Fangdd Network Group Ltd (DUO) 2021 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to FangDD Network Group Ltd.'s Third Quarter 2021 Earnings Call. (Operator Instructions) Please note that this event is being recorded.

女士們、先生們，感謝大家的支持，歡迎參加房多多網路集團有限公司 2021 年第三季財報電話會議。（操作員指示）請注意，該事件正在被記錄。

I'd now like to turn the conference over to your host speaker today, Ms. Linda Li, the company's Director of Capital Markets. Please go ahead, Linda.

現在，我想將會議交給今天的主持人、公司資本市場總監 Linda Li 女士。請繼續，琳達。

Thank you, operator. Hello, everyone, and thank you all for joining us on today's call. The company has announced its third quarter 2021 financial results today and earnings release is now available on our company's IR website. Today, you will hear from our co-CEO, Mr. Xi Zeng, who will start the call with an overview of the current industry dynamics and the details of our development strategies in the quarter. Afterwards, our CFO, Mr. Jiaorong Pan, will go over our financials before we open up the call for questions. Our management team will deliver their remarks in Chinese, and I will provide English translation.

謝謝您，接線生。大家好，感謝大家參加今天的電話會議。該公司今天公佈了 2021 年第三季的財務業績，收益報告現已在我們公司的 IR 網站上發布。今天，您將聽到我們的聯合執行長曾曦先生的講話，他將首先概述當前的行業動態以及本季的發展策略細節。之後，我們的財務長潘教榮先生將介紹我們的財務狀況，然後我們再開始提問。我們的管理團隊將以中文發表講話，我將提供英文翻譯。

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

在我們繼續之前，我想請您參閱我們收益新聞稿中適用於本次電話會議的安全港聲明，並且我們將發表前瞻性聲明。另請注意，我們今天將討論非公認會計準則指標，這些指標在我們的收益報告和向美國證券交易委員會提交的文件中得到了更徹底的解釋和協調，並與根據公認會計原則報告的最具可比性的指標相協調。說完這些，我現在將電話轉給我們的聯合執行長習曾先生。先生，請繼續。

(foreign language)

（外語）

[Interpreted] Hello, everyone, and welcome to our third quarter 2021 earnings call. I would like to start the call with reviewing some of the changes and opportunities we observed in the real estate market during the quarter.

[口譯] 大家好，歡迎參加我們 2021 年第三季財報電話會議。我想先回顧一下我們在本季觀察到的房地產市場的一些變化和機會。

First, the real estate market has rapidly cooled off and expected to continue its downward trend in the short term.

一是房地產市場快速降溫，預期短期內仍延續下行趨勢。

During the third quarter, impacted by the macroeconomic regulation and the tightening of the mortgage loans, the real estate market has rapidly cooled off. According to the National Bureau of Statistics, the total volume of the real estate transactions in China decreased by 14.1% year-over-year to RMB 4.2 trillion in the third quarter of 2021. According to data released by the Real Estate Industry Digitization Research institution, total transaction volume for resale property in the tier-1 cities decreased by 32% year-over-year in the third quarter of 2021. The most notable year-over-year decrease occurred in Shenzhen, which saw an 81% decline in total transaction volume for resale property during the third quarter of 2021. Market sentiment has become more bearish, and the developers' credit risk has been revealed to the market. In the short term, the authorities have emphasized principle of "keeping the real estate market stable and protecting the legitimate rights and interest of housing consumers", accelerating the launch of the pilot property tax reform schemes. This suggests that the control and the regulation measures won't be relaxed significantly, and we believe that the near-term focus of the government remains on stabilization of real estate market expectations. As a result, we believe the real estate market will continue its downward trajectory in addition as real estate developers are entering peak season for repayment of overseas debts, their credit risk will further intensify.

三季度，受宏觀調控、房貸收緊等影響，房地產市場快速降溫。根據國家統計局數據顯示，2021年第三季度，全國房地產成交總額4.2兆元，年減14.1%。根據房地產行業數位化研究機構發布的數據顯示，2021年第三季一線城市二手房總成交量較去年同期下降32%。年減最明顯的是深圳，2021 年第三季該市轉售房產總成交量下降了 81%。市場情緒進一步轉為悲觀，開發商的信用風險開始向市場顯現。短期內，政府強調“保持房地產市場穩定，保護住房消費者合法權益”，加快推進房產稅改革試點。這顯示調控措施不會大幅放鬆，我們認為政府短期的重點仍是穩定房地產市場預期。因此我們認為房地產市場仍將延續下行趨勢，加上房地產開發商進入海外債務償還旺季，其信用風險將進一步加劇。

Second, real estate developers increased investment in digital transformation despite the downward trend and the competitive landscape continues to evolve.

二是房地產企業逆勢上行、競爭格局持續演變，增加數位轉型投資。

With the era of irrational expansion driven by high leverage coming to the end. Differentiation among the developers continues to increase, and the industry faced declining margins and increasing competitions with high inventory levels. Most real estate developers have realized that refined operations and management through digitalization is a long-term solution. According to the data released by the TMTPost, more than 90% of the real estate developers participating in the survey increased investment in digital transformation in 2021. 26% of these developers increased their investment in digital transformation by more than 30% year-over-year. This data indicates that digital transformation remains an important area of investment for developers. However, digital transformation of the real estate industry is still at an early stage of development and the competitive landscape is far from stable, limited by the multiple factors such as transformation model options, the fundamental characteristics of the management and the availability of the talent.

高槓桿驅動的非理性擴張時代即將結束。開發商之間的分化不斷加大，產業利潤率下降，競爭加劇，庫存水準較高。大多數房地產商已經意識到，透過數位化實現精細化營運和管理是長遠之計。鈦媒體發布的數據顯示，2021年，超九成參與調查的房地產企業加大了數位轉型的投資。其中26%的開發商在數位轉型方面的投資年增了30%以上。這些數據表明，數位轉型仍然是開發商的重要投資領域。然而，房地產產業數位轉型尚處於早期發展階段，競爭格局遠未穩定，受到轉型模式選擇、管理根本特徵、人才可用性等多重因素限制。

Third, under the current context of "housing is for living in, not for speculation". Competition in the new property distribution market has intensified, driven by excessive supply. Meanwhile, we are seeing new market opportunities emerge from the real estate asset management service sector.

三是當前「房子是用來住的、不是用來炒的」大背景下。供給過剩導致新房經銷市場競爭加劇。同時，我們看到房地產資產管理服務領域正在湧現新的市場機會。

On July 2, the General Office of the State Council issued the Opinion on Accelerating the Development of Affordable Rental Housing. It is stated that idle and inefficient commercial offices, factories, warehousing and other nonresidential buildings are allowed to be converted into affordable residential housing. It also encouraged specialized large-scale residential leasing enterprise to operate and manage affordable residential housing. According to the Wind database, ROE of A-share listed companies in China was 11.25% in 2020, marking a historical low since the financial crisis in 2018. As a result, real estate developers have an urgent need for asset revitalization to retrieve fund and stabilization of the ROE. In addition, buyers are becoming more demanding in terms of service qualities and transaction transparency. As a result, under the current context that "housing is for living in, not for speculation", more innovation service will emerge as a result of the evolving needs of the government, developers and consumers, which will drive product innovation and development of diversified service for the real estate assets, professional operations with value-added services and more.

7月2日，國務院辦公室印發《關於加速發展保障性租賃住房的意見》。規定允許將閒置、低效率的商業辦公室、工廠、倉庫等非住宅建築改建為經濟適用住宅。鼓勵專業化大型住宅租賃企業經營管理保障性住宅。根據Wind資料庫，2020年中國A股上市公司淨資產收益率（ROE）為11.25%，創下2018年金融危機以來的歷史新低。因此，房地產開發商迫切需要進行資產盤活，以回收資金，穩定ROE。此外，買家對服務品質和交易透明度的要求也越來越高。因此，在當前「房子是用來住的、不是用來炒的」大背景下，隨著政府、開發商、消費​​者等各方面需求的不斷變化，將會有更多的創新服務出現，推動房地產資產服務產品創新、多元化發展、專業化運營、增值服務等。

In a rapidly changing market environment, we continue to closely follow the evolving regulatory policies and compliance requirements to proactively adapt to change in the real estate market and agent service sector, implementing a number of initiatives, properly adjust our strategic direction. Our initiatives include proactively reducing the distribution of new properties, enhancing risk control efforts, focusing on our SaaS business on key accounts and establishing a benchmark and quickly exploring the real estate asset service business. While maintaining the efficiency of our operations, we have adjusted our business scale, layout and the strategic direction to improve the robustness and compliance of our business operations. At the same time, we have continued exploring growth opportunities for the future.

在快速變化的市場環境中，我們繼續密切關注不斷變化的監管政策和合規要求，主動適應房地產市場和經紀服務行業的變化，實施多項舉措，適當調整策略方向。我們的措施包括主動減少新房屋佈局、加強風險管控、聚焦大客戶SaaS業務和樹立標竿、快速拓展不動產資產服務業務等。我們在維持經營效率的同時，調整業務規模、佈局和策略方向，提高業務營運的穩健性、合規性。同時，我們也持續探索未來的成長機會。

First, we adhere to maintaining compliant operations and focus on cost control. In response to government's regulations on data security and privacy, we migrated all our data to Huawei Cloud in the third quarter. We also conducted comprehensive rectification of our current products based on the regulatory requirements and achieved full compliance in our management of user and agent information. For agent services on our platform, we improved operational capabilities for agents to serve the needs of focused market and customers through a couple of measures. On one hand, we conducted a comprehensive evaluation and optimization of our organizational and team structure. On the other hand, we enhanced cooperation and improved resources integration between different regions and areas. However, due to the downward impact of the overall real estate industry, the total number of closed-loop agents on our platform was 10,600 in the third quarter.

一是堅持合規經營，狠抓成本控制。為了回應政府對資料安全和隱私的規定，我們在第三季將所有資料遷移到華為雲端。並根據監管要求對現有產品進行了全面整改，用戶和代理商資訊管理實現全面合規。對於平台代理人服務，我們透過多項措施提升代理人營運能力，服務重點市場和客戶需求。一方面，我們對組織和團隊結構進行了全面的評估和最佳化。另一方面，加強不同區域、不同領域之間的合作，提高資源整合水準。但受房地產整體產業下檔影響，第三季我們平台閉環經紀人總數為1.06萬名。

Second, in terms of new property distribution business, we proactively reduced of the scale of the new property distribution and enhanced our risk control. We focused on the business development in the Yangtze River Delta, Guangdong-Fujian-Zhejiang coastal city cluster, and other key provincial capital cities. At the same time, we trimmed down our service team in non-core cities. For cooperation with developers, we also take initiatives to access credit risk, and focus on the reliable developers while ruling out high-risk developers. During our cooperation, we rated developers' creditworthiness and marked corresponding provision for bad debt in order to control credit risk. Following the conclusion of our cooperation, we implement our pre-established internal procedures to manage developers with high credit risk, with the aim of the mitigating the risk of default. We have developed a project evaluation index system based on the multiple criteria, including developer strengths, project gross margin, receivable cycle, commission split and so on. Based on the evaluation results, we selected premium projects with high productivity and profitability and allocate additional resources towards human resources, capital and technology for key projects. Due to the impact of the market downturn and our business model adjustments, closed-loop GMV of new property was RMB 9.3 billion and the number of new property projects served was 1,815 in the third quarter of 2021.

二是在新貨分銷業務方面，主動壓縮新貨分銷規模，加強風險管控。重點佈局長三角、粵浙沿海城市群以及其他重點省會城市業務拓展。同時，我們精簡了非核心城市的服務團隊。對於與開發商的合作，我們也主動評估信用風險，並專注於可靠的開發商，並排除高風險的開發商。在合作過程中，我們對開發商的資信進行評級，並提列相應的壞帳準備，控制信用風險。合作結束後，我們依照預先設定的內部流程對信用風險較高的開發商進行管理，以降低違約風險。我們根據開發商實力、專案毛利率、回款週期、佣金分成等多項標準制定了專案評估指標系統。根據評估結果，優選生產效率高、獲利能力強的優質項目，對重點項目加大人力、資金、技術的投入。受市場下行及業務模式調整影響，2021年第三季新地產閉環GMV為93億元，服務的新地產項目數為1,815個。

In terms of upgrading our business model for new properties, we established business capabilities for asset management service. We gradually explored possibilities of serving multiple categories in real estate assets. We have also continued to improve the capabilities of our personnel in business development capital, sales and risk control to promote an implementation of high-quality projects.

在新業態業務模式升級方面，建立資產管理服務業務能力。我們逐步探索服務房地產資產多類別的可能性。持續提升業務拓展資金、銷售、風控人員能力，推動優質專案落實。

Third, for our property SaaS solution business, we focused on key accounts and establishing a benchmark. During the third quarter, we further developed our cooperation with Gemdale and integrate Gemdale's internal sales management system with our to-C and to-B apps. Following this system integration, we launched Gemdale official flagship stores in our to-C app. This store aggregates real-time information to Gemdale's properties for new -- for sales and syncs with its internal system, allowing us to provide precision online marketing service by leveraging our platform, big data and analytics. At the same time, Gemdale is able to manage customers through its self-operated system, thus reducing the transition cost of cooperating with us by means of our SaaS solution. And as of the end of the third quarter, Gemdale had launched 30 property projects using our SaaS solution digital marketing service. In addition, we added instant messaging and telephone consultation features to our SaaS system during the third quarter, enabling seamless connection between the home buyers, agents and property sales galleries. In the third quarter, our revenue from SaaS solution business increased by 38.8% sequentially to RMB 3.2 million.

第三，房地產SaaS解決方案業務，我們聚焦大客戶，樹立標竿。第三季度，我們進一步發展了與金地集團的合作，將金地集團的內部銷售管理系統與我們的to-C和to-B應用程式整合。這次系統對接之後，我們在to-C應用中推出了金地官方旗艦店。該門市將金地旗下物業的即時新店及銷售資訊進行匯總，並與內部系統同步，讓我們能夠利用我們的平台、大數據和分析技術，提供精準的線上行銷服務。同時，金地可以透過自營系統來管理客戶，從而減少透過SaaS解決方案與我們合作的轉型成本。截至第三季末，金地已有30個地產專案採用我們的SaaS解決方案數位行銷服務。此外，我們在第三季在SaaS系統中增加了即時通訊和電話諮詢功能，實現了購屋者、經紀人和房地產銷售中心之間的無縫連接。第三季度，我們的SaaS解決方案業務營收季增38.8%至人民幣320萬元。

Fourth, we are quickly reacting to the rapid cooldown of the property resale market in the 2 -- in 2 ways. On one hand, we implemented loss control measures to substantially reducing the scales of Yuancui business. On the other hand, we continued to execute our innovative asset service model in the resale property transaction service space through our Tinghaozhu product. We have sustained healthy development in this segment through accelerating property sales and optimizing our risk control model. Under the impact of the market environment, our closed-loop resale property transaction was GMV RMB 5.9 billion in the third quarter.

第四，我們對2019年房地產二手車市場的快速降溫做出了快速反應——從兩個方面。一方面，落實控損措施，大幅壓縮元萃業務規模。另一方面，我們持續透過聽好住產品在轉售房地產交易服務領域實施創新資產服務模式。我們透過加快房地產銷售和優化風險控制模型，使該分部保持健康發展。受市場環境影響，我們第三季閉環二手房交易GMV為59億元。

Lastly, please allow me to share an update on our current outlook and expectations. In the fourth quarter, our overall business development will continue to be based on our platform for agents. In terms of our SaaS solutions business, we will continue to deepen our cooperation with key accounts to unleash our value in digital marketing after the system integration.

最後，請容許我分享我們當前前景和期望的最新情況。第四季度，我們整體業務的發展還是會以代理商平台為中心。在SaaS解決方案業務方面，系統整合後我們將繼續深化與大客戶的合作，釋放我們在數位行銷方面的價值。

In terms of new property asset service, we will continue to execute our strict risk control measures to manage developer credit risk for our new property distribution business. At the same time, we will continue to develop our asset service for real estate categories. We will continue to revitalize our assets, increase the scale of the project we serve, and drive improvement in our financial performances.

在新房屋資產服務方面，我們將繼續執行嚴格的風險控制措施，管理新房屋分銷業務的開發商信用風險。同時，我們也會持續拓展房地產類別的資產服務。我們將持續盤活資產，擴大服務項目規模，推動財務績效改善。

In terms of the resale property, we will maintain a reasonable pace of business development under the current marketing environment and ensure a sufficient supply of the secondhand -- of the resale housing as we refine our business model to achieve steadier development.

二手房業務方面，我們將根據當前市場環境，合理安排業務發展節奏，確保二手房供應充足，並持續優化業務模式，並實現更穩健的發展。

Due to the downward trend of the industry environment, we face great uncertainty in the fourth quarter performance. As a result, we expect our revenue in the fourth quarter to be between RMB 130 million and RMB 150 million. This forecast only reflects our current preliminary view on the market and operational conditions, which are subject to change.

由於產業環境呈現下行趨勢，我們第四季的業績面臨很大的不確定性。因此，我們預期第四季的營收將在人民幣1.3億元至人民幣1.5億元之間。此預測僅反映我們目前對市場和營運狀況的初步看法，可能會發生變化。

With that, I will turn the call over to our CFO, Mr. Jiaorong Pan to review this quarter's financial results.

接下來，我將把電話轉給我們的財務長潘教榮先生來審查本季的財務業績。

(foreign language)

（外語）

[Interpreted] Thank you, Xi. Now, I will provide a closer look at our third quarter financial results in 2021. Before I begin, please note that all numbers are in RMB terms unless otherwise noted.

[口譯] 謝謝習近平。現在，我將仔細介紹我們 2021 年第三季的財務表現。在我開始之前，請注意，除非另有說明，所有數字均以人民幣計算。

Revenue in the third quarter of 2021 decreased by 57.8% to RMB 169.2 million from RMB 401.4 million in the second quarter of 2021. The sequential decrease was mainly due to several factors. First, the real estate market continued downturn led to a 48.5% sequential decrease in total closed-loop GMV facilitated on our platform. And second, our strategic adjustments to our business scale to manage the downturn in the real estate transactions market. For the new property transaction service business, we strategically reduced our business scale to avoid vicious competition. For the resale property transaction service business, we substantially reduced our Yuancui business to avoid further losses in the third quarter.

2021年第三季營收較2021年第二季的4.014億元人民幣下降57.8%至1.692億元。環比下降主要由於多種因素。首先，房地產市場持續低迷導致我們平台的總閉環GMV環比下降48.5％。第二，我們對業務規模進行策略性調整，以因應房地產交易市場的低迷。對於新的房產交易服務業務，我們策略性地縮減業務規模，以避免惡性競爭。對於二手房交易服務業務，我們大幅減少了元萃業務，以避免第三季進一步虧損。

Despite the current challenges, we continued to optimize revenue mix and prioritized the generation of revenue from value-added services and new business initiatives, including our SaaS solution for various platform participants. Revenue from SaaS solution increased by 38.8% to RMB 3.2 million in the third quarter of 2021 from RMB 2.3 million in the second quarter of 2021. The increase was primarily attributable to an increase in the number of new property projects, which we provide SaaS solutions for developers.

儘管面臨當前挑戰，我們仍持續優化收入結構，並優先透過增值服務和新業務計畫創造收入，包括為各平台參與者提供的 SaaS 解決方案。2021年第三季SaaS解決方案營收為人民幣320萬元，較2021年第二季的人民幣230萬元成長38.8%。成長主要歸因於我們為開發商提供 SaaS 解決方案的新房地產項目數量的增加。

Cost of revenue in the third quarter of 2021 decreased by 51.8% to RMB 163.2 million from RMB 338.9 million in the second quarter of 2021. The decrease was primarily due to the significant drop in revenue for both new property and resale property transaction services, which resulted in a decrease in the commission fees payable to agents for their services rendered.

2021年第三季營收成本較2021年第二季的3.389億元人民幣下降51.8%至1.632億元。減少的主要原因是新建房產及二手房產交易服務收入大幅下降，導致支付給代理商的佣金減少。

Gross profit in the third quarter of 2021 decreased by 90.4% to RMB 6 million from RMB 62.5 million in the second quarter of 2021. Gross margin in the third quarter of 2021 decreased to 3.5% from 15.6% in the second quarter of 2021. The decline was mainly due to our strategic reduction of our Yuancui business to cut losses and our strategic adjustments to reduce our business scale in resale property transactions and new property transactions.

2021年第三季毛利較2021年第二季的6,250萬元下降90.4%至600萬元。2021年第三季的毛利率從2021年第二季的15.6%下降至3.5%。下降主要由於我們策略性地壓縮元萃業務以減少虧損，以及策略調整減少二手房產交易和新房產交易的業務規模。

Operating expenses in the third quarter of 2021, which included RMB 11.7 million in share-based compensation expenses, increased by 54.3% to RMB 316.4 million from RMB 205.1 million in the second quarter of 2021, which included RMB 11.1 million in share-based compensation expenses.

2021年第三季的營業費用包括人民幣1,170萬元的股權激勵費用，較2021年第二季的人民幣2.051億元（包括人民幣1,110萬元的股權激勵費用）增加54.3%至人民幣3.164億元。

Let's take a look at the breakdown of operating expenses for the third quarter of 2021.

讓我們來看看2021年第三季的營業費用明細。

Sales and marketing expenses in the third quarter of 2021 decreased to RMB 8.6 million from RMB 13.1 million in the second quarter of 2021. The decrease was primarily due to optimization of staff composition for the sales department by reducing spending on marketing activities related to new property transaction services, our reduction of the Yuancui business, and our increased focus on new SaaS solutions and other value-added services offered to various platform participants in the third quarter of 2021.

2021年第三季銷售及行銷費用從2021年第二季的人民幣1,310萬元減少至人民幣860萬元。減少的主要原因是，2021年第三季度，我們優化了銷售部門的人員結構，減少了與新房產交易服務相關的營銷活動支出，縮減了緣翠業務，並更加註重為各平台參與者提供新的SaaS解決方案和其他增值服務。

Product development expenses in the third quarter of 2021 was RMB 40.3 million compared to RMB 64.5 million in the second quarter of 2021. This decrease was attributable to a decrease in personnel-related expenses following our decision to halt further investment in research and development for Yuancui business and heightened focused on the research and development for our value-added services and SaaS solutions.

2021 年第三季的產品開發費用為人民幣 4,030 萬元，而 2021 年第二季為 6,450 萬元。這項減少是由於我們決定停止對元萃業務研發的進一步投資，並更加專注於增值服務和SaaS解決方案的研發，導致人員相關費用減少。

General and administrative expenses in the third quarter of 2021 was RMB 267.5 million compared to RMB 127.5 million in the second quarter of 2021. This increase was mainly due to 2 reasons: First, was the increase in provision of impairment of assets, such as accounts receivable due from developers and other accounts receivable of project deposits to RMB 201.9 million in the third quarter of 2021 from RMB 79.1 million in the second quarter of 2021. Second, based on our judgment regarding the continued downturn in the real estate transaction market, we reduced the redundant staff to improve our operating efficiency and optimized our composition of our staff structure, which increased the current quarter's severance expenses for the purpose of long-term expense savings.

2021 年第三季的一般及行政費用為 2.675 億元，而 2021 年第二季為 1.275 億元。此成長主要有兩個原因：第一，應收開發商款項、專案定金等其他應收款等資產減損準備從2021年第二季的人民幣7,910萬元增加至2021年第三季的人民幣2.019億元。第二，基於對房地產交易市場持續低迷的判斷，為提高經營效率，我們進行了裁減冗餘員工，並優化了員工結構，增加了本季度的遣散費用，以節省長期費用。

Net loss was RMB 355 million in the third quarter of 2021, which included the impairment of accounts receivable due from developers because of their tighter financial conditions, as well as the impairment of goodwill, intangible assets and accounts receivable due from the individual and the result of the company's substantial reductions of Yuancui business under the situation of continuous downturn of the resale property transaction market. This is compared to a net loss of RMB 139 million in the second quarter of 2021.

2021年第三季淨虧損為人民幣3.55億元，其中包括因開發商財務狀況收緊而對應收開發商帳款提列的減損損失，以及在二手房交易市場持續低迷的情況下公司大幅削減元萃業務導致的商譽、無形資產和個人應收帳款提列的減損損失。相比之下，2021 年第二季的淨虧損為 1.39 億元。

Non-GAAP net loss was RMB 343.4 million in the third quarter of 2021, compared to a non-GAAP net loss of RMB 127.9 million in the second quarter of 2021.

2021年第三季非公認會計準則淨虧損為人民幣3.434億元，2021年第二季非公認會計準則淨虧損為人民幣1.279億元。

Basic and diluted net loss per American Depositary Share in the third quarter of 2021 was both RMB 4.13. In comparison, our basic and diluted net loss attributable to ordinary shareholders per ADS in the second quarter of 2021 was both RMB 1.64. Each ADS represents 25 of our Class A ordinary shares.

2021年第三季每股美國存託憑證基本及攤薄淨虧損均為4.13元人民幣。相較之下，2021年第二季我們歸屬於普通股股東的每股美國存託憑證基本淨虧損及攤薄淨虧損均為人民幣1.64元。每股 ADS 代表 25 股 A 類普通股。

As of September 30, 2021, we had cash and cash equivalents, restricted cash and short-term investment of RMB 632.9 million, short-term bank borrowing of RMB 220.2 million and un-utilized bank facilities of RMB 180 million. We contributed to keep our cash flow at safe level by increasing the cash inflow and reducing the cash outflows to improve our abilities of going concern. In the third quarter of 2021, net cash used in operating activities decreased to RMB 12.8 million from RMB 53 million in the second quarter of 2021, highly decreased about RMB 40.2 million.

截至 2021 年 9 月 30 日，我們擁有現金和現金等價物、受限現金和短期投資人民幣 6.329 億元、短期銀行借款人民幣 2.202 億元以及未使用的銀行信貸額度人民幣 1.8 億元。我們透過增加現金流入、減少現金流出，將現金流維持在安全水平，提升持續經營能力。2021年第三季度，經營活動所用淨現金由2021年第二季的5,300萬元減少至1,280萬元人民幣，大幅減少約4,020萬元人民幣。

This concludes our prepared remarks for today. Operator, we are ready to take questions.

今天的準備發言到此結束。接線員，我們準備好回答問題了。

(Operator Instructions) We have no further questions at this moment. Ladies and gentlemen, that concludes our conference call for today. Thank you all for your participation. You may disconnect your lines now.

（操作員指示）目前我們沒有其他問題。女士們、先生們，今天的電話會議到此結束。感謝大家的參與。現在您可以斷開您的線路了。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[本記錄中標記為[已翻譯]的部分由現場翻譯人員朗讀。