your opinion and tissue political to let them go tissue calls you got anything technical issue.
Regarding subscription services revenue from subscription services increased by 6% or two then.
Year over year to RMB 11, five.
During the quarter.
Asserting our diversified course offerings and efficiency.
Customer acquisition strategies. In addition to upgrades across our traditional training courses such as finding out that region cap for.
The development and expansion of high quality degree based programs. For example, we made good progress on the post doctoral research program, we rolled out in collaboration with cable College of the University of Oxford further driving our revenue growth in the Meanwhile, we continue to add new courses.
Our portfolio and with a can do spirit partner with top University, it's a worthwhile to cultivate a high value added training ecosystem, providing China based the senior executives with avenue to expand their careers globally.
Oh sure. So you don't want to locate with alcohol when you kind of in general how that doesn't come with you.
So when you put it in your model you should hear that I was trying to you what was it that you have.
We'll go ahead and you don't want to hear about what I don't want to lose I'm wondering you called out.
Has that patient continuum that didn't have the high end.
How much in the huddle conga, she said I've always wanted a higher payout on the Haynesville car T with lease vehicles will have anesthesia or where the widespread application of AI and saving innovation and product intelligence market demands of expert is growing increasingly urgent we are actively embracing the business opportunities arise.
<unk> funded churn in collaboration with more asphalt because the partners to expand and knowledge of our course offerings and training system with AI related causes our strategic partnerships cover AI, plus training and innovative talent development as well as industry specific large language model solutions.
Together with our partners, we are setting a new benchmark for talent development in artificial intelligence for powering the digital transformation of a wide range of enterprises.
Tough, one implication or anything like that.
Lee This is open to them now.
And until that time line utilization, Pennsylvania conversions this year because.
You'll have somewhat also like you show, which is young children, killing them.
So as opposed to that Virginia agreed achieved over there could've been even when we can put that helpful to you.
So as you know Greenway countries you called out.
Yeah.
Cool.
Don't forget aimed macroeconomic uncertainties there has been a sustained increasing user demand for self enrichment. Consequently, their training sector outperformed market trends English contracept, leading fashion, along with the wisdom of saying to do a good job one not the first to sharpen his tools other use.
For self improvement has translated into overall enhancement of their performance and the efficiency and cooperate workplaces. We are confident that as a company when you invest in the training films, where we're further English I've of course offerings constantly enhance our trading system and continues they expand our customer base.
We expect a significant growth potential for our subscription services as we move forward.
Sometimes a show.
I understand you do turnover, partially all of them are passionate total attendees I'm not I'm not sure if I got that.
Sure. So I can tell you that.
She didn't go higher or is there something.
Toni it's Rob Angie.
And our CMO, Tim economic shock.
I thought it was going to call it towards the general than you would have wanted it to.
And whether there's anything hopefully.
Oh sure what was that was talked about shipping immune poco Chippewa.
Bobby.
Jonathan the short wasn't hitting about that should hit then you should you do with the tundra haul. It I tend to go down from here you've got in the yogurt area tornado cannot depend anyhow.
I just wanted to give it to huge annuity agenda has a whole bunch it'll also traditional times right yeah.
How many of them being new to the water she didn't cull down a touch up on that in short we maintain encouraging growth momentum in the third quarter of 2023, our total revenue increased by two 5% year over year to RMB 97 million with revenue from advertising business up 11% year over year outpacing market trends.
Revenue from our subscription services.
62% year over year, and our gross margins and high and 56% of Compositing peckman to them as it is and the vibrancy of our business absolutely Adapalene navigate challenges in the meantime, we're redoubling our efforts across content format, including images, Texas Shaun.
Long videos audio.
And last dreaming, others faltering, a sophisticated full spectrum of content that matrix the number of followers.
32 bit in defending its growth stake for a 10th straight quarter looking ahead building on them.
Peerless content formidable brand influence and keen sense of innovation well actively for new partnerships with global industry leaders.
Thanks, Paul innovative AI application.
<unk>.
Absolutely and sustainable growth.
With that I will now turn the call over to all of those have already seen that who will discuss our key financial results physical Hadley.
Thank you Paul now I'd like to walk you through more details of our third part of our 2023 financial results. Please note all about numbers.
Unless otherwise stated.
Total revenues increased by two 5% year over year to $97 million in the third quarter of 2023.
94 <unk>.
6 million in the same period of last year.
Advertising services revenues increased by 11% to $71 2 million in the third quarter of 2023 compared to 53 9 million in the same period of last year. The increase was primarily attributable to more innovative marketing solutions, we provide to our customers.
Enterprise value added services revenues of $14 2 million in the third quarter of 2023 compared to $23 6 million in same period of last year. The decrease was mainly due to the negative impacts of macroeconomic uncertainties.
Also our offline events are not scheduled evenly throughout the year and it turned out there with relatively fewer events during the third quarter.
Subscription services revenues increased by 62% to $11 5 million in the third quarter of 2023 compared to $7 1 million in the same period of last year.
Increase was primarily attributable to our continuous efforts to offer high quality subscription products and training programs to our subscribers.
For example in the third quarter, we rolled out of the post doctoral research program that we collaborated with the University of Oxford, which was well received by our high end subscribers and help boost our subscription revenues growth during the quarter.
Cost of revenues was $42 3 million in the third quarter of 2023 compared to $35 five many in the same period of last year. The increase was primarily due to higher fulfillment costs and content costs.
Gross profit was $54 6 million in the third quarter of 2023 compared to $59 1 million in the same period of last year.
Gross profit margin was 56% in the third quarter of 2020 compared to 62% in the same period of last year.
Operating expenses were 77 5 million in the third quarter of 2023 compared to $62 1 million in the same period of last year.
Sales and marketing expenses were $32 4 million in third quarter of 2023, an increase of 1% from $32 2 million a same period of last year.
<unk> increase was largely due to the increase in payroll related expenses, partially offset by the decrease in marketing related expenses.
G&A expenses was 36.
<unk> 9 million in the third quarter of 2023% to 123% increase compared to $16 6 million in the same period of last year.
The fluctuation was primarily attributable to certain one off expenses, including severance payments as we optimized our organization and office lease termination fees incurred in the quarter as well as an increase in allowance in allowance for credit losses.
Research and development expenses were $8 three meeting in the third quarter of 2023, a decrease of 38% from $13 4 million in the same period of last year as we continued to proactively embrace AI technology and a streamlined all our research and development teams, resulting in a decrease.
In payroll related expenses.
Share based compensation expenses recognized in cost of revenues sales and marketing expenses research and development expenses as well as G&A expenses totaled $1 4 million in the third quarter of 2023 compared to $2 6 million in the same period of last year.
Other income was 4 million in the third quarter of 2023 compared to $5 7 million in the same period of last year.
Net loss was 18 nine.
<unk> 9 million in the third quarter of 2020 compared to net income of $2 5 million in the same period of last year.
non-GAAP adjusted net loss was $17 5 million in the third quarter of 2023 compared to non-GAAP adjusted net income of $5 1 million in the same period of last year.
Net loss attributable to 36 chaos ordinary shareholders was $18 9 million in third quarter of 2023 compared to net income attributable to series six chaos ordinary shareholders of $1 7 million in the same period of last year.
Basic and diluted net loss for Ibs or both 45 cents in the third quarter of 2023 compared to basic and diluted net income per ads a process in the same period of last year.
As of September 32023, the company had cash cash equivalents restricted cash and short term investments of $116 million compared to $136 5 million as of June 32023.
The increase was mainly attributable to small sized long term investments in certain new economies entities were made in the third quarter of 2020 suite as well as not cash outflow from operating activities.
If we exclude the previously mentioned one off payments relating to the optimization of our organization and moving our headquarters office, which altogether amounted to over $25 million during the third quarter, our cash position actually would have increased quarter over quarter.
This concludes all of our prepared remarks today, we will now open the call to questions.
Please go ahead.
Yes.
Thank you.
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And for the benefit of all participants on today's call.
You wish to ask your question to management in Chinese. Please immediately repeat your question in English.
Today's first question will come from Sharon, Joe, whereas she ICC.
Please go ahead.
Oh gosh, we don't have ghansham.
<unk> Oh.
Well Sheila you can glean, although her challenge with Utah, Wyoming and Doug.
Sure.
Alright, Thank you Sir.
Graduations to their solid performance in the third quarter and how does the management view the fourth quarter and next year's advertising revenue churn. Thank you.
Gotcha.
As you all know, Ohio location count.
I think you cannot tell at all.
So this year it will be going on but I'm just.
So Richard I know you haven't deal, where we're kind of on schedule B can do shields Ocean wind up.
Apologies.
With US you know Patricia she cannot deal with overdue project.
Holding all else equal should you always have also as you guys. You mentioned once you hit a volatile balance transfer we shouldn't lose agenda does not measure.
Is what you pay to go onto the Euro postpone Shouldnt Couldnt have Dolby thought I'm not sure. If you just don't.
Sure.
The only thing anymore.
Do you want to dial in what Theyre going to fool Tortola and kind of shifting from finalizing sure Nigel put them on Colorado, and Utah as usual, we'll dutifully.
Did you say you do a volume.
Okay.
Thailand, and it took a while.
It was on trial will be honored if you've only got the Tri County.
With that I shall also be.
Pennsylvania Your telephone human income will sure let me talk a little more.
Thank you.
Corporate box system robust growth momentum.
Titan business was year over year revenue growth of 11% as the market gradually stabilize we noted an encouraging rebound in demand for advertising compare with previous launches our blending and governments based on one stop advertising solutions have iron a substantial trust and support from clients sparkling.
Steady growth our advertising consumer base conclude interact Internet Giants and the fortune global 500 companies as well as China's traditional industrial icons, such as ebay jewelry, one Sunday in Boston, then that it grows off advertisement placement by this company's per pound a year over year.
The increase in you have a pool of 20%. Meanwhile, we also offered a flexible and versatile services to emerging industry players catering towards their diverse advertising and marketing needs with graphics, Texas and la short videos.
Other formats for the first quarter, we maintain a cautiously optimistic outlook for our advertising business to drive continued growth of our advertising business will further enhance our content influence right now in depth cooperation with advertisers and actively explore am asking and other newmar.
King channels to create more growth opportunities for advertising.
Yes.
Thank you next question please.
Thank you and as a reminder, ladies and gentlemen, it is star then one to ask a question.
Our next question comes from Louise <unk> with <unk>.
Research. Please go ahead.
Wei eight that I'll show how are they don't they can't Guy <expletive> digital whether T that we're gonna go then T. A diva when tissue quantity the woman to combat ship here with Oh, well I'm kind of Ah trial should be not that should be your Easter comes out there'll be not.
Not much in three key car when the whole shooting Bulldog high towards on Gotcha.
Uh huh.
I Hope you are going to you should wait.
It doesn't won't come relative to kill send them. All you do high belt should that'd be the hall. They can talk all the 15th Noma Kinloch also let's say it sounds like so much else on me and she's done that well.
Well. Thank you so Ah congrats.
Congrats with the good results and I have two question.
The first one was both long and short video segments recorded robust growth on a sustained basis. What plan do you have to in place to unlock further growth potential.
And my second question is the company's gross margin remained fairly high in Q3, what has the company achieved in cost reduction and efficiency enhancement. Thank you she said.
Although hany.
What have you.
I can't go into it.
When we read I found hoelscher, especially new ones I'm talking about.
And that actually need to only go hungry.
Chinese don't harsh and woven shirts on building because that would be 10 billion question all the time gentlemen.
Maybe if you can touch on both torture on the treasurer.
I think what you saw someone antibody to anyone else.
Okay.
So it's interesting.
If I'm off interest any of that converted into 2016, the hustle teed. It up if you don't want to change how often you're going to.
I wish you well tell me if I'm wrong I'm, sorry, she won't be Tan, France visual tour, our Azure traditionally how maybe you can clarify that.
Thank you Daniel.
Yeah, Yeah, sure Manav out without one.
Torture does it he won't call China travel Catherine just a phone call to bet on something called because under the table.
So the tissue.
Okay.
And if I can are you telling me we cut you off.
Jim could be arguing law, while surety at home.
So I didn't know I don't have it until <unk>.
<unk> I don't have either didn't do huh.
Okay.
There's other things out which entities again, we usually are on board.
The loan went out and talked about how we got to do more.
We can talk about Yoko hopping over there and hydrological and assay, which is single touch or anything like that.
Loss ratio.
Got it.
People are challenging.
We have consistently.
Right.
This occasion for short videos.
<unk> already covers diverse topics ranging from technology innovation and business insider to lifestyle posted across popular shop video media platforms, including CBD Philly unquenchable, our sub vertical medium. So this is kind of also it's also worth highlighting.
The launch during the first half of 2023. So this is Pierre also has made good progress in terms of content and user engagement with a certain number of likes and followers. We have also initiated partnerships with top tier automakers, such as BMW and Mercedes Benz as off the end of this quarter we had over.
$8 5 million of short video followers up 41% year over year on average more than 2015 maiden will be rebuilding others English.
English swiftly involving landscape of social media platforms. Shortly those have emerged as a crucial channel for user interaction and social engagement, earning west Brett Favre among advertisers short video ads also bolted a higher a pool of compute to either advertising format. Further propelling the company is overdue.
Advertising revenue regarding long video Yeah, I hosted along radio show for say in 2033. The show featured in Lightning competition was an inspiration to raise including lung should be tough diesel James Liang and cabin tabby, which deeply engage a diverse audience. The first.
Susan has successfully consolidated where the total online push off over 250 million views and the second Susan is currently a rising on Youku in Beijing Radio and television station looking ahead at 2024, we will continue to expand our footprint as long videos will have three to four new program.
You have a long radio pipeline, which are set to further enrich our content ecosystem.
Hi, Lee. Thank you for your question on gross margin under the financials. This is Lynn I'll take your question. So.
So first of all we continue to take a rigorous.
Cost control measures and to optimize our cost structure. That's why we were able to maintain our gross margin at a relatively high level, which was a 56% level in the third quarter and are on top off gross margin actually I want to highlight further that we are also taking initiatives to improve our <unk>.
Operating margin as well so to cut our spending actually in the third quarter. We have taken several measures for example.
We moved our had a corner office.
To a relatively lower rental building in the third quarter and secondly, we continue to improve with AI technology, which enables us to streamline our R&D team and which resulted in some cost savings in the payroll side as well. So if you take a look at.
Our operating expenses in Q3, although they'll work temporarily some one off impacts in Q3, because we have to pay some severance compensation.
As well as terminating the old lease contract, we need to pay some compensation expenses, so that hit our third quarter, but that's temporary and that's only a one off issue and if youll take a long term view at our these initiatives those two measures all together will give us a.
Spending cuts off at least something.
13 million RMB.
Annual basis, so that's a quite a.
Improvement on our operating margin and going forward.
One hand, we will continue to grow our revenues and on the other hand, we will continue to embrace technology to more.
Diversified the business scenarios so to cut.
Cut our cost and further cut our spending so of so.
Overall, we will improve our gross margin as well as the operating leverage.
Thank you.
Thank you very much.
<unk> come from.
With industrial Securities. Please go ahead.
Yeah.
Uh huh.
Sure.
Thanks.
You can't make up okay.
Oh, I'm going to need to get off of would just to add on warm nights.
We're going to need all household names they shouldn't have Saudi.
<unk> posted a fishing Yahoo, Guangdong, Zhejiang whimsical way do they fit together that a decision you're quite a few quick ones.
As a new Yorker triangle.
National Football League.
Like I say that just the edge of it checked all the war fighters and hold quite a long time, which is also on the sequel.
And I'm Gonna go well things aren't going to Oregon actually quite good because as someone who sits in quote unquote.
Oh, Thank you management for taking my question and you already explained how AI play a very important role in improving efficiency.
But could you share more details about how eventually and I have to make money. So could you share.
We are a monetization counts in this area. Thank you.
How to hit it.
San Jose because instead of adding units this year.
I think obviously the JV in Ghana.
Trying to get all manager you as usual that whole idea potential here to your answer to enjoy that or nothing at all.
Do you know how to even time with him as usual that's all that's happening is we obviously want to talk a little harder to control.
Pick a hollow man women Pendleton, you as usual Keystone that's helpful. Jose Antonio clothing, while on English on channel telephone you should eventually that you don't you saw some help me.
Hey, young cohorts, you won't cushion of uncalled capital.
On a total knee.
Now classify them publicly.
And you should have.
These were the human genome.
How 'bout here too and he shared his shop model.
So again well then.
The Ohio without having to offer chimera with <unk>.
Thank you.
Or the whole litany of things you see her to Florida now what we have in Asia.
Going forward the trial initiate I'm wondering when the internet pencil.
And of all Shanghai vegetables that comes with that with the kind of the old network.
Sure.
For the cohort on Macondo.
It was all Maggie Shambaugh sure Jonathan here again.
So that those are the <unk> sure.
Why don't I understand your question.
He has been with Anadarko, saying most of the Hershey pressure should go from here.
<unk>.
I'm curious if anything we don't get an issue. Okay. So you can hear well because that has like Atlanta, and Washington as you kind of view, we don't go to a hospital, particularly as your appointment.
John CTO and then of course, you will know Jonathan as you for ACA hometown, Youll hear that Pennsylvania posture without hesitation.
So just wondering what gives you will then trying to challenge it, albeit at home advantage that you have now could you.
So Asia Calvin some covenant.
Yeah.
Yes, because it was one one and of course youre within social that is here with us.
And it was at the time being we should have I think.
Youll see the coal or shop, and I don't think most of the items, although with you. So you hit it.
So they just care has clearly demonstrated its vision and key cumulative.
In respect to generative AI fully last corners pioneer in App hover, Jamie no sessions, featuring digital humans Tabasco.
We collaborated with Alibaba cloud and leverage is large Tam Aldo Tony to create our Asia gains blogger onshore onshore garnering significant visibility and engagement on the advertising front, we are actively exploring and applying AI technologies to enhance marketing effectiveness and crop.
The latest strategies. This includes <unk> personnel.
With housing content generation and advertising placement as well as intelligent decision, making based on data and ethical by consistently extending our footprint and AI marketing, we seek to provide our clients with marketing solutions that are smaller more efficient and more you know it too.
Additionally, joined hang with top tier industrial players, including <unk>.
On slide.
Slide pack to deepen aig's applications.
<unk> financial statements as well as a recording of a primary market.
Delivering more comprehensive more of gel higher quantity offerings to a broad spectrum of companies at exceptional cost to benefit ratio.
Thank you.
Okay.
Thank you and our next question comes from Rich Hill.
With <unk> Securities. Please go ahead.
Okay.
But you know.
What do you guys just show me exactly usually goggles.
You would have with them.
Sure.
Well I do have them quite yet.
It's a legal issue that did go up.
Oh, what's supposed to be captures contributed to the rapid growth in.
Services any new growth strategies in time for this segment.
Thanks, Jason.
Uh huh.
Does he called passengers duration question with digital but he told me. He got here that people are getting hit with visualization reservation Cushal shouldnt, because I'm glad to have with them towards all other than trying to push it out.
Or how long you will do it absolutely I havent done the typical hotel two of them for the potentially cause you can draw from for the Trulia traffic.
Well yeah sure.
Jordan, Utah.
You can go there is last year, you would've been reminding you on that yet.
Yes.
I know you're young in that year.
Intake, but sometimes you end up getting a union shop.
Sure.
Changing according to MBA bundle of controlling the Congo tissue cutting and kind of what this year closer to the active at the moment.
And in doing these relationships.
We'll wait till you cannot you cannot add things you've also heard as well who don't take away I'm Glenn.
Patient policy in fact as usual chronologically.
Quality of location.
The rapid growth in universe exclusion services was primarily propelled by the launch of our havoc degree based programs. This quarter, we joined hands with cable college of the University of Oxford, Anika launched a new degree of days the program that's laid boosting our pool to over RMB six to 8000.
Meanwhile, we continue to enrich the high quality training courses offered through our venture capital class and the funding of Saracen cab, our diverse engaging course offerings broad top tier learning experiences to users drilling extensive.
Looking at the end.
For additional partnership with top universities worthwhile are more international MBA programs, such as the University of Oxford University of Leeds Clean Marine University of London.
Ralph King University in the UK and in fact business school in France, providing China basis senior debt.
<unk> avenues to extend their careers globally.
Over with a vibrant advancement of emulation, we noticed an increase in peoples demand for learning and enhanced technology to address this demand. We are actively working with the leading companies based in China to jointly develop AI focus of training per ones, enabling punished tends to have a better.
Our technology and practical skills.
Thank you.
Thank you.
Further questions I'd now like to turn the call back over to the company for closing remarks.
Yeah.
Thank you once again for joining US today. If you have further questions. Please feel free to contact us or does it appear in our relations through the contact information provided Oh that's it.
Thank you.
Luke.
Thank you. This concludes this conference call.
Now disconnect your lines and have a wonderful day.
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