Youdao Inc (DAO) 2021 Q4 法說會逐字稿

Good day and welcome to the Youdao 2021 Fourth Quarter and Full Year Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Jeffrey Wang, Investor Relations Director of Youdao. Please go ahead, sir.

Thank you, operator. Please note the discussion today will contain forward-looking statements related to future performance of the company, which are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of the future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion.

A general discussion of the risk factors that could affect Youdao's business and financial results is included in certain filings of 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, for comparison purposes only. For the definitions of non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial results, please see the 2021 fourth quarter and full year financial results news release issued earlier today.

As a reminder, this conference is being recorded. Besides, a webcast replay of this conference call will be available on Youdao's corporate website at ir.youdao.com.

Joining us today on the call from Youdao's senior management is Dr. Feng Zhou, our Chief Executive Officer; Mr. Lei Jin, VP of Operations; Mr. Peng Su, our VP of Strategy and Capital Markets; and Mr. Wayne Li, our VP of Finance.

I will now turn the call over to Dr. Zhou to review some of our recent highlights and strategic direction.

Before we begin, I would like to remind everyone that the financial information and non-GAAP financial information mentioned in this release is presented on a continuing operations basis, and all numbers are based on Renminbi, unless otherwise specifically stated.

We finished the fourth quarter and the whole fiscal year 2021 with strong financial results. Total net revenues reached RMB 1.0 billion in Q4 2021 and RMB 4.0 billion in 2021 whole year, representing an increase of 22.6% and 58.9% year-over-year, respectively.

In Q4, we achieved positive net income on the non-GAAP basis for the first time since our IPO, at RMB 31.1 million. Operating cash inflow from continuing operations was positive RMB 142.2 million, mainly due to strong revenue, and lower sales and marketing expenses incurred.

To be fair, achieving non-GAAP profitability was helped by favorable seasonality in Q4 including the year-end shopping season. Nonetheless, the year-over-year trend is clear. The results demonstrated that our financials are steadily improving, and our business is on the right track to sustained profitability, even under the challenging regulatory environment.

Moreover, Q4 results showed that our strategy of doubling down on new growth opportunities is working. We continue to make good progress on multiple fronts, including the smart devices segment, B2B business, and STEAM education business. In Q4, Youdao has also been added to the MSCI China All Shares Small Cap Index as of market close on November 30, 2021. We are pleased to be part of this widely recognized global benchmark and recognized our business performance and growth potential.

We continue to comply with the updated laws and government policies. We have ceased offering the after-school tutoring services on academic subjects in China's compulsory education system and completed the disposal of this business. As a result, the K-9 academic AST Business met the criteria of discontinued operation and retrospective adjustments to the historical statement of operations have also been made for the previous periods, which provides a consistent basis of comparison for the financial results of the continuing operations.

I would like to thank all former teaching and operation staff for their contribution to the K-9 academic AST business in the last several years.

Now let me walk you through some of the details of our fourth quarter. First, our smart devices segment kept strong momentum. It generated revenues of RMB 317 million in Q4, up 24.8% quarter-over-quarter and 33.9% year-over-year from Q4 2020's high base. Dictionary Pen sales exceeded 500,000, a new record. For the full year of 2021, revenue from the smart devices segment reached RMB 980.4 million, representing an 81.6% increase from 2020.

In Q4, we entered into a strategic partnership with the Commercial Press, with the exclusive inclusion of Xinhua Dictionary in Youdao dictionary pens. In addition, many of the well-known dictionaries published by the Commercial Press will also be included in Youdao's smart devices. The integration of smart AI and classic content makes the dictionary pen a truly indispensable tool for language learning and usage.

We also kept improving our core technologies. A new feature called Writing Guide was introduced for the pro version of Youdao dictionary pen. Powered by our proprietary Natural Language Processing (NLP) technology, the Writing Guide feature provides personalized assessment for students' English writing, evaluates vocabulary usage, grammar correctness, and then offers suggestions for improvement. This is another novel application of Youdao's AI learning technology.

Our new-category product, Youdao Listening Pod was released at the end of Q3. So Q4 was the first full quarter of sales. We are happy to say it is off to a strong start. The units of Youdao Listening Pod sold in Q4 was double that of the Youdao Dictionary Pen 1 in the same period.

In Q4, we introduced more licensed textbooks and added AI listening comprehension mock tests to the device. We believe Youdao Listening Pod is a stronger product compared with its peers from other companies and will gain further popularity in coming quarters.

Then let's turn to STEAM courses. The gross billings of Youdao Weiqi or Youdao Go increased by around 130% year-over-year and over 30% quarter-over-quarter, reflecting the sustainable growth and retaining the leading position in the Go course markets. We recently launched the Youdao Boardgame Academy app, for our learners to play Go and Chess matches online with fellow learners. It matches players with similar skill levels, supports both human-to-human and AI matches, and provides high-quality quizzes for improving skills.

Our STEAM courses are also gaining more recognition in the sector. We received 2 excellent-course awards for our STEAM courses from Beijing Association for Science and Technology in Q4.

In terms of adult and vocational courses, our current strategy is to drive growth in areas that have a large addressable market and fits our expertise. Examples include graduate school entrance exam preparation, and digital skills training courses. In 2021, the Ministry of Human Resources and Social Security released a working plan on enhancing digital skills, focusing on digital skills training such as artificial intelligence, big data and cloud computing. This is a good fit for us. Gross billings of vocational education courses grew approximately 170% quarter-over quarter in Q4.

Besides, Youdao was included in the new base of adult education by Zhejiang Province Human Resources and Social Security Department. We believe adult and vocational training have a bright future and we are patient in this area.

As for education digitalization solutions, we kept rolling out new features for our solutions and signing up new customers and partnerships. In Q4 we signed a strategic partnership with Suzhou municipal government to build smart education solutions in the city. Suzhou is a large and prosperous city, whose GDP is #6 among all Chinese cities, right after Chongqing. So Suzhou's endorsement is a milestone for our education digitization business.

We are also dedicated to fulfilling our social responsibilities. Youdao Foreign Language Reading Corner, the public welfare project, benefited over 30,000 people. Besides, Youdao was awarded as the Annual Model Enterprise of CSR for its special contribution to helping the disabled and CSR China Top 100 Best Brand of Fulfilling CSR of the Year.

As we close our books on 2021, we had an eventful year, which I believe will still be special when we look back a couple of years from now. Despite the challenges, our teams were able to drive significant growth of our business, at 58.9% of revenue growth. And likely more importantly, our diversified investment in smart devices, STEAM courses, and others in the last couple of years, and long-term support from our parent company NetEase, have allowed us to navigate the changing environment relatively smoothly, and to build a stronger position for us in the market.

Looking ahead, we are committed to compliance and focus on our growth areas, including smart devices, STEAM courses, adult and vocational courses, and education digitalization solutions. Education technology is in its early days, and we firmly believe it has a bright future. I'd like to thank our investors for your continued support. And we look forward to a fruitful FY 2022.

With that, I will turn the call over to Su Peng to give you more details on our financial performance.

Thank you, Dr. Zhou, and hello, everyone. Today I will be presenting some financial highlights from our 2021 fourth quarter and the full year. We encourage you to read through our press release issued earlier today for further details.

Gross billings increased by 37.3% year-over-year to RMB 854.5 million, or $134.1 million, in Q4. 18.9% of gross billings came from adult and vocational courses. Given the current regulatory environment and the completion of the disposal of K-9 Academic AST business, more focus will be concentrated on AI and technology-driven businesses, such as smart devices and education digitalization solutions. Revenue is a key metrics that could reflect the business performance. Therefore, we would not treat the gross billings of our tutoring services as our key financial measures on a going-forward basis.

For the fourth quarter, total net revenues were RMB 1.0 billion, or USD 164.6 million. This represents an increase of 22.6% from the fourth quarter of 2020. Looking at this growth by segment. Net revenues from our learning services were RMB 579.3 million, or USD 90.9 million, up 20.6% from the same period in 2020. We attribute this growth to the increased revenues generated from our learning services, which were further driven by the growth in paid student enrollments during the period in 2021.

Net revenues from our smart devices were RMB 317.7 million, or USD 49.9 million, up 33.9% from the same period in 2020, driven by the substantial increase in sales volume of Youdao Dictionary Pen in the fourth quarter of 2021.

Net revenues from our online marketing services were RMB 151.8 million, or USD 23.8 million, representing a 10.2% increase from the same period in 2020. For the fourth quarter, our total gross profit reached RMB 445.3 million, or USD 69.9 million, up 11.5% compared with the fourth quarter of 2020.

Gross margin for learning services was 51.4% for the fourth quarter of 2021, compared with 55.9% for the same period in 2020. Gross margin for smart devices was 30.8% for the fourth quarter of 2021, compared with 39.5% for the same period in 2020. Gross margin for online marketing services was 32.6% for the fourth quarter of 2021, compared with 26.9% for the same period in 2020. For the fourth quarter, total operating expenses were RMB 693.6 million, or USD 108.8 million, up 5.8% from RMB 655.7 million for the same period last year.

With that, for the fourth quarter, our sales and marketing expenses were RMB 420.4 million, compared with RMB 511.1 million in the fourth quarter of 2020. Research and development expenses were RMB 170.2 million, compared with RMB 109.0 million in the fourth quarter of 2020.

Our operating loss margin was 23.7% in the fourth quarter of 2021, compared with 30.0% for the same period of last year. For the fourth quarter of 2021, our net loss from our continuing operations attributable to ordinary shareholders was RMB 215.9 million, or USD 33.9 million compared with RMB 251.2 million for the same period of last year.

Non-GAAP net loss from continuing operations attributable to ordinary shareholders for the fourth quarter was RMB 168.2 million or USD 26.4 million, compared with RMB 238.1 million for the same period of last year.

Basic and diluted net loss per ADS from continuing operations attributable to ordinary shareholders for the fourth quarter of 2021 was RMB 1.75, or USD 0.27. Non-GAAP basic and diluted net loss from continuing operations per ADS for the fourth quarter was RMB 1.37, or USD 0.21. Our net cash provided by continuing operating activities was RMB 142.2 million, or USD 22.3 million, for the fourth quarter.

Turning to our full year results. Our total revenues for 2021 increased by 58.9% to RMB 4.0 billion, or USD 630.2 million. Net revenues from our learning services for 2021 were RMB 2.4 billion, or USD 383.1 million, up 61.3% from 2020. Net revenues from our smart devices for 2021 grew by 81.6% year-over-year to RMB 980.4 million, or USD 153. 9 million.

Net revenues from online marketing services for 2021 were up 25.6% year-over-year to RMB 593.9 million, or USD 93.2 million. Total gross profit for 2021 was RMB 2.0 billion, compared with RMB 1.1 billion in 2020. Total operating expenses for 2021 increased to RMB 2.9 billion, or USD 460.1 million, compared with RMB 2.0 billion in 2020.

Net loss from continuing operations attributable to Youdao's ordinary shareholders for 2021 was RMB 895.4 million, or USD 140.5 million, and basic and diluted net loss per ADS from continuing operations attributable to ordinary shareholders for 2021 was RMB 7.36, or USD 1.15.

Looking at our balance sheet, as of December 31, 2021, our contract liabilities, which mainly consist of deferred revenue for our tutoring courses, were RMB 1.1 billion, or USD 167.2 million, compared with RMB 894.2 million as of December 31, 2020. At the end of the period, our cash, cash equivalents, restricted cash, time deposits, and short-term investments totaled RMB 1.6 billion, or USD 247.4 million.

This concludes our prepared remarks. Thank you for your attention. We would now like to open the call to your questions. Operator, Please go ahead.

(Operator Instructions) Our first question is from Sheng Zhong of Morgan Stanley.

So could you please provide an outlook on your learning devices growth in 2022 and if you can break down to your current products and the new product pipeline, that will be great?

Yes. Thank you, Sheng. Yes, this is Zhou Feng. I believe this is going to be an inflection year for us in terms of smart devices. We have a lot of exciting work underway and we will not only drive growth, but also lay the foundation for next year and next to next year's growth. Now first, we are going to release new generations of our Dictionary Pen and Listening Pod products in 2022. There is a lot to do there. For example, we have just added English writing related features to the Dictionary Pen.

So it was made possible by years of R&D and users really like them, so expect us to add more hardware capabilities and more advanced AI technologies to help users in new scenarios. Our new learning cases in the new Dictionary Pens and Listening Pods this year.

Second, so we expect to release more new categories of devices this year. We're going to bring to these new products, our strength, like, attention to detail, great design, seamless AI and -- that really works. Yes, so all the strength that we have building Dictionary Pen to be a really popular learning products, we will bring them to our new categories of devices.

Actually, there is one that's pretty close to launch. Yes, so next month we will launch the Youdao smart learning lamp. We think a smart tabletop device like the learning lamp is very intriguing device. So it's very interesting device to help learners in multiple ways and we have quite a few new ideas there. And we really like the ideas and we want to introduce them to our users.

In general, you know what fascinates me is that the fact that we have only really scratched the surface in using AI to help learners learn better, so with new sensors a more computing power, more data, yes, we'll see a future where AI really understands the learner and makes learning orders of magnitude better, yes so smart devices or we like to call them AI IoT devices, AI plus IoT, Internet-of-Things.

So AI IoT devices are the best of vehicle we believe for helping us to get the AI to the user because they allow us to really deploy these sensors, these industrial designs and, but -- the exact user interface that we want that works best for this -- for any particular learning scenarios. And I want to show you that we think the trend is becoming more and more clear, yes according to 2021 China education smart devices trend insights report by Tencent Research institutes.

The education smart devices market is expected to be close to RMB 100 billion in 2024. So, we intend to be a leading player in this market. So since 2019, we have already achieved 3 consecutive years of triple-digit or high double-digit growth for our smart devices. In 2021, the growth was 82% and revenue reached about RMB 1 billion. So I believe we have demonstrated fast growth for us in this area and sustainable growth.

As I talked about in earlier calls, compared to our peers, Youdao has deep knowledge in both the technologies and content required for the success of smart devices. And compared to many of our peers, we have also a head start in terms of supply chain build up and also sales channel construction. So we are in a very good position here as we compete for customers. So far, I believe the results have agreed with our view and we believe we could achieve good growth in 2022 as well.

My follow-up, a quick question. You mentioned -- I remember in the Double 11 the learning devices -- sorry, the listening devices had a very good sales momentum. Can you please quickly comment what the momentum is recently for this new product?

So I didn't get your last sentence.

Yes, sure. About the learning device, I remember in the Double 11 the sales was pretty good. So would you comment about the recent momentum of these learning devices, which actually was a new product for you?

Right. Yes. So recent trend, yes, as you know, the seasonality of hardware products, learning devices, so we have actually multiple months in the year that are kind of key drivers of sales. So Double 11 is one of that. And also December, the shopping festival in December is also pretty good. And the sales there was also good for us. And the one after that would be the beginning of the semester. That is basically this month and next month. So February and March are normally the strong months.

So after Q2, yes, so we are looking at the -- yes, it's doing pretty well for us right now. And you can expect that at the beginning of the new semester is the one that we are looking at right now, and it's not finished yet. Yes. So that's -- and yes, let me say a few words about the general full year trend. So normally, so the sales actually are strong in February and March. And also one of the key months is the beginning of the whole school year. That will be August and September. And that's normally more stronger than February and March. And because our products are sold more online, so the e-commerce shopping festivals are very important. So Q4 tends to be also pretty strong. Yes. So that's the normal seasonality.

The next question is from Brian Gong of Citigroup.

So my question is regarding our related strategy and the investment plan on STEAM courses, especially considering the latest regulation -- regulatory environment and deposits from MOE in late January.

Thank you, Brian. This is Su Peng. And yes, I will take these questions. As for the STEAM process, right now, there is currently no law or the regulations that impact us to develop the STEAM courses. And so, in our plan, we will smoothly enhance the investment on the STEAM courses in our business segments. And Youdao insists on the empowering the STEAM courses with innovative technology, and it's committed to -- always committed to the offering high quality courses to our users. And the purpose for us to produce that high-quality courses is, for example, like Dr. Zhou mentioned, the goal and as well as the Chess program. And it's not only to teach something to students. But also, we expect our student could understood about the history and the culture of the Go game as well as Chess game, and they know how to play the game, and they can play with their family -- friends and families. And further, we hope they can make a new friend through the playing games with the others.

And we think about that's really something related to the fundamental of the innovation and education. So that's what we think about our now subject or theme process at this moment. And as Dr. Zhou mentioned -- and we have built up Go apps to organize or to celebrate -- to host about online game player for students with the others. So we think about that we expect to build out kind of that online family for our students to play with the others.

So -- and also go back to the -- I think about you mentioned how the regulation is, definitely, we will have been -- kept close attention to the latest regulatory requirement and ensure running the business within the scope of the relevant law and regulation, obviously. And we will keep our eye open and work closely to updates about the regulation issues. I hope that answers your question.

The next question is from Thomas Chong of Jefferies.

May I ask about how we should think about the competitive environment for our ASP courses such as adult education and STEAM courses going forward. Would we expect that the competition will be intensified?

Yes. Thank you, Thomas. And this is Su Peng and for the competitive landscape issues regarding adults and vocational courses, I believe you have already read about the information or the news from the public channels regarding there are several peers has been announced to enter into this area. And that definitely will be the good news for these sectors because that's also being supportive by the central government regards to releasing several policies to support the growth of this and the development of this vocational education business.

And for our business, the first is about -- when we think about the new business, we will think about what's the fundamental issue is about the quality of our products. We think that will be the fundamental thing and fundamental value which we can provide to our users and students. And second thing is about -- yes we own about that kind of Youdao experiences that users do, and we always try to leverage our advantage from our own users on the dictionary to pass the product info as well as pass the trial services throughout that strong platform and to help them to understood our business and that we can help them in the different sectors.

So the third thing is about -- right now, it's because of the -- also in the -- with the support of several different policy and training more and more people is -- notice about the progress and growth in this area. So we think about the total number of users potentially for the number of users for the vocational training, it will grow year-over-year. And we think about that we can be the part of the top players in this area. I hope that answered your question.

The next question is from Linda Huang of Macquarie.

I have one regarding for our normalized business. Can you share with us how should we expect your normalized growth rate? And how should we look at the profit margin for the remaining business, especially for 2022 and 2023?

Linda, this is Wayne. I'd like to pick your question. As I mentioned, the dynamic AST business was stopped in the end of 2021, and we already respectively disclosed our financial figures, our earnings for the remaining business, say, continued operations business. Compared with 2020, the annual growth rate of the revenue from the continuing operations is close to 50%. The overall gross profit margin for continuing operations is around 50%.

Going forward, we will concentrate more on the segment of smart devices, education, digitalization solution and the STEAM and adults. Although we will not provide specific guidance on the revenue rate and their profit margin for 2022 or 2023. However, I would like to add some color on a going-forward basis for this business respectively.

First, for smart devices, we are good at this business and already have a strong business, including but not limited to branding, technology and channel advantages when compared with those peers or new engines. And we are committed to investing more resources in a new category or new pipeline.

As mentioned by Dr. Zhou, new pipelines are started to be launched in the near future. We believe have maintained a great year-over-year growth rate of our revenue, although our revenue business is already a bit high. We also expect a better profit margin, which is mainly contributed from the achievement of economic growth.

Second, for business, the educational digitalizing solutions, we have got certain milestone in 2021. For example, securing strategic partnerships with [Jiangsu], Hefei, Xiamen and recently [Suzhou] to provide school and teachers with our Youdao Math learning terminal and solutions, which empowers them to efficiently track students learning programs and optimize teaching guidelines. Further, the business skills were expected to enlarge. We believe we will achieve over 100% growth due to relatively low basis in 2021.

Lastly, we also plan to invest more R&D and marketing resources to update the product version, for great growth rates as well as more losses we expect in investing in this segment. And finally, for STEAM and adults business, as explained by my partner, these segments are supported by the -- and we will still follow the regulator's guidance.

In addition, we have multiple products in STEAM, such as Weiqi, science, which increased quickly. On one hand, we expect to launch more competitive SKUs to achieve faster growth.

Considering the increase in user demand and the large economic scale, better profit margins are expected to be achieved for this settlement. But we are very confident in the growth rate in revenue and improved profit margin for the remaining business going forward, which is helpful.

The next question is from Hongyi Cao of CICC.

First, congratulations for the great financial performance. My question is, can you give us more color on the strategy for vocational treasury service in the future? For example, consider the policy encouraging the vocational education. Is there any chance to operate with governments or other vocational skills?

Yes, this is Feng Zhou. Yes, of course, we all know that the vocational training services, these are really encouraged by the government right now. And it's a very, very interesting area. So we combine that -- for Youdao, we combine that with adult courses, like English training courses into a segment, we call that adults in vocational tutoring services. And yes, let me share with you a few points regarding the overall segment.

So this is traditionally a strong area for Youdao. We had very successful courses like the Logic English courses in the last couple of years. So we have quite some experience in this area. And the business is changing. So because of COVID, because of other factors. So we had some challenges in last year in recent quarters. And right now, we're looking at several growth areas for this sector. So one important area is still along the similar lines of the successful courses we have. And one very interesting area, we think is graduate school entrance exam, tutoring for graduate school entrance exams.

So this is interesting for us because we all know that this exam is becoming more and more popular. Over 4 million students are expected to take this exam this year. And last year was 3.7 million in 2021. And so because it's such a popular exam and we have a few years of experience in it, and we found that -- also, we found that it's an exam that students invest a lot of time and energy, which we can really help with the vast experience we have in designing courses and also using AI to improve the learning process.

So we have our team looking really seriously at this exam -- graduate school entrance exam. And we have already updated the course starting recently. And also, we will continue to update it throughout the coming quarters. So we think it's a very promising area.

So other areas that we think are really interesting are what we call the digital skills training. So things like Big Data and artificial intelligence application, these kind of subjects and also digital art design and similar subjects. We think these are really helpful courses for adults to take in to potentially have a much, much better chance of getting higher paid. And also, it's something that our teams are really familiar with and good at teaching. So we are investing a lot in these courses. And so far, the progress have been really, really well.

So going further, we are also working with different local governments. So recently, we have cooperated with Beijing Municipal Human Resources and Social Security Department. And also as I just talked about in the prepared remarks, we also signed a collaboration in Q4 with the [Zhejiang] Human Resources and Social Security Department. So -- or working on providing vocational training and courses to adults and workers.

Yes. So overall, we think it's a very, very good area. And right now, we are focusing our efforts on doing this online. Instead of actually operating off-line schools, we are doing this online. Because we think online is -- it's great for us and that is -- online is also has the benefit of that we can use our software and artificial intelligence skills in designing the learning experience. And we will see -- so we're currently focusing on online, and we will, of course, keep an eye on other ways.

The next question is from Candis Chan of Daiwa.

My question is about your customer acquisition strategy for various business segments and also your key investment areas in 2022. And how will that customer acquisition strategy be different from what we've seen in the prior years? And are we further expanding our studios or hiring more teachers in this year?

Thank you, Candis. This is Lei Jin. I will answer your questions. In terms of our customer business target in 2022, we will answer your question from the 2 perspective. Firstly, for smart devices, our customer business strategy will stick to multichannel. Online channels such as e-commerce platform and short video platforms accounted for around 2/3 of sales of our smart devices. We did more efforts entering in Q4 and achieved a good result. We tapped the potential of offline channels at the same time. Recovery business for Costco, Sam's Club, Citi (inaudible) and other off-line channels for our Dictionary Pen and the Listening Pod. To increase our product awareness, we made several viral videos that impress us with the product speakers and the users are willing to share them on social media.

With the multi-channel strategy, we shipped more than 500,000 Dictionary Pen in Q4. Secondly, as for customer business strategy for STEAM courses, we decided to open more off-line STEAM centers and build course as our first STEAM center established in Beijing in Q4 as well.

The first Youdao STEAM center opened in Beijing last November, focusing on children's intellectual development, logic training and strategic thinking, where we offer Youdao (inaudible) programming courses. Youdao performed last -- caused it. More STEAM courses will be on our offline centers so that our users could have a closer and more comprehensive interaction with us.

In terms of our business, we will continue to invest and focus on smart devices. STEAM courses are under vocational courses and vocational digitization solution in 2022. Thank you.

Thank you very much. Ladies and gentlemen, that concludes the question-and-answer session. And I would now like to turn the conference back to management for any additional or closing comments.

Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Youdao directly or reach out to TPG Investor Relations in China or the U.S. Have a great day.

Thank you very much. Ladies and gentlemen, that concludes this event, and you may now disconnect.