Q4 2024 Youdao Inc Earnings Call
Good day, and welcome to city, Utah, 'twenty, 'twenty, four fourth quarter and full year earnings conference call.
Today's conference is being recorded at.
Speaker Change: At this time I would like to turn the conference over to Mr. Jeffrey Wang Investor Relations director of the adult. Please go ahead.
Okay.
Speaker Change: Thank you operator. Please note the discussion today will contain forward looking statements relating to the future performance of the company, which are intended to qualify for the safe Harbor from liability.
Speaker Change: Stablish by the U S probably Securities Litigation Reform Act such statements are not guarantees of future performance and are subject to certain risks and uncertainties assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially.
Speaker Change: From those mentioned in today's press release and this discussion.
Speaker Change: But generally so you've got some of the risk factors that could affect <unk> business and financial results is included in southern company's filings with the U S Securities and Exchange Commission. The company does not undertake any obligation to update these forward looking information except as required by law.
During today's call management will also discuss certain non-GAAP financial measures for comparison purposes only.
Speaker Change: The definitions often won't get financial measures and reconciliations of GAAP to non-GAAP financial results. Please see the 'twenty 'twenty four fourth quarter and full year financial results news release issued earlier today.
Speaker Change: Linda This conference is being recorded a webcast replay a replay of this conference call will be available argue Dallas corporate website at IR Dot Dot dot com.
Speaker Change: Turning us today on the call from <unk> Senior management are.
Speaker Change: Doctor friend, Joe <unk>, Chief Executive Officer, Mr. Lei, Chen our president Mr. Peluso, our VP of strategy and capital markets and Mr. Wang Li our VP of finance.
Speaker Change: I'll now turn the call over to Dr. Joe to review some of our recent highlights and strategic direction.
Speaker Change: Thank you Jeffrey and thank you all for participating in today's call.
Dr. Joe: Before we begin I would like to remind everyone that all numbers are based on and then b unless otherwise specifically stated.
Dr. Joe: In the fourth quarter, our profitability further improved net revenues reached RMB, one 3 billion, a nine 5% decline compared to the same period last year, primarily driven by a decrease in revenues from learning services since the summer we have proactively focused on courses and services was strong.
Dr. Joe: Demand and maintain a rational approach to customer acquisition.
Dr. Joe: This strategy has enhanced our overall house income of operations for the fourth quarter reached RMB $84 2 million.
Dr. Joe: Representing an increase of 10, 3% year over year operating cash inflow was RMB $158 2 million largely stable compared with the same period of last year.
Dr. Joe: For the full year 'twenty 'twenty four.
Key financial indicators demonstrate a significant improvement with record profitability and cash flow performance net revenues totaled RMB five 6 billion up four 4% year over year.
Dr. Joe: Comes from operations amounted to RMB 148.8, mainly.
Dr. Joe: A remarkable turnaround from lots of operations of RMB 406.
Dr. Joe: $66 3 million in 2020 St.
Dr. Joe: Marking a substantial improvement in financial health and achieving our first ever operating profit from a full year basis.
Dr. Joe: Operating cash outflow narrowed to RMB 67, 9 million, representing an improvement of 84, 5% year over year.
Dr. Joe: Now lets review the major progress across our business lines in.
Dr. Joe: In the fourth quarter net revenues from learning services reached RMB $617 7 million down by 21, 2% year over year.
Dr. Joe: Maintaining financial discipline and focusing on of course, it's like you're dialing suite.
We enhanced our financial house in long term competitiveness significantly.
Dr. Joe: Within their learning services segment net revenues from digital content services reached to RMB $388 8 million in the fourth quarter.
Dr. Joe: Which covered the cost in operation operating expenses generating meaningful profits.
Dr. Joe: We are committed to fostering long term growth with top priorities centered on elevating customer satisfaction, optimizing operational vitality and driving forward looking innovation initiatives initiatives.
Speaker Change: Not even sure has pioneered a customer acquisition passed by focusing on operations directors IP.
Speaker Change: Leading to over 10% year over year growth in gross billings for the fourth quarter.
Speaker Change: Additionally, our flagship product, which integrates AI shared learning videos comprehensive learning counseling and small class Saudi expenses has enhanced customer loyalty with retention rates, surpassing 70% in the fourth quarter.
Speaker Change: And the improvement of more than five percentage points year over year.
Speaker Change: This rise in customer loyalty gave us gives us a greater confidence in the future developments, albeit probably shifts in terms of steam causes our franchise our programming courses.
Speaker Change: Focused on informatics programming and have continuously reiterated our products about transitioning from large class a smaller classes.
Speaker Change: This approach has driven more than 20% year over year increase in gross billings drove in the fourth quarter with retention rates exceeding 70% next.
Speaker Change: Within the learning services segment, we see strong growth in our AI driven subscription services.
Speaker Change: Sales witnessed an impressive streak of consecutive quarters with over 50% year over year growth.
Speaker Change: For the full year of 'twenty 'twenty, four AI driven subscription services generated sales of over RMB 200 million, representing an increase of over 130%.
Speaker Change: Year over year recently, we launched an open source to China's first step by step exposition reasonably motto.
Speaker Change: Confucius Oh Wow.
Speaker Change: Does that 14 billion.
Speaker Change: I mean are lightweight single model Confucius, Oh, one supports deployments on its consumer great Gpus and utilizes <unk> technology to provide detailed problem solving processes.
Speaker Change: It achieves high accuracy.
Speaker Change: In problem solving with strong logic and reasoning capabilities and offers reasoning in Chinese.
Speaker Change: Notably Confucius Oh, one has officially been open source to encourage broader use and innovation of reasoning models in the education sector.
Speaker Change: Currently condition Oh, one has been implemented in our AI learning assistant Mr. P. A a tutor.
Speaker Change: Which received a positive feedback with over 100 million cumulative users since the product launched.
Desktop translation has won the best of online Education Award at the Microsoft Store 2024 annual after award.
Speaker Change: Furthermore, we are continuing to develop the high alcohol ecosystem.
Speaker Change: In the fourth quarter, we partnered with Roquette to deliver an immersive AI powered English learning experience through AI, plus a our technology high ash coal.
Speaker Change: Alongside your dictionary was named one of the top nine apps after 'twenty 'twenty four by latex.
Speaker Change: We have quickly embraced the recent deep sea Kuwait by integrating both Confucius mottos in deep sea all one across many of our products. Our teams rapidly expanding experimented with blending the best of both of those deep CCAR, one delivers robust the reasoning and intelligence, while our domain specific.
Confucius models are optimized for high traffic scenarios unique to our offerings. This powerful combination already and hence as products like Mr. Pea shooter, providing users with smarter more friendly chats expenses deeper insights into learning materials and more effective support for it.
Speaker Change: <unk> problems.
Speaker Change: Additionally, it enables us to offer a faster more responsive and cost efficient service.
Speaker Change: Well online marketing services net revenue reached RMB $481 7 million in Q4, representing an increase of one 6% year over year.
Speaker Change: Gross margin increased to 34, 2% up one five percentage points year over year.
Speaker Change: In terms of domestic performance based advertising industries, such as gaming and AI tools have seen record breaking revenues on the international advertising fronts. We recently established an official partnership with Google.
Speaker Change: This milestone lays a solid foundation for the future growth of our overseas advertising.
Speaker Change: Additionally, in the field of overseas Kols key opinion leader in marketing.
Speaker Change: Leverage our extensive database of global Influencers and advanced technologies, such as block language models and image recognition.
With these tools, we have developed and evaluation moderate for payout video conversion effectiveness.
Speaker Change: This module comprehensively analyze those trends and influencer videos in their common sections, allowing us to identify which creator possesses strong virality and a widespread reach therefore driving higher conversion rates by using commercial conversion if I can.
Speaker Change: And the effectiveness as a key metric.
Speaker Change: The motto of signs ratings to each influencer and uses existing data to predict their conversion potential.
Speaker Change: Already played a pivotal role in the global promotion of the game Marvel rivals.
Speaker Change: And the first two weeks after the games lunch, we successfully consolidated.
Speaker Change: The release of nearly 200 pieces of content, resulting in over 80 million impressions across the Internet. Looking ahead, we are optimistic about the long term prospects of our online marketing services. We are committed to strengthening collaboration with clients in the gaming sector, particularly through and hence the synergy there.
Speaker Change: Medical school in both traffic side and demand side.
Speaker Change: Turning to our smart devices segment net revenues reached RMB 244 million in Q4, marking an eight 1% year over year increase.
Speaker Change: With significantly improved the financial health.
Speaker Change: Our flagship product the <unk> Dictionary pen performed exceptionally well with joined in November 11th Shopping Festival.
Speaker Change: Maintaining its position as the top seller in its category on both JD com and Tmall for five consecutive years.
Speaker Change: Seven Pro also earned the top spot in single item sales for dictionary pen on both platforms.
Speaker Change: These successes contributed to an annual 20% year over year increase of revenues for the dictionary pen.
Speaker Change: In addition, we're thrilled to announce that cumulative sales of a dictionary pen have surpassed the 10 million units since its market debut.
Speaker Change: In terms of product, we recently launched the <unk> Dictionary pen 87 feature.
Speaker Change: Featuring an instant scan and translation feature.
Speaker Change: The products that offers top tier performance at an accessible price point earlier.
Speaker Change: Earlier. This week, we also launched the space one a brand new dictionary pen incorporating deep seek.
Speaker Change: Reasoning motto.
Speaker Change: Delivering in depth analytical reasoning capabilities and providing clear guidance for complex problem solving scenarios.
Speaker Change: Going forward, we are committed to continuing to pioneer innovations in smart devices, particularly for a dictionary pen enhancing personalized educational experiences for our users and strengthening our leadership in this product.
Speaker Change: And turning to any fall, we executed our focused business strategy that combines rapid a generative AI implementation with a steadfast drive towards operational profitability.
Speaker Change: As a breakthrough year during which several of our of our business units such as the adult ads you don't even sure Alright Dictionary pens and AI powered English learning and translation apps.
Speaker Change: They emerged as clear leaders in their respective respective segments.
Speaker Change: Looking ahead to 2025 has started with the explosive popularity of deep seek a trend that is reshaping the Chinese tech industry.
Speaker Change: As we discussed on this call we anticipated that open source sand reasoning models, what Robin revolutionize how people learn in a market.
Speaker Change: And that transformation is now underway.
Speaker Change: Our response has been swift over the past few weeks, we have seamlessly integrated deep seek into our apps courses AD platforms and hydro otherwise it yet.
Speaker Change: Yet this is just the beginning we believe that large payer models should surf not merely as additional features such as autonomous agents that's drive outcomes.
Speaker Change: Vision with deeply embedded into our learning in the work processes to unlock higher productivity.
Speaker Change: Accordingly, we are launching our AI native strategy integrating AI more comprehensively across our business lines by for example, automating our advertising platforms and introducing AI driven tutoring for our cost customers.
Speaker Change: We're excited by the rapid maturing of reason and models and eager to deliver these innovative projects to our customers this year.
Speaker Change: Another significant milestone for 'twenty 'twenty four was achieving full year operating profitability for the first time for 2025, given the current economic conditions and our ongoing progress we are targeting moderate revenue growth alongside fast paced improvements in our bottom line with that.
Speaker Change: I will turn the call over to Sue Paul to provide you with more detailed insights into our financial performance.
Speaker Change: [noise], especially with Oracle.
Speaker Change: They will be presenting at some financial highlights from our fourth quarter honestly, yeah, all right cool been hard for you to be swallowed press released earlier, but they prefer the details.
Speaker Change: But the fourth quarter call them bad revenue were RMB, one planes would be better.
Speaker Change: S. Dollar 183, six minute, representing a 19, 5% a decrease from the simpler to open sometimes right.
Speaker Change: Revenue for our drilling services were RMB 617 points that might be Oh, Yes, dollar 84, 6 million, representing a 21, 2% decrease from the computer to off time century.
Speaker Change: So year over year decrease was due to our continue strategy focus on more selective customer acquisition approach prioritizing to higher return on what you bought as much engagement.
Speaker Change: I believe it's bad for short term revenue decline the strategy has been and hence the overall resilience on the operational efficiency of our business.
Speaker Change: Net revenue from our smart devices were RMB 28, what do you think for a minute while U S. Dollar. So he took one 9 million up eight 1% from the same pure after 10 century, primarily due to the driven by the continuing increase you can see all saw people without tickets independent in front of me for.
Speaker Change: Net revenue for online marketing services were RMB.
Speaker Change: 481, 7 million or U S dollar 666 million, representing a modest increase from the same here at all of a sudden penetrate.
Speaker Change: For the fourth quarter, our total gross profit was RMB 640 minutes.
Speaker Change: Stoller East I Havent made it representing a 13, 3% a decrease from the fourth quarter up 10 events right.
Speaker Change: Gross margin for learning services was 60% plus plus quarter of $10 four compared with 63, 6% for the same here at all tempted entry of course, Margaritaville smartly, but I'd say, it was pretty sort of 9% and for the fourth quarter, all four compared with 38, 3% for the same period of the opposite antennas rate.
Speaker Change: Gross margin for online marketing services was 34, 2% plus fourth quarter of 294, compared with 32, 7% and of course, the SMP Europe often times right.
Speaker Change: But first quarter, we reduced our total operating expense to RMB, $556 6 million or U S. Dollar $76 3 million compared with RMB 660 to $62 5 million for the same people write off last year.
Speaker Change: Looking at all expense in more detail.
Speaker Change: Also on marketing expense declined to RMB 381.8 million compared with RMB 441, 4 million in the fourth quarter all the time, that's right rich.
Speaker Change: So we're trying to do I think expense was decreased to RMB $120 7 million compared with RMB 168 point about meeting in the first quarter of time right.
Speaker Change: Our operating income margin was six 3% in the fourth quarter. After a <unk> 74, compared with five 2% for the same period last year.
Speaker Change: Yeah.
Speaker Change: For the first quarter of 104, our net income attributable to ordinary shareholders was RMB 80.
Speaker Change: 83 minutes okay.
Speaker Change: S dollar 11.4 minutes compared with RMB 56, five minutes for the <unk> write off last year.
Speaker Change: Net income attributable to the ordinary shareholders for the fourth quarter was RMB 91.8 million dollar top line six minute.
Speaker Change: Paired with RMB $69 3 million for the same period of Latvia.
Speaker Change: Basic and diluted net income per ads attributable.
Speaker Change: Attributable to the ordinary shareholders for the fourth quarter after accounting for one B zero planes and what are your solar 0.1.
Speaker Change: RMB euro playing salad or U S dollar.
Speaker Change: They were playing whack, respectively, non-GAAP basic and diluted net income per ads attributable to the ordinary shareholders for the first quarter was RMB two airplanes I'm H O U S. Dollar euro claim on one and arm B zero claims I haven't sat with all U S dollar euro and putting them on why respectively.
Speaker Change: Net cash provided by operating activity was.
Speaker Change: M B behind me $58 2 million.
Speaker Change: Talking about putting some minutes for the first quarter.
Speaker Change: Turning to our full year results, our total revenue for the time today and for each increased by a full painful process to RMB five 6 billion or U S. Dollar 707 people in seven minutes now.
Speaker Change: Revenue from our lender services photon counting for Tom by 12, 7% year over year to RMB two plants for $2 7 billion.
Speaker Change: 376 fully implemented.
Speaker Change: Revenue for our smart glasses for tendering for about RMB 900 down three seven minutes, we've got solar behind where potentially the point I made it remained stable compared to the 25th Street.
Speaker Change: Net revenue from online marketing services about 104 were up 48, 3% year over year to RMB 2 billion or 276 million.
Speaker Change: Total gross profit was 184 were RMB, two 7 billion or U S. Dollar. So we had with 76.5 minutes remaining stable compared to the time century.
Speaker Change: Total operating expense four times, a day for a decrease to the RMB, two 6 billion or U S dollar sort of $156 2 million compared with RMB three 2 billion.
Speaker Change: Right.
Speaker Change: Net income attributable to ordinary shareholders was 104 was RMB $882 2 million or U S. Dollar.
Speaker Change: 11 3 million.
Speaker Change: And the basic and diluted net income per E. D. S attributable to the ordinary shareholders photonic, therefore were RMB phylloplane salad.
Speaker Change: To your point about.
Speaker Change: Looking at our balance sheets as of December 31st with 104, or a contract liabilities, which mainly consists of novelty for revenue generated from our in service dates.
Speaker Change: Were RMB 961 minute well U S dollar, while hungry and 31 7 million compared with RMB, One 1 billion as of December 31st depends on the Street.
Speaker Change: At the end of a carrier our cash cash equivalents.
Speaker Change: And no not now.
Speaker Change: Yes.
Speaker Change: Current and non current restricted cash and short term investment totaled RMB $662 6 million or U S. Dollar 90, playing I made it.
Speaker Change: This concludes our prepared remarks. Thank you for your attention we will now like to open up the call to your questions. Operator. Please go ahead.
Speaker Change: Thank you we will now begin the question and answer session.
Speaker Change: To ask a question you May press Star and then one on your telephone keypad.
Speaker Change: We are using a speaker phone please pick up your handset before pressing the keys.
Speaker Change: If at any time Youre question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: The first question, we have is from Brian Gong of Citi. Please go ahead.
Speaker Change: Six months, we're in it for taking my question and congrats on a decent profitability for this quarter.
Just a very quick question Commencements evaporates, so ultimately for the ACO can be it can be five like four different business lines and our overall strategy. Thank you.
Speaker Change: Thank you Brian So our company is focused on two key areas. One is AI driven education technology. The other is a drug.
Speaker Change: It was an online marketing technologies, so I'll talk about our stride.
Speaker Change: Strategy in 'twenty, three five well on these two lines and.
Speaker Change:
Speaker Change: We see a significant significant opportunities in both areas so ones.
Speaker Change: Our strategy is to enhance our offering by leveraging our cutting edge AI on improving our content quality, gaining deeper insights into customer needs and.
Speaker Change: We try to establish leadership positions in each of our key product segments.
Speaker Change: So as we discussed earlier.
Speaker Change: Reasoning models.
Speaker Change: <unk> has become a very important for the edge.
Speaker Change: Education.
Speaker Change: Settlement and also marketing marketing segment. So we.
Speaker Change: Anticipated its rapid advance advancement in this area and the actual case, Oh actually exceeded our expectations today not only do we have motto.
Speaker Change: Auto stats are really good at reasoning.
Speaker Change: At solving problems, but also they are.
Speaker Change: Very affordable so.
Speaker Change: I think if you look at history, so breakthroughs in.
Speaker Change: And just infrastructure technology.
Speaker Change: I have often lead to explosive.
Speaker Change: Growth in application. So we believe that this.
Speaker Change: Turning to refining and like likely next year will be a.
Speaker Change: Very important pivotal for my wife's spreads developing of our larger language module applications in education and advertising.
Speaker Change: So so that that's where we will be focusing on on the product and tech side on the financial side of the 'twenty 'twenty four.
Speaker Change: It was a milestone year for us.
Speaker Change: We achieved profitability.
Speaker Change: Looking ahead to 'twenty two new five so we plan to maintain.
Speaker Change: Uh huh.
Speaker Change: A drive towards a more.
Speaker Change: Just a revenue growth, while keeping profitability a key focus for us so.
Speaker Change: So, particularly in today's challenging.
Speaker Change: Mick environments. So so we will remain financially disciplined.
Balancing growth and profitability.
Speaker Change: So.
Speaker Change: Looking at the separate businesses so for learning services.
Speaker Change: We remain focused on the high demand products are likely youre dialing sure.
Speaker Change: So.
Speaker Change: As we talked about we think this is the right strategy. This was good for the for our financial House and this is also good for long term long term growth.
Speaker Change: And we.
Speaker Change: We are for this year for courses I is going to be a more important for us compared to past years now because the technology is finally, we believe it's ready.
Speaker Change: In place too to introduce features like AI tutoring.
Speaker Change: A core element of our cost offerings.
Speaker Change: So so that's a major project that we're working on right now so combined with our high quality video learning content and the experts service teams. So we believe I tutoring will provides an enhanced a much enhanced learning experience thus far for our customers.
Speaker Change: Additionally, we're also working on other features like our AI driven college admission advisor. So we believe that'll be important too.
Speaker Change: We're also expanding our subscription services.
Speaker Change: Oh.
Speaker Change: Oh for support.
Speaker Change: Interactive learning experiences so.
We recently upgraded its higher coal so.
Speaker Change: With a much better.
Speaker Change: Efficient experience much lower compensation occupancy. So that's an example of what we will do down the line. So we will.
Speaker Change:
Speaker Change: It has a lot of our services and the release, new new New subsystems services this year.
Speaker Change: And.
Speaker Change: As regard to smart devices.
Speaker Change: We see continued opportunities in 2025.
Speaker Change: Our focus remains on maintaining market leadership with a dictionary.
Speaker Change: Pain category.
Speaker Change: And also at the same time.
Speaker Change: We'd like to introduce new category of products. So we have a very good product pipeline for 2025.
Speaker Change: So just two days ago, we launched our first high end product this year.
Speaker Change: Doll space one.
Speaker Change: Yeah.
Speaker Change: Pin so this device represents.
Speaker Change: Our vision for what's our next generation AI tutoring learning device should look like so it's a very different product lines are.
Speaker Change: Dictionary pen.
Speaker Change: So it is a very good example of how we continue to differentiate.
Speaker Change: Through this kind of innovation, so, especially in terms of the enhanced.
Speaker Change: Personalized learning experiences for homeowners.
Speaker Change: Yeah. So.
Speaker Change: Finally.
Speaker Change: But oh, so very.
Speaker Change: Importantly, in our online marketing services.
Speaker Change: The key trend to continue to be we see to be twofold.
Speaker Change: One important trend is the shift of the multi trillion ran at industry towards performance based advertising.
The second trend is the growing application of AI.
Speaker Change: Large language models in the advertising.
Speaker Change: So we are still a relatively small player in this space, but oh, we we see a significant growth opportunities in 2035 by leveraging these trains.
Speaker Change: So.
Speaker Change: We plan to deepen our strategic collaboration with Netease.
Speaker Change: To integrate more traffic ecosystems and advertiser resources.
Speaker Change: The partnership which began last year of 'twenty 'twenty four currently represents less than 10% of our AD revenue and we expect this to growth.
Speaker Change: <unk> in 2025.
Speaker Change: In parallel we are.
Speaker Change: <unk> also continued to expand globally with a focus on our key opinion leader marketing and performance based advertising.
Speaker Change: So mobile we are actively exploring.
Speaker Change: I am driven projects that enhanced platform capabilities for our clients. So I'll go in too.
Speaker Change: Replicate a stepped growths.
Speaker Change: We achieved in Q4 last year Q4, 2023 particular tenant industry.
Speaker Change: Well this is kind of a kind of step growth is challenging to attain.
Speaker Change: We are committed to.
Speaker Change: Find them and pursue them. So at the same time, we continue to optimize and expand our business on a day to day basis. So we think.
Speaker Change:
Speaker Change: That will ensure a more stable and sustainable growth so as our AI technology matures, we will.
Speaker Change: Uh huh accumulate more customers develop more experienced teams contributing to our ads business growth.
Speaker Change: Okay.
Speaker Change: Yes, that's all for me thank you.
Speaker Change: Thank you.
Speaker Change: Thank you about that though.
Speaker Change: It is the win.
Speaker Change: I'd like to add more color from the financial perspective.
Speaker Change: There was a remarkable financial progress.
Speaker Change: Later in the call and we will continue to monitor the key financial metrics to track our.
Speaker Change: Progress in the 25, particularly in profitability.
Speaker Change: Cash flow improvement aspect.
Speaker Change: From the profitability front as mentioned by a doctor.
Speaker Change: 20 to 24 months of the first year to achieve the scheduled profit net income attributable to <unk>.
Speaker Change: Awesome.
Speaker Change: Who knows.
Speaker Change: For 2024 was over on.
Speaker Change: 888 million compared with the loss of around $550 million and be in 'twenty to 'twenty three.
Speaker Change: Significant improvements in our bottom line.
Speaker Change: Murray.
Speaker Change: From our focused strategy and streamline of loss, making up any units.
Speaker Change: We believe and as I am driven technology as mentioned by <unk>. So it's a chance to doing will enhance our advantages of our business do will further drive the improvement.
Speaker Change: Financial performance in 2025.
Speaker Change: Looking ahead to 2025 with the AI technology become more material and the cost of capital we will further leverage this.
Speaker Change: The last month, and the incremental new concepts optimization measures to enhance profitability.
Speaker Change: A second run a cash flow perspective.
Speaker Change: Have dramatically improved our <unk>.
Speaker Change: Net cash outflow from a substantial improvement from 440 million RMB net alcohol.
Speaker Change: On the 23 to.
Speaker Change: Around $70 million and be in 10% default such improvements depth from both enhance the probability.
Speaker Change: Rapid growth of our AI.
Good scripts.
Speaker Change: In 2025.
Speaker Change: We will continue our efforts in revenue expansion and cost control aiming to achieve historical breakeven in annual operating cash flow for the improvement.
Speaker Change: Regarding revenue growth as mentioned by dumped it so we had anticipated.
Speaker Change: <unk> continued moderate growth considering today's challenging economic environment, while keeping profitability.
Speaker Change: A key focus.
Speaker Change: While we face significant challenges from competitors and the business uncertainty.
Speaker Change: <unk> confident in delivering that how does that business and the financial performance.
Speaker Change: In 2025.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: The next question we have is from Brad.
Speaker Change: Sure I'll see ICC. Please go ahead.
Speaker Change: Good evening gentlemen, thanks for taking my question and congrats on the improvement no progress Prada.
Speaker Change: Product is supposed to be education in our sector.
Speaker Change: Sector. So my question is about the.
Speaker Change: Online marketing business, because we saw that the Q4 ground lease business is kind of like flattish or what kind of opportunities will arise for this business. In 2025 are we going to expand our because previously we.
Speaker Change: Mainly in the domestic market how are we going to expand.
Speaker Change: In the overseas market and whats our strategy. Thank you.
Dennis: Oh, Hi, this is Dennis.
Speaker Change: Thank you for your question.
They are independent and inspire you dove, a advertising, Turkey Hill focus honestly inter connected to go over the fourth.
Speaker Change: Yeah.
Speaker Change: Densify, our collaboration with that group.
Speaker Change: Both technological integration and the ecosystem expansion.
Speaker Change: By developing area of Dallas, the proprietary data analytics and yeah, I read them across these platforms.
Speaker Change: They are driving measurable improvement.
Speaker Change: Contingency.
Speaker Change: Our for example, our partnership with Nike.
Speaker Change: Called the music youth in the mailbox relative is it.
Speaker Change: There are.
Speaker Change: Now identifying new high potential traffic channel ecosystem to create additional divide that although it had a pipeline.
Speaker Change: Ultimately our 80 series this fall.
Speaker Change: That is group are achieved over 200% year on year over year revenue growth in 'twenty than before yes, there still account for less than that of our total revenue.
Speaker Change: Demonstrating substantial untapped potential.
Speaker Change: Second as a reminder, that our all our global expansion against strong momentum.
Speaker Change: We are a market to that to the breakthrough becoming one P.
Speaker Change: Pier, one I think the whole partner how path a path.
Speaker Change: 100 million and international revenue base with over 100%, Oh yea over year ago.
Speaker Change: Well listen the Google partnership.
Speaker Change: And establish a sustainable foundation for Kosovo to ago.
Speaker Change: The airlines are politically potential adds to capture the emerging emerging opportunities in global digital marketing through Pennington five yeah.
Speaker Change: Finally, we are their luteinizing, all although have heightened impact back through.
Speaker Change: Following the successful integration of our blood typing error.
Speaker Change: These six capabilities.
Speaker Change: We are now developing on the.
Speaker Change: Yeah, I about hydro optimizer solution.
Speaker Change: Solution automates, a comprehensive idea generation along with Mexico.
Speaker Change: Decorative nemo dynamic, but it might be something that is killed the real time be the adjustment.
Speaker Change: They didn't even Italy, both provision under observation and you didn't see a big delivery.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Mhm.
Thank you.
Speaker Change: The next question we have is from Thomas Chong of Jefferies. Please go ahead.
Speaker Change: Hi, Good evening. Thanks management bought that kicked my question. My question is about the pilot what he said.
Speaker Change: Yeah. Thank you.
Speaker Change: Centered homeostasis coupon.
Speaker Change: I know the question first and I think the philosophy or we initiate those structures are the adjustments you know hold on the survey says put out portfolios.
Speaker Change: We intensified our focus on the courthouse with robust demand in some specialized fleet and you are already I'm sure. We're all facing all non essential programs sometimes just.
Speaker Change: Yes, the restructuring remains ongoing I think and it's project will conclude in the second half of this year.
Speaker Change: Apartment completions revenue profit on a survey, which we expect to the stabilized like the latter half of this year.
Speaker Change: I think that without a true will surpass the strategic priority for the survey said they see all kinds of advice, we commit to the other ones are following the key initials to deliver a more personalized and efficient learning experience for our customers and that sometimes we expect this.
Speaker Change: Revenue of whatever sort of flattened out so of course, we didn't was also ensure will keep growing in the 10 times 25 sale.
Speaker Change: The first we think we've elaborated and so that's why I'm still capability all statistic so luxury models.
Speaker Change: Comprehensively upgrades like yeah, so basis, it seems like without incurring intelligence bonus system.
Speaker Change: Course upgrades that you have to be all include the first as far as the more precisely.
Speaker Change: That is the case up in the Nordics Mac knowledge gaps.
Speaker Change: Optimize the learning house design enhance to clarify it in Kuwait and explanations.
Speaker Change: A more comprehensive college application planning solutions.
Speaker Change: Secondly, we are implement are implementing to Cleveland updates to the instructional videos beyond routine updates of languished a curriculum.
Speaker Change: But with vaccines or primary updates create criteria are built.
Speaker Change: Right to throw out the students exercise accuracy rates basically intelligent lighting system.
Speaker Change: When the hour wage exceeds a threshold our dedicated advisor.
Speaker Change: Local protocol.
Speaker Change: [noise] Pro Act proactively.
Speaker Change: Engage the students still collecting feedbacks on the basic video content.
Speaker Change: Expedia is a consolidated feedback the content managers and our R&D teams facility immediately at the video update at a system of Redevelopments.
Speaker Change: And we think that will be the things we did in the pit at about 500 of them services and we feel confident about the business on the Concord and the.
Speaker Change: We expect to kind of keep belabored, the high quality products and services to our students central Tomas I hope that answer your questions.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: The next question. We have is from version of what time Securities. Please go ahead.
Speaker Change: Some people are taking my question. This is John.
Speaker Change: <unk> grew up on potash.
Speaker Change: Actually one is after the integration you'll don't like.
Speaker Change: Marshall.
Speaker Change: Let's see.
How do you think the impact.
Speaker Change: Is that on the business operation.
Speaker Change: Okay.
Speaker Change: Yeah, I think your jumbo for the question Yeah I'll take it.
Speaker Change: So I think there are three points now so first.
Speaker Change: Youre bidding on deep sea, particularly deep sika are one the reason in bottles.
Speaker Change: Now opens up a lot of exciting opportunities for us. So we're one of the first teams are in the education in the advertising area to integrate <unk> into our <unk>.
Speaker Change: Including Mr. P. A tutor without action area, you talk externally Pan Chinese China University MOOC and.
You'll have a smart cloud.
Speaker Change: So so we're doing that first however, what's more powerful is.
Speaker Change: And seeing these models with a domain specific business specific knowledge. So one key technology that you can enhance the base model faced steep supermodel used to augment it with Ah Ah Ah retrieval augmented generation rack technology.
Speaker Change: So this integrates the model with knowledge bases and.
Speaker Change: Victor databases to combine.
Speaker Change: General capabilities with domain specific expertise so.
Speaker Change: Our team has a significant.
Speaker Change: Experience with rack in our Q anything framework.
Speaker Change: It is actually one of China's leading rack platform.
Speaker Change: So that's a good example, so so we've oh.
Also developed a popular rock applications in education, such as our AI College application assistance last year.
Speaker Change: So now with deep CCAR.
Speaker Change: Strengthen these rack applications, so making them more effective.
Speaker Change: So from a competitive standpoint, the deeper integration of strong models into applications is.
Speaker Change:
Speaker Change: I think it's quite similar to developing apps for mobile platforms like iPhone and Android so.
Speaker Change: Those teams with the better.
Speaker Change: Building experiences I think right now we'll have a.
And edge here. So these teams will develop AI applications better just as a oh, we have been able to develop mobile applications very well.
Speaker Change: So that's one so second point is.
Speaker Change:
Speaker Change: So agents are a newer very promising.
Speaker Change: Application model.
Speaker Change: Of lots of language models so.
Speaker Change: Instead of just the answering single questions. So agent solve multis step.
Speaker Change: So agents have already seen success in areas like our programming and I expect the education and advertising to be the next major area, where agents will be very successful.
Speaker Change: So generally we just talked about.
Speaker Change: AI ads optimizing optimize us yeah. These are.
Speaker Change: Agent applications that we are already exploring and we already see very good early results for these for these agents.
Speaker Change: So there are a lot of very.
Speaker Change: Very highly frequent scenarios, where we see that.
Speaker Change: A strong model.
Speaker Change: Combined with agent technology can automates tasks with a very high success rate such as tutoring on specific topics.
Speaker Change: Such as optimizing advertising assets and <unk>.
Speaker Change: Performing at attribution analysis.
Speaker Change: Congo's Congo Congo.
Speaker Change:
Speaker Change: Oh.
Speaker Change: Third.
Speaker Change: We are enhancing general purpose large scale models with a smaller and more restrictive vertical models.
Speaker Change: No.
Speaker Change: This is different from from rack. So essentially Rajiv you can buy a model with a knowledge base. So our vertical model is you develop a new smaller and more specialized models. This is actually hasn't been our strategy since 2023, and it's proving to be highly effective so far.
Speaker Change: For instance.
Speaker Change: We recently opened the Confucius Oh, what 14 be reasonably model I talked about so this one I was wondering is optimized to run on the consumer grades GPU like the 30, 30, 90 or a 49%.
Speaker Change: So.
Speaker Change: It actually outperforms the.
Speaker Change: There's still a diversion of deep CCAR one.
Speaker Change: Of the same size of the same 14, besides in mass mass tasks. So so basically we developed a model for mass tasks. That's.
More effective than deep sea cough, the same sites. So so I think that's that's.
Speaker Change: That's very exciting so.
Speaker Change: And what's what's also exciting is that Confucius. So one was developed in IR teams in just a month just under a month so that showcases how rapid <unk>.
Speaker Change: Open source models development has.
Speaker Change: Empowered our team in others in the industry to create competitive vertical models. So alongside continuous O. One we've actually also developed Confucius.
Speaker Change: Translation model with just a 10% of the parameters of a larger size general motors and <unk>.
Speaker Change: Oh, so and we also have Confucius edge model.
Speaker Change: With fewer than 1 billion parameters that delivers offline translation quality.
Speaker Change: Better than many online empty translation models. So as we continue to understand and anticipate usage scenarios in the coming quarters.
Speaker Change: We will.
Speaker Change: Quickly upgrade these models and develop new new body cameras. So.
Speaker Change: Keeping our R&D and compute cost efficient, while delivering valuable results to our.
Speaker Change: Our users and our business yeah. So so I hope that answers the question. Thank you.
Speaker Change: [noise] Pepco.
Speaker Change: Okay.
Speaker Change: Thank you. This concludes our question and answer session and I would like to turn the conference back over to management for any closing remarks.
Speaker Change: Thank you once again for joining us today, if you have any further questions. Please feel free to contact us at your without directly.
Speaker Change: Child to appears in financial communications in China, or the U S having that state.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].