Q4 2023 Kingsoft Cloud Holdings Ltd Earnings Call
[music].
Good day, and thank you for standing by welcome to the King So clouds fourth quarter and fiscal year 'twenty 'twenty four earnings conference call and webcast.
At this time all participants are in listen only mode. After the speaker's presentation there'll be a question answer session.
I'll ask a question during the session. Please press star one and one on your telephone you visit.
He ended up made good message advising you hadn't raised to withdraw your question. Please press star one and what good is.
Note that today's conference being recorded I would now like turn the conference over to Niko shot I. All my mother nature of Kings of crowds. Please go ahead.
Thank you operator Hello, everyone.
Joining us today, it's all clouds, all schools around fiscal years and he thought degree one country what did you do.
It's available on our IR website at IR.
Our dog T. S Y you, Linda I'll call as well as on global Newswire services.
Most of the data from the Haynesville cloud, we have our web drama on the field. Neither does help and it's therefore it means a horrible.
Our business strategy operations and company highlights followed by Mr. Ho, who will discuss the initial dozen guidance it will be available to answer your question.
And therefore, you won't be cause that's doing creation, all integration of oil companies and the reference purposes only in kids.
Management statement in the original language.
Before we begin I'd like to remind you that this conference call contains forward looking statements within the meaning of section 21 E of the Securities Exchange Act of 95 at the money and as defined in the U S. Probably security decision that ball up 19, that's what it's forward looking statements about management's accordingly.
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These and other factors all of which are difficult to predict and many of which I'll be on the company's control, which may cause the company's actual results performance or achievements to maturity from those in the forward looking statements further information regarding these and other risks uncertainties or factors are included in the company's filings with the U S.
The company does not undertake any obligation to update any forward looking statement as a result, with new information future events or otherwise, except fault rupaul and absolutely people. Finally, please note that unless otherwise stated all financial figures mentioned during this conference call RMB, It's now my pleasure to introduce.
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Hello, everyone and thank you all for joining <unk> fourth quarter and full year 2023 earnings call.
We.
New to uphold the principle of high quality and sustainable development.
Accomplished significant achievements.
For the full year of 2023, adjusted gross margin was 12, 2% a significant increase of six eight percentage points up from five point put them in 2022.
Adjusted gross profit was RMB $860 million almost doubling the amount of RMB $445 million in 2022.
<unk> adjusted EBITDA was negative three 4% another significant improvement from negative eight 9% in 2022.
During the year, we started building our success based on technology and innovation forging our reputation throughout the entire process in housing our operations management and building in the strength, we have been strategically adjusting our business mix and are proactively embracing the new AI era, therefore, laying solid foundation to la.
Long term sustainable development.
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Now I will walk you through the business highlights one quarter of 2023.
This quarter we are.
Chip dual improvement in both our revenue and profitability metrics.
Particular total revenues reached RMB 172 billion, increasing 66 zero percent.
Or whatever.
Adjusted gross margin recorded a major increase of three one percentage points quarter over quarter to 15, 2%, marking the sixth quarter of consecutive improvement.
Adjusted gross profit reached RMB, 206, 2 million, increasing 55, 8% year over year.
Normalized adjusted EBITDA margin was negative one 6% representing a significant improvement of eight five percentage points year over year.
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In terms of public cloud services revenues were RMB 1.05 billion, representing a decrease of 3.5% quarter over quarter.
Excluding CDN business public cloud revenue increased by 11, 8% quarter over quarter.
Our efforts on our three priorities for public cloud services, namely the Xiaomi kingsolver ecosystem AI business.
On the strategic adjustments here.
First of all and the sole strategic cloud platforms within the Xiaomi ending subs ecosystem, we continue to serve the demand in the ecosystem, well, especially with respect to the highly visible and tangible the amendment in training and inference from telling me E V and W. P. S.
Saving opportunities in structural in the trends.
Their quarter revenues contributed by Xiaomi ecosystem rich six months representing.
Representing an increase of five percentage points year over year.
Suddenly with vigorously develop our AI business with remarkable agility emergent venous retrans. Besides the AI opportunities from the tell me an ecosystem within fully penetrating leading independent AI companies in China, providing long term secure high performance computing power.
She is highly on offer in the market our eight reps.
It represented approximately 8% to our public cloud or.
Or.
Of 82% quarter over quarter.
Besides we have signed a loan facility agreement with Kingsolver Corporation, obtaining a credit line of RMB, One 5 billion dedicated to the development of AI.
Certainly we continue to push forward, our strategic adjustments of CDN business. This quarter CDN revenue decreased by near term for that.
Care to elaborate and CDN revenue as a proportion of total revenue has decreased to approximately 20% to 23%.
Rather than a share of our largest CDN Hoffman was 12% in Dakota top customer concentration has been fundamentally.
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Moving on to enterprise cloud services.
Core revenues were RMB $617 million.
Increasing by 10, 2% quarter over quarter.
You can click service space, we actively seized opportunities of public services cloud and Suffolk Plaza.
We implemented standardized operation and maintenance with core components, such as large language motto big data and workspace collaboration targeting use cases in public service enterprise application domain.
With Beijing, Wuhan and dry as our basis, we have built benchmark project radiating to other large and medium sized cities.
This quarter, we successfully join hands with Shenzhen state owned assets.
To facilitate the digitalization and intelligence evolution of local state owned enterprises.
The health care space.
We continued to promote the fyfe business models and make new breakthroughs.
Inheriting and developing it.
From the cooperation with Shanghai, reaching hospital, we've replicated and scaled our medical and digital capabilities to more right now in hospitals.
Quoting Wuhan Union Hospital drama and hospital affiliated to Howard University, and the pool like Hospital affiliated Chinese Academy of Medical Sciences.
The financial services space, we continue to defend our business cooperation with large state owned banks, improving our big data product and service capabilities and will release of Big data platform project, leaving the state owned bank.
Turning to come up during the quarter, Pamela exhibited stable and healthy revenue and profitability that up of course, new customers, while maintaining robust relationships with existing major clients.
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In terms of product and technology, we uphold our principal building success on technology and innovation.
They bring best in class customer experience across our core product.
In computing space to continue to upgrade our core products and focusing on improving the stability and domestic environment compatibility.
This quarter, we launched our elastic battery metal compute products E. P C X seven with.
Significantly in booths computing memory network and storage performance.
Yeah, so much space to bear.
At a certain high performance use cases, such a decoupling of computing and storage AI computer graphics rendering.
We have released the extreme version object storage service.
Ripped with high performing dynamic scaling and out of the box features.
In big data space, we upgraded our cloud native lighthouse platform with maximum throughput influenced by full time for batch processing tasks.
Better supporting use cases of autonomous driving AI and data models.
In enterprise cloud space, our Galaxy Dot Cleveland rents in the market leader quadrant of both the private cloud market and the private cloud system market in the Reserve report released by <unk> consulting a great recognition of the products and services capabilities.
This quarter Gallagher stack platform released another version, adding six cloud products and the more than 100 functions perfecting the comprehensive enterprise cloud system, which powers our end to end service cloud building cloud migration cloud usage and cloud management.
In terms of the hour.
Our mutual trust dedicated zone solution was awarded the most innovative AI evolution, China Internet economy for 'twenty to 'twenty three.
Our AI product Center deepened research operation with King sells office to strengthen motto research capability the enterprise.
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Moving on to talent strategy, what research center happened quickly expanded.
By the end of 'twenty, one to three total employees one exceeded 500 accounted for one third of total earnings.
And half of them.
Graduate degrees.
Our Beijing Wuhan to R&D Center strategy.
Talents for a long time development it ensures R&D intensity as we stick to our built based on technology and innovation, it's principle, while managing R&D expenses effectively.
In summary, we have achieved a great milestone executing high quality and sustainable development strategy without profitability measures improving continuously.
Looking forward, we will keep our original aspiration and long term strategy to create value to our customers and society throughout business services.
In Britain opportunity and continue to improve our profitability.
With increasing management efficiency.
We will keep improving.
And expense control in house talent and expansion of Richardson and further improve the company's operating efficiency.
I'll now pass the call over to our CFO Henry to go.
Over our financials for the fourth quarter and fiscal year 2023.
Thank you.
And I welcome everyone for joining the call.
Now I will walk you through the financial results for the fourth quarter and fiscal year 'twenty three.
Upholding our strategy off of high quality, that's sustainable development. We are pleased to close the year on that on your three with meaningful milestone.
I've read a quality modern expression and operating efficiency.
For the fourth quarter with deliver another quarter of steady profitability improvement.
Our adjusted gross profit continue to grow for the sixth consecutive quarter and achieved $262 5 million RMB.
Increased by 55, 8% year over year.
Representing adjusted gross margin of 15, 2%.
It's a record high for the company and a significantly improved three one percentage point.
Pair with last quarter.
Our no not adjusted EBITDA narrowed from negative $216 3 million RMB.
In the same period last year.
And then actually a 44.1 million RMB in the last quarter.
Connected 27 and for that matter.
This quarter.
As a result normalized adjusted EBITDA margin further in the road from that kept 10 four two in the same period of last year and a negative two 7% in the same day last quarter.
To a negative one 6% this quarter.
Our total revenue or $1722 5 million RMB this quarter.
Increased by 6% sequentially.
Of which revenue was from public cloud services or 1050 2 million.
Representing an increase of three 5%.
Compared with $1016 60 familiarity in the last quarter.
The increase was primarily due to the expansion from AI related revenues.
And are partially offset by our strategic getting Dov our stadium business.
Approximately 10% quarter over quarter.
Contributing around 23% of total revenue.
Revenue from Enterprise Cloud services were seven four of 678.3 million RMB.
Representing an increase of 10.2 per cent.
From 600 zero $8 5 million RMB in the last quarter.
Our small project scheduled for delivery club.
End of the year.
We're continuing to enhance our cost control measures.
Especially Q4, we'd refine the procurement process of CDM business.
Total cost of revenues decreased by 25, 4% year over year.
$1469 3 million.
I do see decreased significantly by 30% year over year from 1050.
7.6 familiarity to a 744.
For many R&D this quarter the decrease was in line with our adjustments with the uncertain.
Depreciation and amortization costs decreased by 39, 2%.
From 241.7 million RMB two.
Two $146 9 million RMB.
The decrease was mainly due to a previous in parallel.
Our long lived assets.
Solution development services costs increased by 8%.
From $465 8 million RMB, two $502 9 million ought to be this quarter.
This increase was mainly due to business expansion of Camelot.
Fulfillment costs and other costs were $9 4 million RMB 69 points.
Maybe I ought to be this quarter.
Which are in line with our enterprise cloud project quality cultural strategy.
Adjusted gross profit of this water increased by 55, 8% year over year to $262 5 million RMB.
Representing an adjusted gross margin of 15, 2% this quarter compared to seven 9%.
Gotcha, and 12, 1% last quarter.
Making another record high.
While our sixth consecutive quarter of steady margin improvement.
In terms of expenses.
Excluding share based compensation and impairment of long lived assets.
Our total adjusted operating expenses.
$494 8 million RMB decreased by 32, 2% of yoga and of one but not the tenor from last quarter.
I'll pitch, our adjusted R&D expenses were 162.5 mid <unk>.
Decreased by 13 point tubes that are lost work.
As we continue to focus on utilizing our Beijing, Wuhan deal rates et cetera on a welcome new graduate campuses, including employees.
Adjusted selling and marketing expenses were 106.7 million Audi.
Representing a decrease of six 5%.
From 114.1 that I'd be off quarter.
Adjusted SG&A expenses increased by 11, 1% from 203 per one made out in the last quarter to $225 6 million RMB.
The increase was mainly due to a year and a payment to vendors.
As of December 31.
Plenty of parts of it.
Our cash and cash equivalents and our long term investments amounted to $2 3 billion RMB.
Answer financial liquidity for operations.
We have entered into a loan facility agreement.
Whereas at Kingsville Corporation with a cap of 1.5 did at RMB.
They do a dedicated support our AI business development.
Demonstrating our confidence and amendment.
About Eagle system embracing the Fisher property.
The capital expenditure for this quarter was 1000.
$415 8 million RMB.
That's why we invested in our infrastructure to build a sustainable AI business.
Our operating cash flow once again recorded in that inflow returned $16 8 million RMB.
Since the second quarter this year.
We have been generating net inflow for three consecutive quarters.
It resulted from our margin improvement.
As well as our enhanced internal cash management.
Yeah.
For full year 2023, our total revenue or seven solid.
47 5 million RMB.
non-GAAP gross profit increased to $859 nine now and be in 'twenty or 'twenty three.
Almost doubled from $445 2 million in follow up on this.
non-GAAP gross margin increased to 12, 2% and 23 from five 4% in 2020 two.
Such increases were primarily because of the elimination of revenue mix and our effective cost controls.
I think by the success of our high quality and a sustainable development strategy.
non-GAAP EBITDA.
Negative $242 1 million.
Compared with negative $726 2 million RMB in 'twenty two.
non-GAAP EBITDA margin was negative three 4%.
Compared with negative eight 9% in plenty of time there too.
Looking ahead.
Rajeev the positive trend in profitability, you will persist as we're continuing to pursue a high quality and a sustainable development strategy and unlock synergies where they may tell me at a Kmart group ecosystem.
That's why we are integrating our AI technologies, and Eagle system, and a new era.
Good.
This concludes our prepared remarks.
And we are not having to take out.
Pascal fashion, but in those matters.
Please go ahead.
How does that relate that to ask a question. Please press star one and one on your telephone where they attempt to Vietnam to.
Your question. Please press star one and one again once again, please press star one on your telephone and wait for your name to Vietnam.
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Hi, Jonathan.
You don't quite get social content I know that's sort of thing.
So thanks management for taking my questions and my first question is regarding the AI strategy. So the company has been actively investing in AI for the past year. So could management give us some color on the market competency of your AI related products and solutions.
So at this year's Capex plan on the revenue expectation.
And my second question is on gross margin and so I can't see how to achieve them.
Gross margin improved than last year, partially extra but I'll tell you what that change as a rattling index. So ask your CDN business that just now approaching the end of what do you think of the gross margin Kirkman pace going all right. Thank you.
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That's okay I think in terms of the margin expansion.
There are three fundamental drivers for the margin I think you pointed out correctly. The first one obviously.
It's the continuous mix change of the CDM business.
As others, so I don't see that the CDM business itself actually going through a cycle, but right now we are in a.
Kind of a more stable period that we are going to see a potential stability with video revenue contribution that so as the client usage patterns that will contribute to naturally to a margin expansion I think that's contributed one third of the <unk> of the margin.
Margin improvement.
The second thing I also want to mention probably I didn't notice on a plant outage.
So our measure us and the new management initiatives for example, including the renegotiation of our supply.
Supply chain contracts with our suppliers to cutting down the cost basis that actually is not happening a one day or a single month of the year as you can expect it actually spent over for example, the four year from last year right.
And are those contracts on the repricing on a cost basis will be effective on a rolling basis right from January to December of last year, and you actually extrapolate those trends towards 'twenty 'twenty for those.
Good benefits and the positive impact from the re negotiation and the lower the cost basis will actually carry the continuous benefits to our margin and our cost into a 20th plentiful I think.
That power will contribute in the second one third of the margin expansion.
The third is also they probably didn't notice it was really about actually I suppose on mentioning the prepared remarks is getting a better quality of the projects.
Okay about the cloud part of yourself, but also on the enterprise side as well as those of vertical including the financial services health care and.
So to the high quality of public cloud projects as well and those projects as we sign the contracts some of them are doing about it.
And that won't be a leash and nobody can put it.
Paul and in our history, especially in 'twenty, three and we actually are seeing a good experience and a good trends that those enterprise called projects. The single level contract revenue contribution that has expanded from let's say mid single digits in the history, a few years ago to double.
Digits and right now we are seeing those trends actually has continued to improve so the enterprise cloud marketing, especially on high quality initiatives and our strategy with such seems to 'twenty to 'twenty. Two is already see some quarter results. So this hot actually culture building. The last one third of the marketing expansion so to conclude.
I think we do see a positive trend, even though I understand the shutdown your costs. There may be in Q4, you do see a very good Q on Q jump off the margin about three percentage points, but I think we're in a very.
Very good momentum.
We are confident the way that I think Q1 going forward given the three reasons I just mentioned our gross margin will continue to be seen.
Seeing a good result going forward.
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So let me translate it for him.
Uh huh.
Our first question.
First question is about the competitiveness.
All of our products.
So it's only at the crest of the comments you did in the last year. We have comprehensive we've worked very hard on expanding our AI business. However, it would be harnessed last for me to do I click on it.
All of them, how does it all of our product versus other of our peers.
I would say that because of our unique positioning and trial again independent we have if you look at it.
I'll now, becoming a preferred choice.
Cloud service provider a lot now.
Dependent yeah last month model.
And that exactly because if we don't do our language model at that time.
Not at all.
And therefore, you can just round off opportunities.
As a result of recovering in a significant number of tenants.
Yeah, it'd be calling on customers.
You also asked about the future investment in terms of Capex I would say that the rule of thumb is we will be continuing to investing based on the demand that's in the pipeline.
Customers have a pause.
What about the specifics with regards to the specific amount and a specific dollar amount and the temple.
Investment.
It is.
It's probably a bit difficult for me to comment at this stage.
Yeah.
Operator, Please go ahead.
[laughter].
Thank you.
We are not going to proceed with our next question.
And the question comes from the line of Daily Life from Bank of America Securities.
Sunday Night is open.
And.
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I'm going to jump out before I think we caught up.
Oh I gotcha.
Thank you.
That would have been okay.
Two things.
[laughter] sounds management for taking my question two questions first of all you sound like you had this nice.
Could you share some color about the supply and demand trends recently and Oh.
Do we see the gross dollars Tony AI.
It doesn't matter.
Uh huh.
How do you call excuse me going forward and the key drivers and Stephanie.
And my second question about the margin trends.
Looking into.
And how do we see the margins such Anthony I can't even Martin and constant lack of share based compensation cost change. Thank you.
Okay, well it sounds like either you're going to do.
Hmm.
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And secondly, what's your name you probably consider warm sunshine and passenger hydrocortisone she.
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They only have two though Julian student to go quick.
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He says I think that's it.
To Oh Gee the country bundle.
Hello, Greg.
Just it was just some which have anybody.
I know you haven't too soon to say.
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Okay.
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See you soon.
Yes.
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Of course, it's only down though but it's something that's happened in Chicago, you put somebody said she's so cool.
So yes, she's unfortunately.
Hello.
To do that which I mentioned, a couple of quarters until you just shouldn't say.
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So maybe I'm watching things Youll see.
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I think that you've got I guess shouldn't insurance.
We thought that that didn't just that's useful.
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What city, Pennsylvania, all kind of new hires.
So it went up and don't get it finished.
As your total John Hello, Hong Kong who've got drunk.
I'm not so sure that's a woman that's starting to really Hum.
Got it.
She wasn't done.
So if I'm a puzzle to go along with your kind of assumed loss really are trying to do.
Sure John.
How much do you I'm wishing to ask Jonathan.
So Don.
How are you going to Jerusalem about who is shopping later.
Oh, sorry, those from time to time at that particular.
Well count, but a substantial improvement.
Yeah.
Sure.
Well, Josh Joshi, and that's usual she want us around those particular something sometime.
Okay got you.
How are you sure.
So.
Yes, you mentioned that that situation.
And then for a GPU chips.
More than supply.
Which had been the key theme for last year.
I'm joined up here, we have also been trying all of that.
To me.
Our Hoffman on demand.
Well the situation this year, there's no changes right on one hand, the DUC count.
Mainly in China.
Alleviating to some extent.
The issue. However, we have also seen other factors, especially geographics.
Pension and taxes.
Deterioration in that situation. So overall speaking, we see that offset the AI market.
Demand continues to increase.
The overall theme of the demand and supply balance is still at a demand largely exceeding that Oh that's fine.
And we don't expect that kind of relationship to have any material change in.
In the near term future.
Yeah.
I'll respond.
Two the situation Oh, what happened is that we're working with a.
Uh huh.
About half an hour.
Did he had to building dedicated computing powers on them together.
Got it and the second thing that we do it too a lot with a new product that all of them Hum fine our premises.
Lot to supply in China market.
And in terms of our growth drivers are.
There are basically two times.
Growth drivers one is the whole Congress of existing one let's say.
All of which are mainly characterized by the independent AI language model customer that we have been serving recently and it's going to tie in new customers.
Which are typically not the independent AI language.
Companies. However are those companies that are ready to leverage that capability with a model to empower their existing business.
For example, EV customers currently we see that the what Fiverr I'm.
Coming from existing customers, who are taking a high proportion. However, we do expect that in the future the potential for new customers demand has higher.
Financial.
And Mr. Howard SPT also added that.
There are several types of gross drivers one is the internet companies training their own models and using their health models and I think the inference capability off the computer power and ease of use are there any hot model and secondly is the the other.
And the launch of Sarah that leading to a wave of demand coming.
Coming from the video side of things and the third part would be the.
The new companies like news, though Tom mentioned.
E D autonomous driving kind of a demand. Thank you.
[noise] yeah. Thank you.
So I would take on the second question I. Appreciate you all noticed salt Lake expansion on the modern side.
So I think there.
There are a few oh kind of major directions, who are trying to achieve going forward I'd say first of all it's wise to aiming to keep a Q O Q expansion on a growth market.
So this actually is driven by the.
Cutting on the supply channels and better off in a mate nation all the resources we have.
And cutting certain lossmaking.
Computing reagents and certain.
The disposal for certain equipments that would only fitting to today's client requirements. So all the combination of all actions, while contributing to the margin, especially off of gross margin.
And as I said to the first question those efforts that's already in place and they were gonna see those impact would be graduated about going forward in next year as well. So the first as I mentioned is really about expansion on.
Kimco basis on the gross margin. So the second part is really about narrow and better managing the expenses and the operation.
<unk> expenses, including for example are the better management chart the the.
The human capital cost.
<unk>, the internal efficiency and the streaming line or the owner manager.
Initiatives that were actually contributing for the expansion of the EBITDA margin. So as you can see our expenses between the lie off the gross margin and EBITDA margin computer to optimize some of their reduced as well in the past few quarters, so that proven team.
Has already got some good experience in our practice to those skills pretty well and we think we can carry on that in next couple of quarters. So our second and this too.
<unk> improved the EBITDA margin on a computer basis. So we are confident to see as we make our efforts our EBITDA margin will be getting to approaching the break even.
Having a short term of time and a third is we are also adding to another Cape.
Keep your eye for ourself in terms of internal management, we're trying to not only in the EBITDA margin breakeven, but were also trying to making the company better quality arabica deal and a continuous opt in milestone revenue mix and picking the right and.
And also expanding our exposures will be in a very good addition to have the possibility to see a good trends of op margin expansion as well. So I think these are the three goals. We are trying to achieve in 'twenty than before while we are not in a position today to give a clear guidance about the timing of that.
EBITDA margin breakeven as well as the profitability on O P module side we.
We are confident to say that all the initiatives in place, we'll see that in good results going forward.
Next few quarters, probably a week all observed in the two O question with the SBC cost.
And one thing I want to note is that based on accounting rules. The SPC Cosworth book based on the share price at the time when you thought that Michelle was granted to the employees not on a best in period of time, so when share prices were high and those costs will be booked at Emerald highest in next few years.
So I don't think given the volatility of the cabinet market for many of the shelf today. The SBC line is reflecting the true value in the market value of them up the aesop value with granted to the employees. So that it will be need to be revisited and recalculate. If you wanted to do a model, but putting all the.
All things together the company has adopted a very prudent way of granting and divesting. The chefs as you may see from the announcements and also we extended third investing to keep the company employee walking into long granted with better incentive.
So as you can see from 'twenty to 'twenty two 'twenty three our war SBC cost has declined from roughly 316 million RMB in 2022.
To drop about half to one 8 million RMB 23, So I think we are.
It's a prudent attitude from issuing granting an arresting that yourself and I think going forward youre going to see a better and a narrower line between the catheter lock up.
<unk> as well.
I played heavily in London last question.
Yeah.
Thank you we are not going to proceed without question.
Yeah.
And the question comes from the line of <unk> from Goldman Sachs. Please ask your question.
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Yeah.
Yeah.
Yeah, that's yeah, Oh, Glenn you want to kind of.
Got going on in Germany.
Oh, okay.
Consequently, you know without Sunshine, Yeah, we all share.
No.
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Yeah, John I'm cooking for myself couldn't mention I'm talking about the strategic planning.
I was calling 20 times as well.
Second question.
Yeah, Hi competition.
In early 'twenty, 'twenty, four and National House Tomorrow at the latest competitive landscape and are looking for call. It comparatively.
Thank you.
Yes.
Okay.
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T and the high and the Zip.
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What's supposed to jewelry, which is huge because schinder shockwave.
Are you going to think of a central Florida, she's been on yes could be.
When we used to have them.
The Hood Fischer chief human support.
She says better attitude, but also starting to see would you disagree with.
This helps them between your passion.
You may have noticed you shoot.
It is a contaminant, they're telling me the way it's here somewhere this year.
So you can do it especially on a was.
Was it about union that whatever you got a few.
So that took a few in Columbia.
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I know you guys have you assumed.
She was the one or two of them and if I ever heard about on Iraq.
Yeah.
That's doubled year on year.
It's really probably not moved up.
Oh, My God, Nick Junior I should probably take the second move up business. When you look out at the time.
Great.
We don't think it's Susan.
Figure to go yeah, both of them since you can switch also sometimes with all sorts of good.
But we don't think that's what it was in the vehicles.
But what you can see the boardwalk I'm wondering is if she passion behind I guess, what we should go home.
That's almost one of the bigger kind of depending on how to do it.
Especially the cutover. So can you just a question on women women when they do so.
Sure I mean, it's a part of it.
So the ease of use.
Pardon me.
So you'd probably like some good.
Firstly I would like to pursue.
So do you with us I'm not so.
Sure would've been in Chicago.
Sure sure sure.
How are we don't have that figure.
Somehow I jumped onto a single dose efficient, though wondering maybe it seems as though chipotle because some of it.
But certainly if there's I think there's a woman.
Okay.
But even though you've got pricing.
We don't think it was like high school.
That's always a glimmer of hope would you.
Since you have me, Okay, Oh, how you ship to the human away back to we don't think that I was once again.
Just a walk to machine.
Okay got it.
Part of it should be all in I believe September it sounds good.
So I'll have somebody a corner.
The structure that should get you.
You can say look we can you guys just won't work.
Oh Wow.
Okay.
Yep.
Just.
Just wondering behind it.
To go through that.
Condoleezza.
Filippo City of hope she says.
Uh huh.
Okay.
Somewhere in between.
We're supposed to go shoot.
Jonathan I prevention right.
How long can swing that theyre going with.
It's just the finish out of Africa.
Uh huh.
In front of me, but she's done.
Zhengzhou.
So we think that is a I think this is a very good question and we have been.
To conduct an internal discussions around exactly the question you raised so a few opportunities I would like to share with you.
The first one is you might have noted that business for a large number of digital asset companies across China has been established and that basically led to a wave of state owned an asset companies are migrating migrating onto cloud I'm using more up in the second which I think is probably a larger opportunity that is.
Happening. This year is the the measure of digital assets are showing on the balance sheet and we should call. It a plenty of 24 to be the first year updated opportunity because of the government policy recently promulgated we have also been making communications.
With the Shanghai, a digital asset exchange and also it's a professional parties for example, like auditing firms. We do think that it represents a significant opportunity book for a cloud service companies, but because of the digital assets will be running off.
The cloud infrastructure and digital accident data assets cannot run by itself. So in other words, if the integration of cloud service and digital assets. So all these whole chain.
Data production data transactions et cetera are going to be supported by the cloud and therefore all of these represent opportunities for us theres not opportunity with respect to any particular industry, but a general about.
That's probably the larger opportunities that we can expect to see.
In recent years.
Okay Thiago was in Washington, a kind of a honeymoon.
Uh huh.
Sure.
So some part of it has to go.
When you see a question of when he was younger.
Even though it's a good chunk.
John you and you're pushing your luck.
I think it's warm in soybean crush.
What's in there.
John will continue to take the time going to make the time.
She said she was having very.
Thank you Michelle.
To go to the China in game.
What from what my friend has jumped.
So you hold a suddenly from pizza hut.
Hum.
Hi, Bob.
This is something that they go farther in general not because.
Yeah, They should do what you're doing what do you mean to me that he's so yeah, we hear you there.
So it says to you what's essential tremor.
So you want me to pick up.
Submission of a union shop.
Just if you could if you are going to just be able to figure out here. What gives you. The Columbia you will see some of them that union.
All of them through the temporary disruption to that.
To some degree.
Cool.
Charles will move the call to.
Two three.
<unk> you guys hold of them they're going.
When do the easier part of job okay.
Petrol passenger hi, so congrats on that.
Maybe you don't need to affect change.
It's a global football.
How do you believe.
So you can assume that.
Without going into the charter to one gig.
So to follow.
Yeah.
It's a transition year.
So we don't come out you're going to start out in New York, especially something meal you might say.
Assuming you Michelle Jonathan I kind of agree with how long so even if he wishes.
Where they are I would say that's all of them I'm sure you don't give any shot just to do something with it sounds like you you talked about scope and finbar sheehy.
It sounds like Jonathan.
I'm going to talk about the equivalent.
Yeah.
Do you have to go through the door.
So you can say Hello to you just shoot shoot for cohort B right now.
Moody's in human cells.
There was two major two of them.
You can tell us about that because he is something that I think that would be good.
The yoga cocoanuts.
And then what's your name.
Thanks, guys.
Hello.
Kind of how you originally thought.
We've got to get all of them.
Sometimes they do go through with you.
Yeah.
Two upon the junk out of the auction that should that.
Hopefully that's useful shocks that can.
Hum.
That's been the truthful answer it's often do additional shopping with us and you can say that.
Cool and then took a poultry institute.
Also I'm Terry the one but you got to remember kind of not doing.
Okay.
Yeah.
So the second question relates to the competition in the market.
So I would like to share with you a tune up my core.
The first one is we have actually been experiencing price pressure since the day of rounding them every year, we have been seeing different kinds of.
A price pressure coming from.
There is a kick.
In a different kind of product. However, at the end of the day would not really see any of those.
Our by our peers have any material or significant impact to the market and from our own.
Hum performance results. We have also achieved for six consecutive quarters of profitability improvement.
Now I'd like to say that we think the reason for that is of pricing. Obviously is one important factor for customers consider however, it is far from the most important factor and from our own experience and also evidenced by our achievements in the past six quarters.
Focusing on the satisfaction of customers is actually the most important thing and I'd like to also like to say that my my view about this kind of large amount of price cut by our peers.
It's more towards the end of marketing and PR.
Sure.
Some of the cross cut price cost I guess on catalog price. However, a lot of the transaction price that cloud service providers have agreed with the potential customers are already deeply discounted and already are way below the price cut level.
With me today.
And also our and see those.
Now also added that this round of price cuts.
From up here are mainly focuses on the coffers, which are relatively small in scale and not paying out their usage fees.
No basis, and this group of customers actually do not overlap with the cosmos that kicks off a cloud enjoying it and therefore it does not have any material impact on small pricing strategy or our business performance.
Yeah.
Uh huh.
We have no further questions at this time I would like to hand back to Nico sharp for closing remarks.
He loves that game are joining us today, if you have a library that transfer these feel for it to come out about where to speaking with you again.
Thank you.
Yeah.
Ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect. Thank you and have a good day.
Yeah.
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