Fangdd Network Group Ltd (DUO) 2019 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Fangdd Network Group Ltd.'s Fourth Quarter and Full Year 2019 Earnings Call. (Operator Instructions) Please note, this event is being recorded. I would now like to hand the conference over to your speaker host today, Mr. Warren Wen, Financial Controller of the company. Please go ahead, sir.

Thank you, operator. Hello, everyone, and thank you all for joining us on today's call. Fangdd announced its fourth quarter and full year 2019 results today. An earnings release is now available on the company's IR website. Today, you will hear from our Chairman and Co CEO, Mr. Duan Yi, who will start the call with a review of our progress in 2019 and the current industry dynamics. He will be followed by the company's Co-CEO, Mr. Zeng Xi, who will address our development strategies in more detail. Both Mr. Duan and Mr. Zeng will deliver their remarks in Chinese, and I will provide the English translation. Afterwards, our CFO, Mr. Pan Jiaorong, will go over our financials before we open up the call for questions.

Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which apply to this call as we will be making forward-looking statements. And please also note that we will discuss non-GAAP measurement today, which more thoroughly explained and reconciled to the most comparable measures reported under the generally accepted accounting principles in our earnings release and filings with the SEC. With that, I will now turn the call over to our Chairman and CEO, Mr. Duan Yi. And please go ahead, sir.

(foreign language)

[Interpreted] Hello, everyone, and welcome to our earnings call. During the fourth quarter, we remained committed to expanding the scale and strengthening the core competitive advantages of our online real estate marketplace. Our robust financial and operating performances in the fourth quarter certainly reflected our effort in this regard.

(foreign language)

[Interpreted] As of December 31, 2019, our platform boasted approximately to 1.25 million registered agents up 7 -- up 37.4% from 0.91 million as of December 31, 2018. Notably, active agents on our marketplace reached 443,300 during the full year of 2019, representing a 39.7% increase from the full year of 2018. We also recorded more than 60,400 agents who completed transactions on our marketplace during the full year of 2019, up 53.2% from the full year of 2018. More importantly, our total GMV of the closed-loop transaction reached RMB 210.5 billion for the full year of 2019, representing an 85.1% increase from the full year over 2018. Driven by such increases, our revenue grew to RMB 3.6 billion in the full year of 2019, up 57.7% from the full year of 2018. At the same time, we also improved our profitability as our non-GAAP net income increased to RMB 235.5 million for the full year of 2019, up 126.4% from the full year of 2018.

(foreign language)

[Interpreted] Consistent with our previous earnings call, I will briefly go over the current market dynamics of China's real estate industry before our co-CEO, Mr. Zeng Xi elaborates on the main drivers of our robust growth and our business outlook. These macro trends should help obtain a clear picture of the development and implementation of our business strategy. Let us now take a moment to review a few key metrics from the National Bureau of Statistics of China Frost & Sullivan, Vanke Research Institute, freedom data and other research institutions. This data helps to illustrate the major and emerging trend in Chinese real estate market.

(foreign language)

[Interpreted] First of all, after 20 years of development, housing prices in China are no longer rising without corrections. We are embracing a market that centers transaction services instead of development of new housing projects, which has stabilized in terms of transaction volumes. According to Frost Sullivan and Vanke Research Institute, the total transaction value of new properties and secondary properties in 2019 reached RMB 14 trillion and RMB 6 trillion, respectively. Previously, the 2 research institutes have estimated at the total market size of China's residential property transaction market would remain stable at approximately RMB 20 trillion in 2019. Transactions of new properties and secondary properties were expected to account for between RMB 13 trillion to RMB 14 trillion and between RMB 5 trillion to RMB 6 trillion, respectively.

(foreign language)

[Interpreted] The increasing equilibrium between market supply and market demand has accelerated the competition among real estate developers. According to the National Bureau of Statistics, the total volume of new property transactions in China was 1.5 billion square meters, representing a mere 2% year-over-year increase from 1.47 billion square meters in 2018. As the market moves towards its transaction celling, developers are relying more on transaction platform, third-party independent platform to provide service to home buyers in order to improve their sales performance in a quicker and a faster manner.

(foreign language)

[Interpreted] The penetration rate of agent services in China's RMB 20 trillion housing market has continued to increase. According to Frost & Sullivan, the penetration rate of agent services for new property transaction was 15.3% in 2018. Based on research from freedom data, the penetration rate of agent services in China's top 20 cities surpassed 40% in 2019, which represents immense market opportunity for those solutions that can improve agents' service capabilities.

(foreign language)

[Interpreted] With the increasing demand for agent services, we expect that agents will continue to rely upon online and SaaS solution to reach a broader range of demographics as well as improve the quality and efficiency of their services. We believe that our SaaS solutions, powered by technology and data will be the key for the agents to improve their services -- service capability going forward to the buyer side and to the listing side to the seller side.

(foreign language)

[Interpreted] Now I will hand the call over to Mr. Zeng Xi who will provide more information on our growth strategies and business development progress in the fourth quarter as well as our expectations for the first quarter of 2020.

(foreign language)

[Interpreted] Thank you, all, Mr. Duan Yi, and hello, everyone. This is Zeng Xi speaking. The independence of our platform, our empowering SaaS solutions and our efficient services are the cornerstone of our competitive advantage. Building on our past success, we continue to focus on the following 3 key areas.

(foreign language)

[Interpreted] First and foremost, we remain committed to the continuous optimization of our SaaS offerings. In order to attract more agents to our marketplace and ensure that they are effectively capitalizing the transaction opportunities, we will provide our service free of charge to all real estate agents.

(foreign language)

[Interpreted] Secondly, we have expanded our partnerships with real estate developers to further improve the efficiency of our collaboration. By fostering stronger loyalty from our partner developers, we have been able to provide agencies on our platform with access to more property listings.

(foreign language)

[Interpreted] The combination of expanded access to property listings and constant refinement of our matchmaking algorithms has enabled us to further improve the transaction efficiency of the real estate agencies on our platform. As we offer more transaction opportunity to our agencies, we have boosted our GMV and revenue in turn.

(foreign language)

[Interpreted] Now let me explain our first growth strategy at the level of business operations. We have remained committed to continuous optimization of our SaaS solution. In this quarter, for example, we constantly updated and improved our online shop function. This function now allows agents to execute follow-on marketing opportunities to reach more potential customers. As a result, over 60,000 agents frequently used our online shop function in December alone. Furthermore, we also continue to optimize the capabilities of our SaaS solutions to improve the depth and responsiveness of our agency services. For example, by refining our agency servicing -- service -- agency services system, we were able to provide around-the-clock services to agencies. This system enabled us to respond to 90% of all incoming requests within 1 minute. Consequently, the satisfaction and engagement levels of agencies improved significantly in the fourth quarter with the number of active agents on our marketplace, reaching 240,000 in the period, up 40% from the fourth quarter of 2018.

(foreign language)

[Interpreted] Looking at our second strategic focus is to expand our partnerships with the real estate developer to diversify our product matrix. This ensures that we have sufficient property listings on our platform to increase the likelihood that our agent will facilitate a transaction. As of December 31, 2019, we had over 2,500 new development projects for sale listed on our platform, which is significant more than what we had in the end of the previous quarter. The expansion of our listing was the result of our strategy to deepen collaborations with the existing developer partners as well as establishing new partnerships. In the fourth quarter, we forged strong strategic alliances with dozens of top-tier real estate developers. These partnership allowed us to add properties to our listings from some of the most populated cities in China, which helped us to increase the quarterly listings of new development projects on our platform by 25% on a on a -- on a sequential basis.

In addition, we also optimized our product matrix for developers to offer customizable product solutions. Through our portfolios of tailored products, we successfully helped developer to achieve better sales -- quicker sales for their development projects, including commercial properties, and intercity sales and other property held for lease purchase.

(foreign language)

[Interpreted] Lastly, we regularly upgraded our SaaS solutions and leveraged the two growth engines of our agent base and property listings to achieve continued business growth. During the fourth quarter, we further optimized our AI technology and launched the second-generation of the matchmaking algorithms, which allows us to precisely distribute specific properties and customers to agencies based on their service capacity. The improved distribution system further enhanced our transaction efficiencies by increasing the potentials for our developers and agencies to complete the transaction on our platform. As a result, our top line performance for the fourth quarter reflected the success of this initiative as our revenue increased by 50% in year-over-year to RMB 1,047.2 million in the period.

(foreign language)

[Interpreted] Now before I go further to our expectation for 2020, I would like to take a moment to discuss the impact of the COVID-19 coronavirus.

(foreign language)

[Interpreted] First of all, our wishes and thoughts are with all the business and the individuals in those regions that have been impacted by this epidemic. As a responsible corporate citizen, we immediately mobilized our team to help combat the outbreak. As of now, we have procured approximately RMB 1 million worth of medical supplies and equipment for donation to hospital in Hubei province. This supplies include medical glasses, sterile gloves, hazmat suit and face masks. Going forward, we will continue to monitor the situation as it evolves and help wherever we can.

(foreign language)

[Interpreted] Currently, we are experiencing an unprecedented challenge in the real estate industry in the first quarter of 2020. At the beginning of the year, real estate agents across the nation began their holidays in mid-January for the earlier Lunar New Year holiday schedule. However, the holiday was significantly extended by the epidemic, and the nationwide suspension of off-line activities further delayed the resumption of work to mid-March. Consequently, the effective off-line working hours of real estate agents in the first quarter were reduced to just 30% of the prior year level. As a result, domestic property sales in the first quarter were massively disrupted. The impact was especially severe for the secondary housing market with the sales of the secondary property in February fall by more than 80% on a sequential basis.

(foreign language)

[Interpreted] We also noted the new housing transaction volume, down by 50% in the February by the statistic of each city level. So aside from the challenges, the epidemic is also presenting an opportunity for us. As the agencies are increasingly shifting their business online, we focused on our efforts on refining our SaaS solutions, improving our agency services and innovating our product offerings. By upgrading our SaaS infrastructure as well as launching online sales shops and our live streaming platform, we have fulfilled the rising demand of an efficient online risk -- real estate transaction process. In February, our platform recorded a 64.4% year-over-year increase of active agents compared to the same period of [2019] (corrected by company after the call). And currently, we are expecting the number of active agents on our platform to reach a new high in March. And additionally, through the continued improvement of agent-centric platform services, we have launched a few other products like the preferred agent alliances network, buyer side acquisition pass, quicker commission settlement and further strengthen -- and this further strengthen the collaboration between the agents and us.

First, and through business product innovation, we have launched other innovative products such as the small upfront deposit for new housing that enable the buyer to reserve a flat with a small amount of money, verify secondary -- second-hand property transaction center in first tier of cities and the car parking spaces pass, (inaudible) to create new profit growth opportunity for the company.

(foreign language)

[Interpreted] So despite these short-term headwinds, as a leader in the real estate transaction service market, we remain confident about the mid- to long-term market demand. Based on the latest market data, the sales of the new property in the last 10 days of March has recovered to the prior year level.

(foreign language)

[Interpreted] In accordance with the government's plan for the real estate industry, we expect that the implementation of policies designed to stabilize the prices of land parcels and new properties will help the industry to remain stable. As these policies serve to dampen price fluctuations in the market, we expect real estate sellers and property developers to face an increasing amount of sales pressure due to their high turnover business model. This market trend leads us to believe that the demand from developers for online customer acquisition solutions and efficient sales conversion solutions will rise rapidly in the first quarter of 2020.

(foreign language)

[Interpreted] The increased demand is an opportunity for us to further promote our value proposition and propel our growth. We are confident with that. We are confident that with our highly efficient and cost-effective asset-light business model, we will continue to dominate the real estate transaction service center -- sector.

(foreign language)

[Interpreted] Based on such market trend, let me provide an update on our expectations of 2020. In light of the coronavirus outbreak, we are more conservative in our financial estimates and business outlook. Currently, we are expecting our revenue to grow 40% to 45% year-over-year in the full year of 2020, approximately 5% to 10% lower than our previously forecast.

(foreign language)

[Interpreted] With that, I will turn the call over to our CFO, Ms. Pan Jiaorong, to review our financial results in this quarter.

(foreign language)

[Interpreted] Thank you, Mr. Zeng Xi. Now I will provide a closer look into our fourth quarter financial results. Before I start, please note that all numbers are in RMB terms unless otherwise noted.

(foreign language)

[Interpreted] Revenue in the fourth quarter of 2019 increased by 50% to RMB 1,047.2 million from RMB 698.2 million in the same period of 2018. As Mr. Zeng and Mr. Duan mentioned earlier, our revenue growth was driven by our ongoing efforts to attract more agents and property listings to our platform, which enabled us to facilitate a higher commission-based GMV during the -- commission-based GMV and revenue during the quarter.

(foreign language)

[Interpreted] The cost of revenue in the fourth quarter of 2019 increased by 51% to RMB 832.8 million from RMB 551.7 million in the same period of 2018, which was primarily attributable to higher revenue generated from commission from transactions and the corresponding commission fees payable to agents for the services they have rendered. And the gross profit in the fourth quarter of 2019 increased by 46.3% to RMB 214.4 million from RMB 146.5 million in the same period of 2018. Gross margin in the fourth quarter of 2019 remains relatively stable at 20.5% compared to the same period of 2018. And the loss of -- our loss from operations in the fourth quarter of 2019 was RMB 685.2 million compared to income from operations of RMB 30 million in the same period of 2018 as we have recorded share-based compensation expenses of RMB 745.9 million during the quarter. So that our non-GAAP income from operations in the fourth quarter of 2019 was RMB 60.6 million, representing 102% year-over-year increase. Our non-GAAP operating margin in the fourth quarter of 2019 were also expanded to 5.8% from 4.3% in the same period of 2018.

(foreign language)

[Interpreted] Operating expenses in the fourth quarter of 2019, excluding share-based compensation expenses of RMB 745.9 million increased by 32% to RMB 153.8 million from RMB 116.5 million in the same period of 2018. Let's take a look at the breakdown of operating expenses for the fourth quarter. Sales and marketing expenses in the fourth quarter of 2019 increased by -- decreased by 34.2% to RMB 17.1 million from RMB 26 million in the same period of 2018. The decrease was mainly attributable to the decreases in our marketing expenses incurred to attract property listings from sellers and for our brand recognition process. Excluding share-based compensation expenses, product development expenses in the fourth quarter of 2019 increased by 34% to RMB 71.7 million from RMB 53.5 million in the same period of 2018. The increase was primarily driven by higher personnel-related expenses resulting from the increased average compensation in the fourth quarter of 2019 to further enhance our technological infrastructure and expand -- for the purpose of expanding to attract and retain our agent base. And excluding our share-based compensation expenses, general and administrative expenses in the fourth quarter of 2019 increased by 75.9% to RMB 65.1 million from 70 -- from RMB 37 million in the same period of 2018. The increase was mainly attributable to the increase of -- in our headcount and the average compensation during the quarter as we continue to rapidly expand our business. And secondly, in order to improve our corporate governance and ensure compliance with SEC in all material aspects, we also increased our headcount in certain department. And furthermore, considering the impact of the COVID-19 outbreak in the first quarter of 2020, we adopt a more conservative approach when assessing the collectability of our certain debtors' accounts. As a result, we have provided specifically for certain doubtful debts by RMB 17.6 million.

(foreign language)

[Interpreted] Net loss in the fourth quarter of 2019 was CNY 691 million compared to a net income of CNY 40.1 million in the same period of 2018. The decrease was mainly attributable to the CNY 745.9 million in share-based compensation expenses that we recorded in the fourth quarter of 2019. And excluding these expenses, our non-GAAP net income in the fourth quarter of 2019 was CNY 54.9 million compared to CNY 40.1 million in the same period of 2018. Non-GAAP net margin in the fourth quarter of 2019 was 5.2%. And if the -- we have excluded those onetime items, including the CNY 17.6 million increase in provision for certain doubtful accounts and another CNY 16 million impairment provision for our long-term investment due to the downsize of our operation -- cooperation plan with the investee. Our non-GAAP net income would have grown up by 120.7% year-over-year to CNY 88.5 million with a non-GAAP net margin of 8.5%. And basic and diluted net loss per ADS in the fourth quarter of 2019 were both RMB 22 and after taking into account the first share-based compensation expenses of RMB 745.9 million, and that is USD 107.1 million; and the second, a deemed dividend distributed to a preferred shareholder of RMB 642 million, that is USD 92.2 million equivalent. So in comparison, our basic and diluted net loss per ADS in the same period of 2018 were both RMB 0.75.

(foreign language)

[Interpreted] Let me also give a brief overview of our full year 2019 results. And revenue in the full year of 2019 increased by 57.7% to CNY 3,599.4 million from CNY 2,282.2 million in the full year of 2018, driven by the same factors that led to our quarterly revenue increase. Gross profit in the full year of 2019 increased by 58.8% to CNY 757 million from CNY 476.6 million in the full year of 2018. Gross margin in the full year of 2019 remained stable at 21% compared to the full year of 2018.

Loss from operations in the full year of 2018 was CNY 536.8 million compared to the income from operations of CNY 69.4 million in the full year of 2018. Non-GAAP income from operations in the full year of 2019 was CNY 209.1 million in the full year of 2019. Non-GAAP operating margin in the full year of 2019 also expanded to 5.8% from 3% in the full year of 2018. The growth was primarily driven by the continued scaling of our business and the improvement of our operating efficiency through technology advancement. And the net loss in the full year of 2019 was CNY 510.4 million compared to a net income of CNY 104 million in the full year of 2018. Non-GAAP net income in the full year of 2019 was CNY 235.5 million.

If we move other onetime items, including the CNY 17.6 million increase in the specific provision for certain doubtful debtors and the CNY 16 million impairment provision for a long-term investment due to the downsize of the cooperation plan with the investee because of the outbreak. Our non-GAAP net income in the full year of 2019 would have been CNY 269.1 million, basic and diluted net loss per ADS in the full year of 2019 were both RMB 29.25. In comparison, and -- our basic and diluted net loss per ADS in the full year of 2018 were both RMB 3.75.

(foreign language)

[Interpreted] So let's move on to our balance sheet and cash flow statement. As of the December 31, 2019, we have a combined cash and cash equivalents, restricted cash and short-term investment of RMB 1,345.4 million and short-term bank borrowing of RMB 490 million. And at the same time, an unutilized banking facilities of CNY 285 million. And we have net cash provided by operating activities in the full year of 2019 amounted to CNY 118.5 million.

(foreign language)

[Interpreted] In summary, we sustained our strong revenue growth in the fourth quarter while improving our profitability. By the end of the fourth quarter, our cash reserve far exceeded our short-term interest bearing borrowings and other liabilities. With our abundant cash reserve, steady cash inflow and effective cost control initiatives, we are well positioned to sustain our growth momentum and overcome the temporary challenges.

Looking into 2020, as we have previously mentioned, the early Lunar New Year holiday schedule and the coronavirus outbreak have reduced the effective off-line working hours for the real estate agents to just 30% of the prior year level. As a result, the epidemic has severely disrupted the real estate transaction in the first quarter of 2020. Consequently, we expect our revenue to be between RMB 270 million and RMB 300 million in the first quarter of 2020. As the COVID-19 situation continues to evolve, we currently have very limited visibility on the epidemic's impact to our business and the Chinese real estate market as a whole. As a result, this forecast only reflect our current and preliminary views on the market and operational conditions and which are subject to change.

(foreign language)

[Interpreted] And this concludes our prepared remarks for today. And operator, we are now ready to take questions.

(Operator Instructions) The first question today comes from Wei Xiong with UBS.

(foreign language) So my question is related to the impact of the coronavirus outbreak. As the property industry is facing short-term pressure, we saw a lot of property developers launch their online sales channels and many platforms, including ourselves, have launched more tools and services to help facilitate the property transactions online. So I wonder if management can comment on any change in the competitive landscape that you might see during this period? And how is our strategy different from our peers? And if we look at longer term, how will this outbreak impact the user habits of home buyers as well as the digitalization of the whole property industry.

(foreign language)

[Interpreted] Let us share our understanding of online sales places. We think that online sales places should be a fast-paced online interaction and transaction systems that aim to help the buyer to reserve their flat or the property they want to buy rather than a simple online displaying or listing place for the property. And on the -- COVID-19 breakout, many developers roll out their online sales office because of, out of their fear, of the slowing down in the sales, but most developer only consider their online sales price as kind of displaying tools during this epidemic. And following the impact of epidemic become less and less in China and in particular, the China Tier 1 city. The kind of fever of online sales place has become much less. It's kind of fading. And the developers are now returning to the off-line activities on their sales offices for their new product -- new project sales. And so that for us, and we will continue to upgrade the online sales office and -- but instead of just positioning the online sales place as a displaying tools, we consider it is a product for us to connect the buyer and the agent. And we help the agent to interact with the consumers -- with the buyers and familiarize them with the house and the property. We believe through better and more real-time online interactions, agents and the consumer can literally shorten the time spend, have a look on the house off-line and to finally close the deal. And so that to eventually improve the efficiency of off-line transaction to close the deal and the entire efficiency of a real estate agent.

(foreign language)

[Interpreted] And no matter how the competition in this profession evolves, there are some constant trends in the market, and we, Fangdd, has announced that we have 9 beliefs all over this trend. And the first, we believe that the real estate service market has entered into a golden age belief. We second believe that the penetration rate of the agents in new -- new housing market has increased rapidly, and the agency company in real estate transaction and agent are indispensable. And we believe that online plus off-line services for real estate transactions are an inevitable trend in the future. We also believe that the Chinese new agent model will let all be -- will grow in a material aspect and have many ways to improve. We believe that the efficiency of our independent platform transaction resource, collect resources, aggregate resources is much -- way more efficient than aggregate resources than by a single company. And we also believe that the technology research and development, continued investment to the research and development can help the agency company to improve their operation efficiency. We also believe that the qualification of the agent company and agents will become the core competitiveness of our agent-centric platform model. And we believe that the online combination of financial services and real estate transaction will achieve a new agent area. And based on these 9 beliefs, Fangdd will continue to be committed to creating a third-party independent marketplace without hiring a single agent. With the purpose of serving the agents, we will develop more innovative products and helping more agents to make -- do more business on our platform. So in terms of our planning, and it can be refined into 3 major aspects. First, we always focus on the online strategy of listing and broker, and we will drive -- we will continue to drive both the listing and the agents to grow simultaneously. And second, we will continue to increase the investment in research and development and continuously to improve the efficiency of the algorithm, matching both the buyer and the agents. And finally, we will develop more new products based on our existing ones to help the agents to realize more -- to materialize more value-added services other than commission-based one, and diversify the development of our own business as well.

The next question comes from Brenda Zhao with CICC.

(foreign language) So my question is also related to the coronavirus. Could management elaborate the impact of COVID-19 from Fangdd's operations? And what measures has been taken by Fangdd's to limit the negative impact?

(foreign language)

[Interpreted] Okay. The short-term impact of the epidemic on the industry mainly reflect the closure of off-line stores, the suspension of off-line marketing activities and the disruption of off-line personnel movements. And we noticed on both the developer side and the real estate agent side. And both making the developer and agent sales difficult to resume their work. For developers, there are problems of complicated and lengthy application procedure for resumption of their work subject to the government approval and the difficulty for the stuff to return to their posts. And for agencies, off-line agencies, the challenges are reflected on the off-line viewing of the property off-line transactions. And other operating efficiencies like making appointment with the seller, something like that, and so that the entire pace of the transaction is much slowed down during this epidemic.

(foreign language)

[Interpreted] However, during this epidemic, we also see all kind of opportunity to accelerate the pace to go online for all these transactions. In response to the urgent needs of developers and agents for online sales, the company quickly launched -- our company quickly roll out an online sales place. And opening up the developer system and the -- connecting to the agent stock system. And for example, we have improved -- we have provided a lot of further product like the upfront, small deposit for reserving a new house for the buyers so that the buyers can reserve a property without spending too much money. And so that this attracts both the listing and the agent to go online simultaneously, and we expect the -- so that we expect there will be an increased number of active agents in February and the -- increases by 64.4% year-over-year. And we expect the active agent reach a record high in March.

(foreign language)

[Interpreted] With the SaaS system connecting both the developers and the agent and the buyer, we also roll out our online streaming system, streaming video broadcast system, we have organized more than 1,000 online streaming for the agent. So that we empower the agent to do their business more online and track all the property listings online and complete -- close the deal online.

(foreign language)

[Interpreted] Okay. Just a moment. And in terms of our services provided to the real estate agents, we have improved our service, and we have rolled out a preferred alliance network project by identifying the best outstanding real estate agents and provides these best agents better online operation and tools and improve online operation capabilities. And we aim at helping these best and the preferred real estate agents to achieve their business diversification. And we believe that this product is very much welcomed by our real estate agent. We expect more than 10% of our agent base on our platform will join this alliance. And meanwhile, we have also opened up other value-added service product like the buyer side customer acquisition path to help the agent to acquire the buyers online and so that interact with the buyer online and more efficiently to convert into transactions. We have also improved the quick commission payment system so that to respond to the -- so that to improve the -- our experience of our agents so that they can collect their commission fee proceeds in a quicker manner, and we also connect the agent with the bank -- respective banks and so that the banks can grant credit lines to respective agent company or agencies, and so that they can provide more financial product to the agent based on the supply chain financial service.

(foreign language)

[Interpreted] Okay. Last but not least, in terms of our innovation -- innovative initiatives and other value-added service. We have provided a small upfront deposit for new housing so that the buyers can reserve a flat without spending too much money, and we help the developer to develop an online reservation system for their properties. And helping both the buyer and the agent online, we serve the property and provide service to the buyers. And on the secondary housing market, we have particularly respond to pain point of the secondary housing transaction. We have provided verified city level transaction service center, off-line center for the real estate agency to provide secondary transaction support and service. And in terms of other value-added service, we have also car parking product to -- provided to develop agent for them to sell so that they have multiple new business, new services, new products to sell, and it is also a good point for the company to make a better profit in the future and diversify the company's development of business and achieve a co-win position of the company and with the agent.

(foreign language)

[Interpreted] With -- notwithstanding, we have -- we do have impact from the outbreak of COVID-19. We believe following the impact of epidemic become slowed down in the second quarter we have -- we strongly believe that in the third and fourth quarter, we're going to recover in our growth of our business, and we will achieve a much better growth in our business as a whole for the whole year. Thank you. And any further questions?

You do not have any further questions at this time. So we will close the question-and-answer session, and we will also conclude the conference for today. Thank you for participating. You may now disconnect.

Thank you.

[Portions of this transcript that are marked

[Interpreted] were spoken by an interpreter present on the live call.]