36Kr Holdings (NASDAQ:KRKR) Q2 2020 Earnings Call

0:00 Hello, ladies and gentlemen. Thank you for standing by for 36 Kr Holding Inc. Second Quarter 2020 Earnings Conference Call. At this time, all participants are in listen-only mode. After management's remarks, there will be a question-and-answer session. Today's conference call is being recorded. I will now turn the call over to your host, Yolanda Liu, IR Manager of the company. Please go ahead, Yolanda.

0:27 Thank you.

0:28 Hello everyone and welcome to 36KR Holdings' second quarter 21-year earnings conference call. The company's financial and operational results were released via Newswire services earlier today and have been made available online. You can also view the earnings press release by visiting the IR section of our website at ir.36kr.com. Participants on today's call will include our co-chairman and CEO, Paul, Mr. Feng, and our CFO, Ms. Jihong Liang. Ms. Feng will start the call by providing an overview of the company and performance highlights of the quarter in Chinese, followed by English interpretation.

1:13 Ms. Liang will then provide details on the company's financial results before opening the call for your questions. Before we continue, Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Legitimacy Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's Perspectives and other public filings as filed with U.S. SEC. The company does not assume any obligation to update any forward-looking statements, except as required under the applicable law.

2:06 Please know that 36KR's earnings press release and this conference call include discussions on audited GAAP financial measures, as well as on audited non-GAAP financial measures. Thursday's KR press release contains a reconciliation of unaudited non-GAAP measures to the unaudited GAAP measures. And please know that all amount numbers are in RMB. I will now turn the call over to our co-chairman and CEO, Mr. Feng. Please go ahead, Feng.

2:43 Thank you. Thank you and hello, everyone. Thank you for joining us for the second quarter 2020 Earnings Confidence Call

3:21 In the second quarter of 2020, although the COVID-19 pandemic spread has been gradually controlled in China, we, along our clients, were facing significant uncertainties as containment measures and policies related to these measures were not fully eased. Many of our clients have not resumed their marketing plans and promotional activities, but their demand for our services was still delayed in the second quarter. Under this circumstance, we continue to proactively rely our operations to the involving market dynamics, grasping new opportunities from clients' emerging and ever-changing needs.

4:06 Thank you for all the challenges. We have continued to make positive progress in terms of content. During the 12 months of June 30, 2020, our average viewing volume has reached 4.9921 times, which is 43.6 times higher than before. What is worth mentioning is that our live broadcasts and newly created short-term content show strong attraction. Although the number of views contributed to this content has not yet been unified in our viewing volume index, these new content has already received positive feedback from users. The average viewing time of users has achieved a good performance. Despite the challenges, we are encouraged to have kept making positive strides in the content front.

5:01 Our average monthly page views reached 499.2 million for the 12-month period ended June 30, 2020, demonstrating a strong year-over-year growth of 43.6%. Notably, our live streaming programs and newly produced short-form video content have gained robust traction during the quarter. While we have not included the viewerships in our monthly page views yet, Our new video-based content format has garnered a very positive user reception during the quarter. For example, the average user time spent on our live streaming and short-form video content has performed quite well, especially considering the serious nature of our business-related content offerings.

5:52 We are pivoting our efforts to save vast opportunities in the rising popularity of these content categories. and many more, especially in the next few years, and fortifying our leading position as a permanent new economy-focused content platform.

6:10 Next, I would like to introduce our core business. As I just mentioned, due to the ongoing impact of the COVID-19 pandemic, many of our customer sales plans and demand for our services have not fully recovered, which has caused our advertising services, corporate registration services and subscription services to be relatively far behind last year. Turning to our revenue streams, as I just mentioned, due to the enduring impact of the COVID-19,

6:51 Many of our clients' marketing plans and demand for our service offerings had not been restored. This situation led to relatively soft year-over-year performance in our advertising, enterprise value-added services, and subscription services. However, compared with the preceding quarter, revenue from our online advertising services realized 48.9% growth. In the second quarter, We attracted an increasing demand for advertising services from TMP companies, illustrating our brand's strong and pervasive influence among the new economy space.

7:33 In terms of corporate service, we use live broadcasts and other innovative ways to develop solutions for our customers. For example, we cooperate with Twitter's CMO Summit, which is mainly aimed at China-led companies. This two-hour live broadcast is broadcast on the third-party platform, have achieved a total of 3.52 million broadcasts, and a total of more than 28.3 million live broadcasts on 36k free platforms. In addition, in the second quarter, we also held a live broadcast of the 2020 HDC Spring Games. This year's competition was provided by a leading company with a unique stage, which shows its innovative capabilities in the process of developing technical solutions. At the same time, this year's competition also helped Huawei select and identify excellent business partners to jointly build Huawei's innovative ecosystem,

8:20 With respect to our enterprise value-added services, when developing solutions for our clients, we have adopted more creative approaches such as live stream events. For example, our CMOs met in collaboration with Twitter targeted a broad group of Chinese companies that are expanding their business overseas. These two-hour livestream programs generated total viewerships of 3.52 million on third-party platforms and stimulated online interactions of over 283,000 on our own platform.

9:09 Although Also, we jointly administered the Huawei Developer Challenge 2020 with Huawei and livestreamed the contest event in the second quarter. This contest served as a unique stage for stock companies to present their innovative capabilities in developing technical solutions. while assisting Huawei in its effort to screen and identify outstanding startup partners that can contribute to the construction of its innovative ecosystem. Through our multi-channel live streaming, these kinds of online events brought enormous exposure to both our corporate clients and numerous young companies Helping them realize efficient consumer acquisition and build collaborative business connections for more resources and growth opportunities.

10:18 In order to deal with the environmental changes caused by the COVID-19 pandemic, we have been helping the government to achieve the digitalization of the workflow, because of its active economic activity. Through our on-site marketing and cloud service program, local governments are able to The changing environment brought by COVID-19, we have been helping governments digitize their working process

11:00 and Energize the Regional Economy. Through our service solutions, such as online marketing and virtual roadshows, local governments are able to introduce the local conditions and supportive policies with wider exposure for efficient investment and talent attraction. These innovative and efficient solutions have gained positive reception and are attracting new governmental collaborations. As of the second quarter, we have provided related services to about 30 different administrative departments from seven provincial capital cities with repeated purchases to our services.

11:45 In the second quarter, we have provided related services to about 30 different administrative departments from seven provincial capital cities with repeated purchases to our services. In addition, we have also developed various creative projects such as 8-minute press conferences for corporate users, attracting many companies in the new consumer industries such as silver hair economy, fitness, pet, medical beauty, fashion, breastfeeding, and so on. In helping these companies to improve their brands and products' exposure and attract more business opportunities, we have also expanded our user base for the Qianxi area and silver hair products. In addition, since the launch of the 36-course business school in the first quarter, we have been constantly improving the project and successfully launched the first offline course, the Great Health Corridor Innovation Class. In the second quarter

12:53 Our subscription services have not fully resumed offline courses that usually charge higher prices. Still, compared to the preceding quarter, we achieved considerable demand recovery with increased client registration for our featured v-club courses. Additionally, we developed various creative programs such as 8-minute conferences for our conference subscribers. especially these operating in new consuming industries, including senior citizen services, fitness, tech services, fashion, medical aesthetics, and maternal and infant, et cetera. Other programs help corporate clients enhance their brand and product exposure and attract commercial opportunities while introduce various new choices to a wider audience , and Maoluo.

13:55 Since the launch of our mini business administration program in the first quarter, we have consistently refined this program and successfully launched its first offline courses, EarthSkr Healthcare Innovative Class, which attracted numerous elite healthcare enterprises and practitioners in the in this industry. With healthcare as one of our focused industry in the first half of 2020, we organize a variety of activities and events connecting relative related enterprises in the up and downstreams, industrial parks and institutional investors to promote constructive communications and commercial partnerships in this space.

14:47 Our subscription services will continue to target individuals who can view business demand and generate more opportunities for our enterprise services.

14:59 In terms of overseas business, despite the rapid change in global COVID-19 implementation and international situation, our overseas operations are still moving forward. The production volume of high-quality content is increasing, and the volume is growing rapidly. In July of this year, SinoKr Japan officially withdrew Turning to our overseas business, in spite of the involving global pandemic situation and increasing international dynamics,

15:44 Our operations overseas continue to make progress with increased high-quality content production and remarkable traffic growth. In July, Circus KR Japan wrote out Connect.Japan, a subscription-based platform that provides comprehensive enterprise data analysis, in-depth research reports, and bespoke consulting services for both individuals and corporates in Japan. In collaboration with South China Morning Post, Thursday's KR Global will provide objective content reports and marketing solutions for Chinese companies that are expanding their business overseas.

16:26 From this point of view, even though the COVID-19 pandemic has been gradually controlled in China, the uncertainty of the Hong Kong economy still exists, causing the second wave of customer demand to be relatively weak. In the face of the current market situation, we must operate carefully and continue to make strategic adjustments in our services and solutions. and many more. As a result, we have been able to maintain a high popularity among our users, which has brought a strong flow to the platform. At the same time, we have also noticed that the customer's demand for our services and solutions are gradually recovering, which proves our brand's strength and the trust of our customers and partners behind us, so we are very grateful. We will continue to serve new economy participants in a new form and meet their new demands and needs with innovative solutions. We believe that

17:16 Overall, even though the COVID-19 has been gradually brought under control in China, the macroeconomic uncertainties still exist, leading to relatively soft client demand in the second quarter. Faced with this difficult market condition, we maintain our diligent operations with active strategies adjustment and others. It is encouraging that our engaging content maintains numerous popularity among our users, bringing robust traffic to our platform. We have also monitored recovering demand for our service and solutions, demonstrating the strength of our brand equity and deep trust from our clients and partners.

18:09 Inspired by our clients' trust, we remain dedicated to serving new economy participants in the new normal, addressing their new demands and requirements with innovative and creative solutions. We believe we can overcome the short-term challenges and achieve greater success together with the promising new economy that is full of potential. With that, I will now turn the call over to our CFO, Ms. Ji Hongliang, who will discuss our key financial results.

18:48 Thank you, Mr. Feng, and hello, everyone. As Mr. Feng mentioned, the enduring impact from the COVID-19 pandemic presented us with a challenging second quarter of 2020. Our soft year-over-year top-line performance for the quarter reflects relatively lower demand as clients postpone their marketing plans and promotional activities while waiting for pandemic containment matters to be further eased. Letters about revenue from our online advertising services and subscription services delivered a sequential growth, which indicates gradual demand recovery.

19:37 We believe there are still tremendous and underserved demand for enterprise value-added services that we will continue to cultivate and the new normal. In regard to our and other external operations, we deployed more stringent cash management policies such as requiring prepayment for certain projects and the speed of actions of the quality clients to collaborate with. These matters are able to help us maintain healthy cash flows and manageable account receivables. We are pleased that our efforts paid off well as we maintained a solid balance sheet position and for the first time achieved a positive operating cash flow in the second quarter of 2020.

20:37 Moreover, we have made prudent investments in technology and new devices to prepare for changing market environment, which we believe is critical for our future growth. As a unique enabler for new economy participants, we will continue to explore, identify, and understand the demand and needs of our clients across enterprises, and others. By leveraging our brand influence, business connections and extensive service experience, coupled with new methods and technology, we are relentlessly providing effective solutions to support our clients to recover, grow and thrive.

21:35 And now I'd like to walk you through more details on our second quarter of 2020 financial results. Total revenue were R&D 76.7 million in the second quarter of 2020 compared to 118.1 million in the same period of 2019. Online advertising services revenues decreased by 29.9% to 31.3 million in the second quarter of 2020 from 44.7 million in the same period of 2019. Enterprise value-added services revenues decreased by 28.6% to 42.6 million in the second quarter of 2020 from the 59.7 million in the same period of 2019.

22:35 Subscription services revenues were 2.7 million in the second quarter of 2020 compared to 13.7 million in the same period of 2019. Cost of revenue was $54.4 million in the second quarter of 2020, compared to $78.7 million in the same period of 2019. Growth profit was $22.2 million in the second quarter of 2020, compared to $39.3 million in the same period of 2019. operating expenses were 99.4 million in the second quarter of 2020, compared to 71.9 million in the same period of 2019. The increase was mainly due to increases in general and administrative expenses and the sales and the marketing expenses in the second quarter of 2020.

23:41 The sales and marketing expenses were $39 million in the second quarter of 2020, compared to $25.8 million in the same period of 2019. The increase was primarily attributable to an increase in share-based compensation expenses and promotion fees. General administrative expenses were $59 million, in the second quarter of 2020 compared to 38.9 million in the same period of the 2019 decrease was primarily attributable to an increase in the allowance for doubtful accounts and professional fees and were especially upset by the decrease of the share-based compensation expenses Research and development expenses increased by 32.2% to $9.6 million in the second quarter of 2020, compared to $7.2 million in the same period of 2019. The increase was primarily attributable to the increase in technology expenses related to technology procurement and device maintenance and testing.

25:09 Share-based compensation expenses recognized in cost of revenue, sales and marketing expenses, research and development expenses, and general and administrative expenses in total were $12.6 million in the second quarter of 2020 and $27.9 million which includes the exact opposite designation of ordinary shares to convertible redeemable preferred shares accounting to $26.8 million in the same period of 2019. Other expenses were $2 million in the second quarter of 2020 compared to other income of 0.9 million in the interior rate of 2019, primarily attributable to the increase of the share of the loss for advocate method investment.

26:15 Income tax expenses were 85,000 in the second quarter of 2020, compared to 0.2 million in the interior rate of 2019. Net loss was 79.73 million in the second quarter of 2020, compared to 31.9 million in the same period of 2019. Net gap adjusted net loss was 66.7 million in the second quarter of 2020, compared to 4 million in same period of 2019. that loss attributable to 36 Kr Holdings Inc.'s ultimate shares were 79.5 million in the second quarter of 2020, compared to 183.5 million, which includes including the appropriation of unredeemable non-controlling interest, appropriation and redesignation effects of the convertible redeemable preferred shares in the same period of 2019.

27:34 Basic and saluted non-loss per share were both 0.078 in the second quarter of 2020 compared to 0.641 in the tier rate of 2019. As of June 30, 2020, the company had cash and cash equivalents, restricted cash and short-term investments of 197.9 million compared to 294.2 million as of December 31, To be mindful of the stance of our early call for the first six months of 2020 financial results, I'll encourage listeners to refer to our early press release for further details.

28:35 This concludes all our prepared remarks today. We will now open the call to questions. Operators, please go ahead. Yes, thank you. If you wish to ask a question, please press star then 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then 2. If you are on a speakerphone, please flip the handset before you ask your questions. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. And the first question comes from Kenneth Fong with Credit Suisse.

29:20 Hi, Mr. Dai. Hi, Mr. Liang. Thank you for introducing my question. Actually, I have a question about advertising. If we look at the second quarter, which one is better, which one is worse? And if we look at the third quarter, even in the second half of the year, do we see any bright spots? Thank you management for taking my question. I have a question on the overall advertising demand. So can you mind share with us by verticals in the second quarter, which are the vertical which is particularly strong and which one are particularly weak, and what is our overall demand outlook for the third quarter and then longer term into the second half of the year?

30:15 Thank you.

30:18 Thank you, Dennis. Due to the pandemic, the number of our Q2 ads has decreased significantly. However, if we compare it to the first quarter, we can see that we have increased by about 49%. So it should be said that this kind of recovery is still very obvious. And the number of advertising customers has also increased significantly in the same period. This is mainly due to the advantage of our brand and service under the new global environment, and the expansion of new energy customers based on Internet of Things. Then in the domestic epidemic and economic environment, in the first half of 2020, our number of Internet-based advertising customers increased by 13.7%. Among them, companies that have been popularized in the epidemic have shown significant improvements, such as consumer life, online education, enterprise-based office, e-commerce, literature, and media. What is also worth mentioning is that although the overall budget of Internet customers this year is tightening, the leading big companies are more likely to cooperate with us. The demand for traditional customers have been recovering relatively slowly, especially in the cross-border companies, which has been greatly affected by the global epidemic.

31:19 We have been promoting and delaying the cooperation with these companies. However, for our local traditional customers, we have increased the expansion of popular enterprises that have been affected by the epidemic. On the other hand, we have also deepened the cooperation of old customers. So, in the midst of the epidemic, we can see that the new economic companies, which are mainly based in China, have shown very good performance. At the same time, we can also see that the traditional enterprises that have been affected by the epidemic We have seen the transformation of innovation and technology in the service market and customer demand that we are facing. The demand for online education, service, artificial intelligence, cultural entertainment, and these industries has gained momentum during the epidemic. I believe we can continue to continue our advantage in the economy in the post-epidemic era. In the area of car appearance, which is more affected by the epidemic, there has been a significant rebound in Q2. In the context of the pandemic, the budget has been greatly reduced, but the economic recovery has continued.

32:12 I believe that the market budget will gradually recover from the brand of the bank and the brand of the bank. From the industrial structure, it is predicted that the demand for consumer companies will be faster than that of the general manufacturing industry. In addition to the impact of the pandemic on the hardware manufacturing industry across the country, it will also add factors to the international situation. But we have begun to gradually recover from the normal business negotiations with these companies. It's a quite long answer.

32:43 I will do a simplified interpretation of the answer. Thank you so much, Kenneth. I think in the second quarter, due to the COVID-19, our advertising revenue decreased, actually, year over year. And by 49%, while the number of advertising clients had an increase. During the quarter, by leveraging our brand and service strengths, we consistently promote our services among especially TMT companies and benefit from the containment of the pandemic first in China and the Subsequent gradually economy recover. In the first half, the number of the TMT companies purchasing our advertising services increased by 13.7% year over year. Especially those companies experienced a booming demand during the lockup period, such as online business, education, entertainment, et cetera. On the other note, we observed that in general, TMT companies have been cutting their budgets.

34:08 However, we had more collaboration with the top TMT players. Then let's look at the demand recovery to the relatively traditional industry corporate clients. The demand recovery tends to be slower. Thank you very much. Thank you. Well, on the other hand, at the same time, definitely our partnership with the retention client.

35:07 And if we just look forward, in general, amid the pandemic, we witnessed the remarkable resilience for the TMT new economy companies, such as the the industry sectors we mentioned before. Meanwhile, the traditional companies that suffered more from the pandemic actually are seeking the transformation through innovations. So for us, we have been actively collaborating with companies that experienced booming demand during the pandemic to monetize They are growing demand for the marketing and promotion. We also serve more government clients, actually, as we discussed in the earlier. We expect demand from these two types of clients will continue after the pandemic contains.

36:14 In addition, we gradually recover of the economy and all kinds of variable We expect recovery demand from clients in the automotive and financial industries as well as the offline consumption sectors will gradually come back. However, since the global overall pandemic situation is still evolving, Thank you, Ms. Tang. Thank you.

37:21 Thank you. Thank you. And the next question comes from Vincent Yu with Needham & Company.

37:30 Thank you, management. Thanks for taking my question. I have two questions. One is about the live streaming initiative. Can we share any updates with regards to the live streaming initiative 36KR rolled out? The second question is about gross margin Thank you, Mr. Wang. Thank you, Mr. Wang. Thank you, Mr. Wang.

38:19 In Q2, we increased our investment in live broadcasts and short-time platforms. At the same time, we adopted a positive strategy to operate on external platforms. We are very happy to see that the number of our own live broadcast platforms is rising steadily. In July, we conducted a total of 236 live broadcasts, including coverage of news, knowledge expansion, and meeting release. On a daily basis, there are 12 live broadcasts per day. In June and July, the number of views has continued to increase, and the market performance of users has also improved. At the same time, we are still seeking Okay, let's just pause here and I will do a translation for the first question about our live streaming programs and updates. And as we can see, in the second quarter, we made the progress in these

39:18 Thank you very much. Altogether, we delivered 236 live stream programs, including virtual summits, roadshows, knowledge sharing panels, et cetera, with an average of 12 programs delivered on each weekday.

40:06 And the total viewership in July also increased compared with the June data. Average daily time spent per user on our live streaming and short form video content showcase their good performance, especially consider the serious nature actually of our commercial related content. And meanwhile, we are looking for the strategic collaborations with the top TMT giants in In terms of the live streaming and the short form video, so to further to improve our content influence across the internet to capture the opportunities for the massive user growth.

41:00 Okay. And for our GP margin,

41:31 Thanks to our disciplined cost control, the GP margin of our advertising services, enterprise value-added services, and subscription have all reported improvements for these cutters. Now that the pandemic has been gradually put under control in China and the containment measures further eased, We are optimistic in the further GDP margin improvements in the second half of 2020. But since the pandemic situation is still globally, we are also closely monitoring the development and stay agile for our business strategies.

42:22 Thank you so much, Vance, for your questions.

42:27 Thank you. Thank you. And the next question comes to Yanshan with CICC. Thank you, Mr. Kwame. I have two questions I want to ask. The first question is, I want to ask, after the COVID-19 pandemic, we have seen a change in the demand for customers in the industry. Is there a structural difference between the industry and the pandemic? And the second question is, to go back to the previous question, Thank management for taking my questions. I have two questions. The first one is that with the control of the COVID-19 pandemic, how is the recovery of the willingness and need of enterprise customers in different structures and industries in the second quarter? And the second one is that considering the possible structural changes in customers caused by COVID-19 pandemic, what is the strategy for future development of the company? Thank you.

43:35 Okay, thank you, Xueqing. The number of traditional customers among our Qifu customers is increasing, mainly because under the pandemic, we focused on improving the consumer life of our customers. So the number of Internet customers in Qifu is decreasing, but its customer base value is increasing. The impact of COVID-19 has not only affected our customers, but also our hardware customers. Another significant trend is the rapid growth of our government and corporate customers, mainly due to the continuous improvement of our performance during the lockdown. This also shows that we have been able to quickly adjust our strategy to improve our performance. In the early stage of the pandemic, we provided our government-level customers with differentiated online and offline service solutions.

44:23 At the same time, the government-level customers are more resilient. In the period of the pandemic, there will be more demand for high-strength demand in the post-pandemic era. In addition, as the actual economy gradually warms up under more flexible and active policy guidance, and the online and offline models are gradually improved in the post-pandemic era, our real estate and car-related customer demand will be further restored.

44:45 Okay, I'll just do the translation for the first part. To the respect to our enterprise value added services, the number of our enterprise VAS clients from traditional industries increased year-over-year in this quarter because of the COVID-19 impact and the relatively evolving demand. We focus on the expanding client base in the consumer industry to help them enhance the exposure. Although the number of our enterprise value-added services clients from the TMT sector decrease year-over-year, The corresponding average customer price increase in New Carter demonstrating the attractiveness of our services to the top enterprises.

45:45 Besides the clients from the online entertainment sector who are benefited from the pandemic containment measures actually, we also are saying that growing demand for our enterprise services from clients in the industry like mobile device industry. In addition, our enterprise value added services is gaining the traction among the local government. The growing demand not only reflects our brand influence or enhancing as we expanded our services offerings geographically, but also demonstrate the initial positive results of our suite and the active strategy adjustment to our operations.

46:47 And during this very challenging time brought upon by the pandemic, we provided integrated and Zeng Li. Thank you very much. Also, mobile and real estate clients for our integrated online and offline solutions.

47:50 As we discussed earlier on our last earnings conference call, we believe COVID-19 will have a

48:20 and Xiaofei Wang. We have just shared our projections regarding clients' demand recovery for the second half of the 2020 to Kenneth's question. The second half of this year, what we will do, we will continue to leverage our service experience and the resources to further expand our services to clients in a wider range of industries. And on the other hand, we will further solidify the data and technology capabilities for our enterprise services.

49:13 Thank you so much, Xiaoxian. Thank you. Thank you very much. Thank you. And the next question comes from Brian Lee with AMTD.

49:28 Hello, Mr. Da and Mr. Liang. I have a question. Because we know that the company's business and the market relationship is relatively high, I would like to ask about the foreign company legislation passed by the US Senate recently. We know your business is closely related to the primary market, and the U.S. Senate just passed the Holding Foreign Companies Accountable Act. What's the impact on the primary market in China, and also the implication on companies' business? Thanks.

50:10 好的,谢谢。 Because there are two parts to this question. The first part is about the impact on the domestic capital market. I think it's like this. Although today the American market has some uncertainty, the domestic capital market is clearly in a good state. So it should be said that the domestic market is currently in a relatively active state. And then, of course, for a business like this, it's a good news. And then the impact on the third party, including ourselves, as a media and as a company, after the U.S. Senate passed this bill in May, Thank you, Brian. And at these macro level backgrounds,

51:11 Thank you very much. Thank you. We can see the primary market still stays very active and healthy, which is quite a benefit to our own business and all of our different kinds of business streams. And for us, as China's new economy entrance and the serving platform, always keep a close eye on the developments regarding this bill.

52:08 And when the Senate in May, they passed this act, we immediately organized a related livestream program on our own platform, inviting experts from well-known US legal firms to share the background information and to share the Thank you. Thank you. Thank you. And the next question comes from Jay Dong with TH Capital.

53:12 Thank you. Thank you for taking my question. I have two questions here. The first one is about the trend of content pieces in recent months. And the trend of page views is primarily on Weibo, Tokyo, and Baidu. And the second one is regarding the further content strategy. and Hao to continue to create more high-quality content in the future.

54:09 Thank you.

54:13 Hao, thank you. In fact, we have always put content as the basis of our entire business, so our investment in content is constantly increasing. We want to see a few trends. The first is that we believe that short videos and live broadcasts are very important trends for the future, especially short videos. We believe it represents the future of the industry. So what we are doing today is not only to improve our own content and short-formatting. We are also not only on the top three or six platforms. We are still, for example, on Bilibili, on Douyin, on other platforms. We are constantly promoting our products. Our short-formatting content and live broadcast content have received a lot of market attention. I think we will continue to invest in this area.

54:58 Thank you so much, Jay, and I'll do a little translation about this. As everybody knows, we started our business from the content providing, so we always consider the content capability as the basis of all kinds of business streams. We have been consistently enhancing our content capability and fortifying our are leading position as a content provider. You can see the proportion increase of UGC actually in the past few years and also in the future. But this only reflects part of our content development.

55:47 As the short form video and also the live stream programs are gaining the are the world's best attractions among our audience, our users. Since 2020, we have put in our efforts to seize more opportunities in the rising popularity of these new medium forms in our content production. We not only launch short video and live stream programs on our our own platform but also very actively operates our official accounts with high quality content on other key and very popular third party platforms and we will continue to do this. So I think this is the answer and the effort we will put in our content. Thank you, Jay.

56:50 Thank you. And as there are no further questions now, I'd like to return the call to the company for any closing comments.

57:01 Thank you so much, everyone. And earlier today, we have released our earnings Thank you so much for your time today. Have a good night. Bye. This concludes this conference call. We disconnect your lines at this time. Thank you.