Phoenix New Media Ltd (FENG) 2011 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Phoenix New Media Third Quarter 2011 Earnings Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session.

(Operator Instructions)

I must advise you that this conference is being recorded today, Tuesday, the 22nd of November, 2011. I would now like to hand the conference over to your first speaker today, Mr. Matthew Zhao, IR Manager of Phoenix New Media. Thank you. Please go ahead.

Thank you, operator. And thank you and welcome to Phoenix New Media Third Quarter 2011 Earnings Conference Call. I'm joined here today by our Chief Executive Officer, Mr. Shuang Liu; our Chief Operating Officer, Mr. Ya Li; and our Chief Financial Officer, Ms. Lily Liu.

For today's agenda, management will provide us with a review on the quarter and also include a Q&A session after the management's prepared remarks. The third quarter financial results and a webcast of this conference call are available at the Investor Relations section of www.ifeng.com. A replay of the call will be available on the website in a few hours.

Before we continue, I refer you to our Safe Harbor Statement in our earnings press release, which applies to this call as we will make forward-looking statements. Finally, please note that unless otherwise stated all figures mentioned during this conference call are in RMB.

With that, I would like to turn the call over to Mr. Shuang Liu, our CEO.

Thank you, Matthew. Good morning and good evening, everyone. Welcome to our third quarter 2011 conference call. I'm pleased to report a strong third quarter in terms of both user growth and financial performance.

For the third quarter, both revenue and net profit exceeded consensus estimates. Our total revenue grew by 81% year-over-year to RMB271 million, led by a 155% growth year-over-year in online advertising as well as an outperformance in paid services. Our adjusted net income increased by 110% to RMB61 million year-over-year.

Today, I would like to discuss four key topics with you, elaborating on this quarter's strong operational performance as well as areas we deem vital in further expanding our loyal user base, content, and ultimately our revenue performance. These include -- one, our user growth dynamics in comparison to our competitors; two, our differentiated content strategy; three, advertiser growth initiatives; and four, continued focus on our convergence platform efforts.

First, I would like to discuss our strong user growth dynamics. We believe that Phoenix New Media, with our strong core media DNA, stands out among China's top five portals with differentiated independence and high quality content beyond pure aggregations. We continue to expand significantly faster than any of China's major portals as measured by both user growth and revenue growth.

Our premium Phoenix branding, proprietary content, and service offerings have resulted in continued strong growth in our user metrics. Our number of daily unique visitors was up 71% year-over-year to over 18.7 million as of September 2011. Moreover, our broad and premium content offerings also stresses users [digness]. According to iResearch, we also enjoy the most average daily page views per user among top five portals as of September 2011.

In September 2011, after having broadened our content offering, our mobile portal, and developed mobile applications over the past two years, we have been able to attract over 13 million unique viewers, viewing over 160 million pages daily on their mobile devices. This represents a year-over-year increase of over [70 million] viewers and 313 million increase in page views. In addition, we continue to provide easy access of content through our apps, which have been downloaded over 10 million times on mobile devices.

With our large, attractive, and fast-growing mobile Internet user base as well as existing relationships with advertising clients and agencies, we believe that we are well positioned to capture the exciting opportunity in mobile advertising in China.

Secondly, focusing on our content strategy, our differentiated content offering truly stands out because of our unrivaled brand perception and outstanding editorial capabilities. We believe our editorial and the production team has inherited its strong media DNA from our parent Company, Phoenix TV, the most differential global Chinese language TV network.

Through this internal team, plus Phoenix TV's global reporting and over 500 third-party content partners, we continue to offer users balanced perspectives, real-time global news coverage, investigative reports, and in-depth analysis of events in compelling presentation formats.

For example, our most popular feature story this quarter was the July train crash accident in Wenzhou. Even this was a highly controversial move, our in-depth reporting coverage of train crash reached over 100 million page views within the week.

Another example was in commemoration of the September 11th 10-year anniversary we produced a special documentary called, "The US in China's Eyes." In this documentary, we interviewed a group of over 100 ethnically and socially diverse Chinese on their individual perspective of the US, providing a kaleidoscope of source and opinions around China.

For our video subject strategy, we continue to execute and grow rapidly by providing a unique combination of Phoenix TV news and information videos, third-party licensed content, as well as our own in-house-produced entertainment shows and documentaries. This combination of high demand content generated 169% year-over-year increase in daily unique visitors on video websites to over 7 million viewers in September according to the Company's data.

In September, we distributed a new web-based weekly talk show called "Let's Talk Honestly," or (inaudible - spoken in Chinese) in Chinese. We implanted popular TV show characteristics to attract more young audience. In the following quarter and 2012, four or five weekly-based in-house production programs will be filmed. We will continue to strengthen our in-house production efforts to further driving traffic and loyalty with our user and advertisers.

My third point focuses on our advertising clients. We continue to provide our advertisers with innovative and unique advertising solutions to improve their ROI. As a result, we continue to steadily increase the number of advertisers as well as our awarded share of their advertising budgets as evidenced by our 107% year-over-year increase in average revenue per advertiser.

Take an example, we cooperated with Honda to produce a mini-documentary series called "Return to the [Thunderstorm Frontline]." This was a follow-up program from a very well known documentary produced by Phoenix TV 10 years ago discussing environmental issues affecting China.

Not only did the new show increase public awareness about current environmental issues in China, but also for Honda it helped advance its brand perception as being socially responsible. We believe that with such creative initiative and programming we'll continue to enhance our advertiser's loyalty as well as our pricing power.

Lastly, our convergence platform strategy. We continue to involve and adapt to users' behavior by developing products which will further enhance the [simulus] nature of accessing and interacting throughout our convergence platform.

Our recently launched light-blogging platform, Kuaibo, which is a supplementary interactive service to our portal platform and mobile application, WeiShiTong, which brings together social interaction and TV programming, will be our efforts to push the media front forward involving with our audience while helping them access and interact with the desired content when, where, and on any device they choose.

In conclusion, as the leading Chinese new media Company, we'll continue to leverage our portal operations as well as invest intelligently into expanding our convergence platform with new products and services. We're confident that our strong brand recognition, independent news reporting, and preferred content will continue to drive our future growth with China's increasingly sophisticated Internet audience and demand from advertisers.

With that, I would like to pass the floor to Lily to go over our third quarter financial results.

Thank you, Shuang, and hello, everyone. Let me now take our through our third quarter 2011 financial results. The amounts mentioned here are all in RMB unless otherwise noted.

As Shuang headlined just now, I'm pleased to report to you our net advertising revenues grew by 156%, reaching RMB126 million, compared to the third quarter of last year. Our paid service revenues grew by 45% to nearly RMB145 million, compared to the third quarter of last year. As a result, our total revenues grew 81% to RMB271 million year-on-year, or 19% sequentially.

Our net advertising revenues were supported by growth in both number of advertisers as well as average revenue per advertiser, or ARPA. Our number of advertisers in the third quarter was 292, which represents a 24% increase from 236 in the third quarter of last year. ARPA, which is net revenue per advertiser, was RMB432,000 in the third quarter, as compared to RMB209,000 in the third quarter of last year, which represents an increase of 107%. This reflects our ability to garner a greater percentage of our advertisers' marketing dollars.

Our top five industry contributors for this quarter are -- auto, which contributed to approximately 22% of total net advertising revenues; eCommerce, which was 15%; and then financial services, food and beverages, and IT products.

For paid service revenues, we have two sub-segments -- mobile Internet value-added services, or what we call MIVAS, and video value-added services, or video VAS. Starting from this quarter, revenues from Internet value-added services was combined into revenues from MIVAS as it is expected to remain a very minor revenue sub-segment going forward.

MIVAS represented approximately 50% of total revenues in the third quarter, as compared to 63% in the third quarter of last year. MIVAS is mainly comprised of digital reading, mobile games, and WVAS businesses. In particular, WVAS represented approximately 36% of total revenues in the third quarter, versus 44% in the third quarter of last year. Video value-added services represented approximately 3.6% of total revenues in this quarter as opposed to 4.5% in the third quarter of last year.

For the third quarter, our non-GAAP gross margin, which is gross margin with the share-based compensation expenses of RMB1.2 million added back, was 44.3%, compared to 44.1% last year. The four components of cost of revenue are -- revenue sharing fees related to paid services; content costs, which includes all of our content staff, third-party content acquisition costs, as well as the fixed fee that we pay to our parent Company; bandwidth costs; and business tax.

On a GAAP basis, revenue sharing fees as a percent of total revenues remained stable at 32.9%, as compared to 32.6% last year, as a result of increasing payout ratio for paid services revenues despite declining contribution of paid service revenues to total revenues. Going forward, we expect that this percentage to remain relatively stable.

Our content-related costs as a percent of total revenues declined to 14%, from 15% last year, primarily -- actually, further demonstrating the leverage -- our ability to leverage content across our convergence platform.

Bandwidth costs as a percent of revenues increased from 3.3% last year to 3.5% this quarter, reflecting the strong traffic growth. And lastly, business tax as a percent of revenues increased to 5.7%, from 5.1% last year, reflecting higher contribution from advertising revenue growth, which has a higher business tax rate compared to paid services.

Moving on to our adjusted operating income, which added back share-based compensation expense of RMB3.5 million, increased by 55% to RMB49 million, from RMB32 million in the third quarter of last year.

Adjusted operating income margin was 18% in this quarter, as compared to 21% in the third quarter of last year, exceeding consensus estimates of 13% due to our continuing efforts to better leverage our operating expenses, especially in sales and marketing and R&D expenses, as well as demonstrating synergies from our convergence platform.

Adjusted sales and marketing expenses as a percent of revenues slightly increased to 13% this quarter, as compared to 12.8% in the third quarter of last year, due to additional expansion of our sales team.

Adjusted G&A expenses as a percent of revenue, increased to 6.7%, from 4.5% last year, reflecting increased expenses associated with being a public Company. And adjusted R&D expenses as a percent of revenue increased from 5.6% last year to 6.3% this quarter, reflecting increased investments in expanding our convergence platform.

Our GAAP net income increased by 131% to RMB56.8 million in the third quarter, as compared to only RMB24.6 million in the last third quarter. Adding back total share-based compensation expenses of RMB4.7 million, adjusted net income attributable to Phoenix New Media increased by 110% to RMB61.5 million in the third quarter, which also represents a 37% growth sequentially.

Adjusted net margin increased to 22.7% from 19.6% in the third quarter of last year. A part of our income from operations, adjusted net income also included a currency gain of RMB13.8 million.

Net income attributable to Phoenix New Media, excluding currency gain and share-based compensation expenses, was RMB47.7 million, an increase of 64% at year-over-year. Net margin, excluding the currency gain for the benefit of the investors, for the third quarter was 18%, excluding market consensus of 13%.

GAAP net income attributable to ordinary shareholders for the third quarter was RMB56.8 million, compared to a net loss of RMB62.7 million in the third quarter of last year. Fully diluted net income per ADS in the third quarter was RMB0.70, or $0.11, compared with a net loss per ADS of RMB1.54 in the third quarter of last year. Non-GAAP net income per ADS was RMB0.76, or about USD $0.12, per ADS, up by nearly 26% from the third quarter of 2010.

Lastly, I'd like to reiterate our business outlook for the fourth quarter and full year 2011. We're expecting our net advertising revenue to increase approximately 80% to 93%, to between RMB135 million to RMB145 million. Paid service revenues are expected to grow approximately 35% to 43%, to between RMB112 million to RMB119 million.

As a result, for the fourth quarter of this year, our total revenues are expected to be between RMB247 million to RMB264 million, up approximately 56% to 67% year-over-year. For the full year 2011, we expect our total revenues to grow 73% to 77%, or between RMB917 million to RMB934 million.

With that, I'll open the call for questions. Operator, please go ahead.

(Operator Instructions). Your first question comes from the line of Gillian Chung from Morgan Stanley. Please go ahead.

Hi. Hello, everyone. Thanks for taking my questions. My question, the first one, is would you please give us some color about your advertising outlook for the fourth quarter and next year? And also, would you please provide some color on Asia's -- on the pricing trend for next year? Thank you.

Okay. First -- hi. Good morning. Hi, Gillian. This is Ya Li. We provided guidance for the fourth quarter to grow at sequentially double-digit, actually. And compare that to, for example, our peers in the industry, the other portals, have seen a (inaudible) average and 2% sequential growth.

And that guidance is in line with current estimate and also it's over 90% year-to-year growth from the fourth quarter of 2010, which was 134% growth from the year before, the year 2009. So we think the growth rate for fourth quarter is pretty healthy.

And secondly, from the field visit to our clients and the attendance to industry conferences, we feel the current mood for -- actually, some market information from the TV auction, the Phoenix TV auction, and the provincial level of auctions for the next year, we feel that the industry for online advertising is still very healthy, mainly benefitting from the migration from the traditional media to online spending.

And particularly, I think there are some sectors, I know, that might be of concern by the industry, some for the eCommerce sector and the real estate sector. We have very low exposure to the real estate sector.

And for eCommerce right now, we do not have any group buying clients. And we have about 15% of advertising revenue from eCommerce sector; however, most of our clients are very solid, large scale companies. And what we deliver to them are not just clicks; we do deliver them with actual purchasing behavior based on our attractive user base and the branding, which provides enormous endorsement and adds to credibility by our authoritative nature of our premium brand.

So overall for next year's advertising we feel that the macroeconomic condition may vary; however, all of the factors driving our strong growth will keep us at speeds much higher -- growth rates much higher than other portals. And another fact that I want to point out is that our leadership in news video and also enormous amount of mobile Internet assets can provide enormous un-monetized -- or under-monetized ad inventory, which will drive growth for the next few years.

Your next question today comes from the line of Alan Hellawell from Deutsche Bank. Please go ahead, sir.

Yes. Hi, guys. I wanted to see if I could get a little more color on your main verticals and what your expectations are in areas such as autos and some of the other top five verticals going into next year. And then, would love just a little further color on the mobile business, particularly as it relates to the situation with the operators and whether we might expect marketing programs to come back on-stream and what that might mean for ifeng. Thank you.

Yes. Hi. Thanks, Alan. I think Lily mentioned that the top five verticals included the auto industry, the eCommerce financial service, IT products, and food and beverage. And all five of them add together to about 67% of our advertising revenue. And for the auto sector, it remained the same for the third quarter compared to the second quarter, which is at 22%. And because most of our cars are mid to higher end cars, I think they were affected by the policies less compared to the lower end cars.

And for eCommerce, as I commented before, we may provide fewer clicks than the other media; however, the actual purchasing behavior tracked by the clients indicate that we do provide better ROI based on our user's purchasing power and also the brand value helped them to improve their brand credibility.

And I think going forward we do see a strong growth potential from areas like luxury goods, which is migrating a lot of their budget from mostly print media advertising, like magazine advertising, to online as well as some higher end FMCG products.

And last, I think before I pass to Lily to comment on the wireless I want to add, I think that Gillian did ask about the pricing trend and I think I forgot to answer it initially. [Externally first] we gather information from the market intelligence and internally we decide on our pricing policy based on our traffic growth, our sell-through rates fluctuation, and also the actual results, the feedback we got from our advertisers.

And every year in the past few years we had increased our price twice a year, one on April and another one on October 1. This year, we did increase it twice. And the first time, on April 1, it was at 53%; the second was at 41%. This increase is not a simple increase of CPT pricing. It's an increase from CPT -- existing ad resources as well as newly added ad resources.

These two factors work together to increase what we call daily ad inventory value. That daily ad inventory value times the [sales rate] results in the ad revenue. So I think with our strong traffic growth, our increasingly influential brand acceptance, as well as the actual ad result provided to the clients, we feel that our ability to increase our pricing next year will still be much higher than comparing to the other portals.

Now I pass to Lilly to commend on the wireless.

Hi, Alan. Regarding the wireless business, as you can see, WVAS, which is a 2G product, right now is about 36% of our total revenue. For next year, we are expecting that we will maintain the scale of WVAS business. And so as a percentage of the total revenue, it will continue to decline for its contribution to total revenue.

And we expect more growth to come from, again, the 2G to 5G (inaudible) products. But most of these products are going to continue to be subject to fluctuations due to -- from policies from operators and their KPIs and et cetera. So related to mobile business, there's going to be healthy growth, although from quarter to quarter we continue to expect fluctuations.

Overall on the mobile business next year, we are very much focused on the 3G portal business and we believe we're really in the best position to further develop in mobile advertising, which I'm sure Ya can give better color.

In terms of mobile advertising, there are actually a few different formats. There's the in-app advertising, the SMS-based advertising, MMS-based advertising, and, not surprisingly, the WAP-based advertising, which we have really tried to put in some efforts this year. So we think that this part of the mobile advertising will continue to grow strongly next year overall.

Ya, do you have additional comments?

A couple of more points that I wanted -- and this is Shuang -- a couple of more points I want to add. Right now, we have over 10 million media application downloads; we're one of the top players in China. And also, we have our MMS service have reached more than 4 million telecom operators, VIP customers, that is a very good base to try the advertising-driven model.

And also, our WAP, our traffic right now is the number three ranking 3G -- number three ranking wireless portal, right behind Tencent and Sina. So, given all these very encouraging figures, we're very well positioned to take advantage of the pick-up of wireless advertising business.

Yes. I think that for year mobile advertising accounts for about -- for the third quarter, actually, accounted for about 30% of the net advertising revenue -- [3%]. And mobile Internet usage is expected to surpass PC Internet usage in the near future, actually, in China. I think advantageous (inaudible) and transaction potential mobile advertising growth rates is also expected to be higher than both PC Internet and video online media advertising in the next couple of years.

I think -- so we are working right now with interested direct clients, including some international brands as well as eCommerce companies at this time. Also with the mobile ad agencies and the mobile app technology providers, we are aggressively promote and shape the growth path of mobile advertising in China. I think it will be a huge driver for continuous long-term revenue growth.

Your next question today comes from the line of Steve Zhang from Macquarie. Please go ahead.

Hi. Thanks for taking my questions. Can you talk a little more about your progress with Kuaibo and where you are in the user base and where your projections are into the next year? Thanks.

Hi, this is Shuang. Actually, at this stage we are more focusing -- our top priority is focusing on the user experience to develop new features to satisfy our users' needs. So actually, the platform has run just for three months, so the number one priority is not given to the user development -- to the user growth. But we feel very confident about the growth we've been making.

So I can't give you the exact numbers of the users -- of the forecasted users of Kuaibo, but two things I think is important to note. First, the development of Kuaibo does not represent a strategic shift. We continue to focus on our core competence, our user-generated content, our convergence model and the leverage of our existing sources.

So for the social media products such as Kuaibo, it's a must-have product for portal, I think, for us to fulfill our existing users' needs. I also hope to use to reach the younger demographic. But the investment in Kuaibo is a staged and controlled investment. I'm very confident for the next whole year the investment in Kuaibo will now be more than RMB25 million.

(Operator Instructions). Your next question comes from the line of Chenyi Lu from Cowen & Co. Please go ahead.

Thank you. I have two questions. First question regarding the sales and marketing expense, this quarter as a percentage of total revenue declined quarter-over-quarter and then also on a GAAP basis declined [probably also] year-over-year. Can you give us a view as to a sales and marketing trend in 4Q and also for 2012? That will be my first question and then I'll follow-on after that. Thank you.

Hi, this is Lily. Yes, you're right. Sales and marketing expenses as a percentage of revenue declined when you look at compared to last quarter as well as compared to last year. This really just demonstrates the leverage that we have in our sales and marketing functions.

Going forward and next year, we will continue to expand our sales team slightly, a little bit, because actually if you look at our sales team overall, our sales team is still lean compared to other Internet companies at similar stages. But even with the further expansion of sales and marketing, we believe we will continue to see leverage in sales and marketing.

Can you give us --?

Let me add --. Chen, so let me add just one point. I think earlier Lily mentioned that the growth of advertising revenue is driven by -- 24% from number of advertisers and 107% from growth of ARPAs. That's a good indicator for -- because to grow the number of advertisers, we may need to add more sales staff. But to grow ARPA, it doesn't require additional sales staff and it's a more scalable model.

I think going forward in the long run that more revenue -- advertising revenue growth will come from the improvement in ARPA.

So the question I have is regarding as a percentage, and right now you are running GAAP basis about 13.6%. And then do you see the year-over-year improvement in 2012 given that -- what you just say?

Overall for year-over-year for 2012 versus 2011, we are expecting very small leverage.

So that means a very small improvement year-over-year?

Yes, a very small improvement.

Okay, great. Thank you. And then my next question will be in terms of gross margin. Again, this year gross margin compared to last year also see a slight improvement and then as we believe that -- as we project next year the small revenue contribution from the advertisement revenue.

So, can you give us a view as to the gross margin trend in 2012? Do you expect to see an improvement year-over-year? Thank you.

Yes, you're absolutely right. As advertising revenues continue to contribute a higher percentage of total revenues, we are expecting to see a pick-up in gross margin.

Okay, great. Thank you. That will be all my questions.

Your next question today comes from the line of [Yongtao Wang] from CICC. Please go ahead.

Hi. Thanks for taking my questions. My question is about your video business. Could you share some color on your video business data, something like (inaudible)? We all know that in Phoenix media we do have differentiated content offerings. Could you explain the video advertising revenues from total advertising revenues? Thanks.

Thank you. This is Ya. Let me address that. First, on data. For the month of September, our daily video unique visitor was about 7 million; with daily page views about 23 million -- and I'll give you a lot of details -- and on the daily videos viewed at about 35 million. And it showed a -- I think initially it was 170% daily unique visitor growth over a year ago.

And also, the advertising revenue for the first nine months showed almost 300% growth from a year ago, I think far exceeding the industry rate. I think we mentioned -- we have mentioned that we are -- our video strategy is differentiated. We focus to be the leader in news video and we provide short-form videos mainly consisting of news, micro-documentaries, interviews, talk shows, debate shows, which is different from the TV drama or movie-centered approach.

It helps us in terms of cost structure and also it incurs lower bandwidth cost, allows mobile consumption. And for video advertising revenue for the third quarter, it consisted of 19% of our net advertising revenue. We expect that to be exceeding 20% going to next year.

And because as we have witnessed that the TV drama and movie ad dollar has migrated a lot from the TV advertising to online advertising, but also for the TV programs. A lot of the advertising spending is on news-related programs. In the most recent Phoenix TV auction, seven out of its 13 bids -- programs open for bids were categorized as news-related. And also, the news programs -- news advertising on TV also enjoys pricing premium.

So we are here to be best positioned with our -- the unique differentiated news-focused content to not only benefit from the viewer's consumption behavior shift, but also the advertising spending shift from the TV to online format. So the video advertising will provide a very high growth driver going to next two years.

(Operator Instructions). Your next question comes from the line of Steve Zhang from Macquarie. Please go ahead.

Hi. This is a follow-up. Can you discuss if you have started talking about pricing for next year with your advertisers and how that's looking like? Thanks.

Hi. Thanks for the question. Yes, as I mentioned, our first increase for next year will be announced probably a month before April 1, the actual -- the first increase. And at this stage, based on the field visit and to our clients and also the market intelligence data, we are -- I think -- as I mentioned, we are still in the process of formulating the price increase models.

And we have shown slight sell-through increase in third quarter over second quarter. The second quarter, our sell-through rate was 20%; third quarter was 23%. The slight increase in sell-through rates also is positive for our ability to increase our pricing.

However, as I mentioned, there is some uncertainty in the market, especially for some eCommerce sectors and the macroeconomic condition in the world in capital markets. So we will not be able to define our rate hike until probably after the Chinese New Year and that going to next year.

But we feel that our traffic growth, which at 71% for the first nine months of this year, shows great support. And also, in November we also showed double-digit traffic growth over the September quarter, and that is very encouraging. All of this happened at a time when the social media, like Weibo, is vastly expanding its reach and influence.

(Operator Instructions). Your next question comes from the line of [Eric Shall] from [Fura Asset Management]. Please go ahead.

Hi. Thanks for taking my question. My question is can you talk a little bit about the number of customers you have acquired during the third quarter of this year, and what is the outlook for fourth quarter?

Hi. This is Ya. I think also in the opening remarks by Lily we mentioned that our advertiser grew by 23.7% to 292 in the third quarter from the 236 in the year before. And also, it was a growth from 268 in the second quarter. And as I mentioned, most of the revenue comes from the increase in the ARPA. And as we do not try to serve the entire 500 million Internet users, our focus is on quality advertisers the ARPA -- the market -- the largest share of the advertising clients, not just the overall number.

But if we do measure the overall number -- and our total number of advertisers was 319 in 2009, was 502 in 2010; and this year, for every quarter we have showed double-digit growth from the year before. So I think that we will still have great potential in expanding our client base while our -- and focusing on improving the ARPA to drive our advertising revenue growth.

(inaudible - microphone inaccessible).

Yes. And for fourth quarter, I think as we are able to expand further -- expand our content offerings into those vertical channels with great commercial value such as education, parenting, and, for instance, certain verticals like fashion, financials, we are expanding our sector -- advertising sector to some new sectors in order to get more advertisers. And so we remain optimistic about maintaining a double-digit growth in terms of number of advertisers.

(Operator Instructions). It seems that there are no further questions today. I would now like to hand the conference back to your presenters today. Please continue.

Thanks, operator. We have come to the end of our Q&A session and our conference call. Please feel free to contact us if you have any further questions. Thank you for joining us on this call. Have a good day. Bye-bye.

Ladies and gentlemen, this does conclude our conference call today. Thank you for participating. You may all disconnect.