Q2 2019 Earnings Call
Hello, and welcome to GM technologies, Inc. second quarter 2000, <unk> earnings Conference call.
Today's conference call is being recorded.
At this time I would like to turn the conference over to reaching Liz She NPS Investor Relations. Please go ahead.
They say Oh, we need the meaning of the safe Harbor probing on Friday.
They face every phone.
And financially not easy.
He certainly party on the company with the Securities and Exchange Commission. The company does not undertake any obligation to update this forward looking information except as required by law.
During today's call management will also discuss certain non-GAAP financial measures.
Comparison purposes, only for a definition on non-GAAP financial measures and other big companies have started to look at our financial results. Please see our second quarter 2000, <unk> earnings press release Birdies earlier, Oh here today, we are wire services and also posted in the Investor Relations section of our website at <unk>.
Remind our conference is being recorded a live webcast and so.
Mr. Yang Please go ahead.
Hi, everyone and thank you for a journey.
Oh, no I call today.
We continue to accomplish our mission to be caught everyone financial partner, we really have to be above the long term outlook of the digital transformation of China retail financial services industry.
Hi, a mix Oh, I see okay macro economic environment.
Pardon me regulatory policies.
So we don't need to pay off digitalization and just to say, okay and are you increasing demand for access to financial products products that are superseded by consumers and it's I mean I'm the largest independent open platform for discovery and the recommendation of financial products in China.
Oh for financial products and services and to give the market a fan out what's happening in China retail financial services industry, and we've got to provide a macro view of what we have seen no why Jim foolish. So businesses is on the forefront of driving transformation to better serve Chinese consumers.
Let me.
I mean, I certain global macro you Ellman told factors.
From the supply side of the retail financial services sector and liquidity remain weak for consumer for the first half of this year and some of the 20 you called.
And over the top 20, according to call you should harden their credit policy no Dom.
Acquiring new customers.
Well only stand to clarity to existing customers.
Any customers has appealed to appeal to vendors.
Although regulatory guidance by switching from retail you beat your funding to wholesale institutional U.S. The funding cost you know the lender no doubt you acquisition and a market expansion.
For the mortgage sector tier one cities such as Sanjay Shaw.
It is a more difficult for potential homeowners to get a mortgage pools.
By banks to do some cities.
On the other hand demand from consumers and that's amazing.
He was asking me financing auto financing wealth management.
Turning to insurance sectors the government authorities.
Pardon engraved in sound financial regulation, but we're not seeing others. Other secretary regulation since the government are now on the carrier side you do if you lose on the guidance last quarter.
So you know the industry consolidation has been intensified and there will be a expediting in the next two quarters by the end of July number off of you know people have constant traded it down to 997 platform and compete with the lenders.
Diversified funding sources supporting to buy wholesale institutional investors and we will be at least impacted and the whale recovery businesses throughout history.
Sorry that was the revenue the moment the government is pushing forward interest rate you graduation, increasing the liquidity to small and medium sized enterprises I'm also happy to see them go to increase liquidity to assessing the consumer is on the also onto the Central Bank will enable then there is that interest rates.
More freely it is a very good ooh [laughter] due to two very important borrowing costs are lower at a time when to call I mean, you'd you'd opposed and most recently the central government.
Promulgated the new guidance will not show digital.
California economy in China, I know Janine So you put in a row of a digital platform you stimulate economic growth.
And then there's a uncertain period that not all financial institutions should the same view in terms of risk that well have to see minimal risk appetite and to mitigate risk and uncertainty in the short term signed a contract with industrial growth in the medium to long run, let's see increase the U.S. Smith on the spending by banks and I sensed a financial service providers that can take or pay us what were lying on automation artificial intelligence and data science digital cloud computing to you [laughter] to growth and improved risk management the capabilities of the open air retail banking retail banking business in North Sea and large commercial banks to increase the investment in technology, and even though the critical market wasn't ready to be slower in the first half of this year compared to the second half of point the ATM.
What do you call warnings from both recommendation services and advertising reach approximate 31.9 million Q2, nice growth reaffirms our capabilities to capture the evolving dynamics of the market and as we look into the drivers behind is the growth in the coding recommendation business in from the bank.
Could you kind of use your standpoint, the number off of bank partnership increased from 28 in Q2 for 25 in Q1, we are not doing b. The 16 Ottaway team not just the stayed on the banks signed a joint stock a commercial banks nationwide in total and the average number of cards issued to own gym pool is a platform per month.
Reached Oh, what 600 saw that current 30 more than 40% over the quoting how wanting a generated through social media and the C. N Omani channel that will come marketing initiatives leveraging short video content a wish him I mean, you Cobra and other strategic partners visitation or did you drill in financial products, such as the China Unionpay Mobile quick pass 'em, we haven't seen more and more users.
Coming from second.
So surely.
Fourth T O or less affluent cities and then you open nizing areas economy Oh those.
Lower tier or less for the cities that feature.
Naturally see some financial institutions, such as critical issue is actually at capturing the secular trend gliding and nobody would digital banking product to left after the city is signed a younger generation Y and the generation one thing another big secular trend in China retail financial services sector is the adoption of big data and artificial intelligence cloud computing and the did you know I'm not even sure chairman five gene we are transforming how financial service providers.
Communicating on the marketing to their consumers managing risks signed a servicing them we have been investing in those areas in the last couple of years.
No we're seeing strong growth.
Into the second quarter.
Continuing to double or triple digit the Oh deepened the type of financial service provider, though right away and you have a need for uncoated decisioning fraud detection risk modeling.
The other risk management decision how to present.
There are more so than the paging financial service providers Vivint, Oh, a scratchy platform, if it's Steve can adopt a sky Keith.
Well a solution he would choose the while several specific.
Module to me to their sales and marketing risk management decision they need given the strong demand.
Well as soon as he has enjoyed a high growth we have seen and it's a it's a rounding off average spending per.
<unk> financial institution, we have also seen a high retention rate among financial institutions out at the same time, we have actually execute what do you do you end up with a more diversified data ecosystem through the exploration of a deep financial under no financial data analytics continued continuously optimizing our proprietary take nomination and the further improving upon our risk management products, Oh, I better improving credit risk model.
That's all coming to school actually we have.
Just achieved the highest so two seven there was no one certification and see and ice recertification validating our commitment to implementing your factory was security to protect the.
Consumers.
And the information out of data, we are dedicated to helping customers mitigating risk well, providing industry, leading products and services to better serve the evolving on the chart you chatting Janine investing laumann before we go to before we go into the financial in regions to want to continue a lot of state and floating to saying you know even on this and the subsequent the mobile application relaunch in some of the end of last week, Oh, a mobile APPM, a winnable Oh I'm still on 'em. We took the time to conduct a comprehensive internal review any guidance for the total financial PRASK won't cooperate.
Possibility and.
Products standard.
As well as customer rights protection. However, so you and they have a big impact last quarter due to that.
Our mobile ATP, you I am grateful for a long period of time, our long recommendation businesses well the handicapped in.
Disappointing results.
No to May also impact the coming quarter, given the later than I expected the relaunching scheduling as well as time for us to recover before we can fully optimize our scale and everything.
For the second half of 2019, we will continue investing in our capabilities.
The infrastructure Alphatec knowledge data science capabilities, and our people to better serve banks and other financial service providers.
We will focus on our balance the operational strategy.
I can do at schuh, better operating efficiency, most amount of scale, including optimizing use acquisition strategy deep correlating relationship with the banks and other financial service provider as well as strain now organization as we shared in previous earnings call.
We are committed to we are committed to being exploring the new initiatives in terms of a financial product category expansion and a global opportunities in leveraging our strong technological capabilities and a strong relationship with financial service providers.
Yeah actually flooring under testing Lucky to second then related to a wealth management financial contents attitude.
Recently, we also acquired a Hong Kong based law and the credit card recommendation passport, we plan to use the Hong Kong platform.
As a starting point.
To explore cross border opportunities sharing information about our cross border play into the next one to two quarters.
There is a huge untapped potential in China.
Retail financial service industry in artificial intelligence they don't sign.
Cloud computing digital and a five a generation of fluff telecommunication transforming into financial service industry and to potentially changing hi, Andrew is out so many peoples life in China and a worldwide and is joining believes that Jim pool is well positioned and remains a leader and innovator in this industry.
This is John technical capabilities massive warning of valuable data and the unique open platform model connecting all 100 remaining consumers and the 2000 financial institutions in our team and maintain a positive view toward the end of the year and in the medium to long run because that I now turn the call over to our CFO Scott Chen.
Well discuss our financial results and.
Thank you, David and Hello, everyone.
All results in the second quarter salary reflected the challenges and uncertainties, we are phasing as well as all efforts at the moment.
The performance various among business lines.
It impacted by the voluntary suspension of HPV downloads since mid March our loan recommendation suffered a significant year over year decrease during the second quarter. However.
Our credit card the recommendation and the big data and the risk the Master service and one last thing that we are pleased that in the press and the credit card business momentum remains strong as we keep up with the optimization of our product offering mix fault current conditions.
We're also confident that our big data and the risk management services.
Strong demand and demand by the banks and other financial service providers.
As discussed in the last earnings conference call and as a result, all of our voluntary suspension of the.
Mobilized to the downloads.
For all internal reveals in mid March we expected a negative impact on all financial results.
Well the second quarter, we reported total revenues of approximately RMB 300, and the 62 million.
The creation of.
Turning to 6% year over year.
The non-GAAP adjusted.
Net loss of approximately RMB 57 million as compared to an adjusted net loss of RMB 29 minutes in the year ago period.
Hello recommendation services revenues decreased by 32% year over year to RMB.
300 million in the second quarter due to a 65% year over year decrease in loan recommendation services offset by a 32% year over year increase in credit card recommendation revenues.
Combining the credit card business from both recommendation and outcome services.
Hi, Jay we recorded protocol volume of approximately 1.9 million in the second quarter 2019, representing a year over year increase of approximately 19%. The average people credit card increased to RMB 107 from RMB 99.
In the second quarter of <unk>.
I'm trying to 18 as a result revenue from credit card.
Full recommendation of advertising services in the second quarter increased by 25 cents.
To RMB 202 million from RMB 100, 106 to 62 million and yes go period, among the revenues generated from advertising and marketing marketing services and other services, our big data analytics demand for services and remaining strong demand among a multinational theres providers.
Growing 100, and the third is that a 9% year over year to RMB 15 million.
As this as this segment of customers seek us out of out for all this data and the risk management services.
In the past couple of quarters, given the weak sentiment offline, which were negatively impacted by the monitors a fashion up maybe be downloads.
And are the industry dynamics.
We conducted we conducted a couple of adjustments aiming to maintain operational efficiency, including organizational change cutting off low efficiency business and et cetera.
However, such adjustment has certain lagging effect the benefit of which may ticketing in later quarters.
At the same time.
We.
We continued our commitment stay exploring new initiatives.
As David mentioned earlier, which resulted in some upfront investment in people and technology.
As such all efficiency level measured by various expenses line item as percentage of revenue were not performing well in the second quarter 2019.
We strive to maintaining a balanced strategy was profit profitability and margins in mind.
Gross margin increased to 93% in the second quarter upturn in 19.
Sales and marketing expenses, excluding share based compensation as a percentage of revenues was 87 cents in the second quarter I'm trying to 19 compared with 85% during the year ago period.
R&D expenses, excluding share based compensation increased by 46% year over year to RMB.
Six to 8 million R&D expenses as a percentage of revenue rose to 19%.
Our general expenses, excluding share based compensation increase the to RMB 20 million in the second quarter from Ivy RMB 15 million in the same period of trying to 18.
Gen <unk> expenses as a percentage of revenue rose to 60 cents.
As a result, our non-GAAP adjusted net loss, which excludes share based compensation was RMB.
57 million in the second quarter of 2019.
And the net loss was RMB 85 million.
At the same time.
non-GAAP adjusted EBITDA was a loss of RMB is up to 1 million compared to a loss of RMB. So the six minute in the year ago period.
As of June 30.
Tony 19, we maintained a strong balance sheet and cash position with cash and cash equivalents.
Restricted time deposit.
And the short term investments approximately RMB 1.2 billion.
And of the working capital of approximately one approximately RMB 1.2 billion.
[noise] reveal all share repurchase program starting from August Sunday team, Our board approved a share repurchase program was a little authorization of us dollar.
30 million as of August autonomy.
So kind of managing the company has repurchased approximately U.S. dollar.
In 29.7 million shares under this program.
And the last for the guidance.
The company's anticipate that externally environments to remain uncertain and challenged in the third quarter. Although all HBP has been fully relaunch and available in all asphalt the impact from the voluntary suspension may also have some lagging effect into the coming quarter.
On the Companys current estimates, we expect our total revenues for the third quarter I'm trying to 19 to be approximately.
Maybe 300 to 320 million.
With that I will conclude our prepared remarks, we will now open the call to questions.
Operator, please kindly go ahead.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone sound. If you use me speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed or you would like to withdraw. Your question. Please press Star then too.
For the benefit of all participants on the call today, if you wish to ask your question to management and Chinese. Please immediately you repeat your question in English.
At this time, we will pause momentarily to assemble our roster.
[noise] well first question today comes from John Hi, with Morgan Stanley . Please go ahead.
Hi management. Thank you for taking my questions. So three questions. The first one is on the guys on the site and this revenue guidance seems to imply a quarter on quarter decline. So just wonder [noise].
Well sort of external environment uncertainty that would lead to that do you see a weakening benton activities.
From financial institutions and Fenton answers.
It seems that Bobby you already relaunch that should expect an increase on a sequential basis in terms of the revenue.
And my second question is about the second quarter sounds that market and I think most of the second quarter. We are just not available just wonder [noise].
Hi, This do you opened 300 medium sours and marketing expense here and.
Diablo III, obviously deteriorated my thing.
Uh huh.
Okay commencement shamil Carlos about the portion of all kinda, USIS and customer acquisition costs and combustion rates and ultimately sedans and second off [noise]. The final questions is about cash. It seems to me has some on Q1 could you comment on cash and Oh. So Dave you mentioned some of the investments just wonder [noise] and based on the revenue seems sits across so could also be.
Oh challenging quarter, So just wonder how how how you see the cash position.
Going forward. Thank you very much.
Mm mm okay. Thank you John .
I will take the.
I think that's kind of how much also your question.
Yes.
So yeah, I think you know.
Yeah regarding.
Regarding the guidance, we provided most of Florida is a still a bit thing disappointing, but we do we do see some uncertainties and challenges in terms of the.
And external external environment.
So as we mentioned.
As we mentioned in our last conference call, we expected that.
The second quarter give him the.
Given the.
I'll application mobile piece I'll look we're not online so we want to suffer.
A decrease in terms of the offline.
Entering to the.
But we also mentioned that entering the third quarter, when we got our ABTS relaunched.
We still need to.
Spend a quite some effort.
To optimize our acquisition strategy operating structure.
Strategy.
To achieve.
Balance between the scale and efficiency, so firstly I think.
I think that's not going to give an update on our dollar IBP relaunch so.
Hi, David or launches.
As almost a one months.
Behind all schedule.
So we got we got all your fees relaunched in Alice.
In may and mainstream media.
Like Tencent Baidu and Codell in in June and ER and that the OEM App store and.
So July to August .
[noise], so firstly I think the lenders and the re launch schedule is a bit.
The relaunch the relaunch the reduction is a bit behind all schedule. So that may have some impact on the.
Our third quarter.
Performances.
And and also I think in terms of the optimization of our.
Mhm acquisition and operational strategy Oh, we're seeing.
We are seeing the.
Nothing wrong.
External market challenges and uncertainties so than the translate.
That translates into.
Even though we want to burn some cash to scale up our business, but it may not be and may not be justifiable. So we still want to we still want to keep a balance between a scale and efficiencies.
And Oh, Yeah, listen I think the other challenges and uncertainties as more at the micro economic and.
Regulatory environments.
So in this.
With this observation so we will have to wait on a more efficiency that scale in the thinking that Oh, yeah, I think David already talked about some challenges we are seeing.
I'll say, we're seeing in market into the market, including tightening our credit policy from the.
Financial service providers.
And does the overall.
Overall liquidity I think the.
Those are the social liquidity level is.
Is slow then we the worse is slower than we expected.
Oh, so so I think this is what impact us in the in the short term, particularly in the third quarter, but we well now we are more optimistic seeing the medium to long run given our resilient business model and the robust technology infrastructure.
Yeah I think.
Hey, Hey, John This is David I wanted to answer your first question just to add a buddy davita full at the ASCO has said so so so cash position, we have about a 1.2 billion renminbi.
That's that's roughly the number we did a lot last we had our last quarter I know, it's been burned around the 56.
I mean, the last quarter right. That's why our strategy for Q3 is smart growth in small scale right. I mean, if you look at the three segments. The big data risk management of you're going to have strong growth.
However, now seeking maloney accounted for roughly 20% of the revenue I didn't seem to 20% or so so that so we have a high double digit growth that doesn't add much.
Good money got business, we believe it's going to.
Good I had a good Q3, however, we do see some there's a solid summer effect or is there a little bit of some a flow through of one for one of the two big Bang. So does the challenge of course last quarter was a loan recommendation businesses.
We did not achieve the.
Operating if you can see we would like to give us the money, mostly from that segment and that's why.
In Q3, our strategy is really that's the way that's why the management have you made a decision. We maybe you want to further improve the operating efficiency in the loan recommendation basis.
We lost some revenue but of course begin to reduce to as it is is there any kind of impact yes.
So that's that's that's that's set up for question and London Threed to answer. Your question three is about right Hum. So we went to us of any.
You think John .
Tonight I have questions about Oh, I Hudson on the second quarter seems to go South Submarket the news.
Stupid and given that.
I'll add just not available for <unk>.
A quarter. So just wonder why is that [noise].
Comes fall on organic.
Hi, Thanks, and collision raise customer acquisition costs like Centrus and.
And also they mentioned about efficiency improvement just wanted to hone B C D.
Oh, I Oh second half thank you.
Thank you Jonathan.
To your question.
Although you know our.
Alright, if his will not have were not available for download.
During the second quarter.
But do you see will still grow at all or.
Credit card business.
Relatively nicely and in the second quarter. So total for this business line.
Firstly.
I think yeah.
There were also some impact from the sale.
So in that sense.
We got a quick reminder.
Relaunch and the recovery of the bank's relationship.
Thanks related relationships to two gas to get enough credit card product back online.
Yes, as you know, we may not ultimate oil amount to be able to get to get to the bad that's the price. Although you are seeing.
On a year over year.
Unit price increase, but we don't think its a bad surprise, we can guess what now.
Particularly on the.
Under the current.
Environments.
So.
Credit card business.
I think the ROI is.
To quickly recover this business I think dollar is.
The lower than we expected.
For the loan for the loan recommendation apart of course.
I guess as you I guess is perhaps.
We have we have repeated users we have our.
We still although they if he is not online but are we still have the users will have already had only a few people can submit.
The low application through our.
Through our platform.
Firstly, you know they repeat users.
Because of the and on the sale.
They did not available so I don't think the data can tell the data itself can tell the story, we have to repeat users.
We have relatively.
Hi, I'll address.
From the lower condition, but again.
To keep them to keep the scale as it is we still need to.
Spend some marketing dollars.
To do the tools to do the U.S acquisition.
Through the.
So the you know mobile lab.
Through the PC.
Channels.
To to keep the U.S activities and also to to keep the scale off.
Our ball business, so oh, so regarding.
Regarding the.
The percentage of free traffic I think it's high then.
In a quarter.
Before but I don't think the number here.
As it is relevant to telling the stories of the future.
And and also for the conversion rates we are seeing.
The conversion rate from the active users to the application to the number of applications. That's a.
That's a bit that's a bit.
A bit lower than the previous quarters, because if it is not.
It's not on lines and we also you know after sale. We also you know put more stringent.
Financial service provider Onboarding.
Rules this makes our.
Loan products less than before so in that sense.
And then looking to the conversion rate of our business and I think it's two to three percentage points lower.
Than the previous quarter, Yeah. So John I wanted to just add one point, that's a sales and the marketing cost.
Including traffic actually hasn't seen cost and pack as well as the as the staff human cost related to the sales and marketing functions out says and keeping in mind that we do have the fixed cost.
From Q2 into Q1, I mean relatively right. If you look at Oh attack traffic I believe in cost.
Do you I divide that by sales and marketing, we do see some efficiency increase optimized.
The way unless of course, you see and I kind of slow down due to the de risking of the ATP I just want to be shared with you one number.
I will remain key, though and retaining customers, including customer we have seen the number slightly increasing certain segments. So so that's that's why you don't want to look at that as the number one we average in terms of the ROI I mean, we do see a doctor.
There is some degrees in fact caswell saw an increasing factor.
And also.
To your third question about the cash balance decreased.
I think.
A couple of.
A couple of ways weighted.
Deployed the cash dividend.
In the in the last two quarters.
Firstly I think.
We.
I think of the usage included the share repurchase.
And also.
A couple of.
Investments, we conducted in the in the last two quarters.
And all and all and of course, you know.
As David mentioned to you know the operation the Attritional.
Cash flow is.
As the outflow.
Given our give our loss amazing in that in the second quarter.
Yeah, I think John I Hope. This also just three questions.
Yes, that's really helpful. Thank you very much.
Thank you. The next question today comes from Wendy Kim with Goldman Sachs. Please go ahead.
Oh, Hi, Oscar Anita.
So much for taking my question I actually got two questions here first our third quarter guidance I'm wondering that how do we.
Ah different contribution on a quarter from now on the credit card.
Because in the second quarter is actually quite a car business is still a record or some down your growth on the golf course loan business got more impacted by the weakening there just wondering how is our appeal for the contributions of color second question, you said about our alone no recommended hi, we noticed that in the second quarter. So all were on the last question number I got it impact lots five yeah.
Hello, [laughter], but are we still recorded Oh quite about it calls for a long CP I. So just wondering for him to the fact that can happen with the macro half where were seeing and property and to recover from the are you see a healthy.
The rise of the law application Uh huh.
Modifications EPA.
So the reason.
The reason is mine is mainly you know.
You know, we're seeing as we discussed in earlier. This year. So we are we are seeing the loan products.
Let you know.
Available in the market has more.
Has largely because size longer duration.
Including the non product offer to buy the.
Bank's consumer finance companies and also.
No need to be companies Launceston model, a micro lending companies across the board.
We are seeing.
Last thing is I've longer duration.
So this is this is why.
We are.
We are.
I'm happy to see a price increase.
Starting from the first part of this year and have been continuing into the into the second quarter. So.
In the second quarter, if you want a breakdown of the.
Loan.
Loan application volume so.
We are seeing in the over a 50% over 50% off of a loan application volume was the ticket size over.
Okay, 10-K, and 10000, RMB and over 50% of the law application volume, we're going to take a size over 50000, RMB and the remaining steel the units.
Loan size.
Below.
10 million or so through the.
Breakdown of the.
The loan size of the applications, we hosted our platform.
Youre seeing a natural shifting towards.
The larger ticket size and the longer duration. This is why.
The.
Okay.
The unit price increase.
We do believe that this price trend will continue.
Into the second half of this year.
And then back to all.
Back to your question regarding.
The contribution.
The contribution of the.
Between the various business lines.
So I think you know we are seeing.
And China, India and on certain external environment. So in that sense, we are more willing to provides.
A relatively conservative guidance.
In this regard so.
So full full a full for credit cards, a clerical business we would estimate.
We will go to asking made to evolve them on par.
Compared to the second quarter. This year. So probably you may ask why is that.
Because.
Enter into the second quarter, we observed.
So called summer slowdown in the critical part of our business. So in terms of the you know the.
The delinquency rates on the credit card.
I think from the public news all the public reports published by the Central Bank, it's not.
Its not worse.
It's almost a you know.
The delinquency rate also you know.
Become healthier.
At least in the first quarter this year.
That's no different bank has.
Different strategies among the you know trying to age.
Credit card issuing issuing banks, we are working with.
We're seeing most of them are still unknown.
Grow their credit card business.
By the way.
We also see.
A number of the credit card issuers.
They have.
And they have more conservative strategy and.
Entering the second half they may.
Pullback that's.
The scale of the credit card use acquisition. So this is why we would estimate the credit card.
Volume will be on par.
Sequentially compared to the second quarter.
So.
A lot of big data and the risk amendments services.
I think we will see continued growth, although it's a it's a it's still a small part of our business, but we will like to see sequential growth sensor into the.
Enter into the third quarter.
The most uncertain part is the loan recommendation.
For them is so we we just want to put a.
A very conservative number here.
So.
We see that seven days.
We we need to deal with that in the seventies. So from a guidance perspective, we want to be.
As conservative as we can.
So that's pretty much the.
The breakdown.
You know, we estimated for the fourth quarter guidance.
Okay.
Hi, Wendy this David.
So.
So as you might you my closing remark our team.
Definitely we are maintaining our positive view towards the end of the year and in the medium to long run we.
We started this is almost a seven half a years ago.
Do you feel as if we are using one or two words.
Hi, I'm kind of still rise as the growth.
Of the industry or the company so as we add the powerful we knew somebody leave you then the growth in Oh, Oh, Oh, because you called Fintech sector all of you cool.
Did you total retail financial Secretary in China, a one or two words I would want to.
Kind of kind of the rise.
Spiral rice.
Hi real growth.
So, meaning and we actually in the last two quarters last couple of years. We have seen we are actually in a in a I would say we are in a intersection helpful to spiral.
Right, Okay, well defined I mean of course.
So what was the spiral or the other.
From the consumer choosing right digitalization and also to be a secular trend of leveraging data and.
Digital transformation by more and more financial institutions to data shows that the customer and manage digital marketing risk management and better and that's that's the policy was equal or they could spiral of course on the flip side of the coin.
The downward spiral I mean.
We have seen the macro economy, hey was uncertain side it will be maybe uncertain for the next quarter hopefully no longer and we have seen and tightening regulation you might you might you my overview, we havent talked about both on their side that we are on the loss side of Aspira. We can see in the us kind of myself I know the team view I've always give a very conservative conservative guidance.
We have maintained our.
Our policy and we maintain our.
Our appetite so that's all a appetite if you'd rather do provide.
Conservative guidance.
And if you look at our data in the last.
Five or six years, which have a meaningful quarterly seasonality data I can share with you.
In 2017, 18 annual 2015 16, getting some good years in Q4 or we can do around the 30 538, you why you need about 39% of the businesses. That's that's a that's a seasonality I mean.
We are not saying these.
So now do you well.
We are showing off what we have here again this year, we hope so but.
We'd rather than provide a conservative guidance and as you may know.
The national.
Holiday.
Is that coming in about five or six weeks and.
We will definitely hope.
Thank you Bobby.
The better.
In Q4, but of course, we haven't affecting those.
Potential upside trend yet.
I Love. This is a very tough quarter to give any guidance essentially became I mean give me being there due to this we have been doing this business in the last seven eight years that I was in the business World.
Or close to two decades, right I've seen too to economic crisis, and the U.S. as Internet, a bottle and that the financial crisis in New York City, and this time is different that Oh, and I and our teams rather the BBB consulting.
I think when yeah.
Regarding the seasonality I will also provide a couple of data.
Definitely you know this third quarter.
You know, we provided a lower LOE guidance.
But and.
The financial service providers.
CPI driven initiative entering to the fourth quarter. So so so so in coming years, we can we can grow the business sequentially by around 30% for the highest the yeah. We can we also grow the business in a bias by 50% to 60% quarter over quarter. So I think we would hope for the best.
But so far.
Because of the uncertainties and challenges we are observing.
So.
Well not be able to give a very clear timeline in terms of your so called afford recovering and Uh huh.
I think the Wendy thank you.
Again, if you have a question. Please press Star then one.
Our next question today comes from George Yes, T.J.P. Morgan. Please go ahead.
I mean.
My question, George So I have two questions.
My first one is on the <unk> on that but our institutions.
Could you share with us the.
Application Bonnie in terms of the financial institutions are named the things consumer finance companies or in some of the P to P. Sand, how does that trend compared to last quarter and my second question would be on our profitability. So I think the last two quarters are we too.
Rich just to sum up the profits on that this quarter with time.
Into loss again, so how do we think about Oh proper the abilities to earnings in the second half and it's what do you think.
Okay. Thank you Josh.
So quick quick answer to a question regarding the it off.
Breakdown of the loan.
Application volume Bunching, I think you know.
During the second quarter I don't think you know because of the volume.
Decreased along.
A year over year on a quarter on quarter over quarter, I don't think vis vis maybe.
Meaningful.
I'll have a lot of implication to predict the future but anyway.
The rough breakdown is that some way.
The loan.
The loan recommendation revenue only accounts for.
Less and less than one third I think so the percent of our total revenue. So long that I think the majority I run a 50% to 60%.
Contributed by the license the players that the banks and the consumer finance companies.
And then the remaining.
40% contributed by the you know the.
The PDP and Alomar systems tools that emotion, so that's but if you're looking through the.
Look through the two that launch business models. The funding behind that is also the license things in the funding.
But again I think it's it's just to the number for the for the fourth for the past reporting.
And your second question is about other possibility okay.
Yes. Thank you.
We always keep the efficiency on the profitability in our mind.
I think particularly under the under the current marketing environments.
You know I think you know efficiency matters more to us.
This is this is why.
Wade we conduct to some.
You know in a thing called David's comments that smart growth on a small scale entering into the second half of this year. So this means we prioritize efficiency and.
And the probability.
Over this over the scale.
Considering the uncertainties and the challenges we are facing in the current market environment.
But you know.
If you look into our business model.
Particularly the profit profitable quarter.
In the fourth quarter last year and the first quarter. This year you may notice that.
The doesn't at all.
If we want to have to profit profitability, both scale and efficiency matters.
Matt So.
Given the.
Yeah, I I think you know.
I hope you can understand what I'm, saying here.
So.
No we will focus on efficiency.
You know over over the over the scale, but.
To achieve the full four realty, we also need to scale. So yes, yes, yes, yes.
Profitability is not to go it's a natural result, as we scale our platform that we maintained the operating efficiency and profitability will come as a natural disaster.
So that's that's involved we maintain a high margin raise raised no fixed cost out here. So you have seen maybe in profitability for UK and easily chip that I, just want to scale and grow.
Again I know this is Marty.
Try thank you.
The next question.
Comes from Chile, how easy yes.
Good morning.
Thank you for taking my question I have one question are your machines, you took some initiatives last quarter, such as organization change and as Todd noted station to department.
Could you elaborate more on this thank you.
[noise] yeah sure so.
Oh No addition.
No no change here.
Thanks.
Yeah, Firstly, if we.
We formally deployed at the deal structure into our business.
So, which well you know we we can have a more more clear a goal for the team.
To achieve.
For different for different business lines.
So because you know behind the different business alive lauded the mindset of the skill sets.
Hi difference I think that the yield structure maybe.
Well, well well support our business down the road for the for the next month for the next three to five years and and also you know because of the.
New initiatives in terms of category expansion.
We discussed earlier this year. So a we were shuffled our internal resources a bit.
So.
For example, like long recommendation.
Given that you know we are.
The the scale is not there. So we may have redundancy in terms of the.
In terms of the man power, so we but.
R&D R&D guys.
A very valuable in this market. So given that we also have some new products new initiatives. So we reallocated is it.
The R&D resources, among the various business lines.
I think you know we don't want to.
Although we will keep we will keep the efficiency.
As much as we can but we don't want to lose the future opportunities opportunities. So we also want to invest in people and technology, but now the better way as to.
You know to reorganize and reshuffle internally to get more resources to the to the future growth. So this is.
You know, how we mentioned.
Why we caught it organizational change and also.
Yes.
About the cutting off given the location of the business and so.
As as Youre aware as human notice that you know.
Although our sales and marketing.
Advertising marketing and other services this revenue line grow a bit but the major come to fruition.
It was from the big data and the risk managed services and our advertising pure hasn't business was up was was slowed down year over year in the quarter over quarter. So.
I think as the analysts that you also observed the you know the overall advertising the weak sentiment on the on advertising.
Market. So in that sense, we also controlled or the pace our pace into this market.
Into this business. So this business the.
Particularly in this market environment. The ROI is not that good so we cut off.
We slow down the pace and the kind of the size of this vis vis vis business I've been.
So I hope this office your questions.
Yes.
And they're doing.
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