Q4 2023 Smart Share Global Limited Earnings Call
Unknown Executive: Yi Wei, Hansen Shi, Mars Cai, Yi Xin, Weiting Tang, Smart Share Glo Hello and thank you for standing by for Energy Monster's fourth quarter and fiscal year 2023 earnings conference call. At this time, all participants are in a listen-only mode.
Yes.
Yeah.
Okay.
Okay.
[music].
Hello, and thank you for standing by for Energy Monster is fourth quarter and fiscal year 2023 earnings conference call at.
None: At this time all participants are in a listen only mode. Today's conference is being recorded if you have any objections you may disconnect at this time.
Unknown Executive: Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference call, Director of Investor Relations, Hansen Shi. Please go ahead.
I would now like to turn the meeting over to your host for today's conference call Director of Investor Relations Henson. She please go ahead.
Hansen Shi: Thank you. Welcome to our 2023 fourth quarter and full year earnings conference call. Joining me on the call today are Mars Cai, Energy Monsters Chairman and Chief Executive Officer, and Maria Xun, Chief Financial Officer. On today's agenda, management will discuss business updates, operations highlights, and financial performance for the fourth quarter and full year 2023. Before we continue, I refer you to our safe harbor statement in the earnings press release which applies to this call, as we will make forward-looking statements.
Henson: Thank you welcome to our 2023 fourth quarter and full year earnings conference call.
Henson: On the call today are Marc Hi, Energy Monsters, Chairman and Chief Executive Officer, and Laura, Yes, Yan Chief Financial Officer.
Henson: For today's agenda, Madison will discuss business updates operation highlights and financial performance for the fourth quarter and full year 2023.
Henson: Before we continue I refer you to our Safe Harbor statement in the earnings press release, which applies to this call as we will make forward looking statements.
Hansen Shi: Also, this call includes discussion of certain non-GAAP financial measures. Please refer to our earnings release, which contains the reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally, please note that unless otherwise stated, all figures mentioned during this call are in RMB. I would now like to turn the call over to our Chairman and Chief Executive Officer, Mars Cai, for the business and operation timeline. Thank you, Hansen. Good day, everyone.
Also this call includes discussion of certain non-GAAP financial measures pizza.
Henson: Please refer to our earnings release, which contains reconciliation of non-GAAP measures to the most directly comparable GAAP measures.
None: I know Lee. Please note that unless otherwise stated all figures mentioned during this call are in RMB.
None: I would now like to turn the call over to our chairman and Chief Executive Officer, Mark tie for the operation highlights.
Mark: Thank you Hans and good day, everyone welcome to our 2023 fourth quarter and full year earnings call.
Mars Guangyuan Cai: Welcome to our 2023 fourth quarter and full-year earnings call. During 2023, our operations underwent a notable transformation after overcoming the challenges of the previous year. We were able to achieve historical high growth rates of 27% year-over-year during 2023, fueled by a combination of recovery in offline traffic and expansion of our mobile device charging network, but this was partially offset by a softer than expected consumption environment. The general recovery in food traffic last year compared to 2022 has been apparent, and especially significant during holidays and weekends. The scale of our network also increased significantly during this year, led by the combination of network partner and direct model. The total POI count reached 1.2 million as of the end of last year, up 237,000 from the end of 2022.
Mark: Tubing Twenty-twenty suite, our accretions underwent a notable transformation after overcoming the challenges of the previous years.
None: We were able to achieve historical high GMB growth rate.
None: 10% year over year during 2023.
None: Field by a combination of recovery being offline traffic and expansion of our mobile device charging network.
None: But partially offset by a softer than expected consumption environment.
None: The general recovery in foot traffic.
None: Last year compared to 2022 has been apparent in especially significant duly holidays and weekends.
The scale of our network also increased significantly during this year.
None: Net but the combination of two of partner and develop models.
None: Total appeal I count reached $1 2 million as of the end of last year.
None: 237000 from the end of 'twenty to 'twenty two.
Mars Guangyuan Cai: Furthermore, we achieved positive possibilities with non-GAAP net income reaching RMB108.1 million, a stark turnaround from the non-GAAP net loss of RMB683 million in 2022. These robust operational and financial recoveries underscore our dedication to seizing opportunities within China's mobile device charging service industry while adhering to our philosophy of efficient expansion. We are confident that this transformation will continue to unfold throughout 2024 as we remain focused on the pursuit of strategies aimed at sustainable growth and enhanced profitability. Now, as for the fourth quarter of last year, we were able to deliver strong year-over-year results, with GMB increasing by 42. Generally, the fourth quarter is a light season for our operation due to the generally cold weather.
None: Furthermore, we achieved positive profitability with non-GAAP net income, reaching RMB $108 1 million.
None: Talk time learned from the non-GAAP net loss of RMB $683 million in 2022.
None: This robust operational and financial recoveries underscore our dedication to seizing opportunities within China's mobile device charging service industry.
None: While adhering to our philosophy of efficient expansion.
We are confident that this transformation will continue to unfold throughout 2024, as we remain focused on the pursuit of strategies aimed at sustainable growth and enhanced profitability.
None: Now as for the fourth quarter of last year, we were able to deliver strong year over year results with <unk>, increasing by 42% gender.
None: Generally the fourth quarter is a light season for all accretion due to the generally colder weather.
Mars Guangyuan Cai: However, we continue to see highlights during the quarter. Total POIs increased by more than 45,000 during the quarter, despite seasonality and the rebalancing of our direct model POI portfolio. GNV during the National Golden Week in October displayed strong results, with average daily GNV increasing by 26% year-over-year. Our network also displayed improved diversification regionally, with fifth-tier cities' GNV increasing by more than 50% year-over-year during the quarter, as our network partner model continues to drive growth in coverage of our service. Growth in terms of PY time was well-rounded, as well as with every type of PY growing year over year Notably, transportation hubs led the growth by PY type with an 114% year-over-year increase in GNV. Office Buildings, Bank, Beauty, and Healthcare POIs, all exhibitors, had strong growth of more than 50% year-over-year GME growth. We are delighted to witness the continued diversification of our PY portfolio and the transactions gained by new PY categories. Looking ahead, we believe substantial and tapped opportunities remain for our society, both in terms of region and PY, across China in the years to come.
None: We continue to see highlights during the quarter.
None: Total <unk> increased by more than 45000 during the quarter.
None: Spikes of seasonality and the rebalancing of all direct model your wind portfolio.
None: G N V. During the National Golden week in October displayed strong results with average daily G M b increasing by 20.
None: 26% year over year.
Oh network also displayed improved diversification regionally with fifth tier cities G N b, increasing by more than 50% year over year during the quarter.
None: As our network partner model continue to drive growth in coverage amongst others.
None: Growth in terms of P lighthouse.
None: With well rounded.
As well as with every type of P. A white growing year over year.
None: Notably transportation hubs led the growth by P Y type with a hungry and 14% year over year increase in G&A.
None: Office buildings banks beauty and health care Py's, all exhibited strong growth of more than 50% year over year G&A growth.
None: We are delighted to witness the continued diversification of our P white portfolio and the tracks transaction gained a new P like categories.
None: Looking ahead, we believe substantial untapped opportunities remain for our service.
None: Both in terms of reaching and P y types across China in the years to come.
Mars Guangyuan Cai: In the fourth quarter, we continued to expand our network while rebalancing the contribution by our network partner and direct model in order to more efficiently expand our operation. Our dedication to expanding our network remained consistent, as we utilized a blend of both direct and network partner models to expand the reach of our service. We proactively pursue new network partners across all regions to enhance our footprint in existing regions and extend to new ones. We attracted over 4,300 network partners during the fourth quarter of last year.
None: In the fourth quarter, we continue to expand our network.
None: While rebalancing the contribution by our network partner and direct models.
None: Order to more efficiently expand our penetration.
None: Oh dedication to expanding our network remained consistent as we utilized a blend of both direct and network partner models to expand the reach of our service.
None: We proactively pursue new network partners across all regions to enhance our footprint in existing regions and extend to new ones.
None: We attracted over 3000 and through Oh over 4300, sorry network partners during the fourth quarter of last year.
Mars Guangyuan Cai: Furthermore, our direct model complements our network partner strategy, leveraging the Energy Monster brand to forge alliances with national and regional KAs, including prominent players in chain restaurants, hotels, convenience stores, and tourist destinations. We will also focus on optimizing our portfolio of POIs and the direct model, particularly those underperforming post the normalization phase in 2023. Notably, in the fourth quarter of last year, locations in the categories of restaurants, entertainment, and shopping hubs spearheaded PY-type growth, with lower tier cities leading in terms of reach.
None: Furthermore, our direct model complements our network partners strategy.
None: Leveraging the energy amongst our brand to forge alliances with nationals and the original case, including prominent players in chain restaurants hotels convenience stores and tourist destinations were.
None: Also focused on optimizing our portfolio of P wise and the direct model, particularly those underperforming post the normalization phase 820 23.
None: Notably in the fourth quarter of last year locations in the cat can degrees of restaurants Entertainment shopping hubs spirit had at T O Y type growth with lower tier cities, leading in terms of the region.
Mars Guangyuan Cai: We also continue to strengthen our balance sheet and optimize our working capital during the last year, while our operations continue to recover towards normalization. The increasing contribution of the network partner has been a positive contribution towards our profitability during the year. The return to profitability in each quarter of 2023 stands as a pivotal indicator of our resurgence into a consistently profitable economy, even amidst a soft consumption cycle.
Yeah.
None: We also continue to strengthen our balance sheet and optimize our working capital jewelry last year, while our operations continue to the covenant towards normalization.
None: The increasing contribution of network partner has being a positive contribution towards our profitability during the year.
None: They returned to profitability in each quarter of 2023 stents as a pivotal pivotal indicator of a resurgence into a consistently profitable company.
None: Even amidst a soft consumption environment.
Mars Guangyuan Cai: Our ongoing initiatives to optimize costs and expenses, particularly around our direct model, have continued to enhance our financial efficiency. With profitability restored, a steady cash flow, and a robust balance sheet, we now possess the flexibility to explore diverse avenues for delivering value to our shareholders. This includes initiatives such as the previously announced share repurchase program and a special dividend.
Our ongoing initiatives to optimize costs and expenses, particularly around all direct model have continued to enhance our financial efficiency.
None: With profitability restored our steady cash flow and a robust balance sheet, we now process the flexibility to explore diverse avenues for delivering value to our shareholders.
None: This includes initiatives such as the previously announced share it with you.
None: Repurchase program and a special dividend.
Mars Guangyuan Cai: Going forward, we will continue exploring ways of delivering sustained value to our shareholders. Now, let me walk you through our key initiatives in coverage and efficiency in greater detail. First is our commitment to expanding our PY network, driven by the immense potential we see in untapped regions and POI categories. We delivered robust growth in our PY coverage during this quarter and for the full year of 2023, with a net addition of 45,000 new POIs for the quarter and 237,000 for the year, bringing our total POI count to over 1.2 million. The growth in POIs was primarily driven by our network partner model and supported by our direct model for national and regional KAs. New POIs predominantly include locations in the restaurant, entertainment, and retail categories, accounting for 33%, 20%, and 17% of the total increase in POIs, respectively, during this quarter. Furthermore, we witnessed substantial growth in healthcare and office building locations, with quarter-on-quarter increases of 9% and 8%, respectively, compared to the end of the previous. Horizontally, we successfully expanded into 39 new regions this quarter, bringing our total count to nearly 2,100 counties and county-level cities, with ongoing expansion in progress.
None: Going forward, we will continue exploring ways of delivering sustained value to our shareholders.
None: Now, let me walk you through our key initiatives in coverage and efficiency in greater details.
None: First is our commitment to expanding our P y network.
None: Driven by the immense potential.
None: We see untapped regions and pillar categories.
None: We delivered robust growth in L. P like coverage during this quarter and for full year 'twenty 'twenty suite with a net addition of 45000, new P O I's fourth quarter and 237000 for the year, bringing our total P like hand to over.
None: $1 2 million.
None: The growth in P. Wise was primarily driven by our network partner model and supported by our direct model for National and the original case.
None: New P. Wise predominantly include locations in the restaurant entertainment and retail categories accounting for 33%, 20% and 17% of the total increase in P lives respectively Dream this quarter.
None: Furthermore, we witnessed substantial growth in health care and office duty locations with a quarter on quarter increases of 9% and 8% respectively.
None: Compared to the end of the previous quarter.
None: Horizontally, we successfully expand into 39 new regions this quarter.
None: Our total count to nearly 2000 and hungry to countries and country level cities.
None: With ongoing expansion in progress.
Mars Guangyuan Cai: This dual approach of vertical expansion into diversified POI mixes and horizontal expansion into new regions serves as pathways towards sustained growth. Central to our POI expansion strategy is our network partner model, which has proven instrumental in our growth trajectory. We are delighted to announce that our active network partner count surpassed 11,000 during the fourth quarter, making a notable increase of over 900 partners compared to the preceding quarter and a substantial rise of 4,300 partners from the end of 2022. The remarkable 65% year-over-year surge in network partners equips us with the capability to extend our reach to more regions and countries. The acquisition of new partners is, however, just the first step in our network partner model. Our dedicated network partner team is committed to unlocking the full potential of each partner upon onboarding, providing hands-on and timely guidance. Our network partner support team ensures that the partner receives the necessary assistance for their everyday operations.
None: This dual approach of vertical expansion into diversified py mixes and horizontal expansion into new regions says S pathway towards sustained growth.
None: Central to our P Y expansion strategy is the only network partner model, which has proven instrumental in our growth trajectory.
None: We are delighted to announce that our active network partner account deposits are 11000 during the fourth quarter.
None: Making a notable increase of over 900 partners compared to the preceding quarter and a substantial rise of 4003 hundred pounds from the end of 2022.
None: The remarkable 65% year over year search in network partners Equips us with the capability to extend our reach to more reaches N P wise.
None: The acquisition of New partners. However, just the first step in our network partner model.
None: Our dedicated network partner team is committed to unlocking the full potential of each partner upon on body.
None: Providing hands on and timing guidance.
None: And that's what partner supporting anxious that the partner receive the necessary assistance for their everyday operation.
Mars Guangyuan Cai: We adopt a tailored approach, offering training-focused support for new partners, while delivering data-driven insights to season the work. Our objective is clear, to enable new partners to swiftly achieve positive economics and empower established partners to scale more efficiently. Only through this alignment of interests can we truly unleash their growth potential, driving mutual success and fostering lasting partnerships.
None: We adopt a tailored approach offering training folks to support for new partners, while deliberately data driven insights to season the ones.
None: Oh, Oh, Oh objective is clear to enable new partners to swiftly achieved positive economics, and empower established partners to scale more efficiently.
None: Only through this alignment of interests can we truly unleash their growth potential.
None: Why the mutual success and fostering lasting partnerships.
Mars Guangyuan Cai: For our direct model, our team continues to focus on more exclusively national and regional KAs and the optimization of the existing direct model POI portfolio. During the fourth quarter of 2023, we were able to secure partnerships with renowned chains in sectors such as chain restaurants, hotels, convenience stores, and tourist destinations, while this K8 represents only a portion of our total increase in PY. The quality of this location, in terms of volume, offline user traffic, and conversion rate, is generally significantly higher than our current average. That's why our direct model will be more dedicated to the acquisition of KAs and in higher-tier cities where the execution capabilities of our direct model can be more pronounced. We have also been reviewing the performance of each and every one of our direct model POIs based on the current user traffic.
None: For our direct model our team continue to focus on more exclusively national and regional case.
And the optimization of existing direct model P. A wide portfolio during the fourth quarter of 2023.
None: We're able to secure partnerships with renowned chang's in sectors, such as chain restaurant hotel convenience store and tourist destinations.
None: While these K a presents only a portion of our total increase in the P wise.
None: The quality of this location.
None: In terms of volume of offline user traffic and conversion rates are generally significantly higher than all cutter-rigged everage. That's why our direct model will be more dedicated to the acquisition of case and in higher tier cities, where the execution capabilities along with director model.
None: Can be more pronounced.
None: We have also been reviewing the performance of each and every one of I'll give up the modal P wise based on the current user traffic.
None: As a result.
None: This evaluation, we have transitioned our position of these P O wise to our network partners.
None: Optimizing our portfolio for maximum effectiveness.
None: The network partner program under the direct motto team, which was launched in 2022 also says as a wave of direct modal business personnel to extend L. P. Why coverage through the network partner model.
Mars Guangyuan Cai: As a result of this evaluation, we have transitioned the position of these POIs to our network partners. Optimizing Our Portfolio for Maximum Effectiveness. The Network Partner Program under the Direct Model Team, which was launched in 2022, also serves as a way for our direct model business personnel to extend our POI coverage through the network partner model. This program leverages the coverage and main power of our direct model and their familiarity with their location and Market to effectively expand our coverage of network partners in large cities. The overall transformation in our direct model has been significant in the past year, and the results are clear.
None: This program Leverages, the coverage and the manpower, although director model and their familiarity with their location.
None: And the market.
None: To effectively expand our coverage of network partners in large cities.
None: The overall transformation director model has been significant in the past year.
None: And the results are clear.
None: Under the direct model.
None: Decreased from 47%.
None: After the end of 2022, 227% as of the end of last year.
None: Moving forward on.
None: Priority for expansion of our P Y count would be through the network partner model, while our direct motto team, we're focused more on high performing case in higher tier cities.
Mars Guangyuan Cai: POIs under the direct model decreased from 47% at the end of 2022 to 27% as of the end of last year. Moving forward, our priority for the expansion of our PY count will be through the network partner model, while our direct model team will focus more on high-performing KAs and higher tier CTMs. Both our direct and network partner models play pivotal roles in driving our expansion efforts. The utilization of both models provides us enhanced flexibility in accessing new POIs, expanding across diverse regions, and PY time. The DirectModel's swift execution and high-quality service to location partners are particularly effective for high-yield locations and higher-tier systems and KAs. Meanwhile, the Network Partner Model offers distinct advantages in providing comprehensive coverage across all regions. Seamlessly complementing our direct model strength.
None: Yeah.
None: Both our direct and network partner models play Peter told those in driving our expansion efforts.
None: Utilization of both models provide us enhanced flexibility in accessing new P wise spanning across diverse regions and P. Lifetimes.
None: The direct model Swift execution and high quality service to.
None: Location partners are particularly effective for high yield locations and higher tier cities and case.
None: Meanwhile, the network partner model offers distinct.
None: Long tedious and providing comprehensive coverage across all regions seamlessly complementing I'll give up the Moto stress.
None: Moving forward, we were strategically balanced the utilization of these two models leveraging the unique advantages of each to effect efficiently expand our coverage network.
None: The rapid expansion of our P white count and diversification in P. Like category and region mix is unlocking new opportunities to reach and serve a broader use user base.
None: With the placement of more cabinets in each region and network effect is created.
Mars Guangyuan Cai: Moving forward, we will strategically balance the utilization of these two models, leveraging the unique advantages of each to effectively expand our coverage network. The rapid expansion of our PY count and diversification in PY category and region mix is unlocking new opportunities to reach and serve a broader user base. With the placement of more cabinets in each region, a network effect is created, facilitating easier access and return of our power banks for users. The cumulative uses based experienced a remarkable growth of 12.6 million during the fourth quarter of 2023, bringing our total to 391.5 million cumulative users as of the end The large user base is directly translating into the number of unique users and mobile device charging orders, which totaled approximately 155 million orders for the fourth quarter of last year and 656 million for the year, representing a year-over-year increase of 33% and 19%, respectively. The larger user base additionally gives us the capability of working with leading IPs and celebrities for collaboration. During the quarter, we continue to roll out IP partnerships with leading celebrities and brands for the promotion of tailored PowerBank. This continues to be one of the differentiations that EnergyMonster excels in terms of offering a different experience for our users.
None: Facilitating easier across.
None: The regions.
None: And for the X axis and the return of all power banks will use it.
None: The accumulated users based experienced a remarkable growth of $12 6 million during the fourth quarter of 2023.
None: Bringing our total to $391 5 million cumulative users as.
None: At the end of 2023.
None: The large user base is directly translating into the number of unique users in the mobile device charging orders.
Which totals to approximately mostly are hungry and 55 million orders for the fourth quarter of last year and 656 million for the year.
None: Representing a year over year increase of 33% and 19% respectively.
None: The larger user base. Additionally gave us the capability of working with leading eye piece.
And celebrities for collaborations.
None: During the quarter, we continued to roll out the IP partnerships with leading celebrities and the brands for the promotion of payload power banks.
None: This continues to be one of the depreciation that energy amongst itself in terms of offering a different experience for our users.
None: Every time all user access our service they have a chance to use one of the tailored Taliban that we have circulation.
None: For example, we worked with the popular Popstar Jay Chow during the fourth quarter of 'twenty 'twenty suite to launch a tailored power bank.
None: No.
None: Paired it with our online campaign for users to find those limited edition power banks.
None: The collaboration garnered tremendous user interactions and provides provide.
None: Provide a proved to be a massive success.
None: Going forward, we will continue to look into innovative and fun ways of leveraging our branding capabilities to bring a more differentiated experience to our users.
Mars Guangyuan Cai: Every time our users access our service, they have a chance to use one of the tailored PowerBank that we have in circulation. For example, we worked with the popular pop star Jay Chou during the fourth quarter of 2023 to launch a tailored power bank. And we paired it with an online campaign for users to find those limited-edition power banks. The collaboration, Garner, proved to be a massive success. Going forward, we will continue to look into innovative and fun ways of leveraging our branding capabilities to bring a more differentiated experience to our users and to cement ourselves as the go-to choice for their everyday charging needs. Now on to the focus of the operation.
None: And to cement ourselves as the to go choice for their everyday charging needs.
None: Now all the focus of the operation.
None: Wyszynski.
None: Which has remained a cornerstone of our strategy.
None: In the fourth quarter, we continue to refine the contractual structure.
None: Our direct sales model.
None: The contract signed in the fourth quarter.
None: Pure revenue sharing agreements consistent 83%, while upfront entrance fee contracts jumped to less than 0.5%.
None: This again stems from our focus on the reduction of fixed expenses in favor of variable ones in.
None: In terms of the percentage of revenue sharing.
None: I have seen a noticeably decline in fixed contract expenses.
None: Overall, the general transformation in the structure of our incentive fees towards variable revenue sharing contracts reduces our risk from fluctuations in offline foot traffic and at the same time further aligns the interests of the P line with that of energy amongst us.
Mars Guangyuan Cai: Efficient, which has remained a cornerstone of our strategy. In the fourth quarter, we continued to refine the constructual structure under our direct sales model of the contracts signed in the fourth quarter. Pure revenue sharing agreements accounted for 83%, while upfront entrance fees dropped to less than 0.5%.
None: The shift between our two models has also resulted in improved head count efficiency.
None: P O I's under the direct model decreased from 47% as of the end of 'twenty 'twenty, 2% to 27% at the end of the 2023.
Mars Guangyuan Cai: This, again, stems from our focus on the reduction of fixed expenses in favor of variable ones. In terms of the percentage of revenue sharing, we have seen a noticeably decline in fixed contract expenses. Overall, the general transformation in the structure of our incentive fees towards variable revenue-sharing contracts reduces our risk from fluctuations in offline food traffic and, at the same time, further aligns the interests of the POI with that of energy money. The shift between our two models has also resulted in improved headcount efficiency. POIs under the direct model decreased from 47% as of the end of 2022 to 27% at the end of 2023. At the same time, the scale of our BD person was also reduced during this period. This is another fixed expense that we have been optimizing during 2023 and expect the average POI managed by a person now to increase going forward as direct models focus on large, high-traffic and high-yield locations define its priority. Our network partner model is highly scalable.
None: At the same time the scale of our BD person.
None: Was also reduced during this period.
None: This is another from the fixed expense that we have been optimizing during 2020 suite and expect the average P. O Y and managed by a person now to increase going forward as direct motives focus and lush high traffic and high yet locations differ.
None: Do you find its priority.
None: Oh, it's all a part of their model is highly scalable we were able to maintain a similar size network partner teeth, even though the number of active network partners increased by 65% between the yen and the percentage of the Pea lives managed by network partner model continuously.
None: Training up.
None: These scalability and operating efficiency of our network partner model provides even more potential operating leverage to be extracted as we further scale, our mobile device charging service.
None: The rebalancing of existing direct model P. A white portfolio is also yielding.
None: Higher levels of operating efficiency.
None: We continue to individually assess and monitor the performance of each and every one of our direct model P life based on the current use of traffic.
None: Underperforming py's reaches in terms of economics.
None: Two the company either transitioned away to network partner model or terminated.
Mars Guangyuan Cai: We were able to maintain a similarly sized network partner team even though the number of active network partners increased by 65% during the year, and the percentage of the POIs managed by the network partner model continuously trained up. This scalability and operating efficiency of our network partner model provides even more potential operating leverage to be extracted as we further scale our mobile device charging. The rebalancing of the existing direct model POI portfolio is also yielding higher levels of operating efficiency. We continue to individually assess and monitor the performance of each and every one of our direct model POIs based on the current user traffic; underperforming POIs or regions in terms of economics to the company are either transitioned away to the network partner model or terminated. By proactively making such an adjustment, we were able to maintain a higher quality of PLI under the direct model.
Proactively, making such adjustment we were able to maintain.
None: A higher quality of P. A line under the direct model.
None: Regarding hologram we've commenced.
None: The development of a new series of covenants prioritizing module of design enhancement aimed at streamlining maintenance and operations.
None: This initiative has yielded a note with cost reduction off of promised late five per cent compared to previous generation.
None: My older. These upgraded cabinets feature enhanced water proofing capabilities.
None: We then.
None: Rendering them more resilience for outdoor and extreme weather condition.
None: These advanced and underscores our unwavering commitment to innovation and cost effectiveness.
None: We are making significant strides in enhancing our operational efficiency across all fronts.
None: The reduction in fixed expenses contracts scaling down of our direct model team and cost optimization of our heart when coupled with the increased combination from the highly scalable network partner model, our pivotal in our ongoing pursuit of enhanced and sustained profitability.
Mars Guangyuan Cai: Regarding hardware, we've commenced the development of a new series of cabinets. Prioritizing Modular Design Enhancement, aimed at streamlining maintenance and operations, this initiative has yielded a noteworthy... cost reduction of a promising 5% compared to previous generations. Moreover, these upgraded cabinets feature enhanced water-proofing capabilities, which then render them more resilient for outdoor and extreme weather conditions.
Future.
None: Overall, our expansion into mobile device charging so this sector has reached unprecedented heights.
None: While our operational performance consistently achieved new milestones across various matrix.
None: Our leadership in this sector continues to rise as evidenced by an increase in market share each year since full funding.
None: This quarter than a year marks a significant rebound in performance with puppet sustained for four consecutive quarters.
Mars Guangyuan Cai: This advancement underscores our unwavering commitment to innovation and cost-effectiveness. We are making significant strides in enhancing our operational efficiency across all our businesses. The Reduction in Fixed Expenses Contract, the Scaling down of our direct model team, and cost optimization of our hardware, coupled with the increased combination from the highly scalable network pilot model, are pivotal in our ongoing pursuit of enhanced and sustained profitability in the future. Overall, our expansion in the mobile device charging service sector has reached unprecedentedly high levels, while our operational performance consistently achieved new milestones across various metrics. Our leadership in this sector continues to rise, as evidenced by an increase in market share each year since fall funding. This quarter and year mark a significant rebound in performance, with profit sustained for four consecutive quarters.
None: Structuring with the down turn observed in the same period last year.
None: While we are actively exploring avenues of cost and expense optimization to boost net profit margins.
None: Oh.
None: Work.
None: Partner and direct model will provide the engine for the <unk> expansion.
None: Despite the ongoing soft consumption power going into the first quarter of this year.
None: Signs of recovery is still in progress.
None: Average daily G N b doing 'twenty 'twenty for Chinese new year holidays was more than 20% higher year over year compared to the same time last year.
None: We are confident in the long term recovery off the consumption power in China. That's why we continue to focus on strengthening our operational scale and efficiency in.
None: In the first quarter of 'twenty 'twenty four we were further strengths in K, a acquisition and our direct model expand network partner coverage and operational support and optimize T y quality to enhance our margins. Additionally.
None: Additionally, we were further drive user engagement through IP collaborations such as the partnership with Disney in generally yes.
Mars Guangyuan Cai: Constructing with the downturn observed in the same period last year, while we are actively exploring avenues for cost and expense optimization to boost net profit margin, the work partner and direct model will provide the engine for the PY expansion. Despite the ongoing soft consumption power going into the first quarter of this year, signs of recovery are still in progress. Average daily GNV during the 2024 Chinese New Year holidays was more than 20% higher year-over-year compared to the same time last year. We are confident in the long-term recovery of consumption power in China.
None: S G wise.
None: <unk> committed to drive inbound environmental environmental sustainability and fostering a community. That's actively participates in the responsible use of electronic devices based on the principles of shared economy and visions of a greener and more sustainable future.
None: Our new power Bank sustainability campaign that we launched in March prioritized the enhancement of the use experience why embracing our ESG responsibilities as the leader in the market.
In conclusion, we are optimistic about the future office market in China.
None: And we remain steadfast in our commitment to delivering sustainable value to all shareholders.
Mars Guangyuan Cai: That's why we continue to focus on strengthening our operational scale and efficiency. In the first quarter of 2024, we will further strengthen KA acquisition and our direct model, expand network partner coverage and operational support, and optimize TOI quality to enhance our margin. Additionally, we will further drive user engagement through IP collaborations, such as the partnership with Disney in January. ESG-wise, we remain committed to driving environmental sustainability and fostering a community that actively participates in the responsible use of electronic devices based on the principles of the shared economy and visions of a greener and more sustainable future.
None: And as you most of it is poised for sustained growth with our mobile device charging service, achieving you operational milestones and profitability on the rice.
None: Our robust cash reserves and cash flow provides a solid foundation for driving continued growth and value creation.
None: For the shareholders.
None: As we remain active in exploring new initiatives to propel energy amongst them to even greater heights.
Speaker Change: Thank you very much I'll now turn the call over to my regime, our Chief financial Officer for the financial highlights.
Speaker Change: Yeah.
Speaker Change: Thank you Omar now that's only love used to move their first quarter and full year 2000, 25000 readout in greater detail.
Speaker Change: For the first quarter of 2023 revenue of 400, and if you think I think many representing a 18 clients wait per se.
None: That'd be great.
Unknown Executive: Our new power bank sustainability campaign that we launched in March prioritized the enhancement of the user experience while embracing our ESG responsibilities as the leader in the market. In conclusion, we are optimistic about the future of this market in China and remain steadfast in our commitment to delivering sustainable value to all shareholders. Energy Monster is poised for sustained growth with its mobile device charging service, achieving new operational milestones and profitability on the rise. Our robust cash reserves and cash flow provide a solid foundation for driving continued growth and value creation for shareholders, as we remain active in exploring new initiatives to propel Energy Monster to even greater heights. Thank you very much. I will now turn the call over to Maria Xin, our Chief Financial Officer, for the financial highlights. Thank you, Mars.
Speaker Change: Mobile device charging revenues. They each consists of revenue generated from both direct and the network partner models, well 464, I've pointed out a minute and accounting for 95, 7% of our total revenue for the quarter.
Speaker Change: Revenue generated from direct model, which comprised of multiple viral Dubai charging a fee of 210, one 9 billion and the part that south of four 8 million or 215 class at a meeting for the first quarter of $2023.
Speaker Change: 19, 8% year over year. The decrease was primarily due to the decrease in number of Peel I operating and they'll give us model.
Speaker Change: Revenue generated from them, that's what part of the last model, which were comprised of mobile device charging solution fee of 15, plus eight milli and south.
Speaker Change: Kevin Knight and power banks of 118, 914 million or 258 for the fourth quarter of 2023 downturns in one class 8% year over year.
Unknown Executive: Now, let me walk you through the first quarter and full year 2023 financial results in greater detail. For the first quarter of 2023, revenues were 486.6 million, representing an 18.3% year-over-year decrease. Mobile device charging revenues, which consists of revenue generated from both direct and the network partner models, were $465.7 million and accounted for 95.7% of our total revenue for the quarter. Revenues generated from the direct model, which comprised of mobile device charging services fees of 210.9 million and product sales of 4.8 million, or $215 million for the first quarter of 2023, down 19.8% year-on-year. The decrease was primarily due to the decrease in the number of POIs operated under the direct model.
Speaker Change: The decrease was primarily due to the change in the contractual arrangement with network partners and Theres, a new contractual arrangement mobile device charging revenue generating and there's a natural part of it is not of incentive fees paid to the network partners.
Speaker Change: The decrease was partially offset by the increase in the south of candidate and the power back to backlog patent.
Speaker Change: Other revenues, which I'll come hit a fault for applying 20% of our total revenues was 20 point Tonight. Many for the first quarter of 2023.
Speaker Change: 167.7% you know a year.
Speaker Change: The increase was primarily attributable to new business initiatives and the increase in users and I had about has meant efficiency.
Speaker Change: Cost of revenues were up 41% you know year to 100.
Speaker Change: Nike a planned southern living for the first quarter of 2000 and Chinese rate the.
Speaker Change: The increase was primarily due to the increase in south of culminate in a claw back and there's a new contractual arrangements, it's not about patios.
Speaker Change: Partially offset by the decrease in depreciation cost.
Speaker Change: Gross profit was down suddenly say, one 7% year on year to 287.9 inning for the first quarter of 2023.
Unknown Executive: Revenue generated from Network Partners, which comprises a mobile device charging solution fee of $16.6 million, and sales of Cabinet and power banks of $189.4 million or $250 million for the fourth quarter of 2023, down 21.6% year-over-year. The decrease was primarily due to the change in the contractual arrangement with Network Partners. Under the new contractual arrangement, mobile device charging revenue generated under the network partner is not incentive fees paid to the network partner. However, the decrease was partially offset by the increase in the sales of Kaminade and the power bank to network partners.
Speaker Change: Operating expenses for the first quarter of 2023 was 320.8, meaning downfall, its 15th straight plentiful plus that you know at year end.
Speaker Change: Excluding share based compensation non-GAAP operating expenses was 317 quantify many representing a year over year decrease.
Speaker Change: 15th plus 4%.
Speaker Change: Research and development expenses for the first quarter of two or three or 27 plants. They meaning 77, 1% you know yeah.
Speaker Change: The increase was primarily due to the increase in personnel related expenses.
Speaker Change: South and the marketing expenses for the first quarter of 2003 or $248 eight mini dosing cheap pallet 0.8, plus that you all year.
Unknown Executive: Other revenues, which accounted for 4.3% of our total revenues, or $20.9 million for the first quarter of 2023, up 167.7% year-over-year. The increase was primarily attributable to new business initiatives and the increase in users and advertisement efficiency. Cost of revenues was up 41% year-over-year to 198.7 million for the first quarter of 2023.
Speaker Change: The decrease was primarily due to the decrease in incentive fees paid to them. That's what happened to us as a result of change in the contractual regiment isn't that for our partners and the decrease in incentive fees paid to location passengers.
Speaker Change: General and administrative expenses or 13 points found money in the first quarter of 2023 odd how plentiful pass that you know the ear.
Speaker Change: The increase was primarily due to the increase in personnel related expenses.
Speaker Change: Loss from operations or 32.9, mainly and the operating margin for the fourth quarter of 2000, and Chinese rain or negative one 8% compared to a negative 39, 3% in the center of it last year.
Unknown Executive: The increase was primarily due to the increase in sales of Kaminade and Cloud Bank under the new contractual arrangement with network partners, partially offset by the decrease in depreciation costs. Gross profit was down 36.7% year-on-year to 287.9 million for the first quarter of 2023; operating expenses for the fourth quarter of 2023 were 320.8 million, down 53.4% year-over-year. Excluding share-based compensation, non-GAAP operating expenses were $317.5 million, representing a year-over-year decrease of 53.4%. Research and development expenses for the first quarter of 2023 were $27.6 million, up 77.1% year-on-year. The increase was primarily due to an increase in personnel-related expenses.
Speaker Change: Net income was two point for many in the first quarter of 2023 compared to a net loss of 334 quantify money in a center right last year.
Speaker Change: That's module for the first quarter of 2023 was there a one 5% compared to a margin of negative 15 sales plus 2% in the center in Lafayette.
Speaker Change: non-GAAP net income this is cool of share based compensation expenses was $5 seven in.
Speaker Change: In the first quarter 2023.
Speaker Change: Compared to a non-GAAP, that's a loss of 327 point to many in the same period last year.
Speaker Change: As of December 31st 2023, the economy had a cash and cash equivalents.
Speaker Change: Shifting to cash out of Salt time investment up 3.3 billing.
Speaker Change: Cash flow generated from operations for the fourth quarter of 2000, and Chinese rain or especially one quite some money.
Speaker Change: Capital expenditure for the first quarter of 2000, Twenty's range or they're all part seven minutes.
None: No no.
None: Turning to full year 2000 Twenty's results.
Unknown Executive: Sales and marketing expenses for the first quarter of 2023 were $248.8 million, down 60.8% year-on-year. The decrease was primarily due to a decrease in incentive fees paid to network partners as a result of a change in the contractual arrangement with network partners and a decrease in incentive fees paid to location partners. Journal and administrative expenses were $30.5 million in the first quarter of 2023, up 12.4% year-on-year. The increase was primarily due to an increase in personnel-related expenses.
None: Well, it's not that we have changed our contractual arrangement. So that's about partners in the second quarter of 2023, you may find additional detail in Kent on the change of the contractual arrangement and the difference in the revenue recognition Oh.
None: <unk> press release.
None: In 2023 revenues, what's retailing, representing a 4.2% you know.
None: The inquiry.
None: The increase was primarily due to the increase in mobile device charging revenues as a result of general like Colorado.
None: Offline foot traffic in China, and the increase in pop out and accumulate south on the mobile device charging solutions Avenue and Theres, a new contractual arrangement is not more partners.
Unknown Executive: Loss from operations was $32.9 million, and the operating margin for the first quarter of 2023 was negative 6.8% compared to a negative 39.3% in the same period last year. Net income was $2.4 million in the first quarter of 2023, compared to a net loss of $334.5 million in the same period last year. Net margin for the fourth quarter of 2023 was 0.5%, compared to a net margin of negative 56.2% in the same period last year. Non-GAAP net income, which excludes share-based compensation expenses, was 5.7 million in the fourth quarter of 2023, compared to a non-GAAP net loss of 327.2 million in the same period last year.
None: I mean, she is partially I'm sorry by the decrease in mobile device charging so let's see as a result of.
None: The change in the contractual arrangement is not what pattern us.
None: Mobile device charging revenues, which causes a revenue generating from both direct and then I have a pattern of models what to prime not binney and accounted for.
None: 97% of our total revenue for the ear.
None: Revenues generated from direct model, which comprised of mobile device charging so I'd see of one point of my belly and the par back south of <unk>.
None: 24 plants that are meeting or one point to one thing in $2023, 33% year over year.
None: The decrease was primarily due to the decrease in number of appeal is operating and our theoretical model.
None: Revenue generated from that's where our partners are Moto leisure comprised of mobile device charging. So we see a 518 Qantas dominating mobile device charging solution a sea of 173 part one too many and south of culminate and pop back up one follow up.
None: Got it.
None: Or 1.8 thing into southern the tiniest rain off 49 clients, where they press that you all year.
Unknown Executive: As of December 31, 2023, the company had cash and cash equivalents, restricted cash, and short-term investments of 3.3 billion. Cash flow generated from operations for the fourth quarter of 2023 was 31 points some, meaning capital expenditures for the fourth quarter of 2023 were 0.7 million. Now moving to full year 2023 results. Please note that we have changed our contractual arrangement for network partners in the second quarter of 2023. You may find additional details on the change in the contractual arrangement and the difference in revenue recognition in our earnings price release. In 2023, revenues were rebilling, representing a 4.2% year-over-year increase. The increase was primarily due to the increase in mobile device charging revenues as a result of the general recovery in offline food traffic in China and the increase in power bank and cabinet sales and mobile device charging solutions revenue, and there is a new contractual arrangement with network partners, which is partially offset by the decrease in mobile device charging service fees as a result of the change in the contractual arrangement with network partners.
None: The increase was primarily due to the addition of rack revenue generate head of south of carbonate.
And pop acts as a result of change in the contractual arrangement neither novel of patent life.
This includes a one time recognition of half Henry plastics, many south of terminate at par back to another one patent not doing the second quarter of 2023.
None: The increase was partially offset by the decrease in mobile service charging stomach fee deals with a change in the contractual arrangement.
None: And that's what happened to us.
None: And there's a new cultural advancement mobile device, having revenue generating and there's a natural part of that is not of any incentive fee paid to that's what partners.
None: All right.
None: Well, 3% all right.
None: Yes.
None: Or 89 quantify many into him and he's right up to 164, plus 8% yeah all year.
None: This was primarily attributable to new business initiatives and the increased user and advertisement efficiency.
None: Cassel around meals, well, one two bidding Poseidon Antonius rate up 117.2% you know ye.
None: The increase was primarily due to the increase is out of culminate in a pop out and there's a new contractual arrangement with network partners.
None: These include a one time a donation of $155 8 million in the cost of culminate and pop back so to a nickel of passengers.
None: This increase was partially offset by the decrease in depreciation cost.
None: Gross profit was.
None: <unk>, 20th 3.3% you know year to 1.7 bidding in 2023.
None: Operating expenses.
For the year of 2023, well 1.8 billion, representing a 39, 7% you know at year decrease.
Unknown Executive: Mobile device charging revenues, which consists of revenue generated from both direct and network partner models, were $2.9 billion and accounted for 97% of our total revenues for the year. Revenues generated from direct models, which comprise a mobile device charging service fee of 1.1 billion and power bank sales of 24.7 million, or 1.1 billion in 2023, are 33% year-over-year. The decrease was primarily due to a decrease in the number of POIs operated under the direct model.
None: Research and development expenses in 2023 remained stable at Nike one quantify money.
None: And the marketing expenses in 2023, well 1.5 thing.
None: For one 4% you know are the <unk>.
None: This was primarily due to the decrease in incentive fees until now our partners as a result of the change in the contractual arrangement, it's not what patronize.
None: Yes, and you'll see Petro location in Panama, and the person that now all related expenses.
None: General and administrative expenses in 2020, a three well by 120 515 money up 11, 7% year over year. The increase was primarily due to the increase in personnel related expenses.
None: Loss from operation of one 1 million compared to a loss of operations of 621 point too many in 2022.
Unknown Executive: Revenues generated from Network Partners, which comprised a Mobile Device Charging Service Fee of 518.7 million, a Mobile Device Charging Solution Fee of 173.2 million, and Sales of Cabinets and Power Banks of 1.1 billion or 1.8 billion in 2023, up 49.3% year-over-year The increase was primarily due to the addition of revenue generated by sales of Kaminade and Power Banks as a result of a change in the contractual arrangement with network partners, which includes a one-time recognition of 500.6 million in sales of Kaminade and power banks to network partners during the second quarter of 2023. The increase was partially offset by the decrease in mobile service charging service fees due to the change in the contractual arrangement with network partners.
None: Net income or <unk>.
None: 80, 717 million in 2023 compared to a net loss of 700 and you learn what point too many in 2024 two.
None: Nice margins for 2023, 3%.
None: non-GAAP net income, which excludes share based compensation expenses.
None: Expenses was 108.1, maybe in 2023.
None: Compared to a non-GAAP net loss of 10.
None: And it is remaining in 2022.
None: Capital expenditure were $175 nine many in 2023.
None: Thank you for your lessening our we are now ready for your questions operator.
None: Yeah.
None: Thank you the question and answer session of this conference call will start in a moment in order to be fair to all callers who wish to ask questions. We will take one question at a time from each caller.
None: Do you have more than one question. Please request to join the question queue again. After your first question has been addressed.
None: If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.
Unknown Executive: Under the new contractual arrangement, mobile device charging revenue generated under the network partner is net of the incentive fee paid to the network partner. [inaudible] which accounted for 3% of our revenues, or $89.4 million in 2023, up 264% year-over-year. The increase was primarily attributable to new business initiatives and an increase in users and advertising efficiency. Customer revenues were 1.2 billion in 2023, up 117.2% year-over-year. The increase was primarily due to the increase in sales of Kaminade and PowerBank and the new contractual arrangement with network partners, which includes a one-time recognition of 454.8 million in the curve of Kaminade and power banks sold to network partners. The increase was partially offset by the decrease in depreciation cost.
None: If you wish to cancel your east placed press star two.
None: If you're on a speaker phone it placed to pick up the handset to ask you a question.
Speaker Change: Your first question comes from Charlie Chan Chief.
Speaker Change: China Renaissance. Please go ahead.
Speaker Change: [laughter].
Speaker Change: Yes.
Charlie Chan: Thank you so much for it.
Speaker Change: Taking my question I actually I have two questions.
Speaker Change: One was can you elaborate a little bit more on the rebalancing of the appeal is on <unk>.
Speaker Change: Through network partner model.
Speaker Change: Exactly that this works and is there a more specific target for the balance of the two models.
Speaker Change: No customer is the ultimate cause sometimes before commencement skewed a bit more color on overall alcohol in terms of growth and profitability.
Speaker Change: Okay.
Thank you Charlie I think your question is regarding how we balance the two models business models and also what's the future of the models the trend.
Charlie Chan: It's a great question, we definitely spent less time and.
Unknown Executive: Gross profit was down 23.3% year-over-year to 1.7 billion in 2023. Operating expenses for the year of 2023 were 1.8 billion, representing a 39.7% year-over-year decrease. Research and development expenses in 2023 remained stable at 91.5 million.
None: Discussing this strategic questions and I think we all are.
Getting there.
The <unk> recalibration.
None: Collaboration are about pier one locations between the two models stems primarily from two factors actually are firstly, the remarkable expansion of our network partner model it.
None: Since two 2022 the growth in the number of network partners.
None: Have picked up significantly as a result of the two.
None: We were able to increase the effective coverage of lives in regions, where we have.
Unknown Executive: Sales and marketing expenses in 2023 were 1.5 billion, down 44.4% year-on-year. The decrease was primarily due to a decrease in incentive fees to network partners as a result of the change in the contractual arrangement with network partners. Incentive fee, pay-to-location panelists, and personnel-related expenses. Journal and administrative expenses in 2023 were $125.5 million, up 11.7% year-over-year. The increase was primarily due to an increase in personnel-related expenses.
None: Our direct model.
None: Presence and at the same time enhanced regional diversification, that's why our P Y count under the network partner model have consistently trended up.
None: Last few years.
None: Secondly is the adjustment of our direct model, which we have consistently performed during the pandemic the closure rates over the P wise Ah was significant.
None: And very high and the normal times and this has resulted in a direct model having to terminate partnership and removed cabinets from large number of P Y Street in that period during the general recovery face of last year, we proactively looked at.
Unknown Executive: Loss from operations was 1.1 million compared to a loss of operation of 621.2 million in 2022. Net income was $87.7 million in 2023, compared to a net loss of $711.2 million in 2022. Life Margin for 2023 was 3%. Non-Gap Net Income, which excludes share-based competition expenses, was $108.1 million in 2023, compared to a non-gap net loss of $683 million in 2022.
None: Each pillar and the direct model underperforming ones that generates noctis comics, even after the recovery in food traffic a 2023 are then terminated and the direct model.
None: So again the rebalancing between the two models is driven by the increase in network partner Count and decrease in director modal P. O Y that are underperforming.
None: Going forward I think the trained of increasing contribution of network partner model will cause this.
None: In the foreseeable future and we were naturally find the balance between the two over time, but I would like to emphasize a bit how transitioning our P line to the network partner model is beneficial to us in a few ways.
None: We are able to cover more reaches for sure where the director Moto is unable to reach a notably in smaller regions or countries, but generally have a smaller potential market for.
Unknown Executive: Capital expenditure was $175.9 million in 2023. Thank you for listening. We are now ready for your questions. Operator.
None: That's where a partner model allows us to identify partners in regions and countries of all sizes and in fact to extend our service in those regions.
Operator: Thank you. The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take one question at a time from each caller. If you have more than one question, please request to join the question queue again after your first question has been answered. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.
None: Currently that's where partners complements our coverage of existing regions, where our direct modal upgrades Inc.
None: Oh Nitro upon that is able to work into P. Lives. That's may be relationship driven this allows them to help us extend our coverage even in larger tier city and counties.
None: Thirdly is the operational leverage of the network partner model.
None: Oh and its partner models contribution has increased significantly in the past years, while the size of natural upon a team has stayed largely the same.
Operator: If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Charlie Chen on China Renaissance. Please go ahead.
None: This displays high degrees of operating leverage to be attained as we continue to scale the network partner model.
Mars Guangyuan Cai: Thank you very much for taking my question. I actually have two questions. One is, can you elaborate a little bit more on the rebalancing of POIs from the direct to network partner model? How exactly does this work, and is there a more specific target for the balance of the two models?
None: After the same time because of the lower contribution from the direct model, we can scale down its workforce, which in turn further reduces our fixed expenses.
None: Lastly.
None: The network partner model provides positive economics for the company, even there's still a lot of external impacts that may lower.
Mars Guangyuan Cai: My second question is the outlook for 2024. Can measurements give a bit more color on the overall outlook in terms of growth and profitability? Thank you. Thank you, Charlie. I think your question is regarding how we rebalance the two models, business models, and also what's the future of the models, the trend. It's a great question.
None: <unk> traffic all consumption power, making our operational and financial matrix, a lot less susceptible to volatility.
None: Driven by the external events.
None: Going forward the network partner model will be a major driver for growth as well as higher and more sustainable profitability.
None: Direct model, we are Meanwhile, folks K as both nationally and regionally and high and in higher tier cities.
Mars Guangyuan Cai: We definitely spent a lot of time discussing these strategic questions, and I think we are getting there. The recollection of our POI allocation between the two models stems primarily from two factors, actually. Firstly, the remarkable expansion of our network partner model. Since 2022, the growth in the number of network partners has picked up significantly as a result of the two. We are able to increase the effective coverage of POIs in regions where we have our direct model presence and, at the same time, enhance regional diversification. That's why our POI count under the network partner model has consistently trended up in the last few years. Secondly, is the adjustment of our direct model POIs, which we have consistently performed. During the pandemic, the closure rate of the POIs was significant, very high compared to normal times.
None: Thank you very much and I'll, let Maria address your second question.
Maria: Thank you Tani the consumption power in China has been a big makes it in the past I feel now we are seeing that ease off the holidays and a weekend recovering normalization by the weaker days, helping a.
Maria: Because after we do not Oh for together on the topline girls, Oh probability, but Ah in 2024, we will continue to drive our growth and given the potential untapped appeal is leaving China and introduce more ways too.
Our costs and expenses.
Maria: We are confident that we can best capture the opportunities in the mobile device charging so it's a market in China as well as continue delivering value to our shareholders. Thank you.
None: Thank you once again, if you wish to ask a question. Please press star one on your telephone well.
Mars Guangyuan Cai: This has resulted in our direct model having to terminate partnerships and remove cabinets from a large number of POIs during that period. During the general recovery phase of last year, we proactively looked at each POI under the direct model; underperforming ones that generate a negative economics even after the recovery in food traffic in 2023 are then terminated under the direct model. So again, the rebalancing between the two models is driven by the increase in network partner count and decrease in direct model POI that are under- Going forward, I think the trend of increasing contribution of the network partner model will persist for the foreseeable future. We will naturally find the balance between the two over time, but I would like to emphasize a bit how transitioning our POI to the network partner model is beneficial to us in a few ways. First, we are able to cover more regions, for sure, where the direct model is unable to reach, notably in smaller regions or counties that generally have a smaller potential market.
None: I will now close the short moment for questions to be registered.
None: Okay.
None: Once again, thank you for joining us.
None: Yeah.
Speaker Change: Thank you we are now approaching the end of the conference call I'll now turn the call over to energy Monster CSI Morrison for closing remarks.
Speaker Change: Okay.
Unknown Executive: Again, thank you for joining us today, please don't hesitate to contact us.
You'll have an even better collections.
Unknown Executive: Thank you for your continued support and look forward to speaking with you in the coming months. Thank you.
Thank you for your participation in today's.
None: And close the presentation now disconnect good day.
None: Yeah.
None: Okay.
None: [music].
None: Uh huh.
Mars Guangyuan Cai: The network partner model allows us to identify partners in regions and counties of all sizes and effectively extend our service in those regions. Secondly, Network Partners complement our coverage of existing regions where our direct model operates. Our network partner is able to work into POIs that may be relationship-driven. This allows them to help us extend our coverage even in larger TSAs.
None: [music].
None: Okay.
None: [music].
None: Yes.
None: Okay.
Mars Guangyuan Cai: And thirdly, the operational leverage of the network partner model. Our net partner model's contribution has increased significantly in the past years, while the size of the network partner team has stayed largely the same. This displays high degrees of operating leverage to be attained as we continue to scale the network partner model. At the same time, because of the lower contribution from the direct model, we can scale down its workforce, which in turn further reduces our fixed expenses.
None: Okay.
None: [music].
None: Yeah.
None: Okay.
None: Yeah.
None: [noise].
Mars Guangyuan Cai: Lastly... The network partner model provides positive economics for the company even if there are external impacts that may lower offline traffic or consumption power, making our operational and financial matrix a lot less susceptible to volatility driven by external events. Going forward, the network partner model will be a major driver for growth as well as higher and more sustainable profitability. The Director Model will, meanwhile, focus on KAs, both nationally and regionally, and in higher tier cities.
Mars Guangyuan Cai: Thank you very much. I'll now let Maria address your second question. Thank you, Charlie. Consumption power in China has been a bit mixed in the past few months.
Unknown Executive: We are seeing mixed results with holidays and weekends recovering normalization, but weekdays have been a little softer. We do not offer guidance on top-line growth or profitability, but in 2024, we will continue to drive our growth and provide the potential for untapped POIs within China and introduce more ways to optimize our costs and expenses. We are confident that we can best capture the opportunities in the mobile device charging service market in China as well as continue delivering value to our shareholders. Thank you. Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone.
Operator: We'll now pause for a short moment for questions to be registered. Once again, thank you for joining us. Thank you. We are now approaching the end of the conference call. I will now turn the call over to Energy Monster's CSO, Marie-Essene, for closing remarks. Okay, once again, thank you for joining us today. Please don't hesitate to contact us if you have any further questions. Thank you for your continued support, and we will look forward to speaking with you in the coming months. Thank you. Thank you for your participation in today's call. This concludes the presentation. You may now disconnect. Good day. Yi Wei, Hansen Shi, Yi Xin, Weiting Tang, Smart Share Glo
None: Yes.
None: Okay.
[music].
None: Uh huh.
None: Okay.
None: Yeah.
None: [music].
None: Uh huh.
None: Okay.
None: [music].
None: Okay.
None: [music].