Q2 2019 Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by and welcome to Sogou second quarter 2019 earnings Conference call.
At this time all participants are in a listen only mode.
After managements prepared remarks, there will be a Q and a session.
Today's conference call is being recorded if you have any objections you may disconnect at this time.
Now, let's turn the call over to your host today, just see Zhang Investor Relations Director of Sogou. Please go ahead.
Hello, everyone and thank you for joining the <unk> second quarter 2019 earnings conference call on the call are he always downtrend, along and our CFO Jill will give an overview of the operations and the financial results.
In line with our practice on the previous earnings conference call shall trends prepared remarks will be made NGL trends boys using personalize the speech synthesis and style trends for learning technology, which was developed by the Sogou voice interaction Technology Center cell trial will join the Q and a portion of the call in person.
Before management begins their prepared remarks, I would like to remind you of the Companys Safe Harbor statement in connection with today's conference call, except for the historical information contained herein. The matters discussed during this conference call are forward looking statements. The statements are based on current plans estimates and projections and therefore, you should not play 'em do reliance on them forward looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those containing any forward looking statements for more information about potential risks and uncertainties. Please refer to the Companys filings with the Securities and Exchange Commission with that I will now turn the call over to our CEO shell trend along.
Thank you Justin and Hello, everyone.
We are pleased to report that in the second quarter, we achieved steady growth across our core businesses.
With total revenue, reaching the hunger and $4 million.
Our over 2 billion RMB.
We also recorded solid profitability with non-GAAP net income of nearly 38 million U.S. dollar.
Or a hunker and 89 million RMB.
Third as of the end of Q local maintained its position as kind of the second largest search engine.
At the same time, our third revenue continued to grow faster than the industry average.
Mobile keyboard, we recorded $415 million in Europe in the quarter up 17% year over year.
Which reinforced its position as the third largest Chinese mobile app in terms of you. According to research.
With this expanded use of basis for both search and mobile keyboard, we have gradually build RP data a recommendation does it as a company level.
Revenues generated from this service have ramped up quickly and is on track to become our second growth engine.
Additionally, with the support of our core AI capability.
The smart hardware business has been progressing well with its ongoing upgrade.
And it's delivering tangible results.
Now, let me walk you through each of our core businesses.
Third we are committed to building a more efficient and not let both purchase platform that provides high quality content.
Particularly in healthcare search and intelligent Una.
In the second quarter, we further expanded the authoritative content offering to better address users search intention and constantly.
The <unk> has resulted in a significant increase in the proportion of health care for clearly as well as growth in the average number of clicks per user for healthcare search result.
Moreover, with they significantly ahead of our peers in both the fulfillment and occur with the rate of our call rep as the results in the quarter.
In addition, with further builds up our content ecosystem with bogo handle our content aggregating platform.
During the quarter, we continued broad investor, who these authoritative healthcare and you when they called focal while allowing us to provide high quality content as the consistent standard across our platform.
All of this effort have effectively boosted our organic traffic growth.
On top of embracing high quality content, we have also been strengthening our service offering inserts.
During the quarter, we started with the health care vertical and introduced initiative to build a closed loop to better serve the demand of our users.
Typically we recently received an internet hosted the license that to secure the permission to develop long life diagnosis and treatment services.
Of note our independently develop large price technology, a core technology, you ally diagnosis and treatment was adopted by the regional healthcare platform in Shanghai team and district in July 2019.
Turning to mobile keyboard sent to a number of industry, leading product innovation Sogou mobile keyboard continued growth user base.
By the end of June average daily voice request made via Sogou mobile keyboard increased by 72% year over year.
With up to 618 million requests per day.
Thereby retaining its position as the largest voice app in China.
During the quarter.
We'll go Bobo people lost the most advanced voice conversion technology receive the voice industry.
Our strong testament to leading edge voice services capability as well as its innovation strength.
This technology allows user pickled work their voices through a selection of nearly 30 characters such as celebrities and animated characters.
As well as dialect.
As it enables our users to communicate in a more progressive and Entertainingly.
Whilst conversion has become one of the most popular entertainment function our mobile keyboard.
Well, we're testing more users third at mobile people were also building the big data every compensation service to unlock is commercial value.
And big data based on our understanding of hundreds of millions of art user.
We have developed a curve with user profiling and have continuously improve the us lower incentives to make part is the commendation.
These has that a solid foundation for our recommendation does it.
Meanwhile, we have leveraged our own product matrix to provide our recommendations 34 more users in particular, we enhanced content and service distribution capabilities for mobile keyboard first member during the quarter were improved user interface income confirming the making the commendation feature more inquisitive in cap so that our users can receive and share content more conveniently.
We're pleased the mobile keyboard is becoming an important driver for our recommendations further.
In the second quarter revenues generated from the big data and recommendation therapists Pip growth year over year.
The service consists of new speed that leverage our various search related assets.
As a content fermentation within mobile keyboard among other things.
We expect the growth momentum to continue in the second half of 2019.
Moving now to eight.
In the second quarter, we continued to implement our strategy of developing language centric AI technology.
We cleared up our effort to drive the innovation in technology and application and advance our leadership in voice and computer vision with many industry leading bridge growth.
For example, we launched the world's first Russian speaking AI news anchor men's list in partnership with the power cost.
A new seasons in Russia.
We also expanded the application scenario of our Fogo vocational avatars moving into the legal industry.
Jointly with the Beijing Internet Court, we are viewed and I guess, the first of its kind in the world.
With respect to smart hardware, we have leveraged our core capabilities to drive the ongoing upgrade of the three major product line.
Children translation and boy.
As a result, our AI smart hardware business made significant progress in the second quarter.
Let me provide just a few updates on the product.
In May 2019, we launched deployed to a new generation of children Mark what.
That integrates multiple layer enabled functions such as intelligent una simulations of parent debt and storytelling and smart evaluation of children spoken English level.
All of the functions are significantly improving our product competitiveness.
Also our AI enable mark the quarters see one has the best Seldomly are several mainstream e-commerce platform since its launch in March.
In addition, we have initiated R&D for high end voice enabled hardware products that are empowered with enhanced AI capabilities for more sophisticated use cases.
As new products hit the market, we expect our hardware business to return to growth from the third quarter.
In summary, it was a busy and productive quarter and now I will turn the call to Joe who will walk you through our financials.
Thank you sell trends Hello, everyone.
In the second quarter, our total revenues reached 300 and a $4 million.
Which on a constant currency basis.
We would have booked an 8% increase year over year.
Notably we saw a larger revenue contribution from the big data and their recommendation service.
As we continue to tap into is monetization potential.
We're also focused on improving operational efficiency and achieved a solid profitability in the second quarter.
Although we anticipate the external environment to remain challenging in the second half of 2019.
We expect to experience positive momentum from our new growth drivers.
Including the big data and our recommendation surveys.
As well as smart hardware.
I'd like to also point out one other key portion of our announcement today.
Highlighting our solid balance sheet and the confidence in the company's long term growth.
Our board of directors recently authorized share repurchase program.
Of up to 15 million gas dollars over the next 12 months.
And the place now that we're well found other purchases from our existing cash balance.
Now I'll walk you through our financials in greater detail.
Please note that unless otherwise noted.
Our money Ituran loans that I discussed.
Yes dollars.
We also know that well refer to some non-GAAP numbers.
Which exclude share based compensation expenses.
You can find a reconciliation of non-GAAP to GAAP measures in our earnings release.
Total revenues in the second quarter was $304 million.
On a constant currency basis total revenues in the second quarter would have been 300, and then $24 million.
8% increase year over year.
Search and a search related revenues.
Were $276 million.
On a constant currency basis.
Search and the search related revenues would have booked at a 9% increase year over year.
The increase was primarily due to the growth in auction based pay for pig services.
Auction based to pay for paid services accounted for 88% of search and search related revenues.
Compared to 85% in the corresponding period in 2018.
The number of advertisers for our auction based pay per click service was approximately 87000.
Up 5% year over year.
The average revenue per advertiser for auction based a pay for play it services was $2800.
Up 1% year over year.
Other revenues were $27 million, an 11% decrease year over year.
The decrease was primarily due to lower sales.
Our smart hardware products.
As a result of continued efforts to upgrade our smart hardware strategy.
Based on new logos launched and the more in the pipeline.
We expect hardware sales to attend to close in the third quarter of 2019.
Cost of revenues was $196 million.
Our 9% increase year over year.
Traffic acquisition cost.
Our primary driver of cost of revenues was $146 million.
8% increase year over year.
Representing 48% of total revenues compared to 45% in the corresponding period in 2018.
The year over year increase was driven by price inflation.
Which has clearly moderated from a year ago.
As we continue to be selective less traffic acquisition.
And the benefit from increasing contribution from organic traffic.
Great expect tech gross to be well contained for the remaining hotez of 2019.
Thorough Scotland and non-GAAP gross profit was $108 million.
Compared to 100, and the $22 million in the corresponding period in 2018.
GAAP gross margin was 35% and a non-GAAP gross margin was 36%.
Compared to 40% a year.
Hello.
The decrease primarily resulted from the gross of traffic acquisition costs.
Outpacing that of revenues.
Total operating expenses were $96 million.
Largely flat year over year.
Research and development expenses was $51 million.
10% decrease year over year.
Representing 17% of total revenues.
Compared to 19% in the corresponding period in 2018.
Sales and marketing expenses were $37 million.
8% increase year over year.
Representing 12% of total revenues.
Compared to 11% in the corresponding period in 2018.
GA expenses were $9 million.
31% increase year over year.
Representing 3% of total revenues.
Compared to 2% in the corresponding period in 2018.
Operating income was $12 million.
Compared to an operating income of $25 million in the corresponding period in 2018.
non-GAAP operating income was $18 million.
Compared to non-GAAP operating income of $30 million in the corresponding period in 2018.
On the.
Income net was $4 million.
Compared to a $3 million in the corresponding period in 2018.
Income tax benefit was $1 million.
Compared to income tax expense of $3 million in the corresponding period in 2018.
The income tax benefit.
Primarily resulted from tax filing adjustment of income tax expense playwear slate recognized.
Net income attributable to SOPO was $21 million.
Compared to net income of $33 million in the corresponding period in 2018.
non-GAAP net income attributable to sogo was $28 million compared to net income of $38 million in the corresponding period in 2018.
Basic and diluted earnings per Adss were five cents.
non-GAAP basic and diluted earnings per Adss was seven cents.
As of June 32019.
We had cash and cash equivalents.
And short term investments of $1.1 billion.
Compared to $1 billion as of December 31st 2018.
Net operating cash inflow for the second quarter was $56 million.
Capital expenditures for the second quarter were $12 million.
And lastly, turning to our outlook.
For the third quarter wait expects to total revenues to be in the range of 300, and the $4 million to $314 million.
Representing a 10% to 14% increase year over year.
Or an 11% to 15% increase year over year in RMB terms.
Please note that for the Subcon attained 19 guidance.
We have assumed an exchange rate of 6.9 RMB to the dollar.
As compared with the actual exchange rate of approximately 6.81 R&D to that dollar for the third quarter of trying to 18.
And 6.82 RMB to the dollar for the second quarter of 2019.
That concludes our prepared remarks.
Thank you Jessica operator, we'd now like to open the call for questions.
Yes. Thank you.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you're using a speakerphone please pick up your handset before pressing the keys.
If any time your question has been addressed and you would like to withdraw it. Please press star then too.
At this time, we will pass momentarily to assemble the roster.
And the first question comes from Elsie Zhang with Goldman Sachs.
Thank you management, we're taking my question now would you be on that one.
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I would like to James you, James Hardie Jain core churn young woman Pete.
Great. Thanks.
You don't show one yes.
Yes, George you mentioned that you won't be large and.
Between GE and you should you flow that you guys Jim Sheehan.
And quickly translate my question.
My first question is on industry, where the overall advertising industry growth remain challenge. This year. We also observe some other internet companies with big amount of user tragic are actively launching search features in that as well.
It is still very early stage right now, but I would like to hear managements thoughts on whether you think there's any changing dynamics in competitive landscape in the search state and how it still goes strategically positioned to take on the challenges.
And my second question is on the growth outlook of search business. It still goes if it says we'll meet interpret to interpret the.
Threeq you around the guidance, which is a robust number of 11% to 15% in RMB terms.
At the start of a normalized school periods, the company and come out of the girls bottoms on the second quarter.
As we just did and can you provide more color on the short term or the long term goals drivers as well. Thank you.
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Eagle Clingy Nondilutive amendments to the Lewis group and how to join the team struggled hotel 2 billion in order to.
No. This is a unique visitor Tina.
See when we hope to achieve whatever that is even the Han Chinese who probably has to be on your question to humans and.
And can you tell me what are those open versus shipments to two young will diminish officer for the future.
How does the Seadrill has another full floor contingency with me on the GT should hopefully soon.
Yes, so for you guys from quarter to concurrently also consumer Linda.
Now I feel that India will be able to achieve sooner would you bumped Liu who you talk to how the licensee fourth quarter in more detail.
If this is obvious hanting, 2% globally.
Just on the lead each season to the Ccs, Amit Daryanani solution to sunken gender.
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Yes.
Oh, Okay. So I'll take the first question first on online advertising, we believe that hotels entry into Oh, My etcetera has made a good set a a very.
Very very competitive and actually has negatively impacted on the search advertising.
However, we believe that to it and we are.
We continue to grow our own traffic and revenue we believe our search revenue to maintain a steady grows and continue to be grew faster than the industry average and on the product front. Our observation. So far is that total searches intended to meet the user demand for consuming a variety of content.
Remember totality is pretty much in labeled as a constant the aggregator and a very naturally is search will be serving the accountant that happens to match the user consumption peptide.
So in contract at Sogo, we do generate surge and generous or just more about how can users find your writing from nation.
There or develop an understanding of things.
Its motor use case for consumption are consuming content.
So for US we are we will.
Focus more on.
Leveraging our AI technologies, such as knowledge computing to enhance the search quality and the reason mindshare of Sogou search among users.
So that we can be very differentiated from our competitors and continue to grow our market share.
So I don't want to.
The Bakken crude to hear what gets you to join the team that we cannot so fortunately clean Supergirl season, but we couldn't get intelligence. Your line is open seats as either Daniel just over a year with select committees to GE added people to walk you know gokul holger similar to the full quarter can you would you took balance sheets to due diligence.
In addition, our you know.
We have been focusing on developing our big data and a recommendation series.
With the expanded user basis for both search and mobile keyboard, we have gradually build up of our data recommendations or is the company level two on monkeys commercial value and we have seen very solid momentum on that front and second we made.
Very good progress with the business upgrading.
Across our us more hardware categories, including children translation voice. So we believe this on new growth drivers will continue to experience positive momentum and.
Helps sogo grow its business for the longer term.
Hi, This is Joe I'll take second question regarding the guidance of Qs rate.
So for Q3 total revenues the RMB.
Expected to increase by 11% to 15% so take the.
Middle end that implies 13%.
The increase year over year, the RMB terms, so I want to remind you that in.
Q3 2018.
We did have a low base.
As we assess friendly 10 days of online.
Business due to that though it is stunned.
So.
Apple to Apple basis, if there was no totally istent.
The.
Right in Q3 guidance I mean for the middle end would imply.
8% growth year over year, the RMB terms, so basically that means.
Comparing to Q2 of those are 8%.
Gross year over year, the girls, we in Q3 and the continuing to the.
Q4, well be steadily.
At around 8%.
Looking to.
Next year.
List.
The last month of our big data and the recommendation surveys and so.
Accelerator grows from smart hardware, where you expect the revenue growth in 2020 well accelerate.
Yes.
Okay.
Got it. Thank you. Thank you very much.
Thank you.
And the next question comes from Alicia Yap with Citigroup.
Hi, good evening.
Hi, Joe.
Thanks for taking my questions I have a couple of questions number one is that.
Could you elaborate a bit on the increase in traffic.
Acquisition cost, which I think you mentioned was due to the increase in pricing. So are you able to share with you guys. What he said met me to offer an increase in pricing.
And also how should we expect that to trend in the second half and if you have any early collars in two to 2020 on these GHG call. Second question is how do you quantify the late stage at demand outlook, especially on the medical Oh customer you seems to be a common thing you're gaining some share. So all wonder if you're able to.
Quantified the percentage of the share gains from your peers.
And also related to that health care, a wonder usage. So go Oh Heck Trenton.
To move the dramatic search queries into the structure data platform like your peers. Thank you.
Okay I'll take the first question regarding the tax increase.
So.
I suppose.
So as a percentage of total revenue for Q2.
Hi Tech accounted for.
48% of total revenues.
Comparing to last year's 45%. So the increase is mainly due to the price inflation. So you know for I'm just trying to 18.
Unlike previous years.
There is a mid year price inflation in 2018, so for the first half of Twentys lighting. The price inflation is about us a 30% to 40% for the second half suppress inflation well.
[noise] slow down to 10% to 20% so with our efforts to drive up the organic traffic tend to be more selective.
Traffic acquisition, so in the second half.
Tech has a percentage of total revenue well continue to decrease.
In Q3, and the Q4 so.
Overall for full year 2019 pack has percentage to total revenue well be.
Yeah, Chris just a little bit say, one or two percentage points.
I mean as percentage of total revenue comprising two.
Last year's 47% of total revenue.
Oh, Kelly's O'neill candle Tivo, yes, I am going to fulfill the film will bleed over into the social possibly be cheap how does it on the lead ship reckons other things that seasonal machines or don't.
Hello.
It's a change in the ultimate goal one of US would have been had some drop off gold. She is an achievement.
From a.
Total.
And what are the you know the plaza, which will continue to do so.
Sure I can go back to the full four home interviews with Virgin coconut eligible for Ttcogen Hopper turns vessels or.
Yes, it's now the question.
So in terms of the item on our outlook for the health care sector, we haven't seen a.
And second if it hanging pattern from our vertical out peers.
And I think in substance.
Health care sector is very fragmented on compared to other sectors. So it's very difficult for vertical apps to just to satisfy the older users demand second in terms of the structured data or we are doing the same thing as our competitors do Oh, we are moving our search.
Okay series on related to healthcare into a more structured platform. So that we can increase the mindshare of Sogous search among all the users.
And improve our search quality.
Thank you.
Thank you.
And the next question comes from Zero is wrong with 80 Sixresearch.
Good evening management. Thank you for taking my questions I have a quick question on mobile keyboard can management help us understand I understand better.
How old recommendation works on the mobile keyboard how sole goal to monetize.
Teachers.
What is your long term revenue and hockey regarding this business.
Okay. That's all I'm going to put us off to general terms, which again will hopefully hopefully he will answer to you all who will continue on the Pasha.
Evenness as local Chinese vessels in June when would the focus and we've gotten over the this is what this is as Rupert condoms will you. Please Jason confidence those war so talented people to the component of personal authority on the shift gears onto disposal, how much outsourcing illness, including Washington, 13 assumes holding over Jason go back home business, which is on us to hold on to.
So as long as 2014 inclusive of Cushing Malema Gysle Shellum has enabled a house or through five bullets on the approval to the Cheadle She puts on China tends to Celsions.
Hello, just similar to the alleviates was due to leave a fool you heard us each year, so that young within your question in looking at people cohort of all pervasive to Relever nobody that answer.
[noise] Oh in terms of the.
Anti addition potential from mobile keyboard you know we are.
Building actually is a big data and recommendations series so in big data or actually we have a very good understanding our users from our various search assets. So that we can develop accurate to use a profiling and improves the algorithm to make teradata recommendations oddly mobile keyboard a we believe a lot of users that trying to searcher with mobile keyboard, whether its general search all E. Commerce search on so on mobile keyboard has also generated a lot of data. So that we can improve our recommendations series in the future mobile keyboard is going to be operated like a channel for us to push you know.
There is information then remembers countenance services it will be more like a BP ikang leaky eight kind of services.
On that weekend I recommend on various content and services.
Mmm include increasing.
And this is going to be Uh huh.
Add on.
Our value added services for our Oh millions hundreds of millions of our mobile keyboard users.
The Magellan eager to fall into on your own projections as we move onto the team showpiece I wouldn't aneel I assume it's usually but not all and welcome to the seasonal reorders. So good with SLC totality to fully focus in on that sort of thing.
Two questions. If you would what are your goal. However, we will finish the thought on younger sort of you guys sit on the deep cws notions of she's autism.
I do apologize to all pulling launching with someone arguments will go to Jennifer so much seasonal so it will take before the approval machines into the little green more ideological so telecom benefit also.
Oh the series a the reckon the recommendations or is it not going not only going not trying to keep on users within the mobile keyboard as trying to leverage that user profiling to develop other services like news feed which is still an enter.
Accounts for a very low proportion of total revenue and also honored services like Internet finance.
That's very helpful. Thank you.
Thank you.
And the next question comes from Alex Yao with JP Morgan.
Hi, good evening restaurants, thank you for taking the question.
I have two questions I'm sure you talked about.
He has seen growth outlook in terms of trends you will be better than mentioned by Jean can you walk through what is the underlying assumption behind the statement. For example are you seeing the macro impact to advertiser sentiment or bunch I look teaching the diminishing or are you seeing the pricing pressure from.
Though in releasing inventory is going down or are you seeing a traffic contribution meaningful from traffic contribution for the keyboard software and then second question is the reason to hotels search engine launch I think you guys already you talked about to you or do you see the impact to our operation.
My question is how do you see the next or two two full quarters are you seeing.
Probability the Mr will increasingly make more search.
Hotel the platform gradually from content sourcing to the smoking. So we expect to increasing competition pressure from a new entrant to search engine marketing. Thank you.
Okay.
For 2020 outlook.
For search revenue they fix that it will be quite stable in 2020. So the acceleration is coming from number one.
A waste development of our recommendation studies they expect the revenue from that well continue to ramp have seen 2020.
And the second ways Neil.
Product launched this year and the moisture in the past nine wakes Baptists my hardware itself well accelerate team 2020.
I'm a cotwo sources is home to the nuances of Telecom <unk> I mean, you don't want to figure out how to tell me good.
Well did other rooms, you can listen to the mean older or selfie see on the strategic wins will just depend if either.
Uh huh.
In terms of the test can I tell account to you now hot band from common searched agenda stage, and we believe that talent how hot it depends how how users Oh I recognize Tony I said, whether it's a similar change all at constant currency and catalog I think oh, so far.
Our nations that Tony I pretty much labeled an accountant aggregator.
Having said that and we will keep an eye on how things are going to develop going forward.
[noise].
Okay. Thank you and the next question comes from Natalie Wu see I see.
Oh thanks.
Gotcha.
We got paid any Natalie do we noticed that the recommendation experienced ask on closing the second quarter. So what do you think I'd like major drivers behind and what do you think are you are like major competitive advantage compared to the industry peers and what if youre like strategy and expectation for I guess kind of as for this business going forward.
I'm with you I think that I just shouldn't do we thought you would everything they need to go back on that you go to the class C sound Kinda talk one's home do ship after that they hold the drugs are the twod oneish him and that of course, we can do the hunger that she'd how did you get to do it or something.
Yeah, I'll draw that Youve. It seems to me Shuang you Mattie if you can see in I do would you pay you that he had to have the class C. S.
No it's on their highest liquidity Unfortunately, all along to see.
There are some new York City thought they know who the way more volume you will know the croissant yeah.
Not at all in Chicago, So 20 will be more houses that's when we'll put on how to do that since he did he.
I also want you to go to social each year easily done Lewis, who actually was on it until it was a girl because what I feel I feel that this on that on the leap.
As compared to our peers I think Oh, we have competitive advantage Ingram <unk>, providing their recommendation series because we have a massive user base. We are actually the number four largest internet company in terms of our user base only up to be a ti and second do we have a very good I use the profiling capability, because we understand our users from search and mobile keyboard, that's where all the strength is.
Well look I mean, I did have a guy who showed no substitute for example, which he needed who's out looking for since I guess you'd think GE bronco.
I think we feel much some great concern to publish all of them have essentially look we will for sure.
Anyone who comes on but we'd like to grow for the time, where you put the obstacle nothing.
Indeed, our Gulf.
Oh in terms up around new compensation I think it's a bit too early to tell I. Because this is a recommendation server is this not only about you know Oh, Oh my advertising, if it's more about other services, including seed and financial services, which we expect a higher ARPU from these you know Uh huh.
Innovative services, leveraging big data capabilities off the recommendations service.
Oh.
[noise] churn comes from Thomas Chong with Jefferies.
Hi, Thanks management, but taking my questions.
I'm not sure if my questions has been answered in P. you asked questions.
I just wanted to get an update about our co operations with 10 cents in terms of the monetization.
Hello General search.
And my second question is about our hot there in new shapes.
Can management give us some color about the feed a puppet profile.
Over the long run.
If that's any thank you.
Thanks Sheila.
On the restaurant you'll mail.
Okay.
Yeah [laughter]. She says with you about to come. Thank you know, let's watch and I'd say I know you hear them sooner preaching on you Susie.
Resolution refer to as a digital Sylvia, let's work, which is I can change and Glenn organic.
Well its launch on the aluminum component that you have which is used for that.
In terms of our coverage cooperation with Tencent I think it's progressing well as Ken whether it's on reaches search our current collaboration with QQ mobile browser.
We have extended the you know relevant agreements and we believe there is a chance that we can expand our corporation going forward.
Okay.
Those will be the engines and humor Centennial five would we indeed are the realities from socal by some of the on the growth.
Just one on total wonder Joe who thought here on the growth.
We just had in Oneq sees us as a family Jim Sullivan from it.
Got it in terms of growth you got the donors severely Nemo data on this softening and having been fully can yell crj gtwenty on growth shown on something that you sort of ops nobody knew who she seasonal sufficiency are those the bundling issue is an issue. So much on the 79 years now, let's say your distributions from EMEA and look I'm going to tell you.
Andrew for details. Thank you. Thank you Ms., having Antonio will have it probably wasn't quite okay.
Yes, so totally uncontrollably overseas.
In terms of our hardware.
Okay.
Our most recent product.
Hi, it's more recorders you won.
Strong Testament to our.
Hi technology capability.
It's a very good use of our natural interaction and knowledge computing strategy. For example, it has a wonderful sound picking capability with very high accuracy and the future we're going to leverage our.
Advantages in search and mobile keyboard search, which means you actually.
Our protein.
Which means output and mobile sports, which means input so in the future.
We are going to develop.
Honor categories of products that can leverage this output input capabilities.
And that does that those are categories. Those products are intended for much more mainstream market.
Thank you.
Thank you.
And as I know, there's a lot of the questions session I would like to return the floor to management for any closing comments.
Thank you everyone. We can todays call and for your continued support what they'll go we look forward to speaking to you again in the future.
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
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