Kingsoft Cloud Holdings Ltd (KC) 2022 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Kingsoft Cloud Fourth Quarter and Full Year 2022 Earnings Conference Call. After the speaker's presentation, there will be a question-and-answer session. (Operator Instructions) Please be advised today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Nicole Shan, IR Manager. Please go ahead.

您好，感謝您的支持。歡迎參加金山雲2022年第四季及全年業績電話會議。演講者演講結束後，將有問答環節。 （操作員指示）請注意，今天的會議正在錄音。現在，我想將會議交給今天的第一位發言者，投資者關係經理 Nicole Shan。請繼續。

Thank you, operator. Hello, everyone, and thank you for joining us for today's Kingsoft Cloud fourth quarter and full year 2022 earnings release was distributed earlier today and is available on our ir.ksyun.com, as well as on the Globe Newswire services. On the call today from Kingsoft Cloud, we have our West Chairman and CEO, Mr. Tao Zou; and our CFO, Mr. Henry He. Mr. Zou will review our business strategy, operations and the company highlights, followed by Mr. He, who will discuss the financials and the guidance. They will be available to answer your questions during the Q&A session that follows.

謝謝您，接線生。大家好，感謝您參加今天的金山雲 2022 年第四季度和全年收益報告，該報告已於今天早些時候發布，可在我們的 ir.ksyun.com 以及 Globe Newswire 服務上查閱。今天金山雲的電話會議上，我們邀請到了西部董事長兼執行長鄒濤先生；以及我們的財務長 Henry He 先生。鄒先生將回顧我們的業務策略、營運狀況和公司亮點，然後何先生將討論財務狀況和指引。他們將在隨後的問答環節中回答您的問題。

There will be consecutive interpretations. All interpretations are for your convenience and reference purpose only. In case of any discrepancy, management's statement in original language will prevail.

將會有連續翻譯。所有解釋僅供您方便和參考。 若有任何差異，以管理層的原始聲明為準。

Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions and related to on that well known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements.

在我們開始之前，我想提醒您，本次電話會議包含經修訂的《1934 年證券交易法》第 21E 條和《1995 年美國私人證券訴訟改革法》定義的前瞻性陳述。這些前瞻性陳述是基於管理層當前的預期以及當前的市場和營運條件，並與已知或未知的風險、不確定性和其他因素有關，所有這些因素都難以預測且其中許多超出了公司的控制範圍，可能導致公司的實際結果、業績或成就與前瞻性陳述中的結果、業績或成就存在重大差異。

Further information regarding this and other risks, uncertainties or factors are included in the company's filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise except as required under applicable law.

有關此風險和其他風險、不確定性或因素的更多資​​訊包含在公司向美國證券交易委員會提交的文件中。除適用法律要求外，本公司不承擔因新資訊、未來事件或其他情況而更新任何前瞻性聲明的義務。

Finally, please note that unless otherwise stated, all financial figures mentioned during this conference call are denominated in RMB. It's now my pleasure to introduce our Vice Chairman and CEO, Mr. Zou. Please go ahead.

最後，請注意，除非另有說明，本次電話會議中提到的所有財務數據均以人民幣計價。現在我很高興介紹我們的副董事長兼執行長鄒先生。請繼續。

[Interpreted] Hello, everyone, and thank you all for joining Kingsoft Cloud's Fourth Quarter and Fiscal Year 2022 Earnings Call. 2022 was an extraordinary year in many ways, and we're pleased to have successfully navigated the various challenges we faced in the complex and dynamic environment.

[口譯]大家好，感謝大家參加金山雲2022財年第四季及年度財報電話會議。 2022 年在許多方面都是不平凡的一年，我們很高興能夠成功應對複雜多變的環境中所面臨的各種挑戰。

As I took on the CEO role, we have remained committed to our strategy for high-quality, sustainable growth while continuing to building success based on technology. We have also implemented cost reduction and efficiency initiatives, which have resulted in steady improvements to our profitability.

在我擔任執行長期間，我們始終致力於高品質、可持續成長的策略，同時繼續以技術為基礎取得成功。我們也實施了降低成本、提高效率的舉措，從而使我們的獲利能力穩定提高。

I am pleased to highlight some of our notable results with it. In Q4, we saw a remarkable increase in our adjusted stock profit, reaching RMB 169 million, representing a fourfold increase year-over-year. Adjusted gross margin increased to 7.9%, rising by a significant 6.7% from the same period last year.

我很高興地強調我們所取得的一些顯著成果。第四季度，我們的調整後股票利潤大幅成長，達到1.69億元，年增4倍。調整後毛利率上升至7.9%，較去年同期大幅上升6.7%。

Furthermore, our net operating cash inflow amounted to RMB 370 million, marking the third consecutive quarter of positive net operating cash flow since Q2 of last year. We also recorded a quarterly free cash inflow for the first time, which is an important milestone for us. These impressive results demonstrated our strong business resilience and provided a solid foundation for us to stabilize, restart and emerge even stronger.

另外，公司淨經營現金流入3.7億元，這是自去年第二季以來，連續第三季淨經營現金流為正。我們也首次記錄了季度自由現金流入，這對我們來說是一個重要的里程碑。這些驕人的業績彰顯了我們強大的業務韌性，為我們穩定、重啟和更強大的發展奠定了堅實的基礎。

Now I would like to provide some updates on our progress in 3 areas, namely public cloud, enterprise cloud and research and development. I'll start with public cloud services.

現在我想介紹一下我們在公有雲、企業雲和研發三個領域的進展。我將從公有雲服務開始。

In Q4, revenues from this business remained stable at RMB 1.35 billion, representing a slight increase from the third quarter. We fine-tuned our positioning and implemented differentiated strategies for key account customers and midsized customers. With key account customers, we strive to maintain a balance between revenue and profitability while delivering the ultimate service experience to establish a superior word-of-mouth reputation for our full stack solutions.

第四季該業務收入維持穩定，為13.5億元，較第三季略有成長。優化定位，針對大客戶、中型客戶實施差異化策略。對於大客戶，我們力求在收入和盈利之間保持平衡，同時提供極致的服務體驗，為我們的全端解決方案樹立卓越的口碑。

We leveraged this strong reputation and the scalable core capabilities we have developed to serve key account customers to expand our cost business opportunities with midsized customers. This approach allowed us to gradually reduce our dependence on key account customers while driving revenue growth and profit enhancement in our public cloud business.

我們利用這一良好的聲譽和為服務大客戶而開發的可擴展的核心能力，擴大了我們與中型客戶的成本業務機會。此舉讓我們逐步減少對大客戶的依賴，同時推動公有雲業務的營收成長和利潤提升。

During the past half year, we carried out a systematic review of more than 200 companies from above 10 industries and signed more than 30 new midsized customers with high growth potential. Thanks to these strategies, the revenue contribution from our top 3 public cloud partners has been on a decline, while the revenue contribution from midsized customers continues to increase steadily. As a result, we have improved our customer mix while maintaining stable revenue growth in the public cloud business.

在過去的半年裡，我們對10多個行業的200多家公司進行了系統性審核，並簽約了30多家具有高成長潛力的新中型客戶。由於這些策略，我們來自前三大公有雲合作夥伴的營收貢獻一直在下降，而來自中型客戶的營收貢獻則持續穩定成長。因此，我們改善了客戶結構，同時保持了公有雲業務的穩定收入成長。

Moving on to Enterprise Cloud Services. Revenue increased by 26.4% quarter-over-quarter to RMB 790 million in Q4. We remain steadfast in executing our high-quality and sustainable growth strategy and further clarify and institutionalized our project management best practices will fundamentally enhance our enterprise cloud business quality. This effort is centered on 4 key initiatives.

轉向企業雲端服務。第四季營收為7.9億元人民幣，季增26.4%。我們堅定不移地執行高品質、可持續的成長策略，進一步明確和製度化我們的專案管理最佳實踐，從根本上提升我們的企業雲端業務品質。此項工作主要圍繞著四項關鍵措施。

First, we focus on accumulating and enriching our core offering of proprietary products and solutions capabilities. Second, we continued to enhance the revenue share of our proprietary products and solutions across our projects. Third, we targeted industries and customers with high potential lifetime value catering to their evolving needs and grow with them. Lastly, we further enhanced our project execution to improve customer experience and reduce costs.

首先，我們專注於累積和豐富我們的核心專有產品和解決方案能力。第二，我們持續提高專有產品和解決方案在各個專案中的收入份額。第三，我們瞄準具有高潛在終身價值的產業和客戶，滿足他們不斷變化的需求並與他們一起成長。最後，我們進一步加強了專案執行，以改善客戶體驗並降低成本。

These initiatives not only generated a relatively high estimated margin for enterprise cloud projects in the current financial period, but will also drive sustainable margin expansion in the long run.

這些舉措不僅為本財務期間的企業雲端專案帶來了相對較高的預期利潤率，而且將推動長期利潤率的可持續擴大。

Taking the public services sector, for example, we focus on the public service cloud model and developed a benchmark system consisting of cloud products, services and operations.

以公有服務產業為例，我們聚焦在公有服務雲模式，建構了由雲端產品、雲端服務和雲端運營所構成的標竿體系。

In Q4, we completed a smart city upgrade project for the Public Services and Big Data Management Bureau of (inaudible) municipality for the province in which we deployed our core proprietary enterprise cloud solution, Galaxy Cloud. We are also carrying out a number of other projects, including the Beijing Water Authority Public Services Cloud and the (inaudible) Public Cloud, further sharpening our competitive advantages and business scale in public services.

第四季度，我們完成了該省（聽不清楚）直轄市公共服務和大數據管理局的智慧城市升級項目，並在其中部署了我們的核心專有企業雲端解決方案 Galaxy Cloud。我們也正在實施北京水務局公共服務雲、（聽不清楚）公有雲等一批項目，進一步增強我們在公共服務領域的競爭優勢和業務規模。

In the health care sector, we continued to enhance our 5 major models, namely the regional health care cloud model, medical image cloud model, integrated health care organization model, regional integrated model and smart capital model.

在醫療健康領域，我們持續強化區域醫療雲模式、醫學影像雲模式、綜合醫療組織模式、區域整合模式、智慧資本模式五大模式。

During the quarter, we completed the second phase capacity expansion projects for the health care cloud in the (inaudible) new area and the medical image filing of the Chongqing Health Commission. This showcases our ability to provide continuous ongoing support for enterprise cloud partners using our market-leading products, solutions and services.

本季度，我們完成了（聽不清楚）新區醫療健康雲二期擴容計畫和重慶市衛健委醫學影像備案計畫。這表明我們有能力利用我們市場領先的產品、解決方案和服務為企業雲端合作夥伴提供持續的支援。

In the financial services sector, we further deepened cooperation with state-owned banks and major commercial banks by focusing on providing financial big data support and operational capabilities. In addition, while retaining a stable existing customer base, we strengthened our project deployment partnership with (inaudible) , particularly enhancing our synergies and cross-selling in the banking segment.

在金融服務領域，我們進一步深化與國有銀行、主要商業銀行的合作，並專注於提供金融大數據支援和營運能力。此外，在維持現有穩定客戶群的同時，我們加強了與（聽不清楚）的專案部署合作夥伴關係，特別是增強了我們在銀行領域的協同效應和交叉銷售。

In terms of technology, we continued to advance our core strategy of building success based on technology. In third quarter of 2022, we developed the Beijing Wuhan dual research center strategy, and we executed well in the fourth quarter. We aim to sustainably enhance our R&D capabilities while maintaining a disciplined R&D budget.

在技​​術方面，我們繼續推動科技興業的核心策略。 2022年第三季度，我們制定了北京武漢雙研究中心策略，並在第四季度執行良好。我們的目標是持續增強我們的研發能力，同時保持嚴格的研發預算。

We doubled the number of R&D funds in the Wuhan Research Center within just 3 months of its launch in December 2022, and we expect to grow the headcount there to more than 1,000 over the next 3 years, injecting momentum into our R&D initiatives and helping cement our industry leadership.

武漢研究中心於 2022 年 12 月啟動，僅用 3 個月時間就將研發資金數量翻了一番，預計未來 3 年內員工人數將增加到 1,000 人以上，為我們的研發計劃注入動力，鞏固我們的行業領先地位。

We strive to deliver the ultimate user experience across our core products and technology categories, including cloud hosting, cloud-native enterprise cloud infrastructure, enterprise storage and big data cloud platforms, and we benchmark ourselves against the top-tier players in the cloud industry.

我們致力於在我們的核心產品和技術類別（包括雲端託管、雲端原生企業雲端基礎設施、企業儲存和大數據雲端平台）上提供極致的用戶體驗，並以雲端產業的頂級公司為標竿。

For example, we recently launched our seventh generation cloud host, as well as new versions of our container services and serverless cloud functions, delivering significant performance improvements.

例如，我們最近推出了第七代雲端主機，以及新版本的容器服務和無伺服器雲端功能，帶來了顯著的效能提升。

We added 79 key operating features, including various (inaudible), test solutions and operational management assumptions to the upgraded version of Galaxy Cloud, significantly enhancing the competitiveness of our flagship enterprise cloud product. We also upgraded the data collection, data integration and hybrid architecture deployment capabilities of our big data cloud platforms and engine solutions. In addition, we significantly enhanced our product compatibility with various operating systems, databases and chips.

我們在升級版的銀河雲中增加了79個關鍵營運功能，包括各種（聽不清楚）、測試解決方案和營運管理假設，大大增強了我們旗艦企業雲端產品的競爭力。升級了大數據雲端平台和引擎解決方案的資料收集、資料整合和混合架構部署能力。此外，我們也大大增強了產品與各種作業系統、資料庫和晶片的兼容性。

Since the debut of GPT 3.5, we have been closely following its development and actively exploring relevant business opportunities. First, GPT models require massive computing power and vast group of data, making cloud computing a natural fit for this technology and an essential enabler for use cases, including both training AI models and applying them to various scenarios. The years of collaboration with leading AI companies we have developed a market-tested solutions that can be rapidly deployed on demand.

自GPT 3.5首次亮相以來，我們一直密切關注其發展並積極探索相關商機。首先，GPT 模型需要強大的運算能力和大量的數據，因此雲端運算自然適合這項技術，並且成為用例的重要推動因素，包括訓練 AI 模型並將其應用於各種場景。經過多年與領先的人工智慧公司的合作，我們開發了經過市場測試的解決方案，可以根據需求快速部署。

Second, major Internet cloud service providers generally are developing their own GPT businesses, whereas we remain a neutral player. This means we can serve a wider range of partners and a natural advantage that the market is beginning to recognize. Third, the application of GPT models, especially in traditional industries with relatively underdeveloped IT capabilities will require extensive preparation work unique to each company, including consulting and planning, process reengineering, customized development, installation and deployment and ongoing maintenance. Our strong and wide-ranging IT support and deployment capabilities will enable us to capitalize on such huge opportunity in this market.

第二，各大網路雲端服務商普遍都在發展自己的GPT業務，我們則保持中立。這意味著我們可以服務更廣泛的合作夥伴，這也是市場開始認識到的天然優勢。第三，GPT模型的應用，特別是在IT能力相對不發達的傳統產業，將需要每家公司進行大量獨特的準備工作，包括諮詢規劃、流程再造、客製化開發、安裝部署以及持續的維護。我們強大且廣泛的IT支援和部署能力將使我們能夠利用這個市場的巨大機會。

Overall, looking back at the challenges we faced in 2022, we are gratified that our proactive strategic adjustments enabled us to achieve positive initial results and strengthening our conviction that we are on the right track. Looking ahead, in the face of new challenges and opportunities, we will pursue high-quality and sustainable development no matter how the environment changes and roll up our sleeves to create sustainable value for our customers, shareholders, employees and the society.

整體來看，回顧2022年面臨的挑戰，我們感到欣慰的是，我們主動的策略調整，使我們取得了階段性的積極成效，也更加堅定了我們走在正確道路上的信念。展望未來，面對新的挑戰和機遇，無論環境如何變化，我們都將追求高品質、永續發展，擼起袖子為客戶、股東、員工、社會創造可持續的價值。

I will now pass the call over to our CFO, Henry, to go over our financials for the quarter and full year 2022. Thank you.

現在，我將把電話轉給我們的財務長亨利 (Henry)，來討論我們 2022 年本季和全年的財務狀況。謝謝。

Thank you, Tao Zou, and welcome, everyone, for joining the call. Before diving into the financial details, I will walk you through a quick summary for the fourth quarter 2022.

謝謝鄒濤，歡迎大家參加電話會議。在深入了解財務細節之前，我將先為您簡要介紹 2022 年第四季的概況。

First of all, with our strong commitment to improve profitability, we have taken comprehensive measures from all sectors, including proactive adjustments to our CDN services, strategic restructuring of customer mix, prudent sanitized cloud selection and a strict control of fixed assets and operational expenses.

首先，我們堅定致力於提高獲利能力，從各個方面採取了綜合措施，包括主動調整CDN服務，策略性地重組客戶結構，審慎選擇雲端服務，嚴格控制固定資產和營運費用。

Since the third quarter of 2022, our adjusted gross margin has been increased for 5 consecutive quarters, increasing from 1.2% in the fourth quarter in 2022 to 3.6% in the second quarter last year, 6.3% third quarter and a further to 7.9% this quarter. Adjusted gross profit increased by 408% year-over-year to RMB 168.5 million this quarter.

自2022年第三季以來，我們的調整後毛利率已連續5季增加，從2022年第四季的1.2%增加到去年第二季的3.6%，第三季的6.3%，本季進一步增加到7.9%。本季調整後毛利年增408%至人民幣1.685億元。

We disposed certain underutilized service based on the current customer demand and record loss on disposal of properties and equipment. However, we believe this is helpful for our long-term development and gross margin expansion.

我們根據當前客戶需求處置了某些未充分利用的服務，並記錄了財產和設備處置損失。但我們相信這對我們的長期發展和毛利率擴大是有幫助的。

Non-GAAP EBITDA margin profit was negative RMB 245.1 million, impacted by nonrecurring Hong Kong IPO listing expenses of RMB 94.9 million and a loss of disposal of properties and equipment of RMB 28.8 million. Non-GAAP EBITDA margin was negative 11.5%. However, it's excluding the IPO expenses and the loss of disposal of properties and equipment expenses, our non-GAAP EBITDA margin would have been negative 5.7%, compared with negative 10.3% last quarter and a negative 4.7% in the same period of 2021.

非美國通用會計準則 EBITDA 利潤率為負 2.451 億元人民幣，受非經常性香港 IPO 上市費用 9,490 萬元人民幣以及物業及設備處置損失 2,880 萬元人民幣的影響。非公認會計準則 EBITDA 利潤率為負 11.5%。然而，如果不包括IPO費用以及物業和設備處置損失，我們的非GAAP EBITDA利潤率將為負5.7％，而上一季為負10.3％，2021年同期為負4.7％。

Second, our operating cash flow has been positive for the past 3 quarters consecutively, and we have achieved RMB 370.4 million net operating cash inflow this quarter. Thanks to our prudent control over capital expenditures, free cash flow, as measured in net cash generated from operating activities minus capital expenditures, was RMB 259.6 million, marking the first quarter of the positive free cash flow, demonstrating our strong commitment and the successful execution of our cash management.

第二，我們經營性現金流連續3季為正，本季實現淨經營性現金流入3.704億元。由於我們對資本支出的審慎控制，自由現金流（以經營活動產生的淨現金減去資本支出來衡量）為人民幣2.596億元，這是公司第一季實現正自由現金流，體現了我們對現金管理的堅定承諾和成功執行。

Third, our cash and cash equivalents and short-term investments was RMB 4.7 billion by December end 2022. Considering the improvement of our profitability, our scaling down of capital expenditures and cash inflow of operating cash flow, our cash reserve is well positioned and sufficient to support us walking through the challenge here and provide flexibility to further business development.

第三，截至2022年12月底，我們的現金及現金等價物及短期投資為人民幣47億元。考慮到我們獲利能力的提高、資本支出的縮減以及經營現金流的現金流入，我們的現金儲備充足，足以支持我們渡過難關，並為進一步的業務發展提供靈活性。

Lastly, our total revenue was RMB 2,131 million this quarter. Revenue from public cloud services was RMB 1.34 billion, remained stable compared with last quarter. Revenue from Management Cloud was RMB 785.9 million, increased by 26.4% quarter-over-quarter. With a more balanced and healthy business mix, we believe we are well positioned to start a new journey for our sustainable long-term development, being able to allocate more resources to expand our mid- to long-tail customer basis and high-quality non-Internet companies.

最後，本季我們的總收入為人民幣21.31億元。公有雲服務收入為人民幣13.4億元，與上一季相比維持穩定。管理雲端收入為人民幣7.859億元，季增26.4%。憑藉更均衡、健康的業務結構，我們相信我們有能力開啟公司長期可持續發展的新征程，並能夠配置更多資源來擴大我們的中長尾客戶基礎和優質非互聯網公司。

Now I will go through our financial in detail. Our total cost of revenue decreased by 25.2% year-over-year to RMB 1,969.1 million. IDC costs decreased significantly by 20% year-over-year from RMB 1,321.9 million to RMB 1,057.6 million this quarter. Depreciation and amortization costs increased by 6.4% from RMB 227.2 million in the same period last year to RMB 241.7 million this quarter.

現在我將詳細介紹我們的財務狀況。我們的總收入成本較去年同期下降25.2%至人民幣19.691億元。 IDC成本由去年同期的13.219億元大幅下降至本季的10.576億元人民幣，較去年同期下降20%。折舊及攤銷費用由去年同期的2.272億元增加6.4%至本季的2.417億元。

Solution development and services costs decreased from RMB 497.2 million to RMB 465.8 million this quarter. The decrease was mainly due to the synergies from overlapping headcount reduction within catalog and into cloud on the COVID-19 impact and other synergy initiatives on the demand side in last December.

本季解決方案開發服務成本從人民幣4.972億元減少至人民幣4.658億元。下降的主要原因是去年12月目錄內的員工人數減少和雲端運算對COVID-19的影響以及需求側的其他協同措施所產生的協同效應。

Fulfillment costs and other costs were RMB 155.6 million and RMB 48.3 million this quarter. Adjusted gross profit of this quarter increased by 400.08% to RMB 168.5 million, representing adjusted gross margin of 7.9%. The significant gross margin improvement was mainly due to the impact of cost-control measures and the strategic adjustments of our revenue mix.

本季履約成本及其他成本分別為人民幣1.556億元及人民幣4,830萬元。本季調整後毛利年增400.08%至1.685億元，調整後毛利率為7.9%。毛利率的大幅提升主要得益於成本控制措施及收入結構的策略調整的影響。

In terms of expenses, excluding share-based compensation, our total adjusted operational expenses was RMB 729.7 million. However, still impacted by Hong Kong IPO exiting expenses of RMB 94.4 million. The disposal of fixed assets of RMB 28.8 million. Within that, adjusted R&D expenses was RMB 239.4 million, remained relatively stable compared with RMB 231.6 million from last quarter.

在費用方面，不包括股權激勵費用，我們的調整後總營運費用為 7.297 億元。但仍受到香港IPO退出費用9,440萬元的影響。處分固定資產2880萬元。其中，調整後研發費用為2.394億元，與上季的2.316億元相比保持相對穩定。

Adjusted selling and marketing expenses was RMB 118.4 million, compared with RMB 125.5 million last quarter. Excluding the lifting expenses and disposal of fixed assets of RMB 123.7 million, adjusted G&A expenses increased slightly from RMB 219.9 million last quarter to RMB 248.2 million.

調整後銷售和行銷費用為人民幣 1.184 億元，上季為 1.255 億元。除去起重費用及固定資產處置費用1.237億元，調整後的一般及行政費用從上季度的2.199億元小幅增加至2.482億元。

We have taken various measures to cut down expenses, including, but not limited, to the following aspects. First of all, we will review weekly the variable operational expenses, especially in marketing and administrative expenses. Second, we streamlined headcount management within the firm and reviewed our cost strategy and adjusting for fees and other structure of personnel.

我們採取了各種措施來削減開支，包括但不限於以下幾個方面。首先，我們會每週審查變動營運費用，特別是行銷和管理費用。其次，我們精簡了公司內部的員工管理，審查了我們的成本策略並調整了費用和其他人員結構。

Third, along with the scaling down of certain customer CDS services, we probably may improve the efficiency of underlying resources. We also did post certain fixed assets and scaling down benefit costs as well. Net loss margin was negative 24.5% this quarter, and adjusted net loss margin was negative 25.9%.

第三，隨著某些客戶CDS服務的縮減，我們或許可以提高底層資源的效率。我們也確實發布了某些固定資產，並削減了福利成本。本季淨虧損率為負24.5%，調整後淨虧損率為負25.9%。

The adjustment was mainly due to the foreign exchange gain of RMB 132.3 million caused by fluctuation of U.S. dollar RMB exchange rates, which is a noncash impact.

此調整主要由於美元兌人民幣匯率波動產生的匯兌收益人民幣1.323億元，屬於非現金影響。

As of December end 2022, our cash and cash equivalents and short-term investments was RMB 4.7 billion, providing us sufficient liquidity operations. During the fourth quarter, we have repaid certain loans within the group and the banks to reduce our interest costs. The capital expenditure for this quarter was RMB 110.8 million, which primarily consists of payments for service.

截至2022年12月底，我們的現金及現金等價物和短期投資為人民幣47億元，為我們的營運提供了充足的流動性。第四季度，我們償還了集團內部和銀行的部分貸款，以降低我們的利息成本。本季的資本支出為人民幣1.108億元，主要為服務費用。

In terms of share repurchase, regarding our USD 100 million share repurchase program within a 12-month period as approved by the Board of Directors announced in March 2022. Since the release of our second quarter results up to the year-end of 2022, we bought a total of 12.3 million ADR shares for the cost of roughly USD 29.2 million.

股票回購方面，我們於2022年3月宣布經董事會批准的12個月內1億美元股票回購計劃，自第二季業績公佈至2022年底，我們共回購了1,230萬股ADR股票，成本約為2,920萬美元。

Going forward, we still have authorization from the Board of Directors and the flexibility to continue execution from time to time as way to the mandated repurchase program. These efforts fully demonstrates our Board and management's strong commitment and confidence in the long-term business development of the company.

展望未來，我們仍然擁有董事會的授權，並且可以靈活地不時繼續執行強制回購計畫。這些努力充分體現了董事會和管理階層對公司長期業務發展的堅定承諾和信心。

Finally, we have successfully finished the new primary listing on the main board of Hong Kong Stock Exchange by the way of introduction on December 30, 2022. In March 2023, we have been selected and included into Hong Kong Composite Index, Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect at the same time. Private listing in Hong Kong has helped us broaden our investor base and open up new investment channels.

最終於2022年12月30日成功以介紹方式在香港聯交所主板新一輪主要上市，並於2023年3月同時入選香港綜合指數、滬港通及深港通。在香港私人上市幫助我們拓寬了投資者基礎，開闢了新的投資管道。

Our teams have been communicating more frequently and broadly with domestic investors, and we have seen more active trading patterns since we joined Hong Kong Stock Connect. Looking ahead, although we are still implementing our strategic initiatives, including business repositioning and cost control efforts on an ongoing basis, such adjustments have already yielded positive preliminary results as reflected in a clear improvement of profit margin in Q3 and Q4.

自從加入港股通以來，我們的團隊與國內投資者的溝通更加頻繁、更加廣泛，我們看到了更活躍的交易模式。 展望未來，雖然我們仍在持續實施業務重新定位和成本控制等策略性舉措，但這些調整已取得積極的初步成效，第三季和第四季的利潤率明顯改善就是明證。

We expect our total revenue to be between RMB 1.85 billion and RMB 2.05 billion for the first quarter of 2023. While the forecast and comments are based on our current and preliminary views on the market and operational conditions, which are subject to change, we firmly believe at given time, our potential positive impact of our ongoing strategic initiatives will continue to amplify and reflect our financials in the mid- to long term. Thank you.

我們預計2023年第一季的總收入將在人民幣18.5億元至人民幣20.5億元之間。雖然預測和評論是基於我們對市場和營運條件的當前和初步看法，這些看法可能會發生變化，但我們堅信，在特定時間，我們正在進行的策略舉措的潛在積極影響將繼續放大並反映在我們中長期的財務狀況中。謝謝。

This concludes our prepared remarks. (inaudible) This answer will contain both Mandarin and English, if possible. Operator, please go ahead.

我們的準備好的演講到此結束。 （聽不清楚）如果可能的話，這個答案將包含普通話和英語。接線員，請繼續。

(Operator Instructions) We'll now take our first question. This is from the line of Brian Gong from Citi.

（操作員指示）現在我們來回答第一個問題。這是花旗銀行的 Brian Gong 寄來的。

(foreign language) I will translate myself. I have 2 questions. First is regarding the enterprise cloud. Regarding the 3 verticals, how should we see the demand this year? Last year, the delivery was impacted by COVID. So this year, should we see faster growth? And how should we balance the growth -- revenue growth and the margin?

（外語） 我自己來翻譯。我有兩個問題。首先是關於企業雲端。對於三個垂直領域，我們該如何看待今年的需求？去年，交付受到了新冠疫情的影響。那麼今年我們應該看到更快的成長嗎？我們應該如何平衡成長—收入成長和利潤率？

And the second question is about Chat GPT, total transformation as independent cloud provider, we have some advantages in China. But in China, for those Internet giants who have capability to develop large language models, they all have their own cloud service. So if the enterprise users, they use their language, large language model, will those users more -- have more intention to use those Internet giants cloud services?

第二個問題是關於Chat GPT，作為獨立雲端供應商的全面轉型，我們在中國有一些優勢。但在中國，那些有能力開發大型語言模式的網路巨頭都有自己的雲端服務。因此，如果企業用戶使用他們的語言，大語言模型，這些用戶是否更願意使用那些互聯網巨頭的雲端服務？

[Interpreted] So as you rightly pointed out, so we are noticing that right now, we are going through the opening up phase after the COVID period. And the country is also reverting back to the model of business development.

[口譯] 正如您正確指出的那樣，我們注意到，現在我們正處於 COVID 時期後的開放階段。而該國也正在回歸商業發展模式。

And admittedly, last year, they had the COVID situation and relevant restrictions did have impact to our deployment and delivery of our industry of our enterprise cloud business, and some of the planned deployment that was originally planned to be completed in Q4 last year were actually delayed this year. But if you look at the situation now, although we haven't disclosed the particulars and the concrete numbers of the specific 3 verticals that you mentioned, we do remain highly confident about our operating metrics in our enterprise cloud, including revenue, including gross profit and including our operating margin, and we expect to have significant improvements in those metrics.

無可否認，去年受到了新冠疫情的影響，相關限制確實對我們企業雲端業務的行業部署和交付產生了影響，部分原定於去年第四季度完成的計劃部署今年實際上被推遲了。但如果你看看現在的情況，雖然我們還沒有透露你提到的具體三個垂直領域的細節和具體數字，但我們對企業雲的營運指標仍然非常有信心，包括收入、毛利、營業利潤率，我們預計這些指標會有顯著的改善。

And secondly, I would like to clarify in our pursuit of high-quality and sustainable growth does not necessarily mean that we do not pursue growth. For every customer and for every project, what we do is to evaluate whether that customer and that project is centered around the core cost business and whether that brings about profitability to us.

其次我想澄清一點，我們追求高品質、永續的成長，並不代表我們不追求成長。對於每一個客戶、每一個項目，我們會評估這個客戶、這個項目是不是圍繞著核心成本業務，是否為我們帶來獲利。

In other words, if some of the customers and projects, even if we evaluate them from a longer time period, and it will not bring about profitability to the company, and this is actually not a high-quality project and not high-quality development. So the point I would like to mention, and I would like to highlight is that in the past, we have been overly emphasizing the growth. And now what we need to do is to replace that overly emphasis on growth to high-quality and sustainable growth, which is of strategic value to us.

也就是說，如果有些客戶、項目，即使我們從更長的時間段去評價，也沒有為公司帶來盈利，這實際上就不是一個優質的項目，不是一個優質的發展。所以我想提及並強調的一點是，過去我們過度強調成長。現在我們要做的就是把對成長的過度強調轉向對高品質、可持續的成長，這對我們來說具有戰略價值。

Just to briefly hand it to CEO. So we have announced in the sense of (inaudible) companies that we will not send a lot of managing resources on working on the big language model ourselves. Because we have a very clear value proposition, which is we're providing solutions to these customers. And therefore, working on such a model is not significant strategic value to us.

只是簡單地將其交給首席執行官。因此，我們從（聽不清楚）公司的意義上宣布，我們不會投入大量的管理資源自行開發大型語言模型。因為我們有一個非常明確的價值主張，那就是我們為這些客戶提供解決方案。因此，研究這種模型對我們來說並不具有重要的戰略價值。

However, the platform companies or the platform Internet companies, they have the core capability and they have development numbers and therefore, a more suitable to develop such big models. However, in relation to your question, who use our services and products, I have 2 main things.

但是平台型公司或平台型網路公司，他們有核心能力，有開發數量，所以比較適合發展這種大的模式。然而，關於您問的誰使用我們的服務和產品，我主要有兩點看法。

One is that, although the larger technology companies, the technology giants, have their relative advantages that we mentioned just now, but it does not necessarily mean that those models need to be developed the research and developed by such giants. OpenAI is a good example, which is not a technology giant. However, generated the best in class such model.

一個是，雖然我們剛才提到較大的科技公司，也就是科技巨頭，有他們的相對優勢，但不代表這些模式就需要這些巨頭來研發。 OpenAI就是一個很好的例子，它不是科技巨頭。然而，生成了同類中最好的此類模型。

And then the second is that -- so as -- also as we discussed in the prepared remarks, because of our neutrality, all these venture teams that are in smaller companies because of the potential conflict of interest with major Internet clients will also choose the service of us rather than those Internet-based -- Internet giants based cloud service providers. And then the second proposition I would like to say is that although in the short period of time, we do think that it is unlikely that the big language model, the GPT in China to develop to a level similar to that of the GPT 4.0 in the United States. However, it does not necessarily mean that smaller models that do not present real value and applications in the wide industries in China.

第二，正如我們在準備好的評論中所討論的那樣，由於我們的中立性，所有這些規模較小的公司的風險投資團隊由於與主要互聯網客戶存在潛在的利益衝突，也將選擇我們的服務，而不是那些基於互聯網——互聯網巨頭的雲端服務提供商。然後我想說的第二個命題是，雖然在短時間內，我們確實認為中國的大語言模型、GPT不太可能發展到類似美國GPT 4.0的程度。但這並不一定意味著較小的模型沒有在中國廣泛的行業中體現出真正的價值和應用。

For example, we're already seeing a lot of small models with parameter number amounting to 6 billion to 10 billion, having very vivid and confident applications in various industries. And for those application scenarios are basically also our potential business opportunities.

例如我們已經看到很多參數量高達60億到100億的小模型，在各行業都有非常生動和自信的應用。這些應用場景基本上也是我們的潛在商機。

So to sum up two of the potential business opportunities that is the current wave of activity process for us. One is the venture teams from smaller companies who work on those models. And secondly is the application of such models and small models, which we might also call industry models their application into the traditional companies with relatively underdeveloped IT capabilities, which will help them to apply such models in their day-to-day operations.

因此，總結一下當前我們面臨的活動浪潮中的兩個潛在商機。一類是來自小公司的致力於這些模型的創投團隊。第二就是把這樣的模型，小的模型，也可以叫產業模型，應用在那些IT能力比較不發達的傳統企業，幫助他們把這樣的模型運用到日常的營運當中。

(foreign language) Hello, Brian. The first question you're asking about (inaudible) information. I think, first of all, if you look at our Q-on-Q growth, if you remember last quarter, we created about RMB 600 million revenue for the prior 3 verticals in total.

（外語）你好，布萊恩。您詢問的第一個問題是關於（聽不清楚）資訊。我認為，首先，如果你看看我們的環比成長，如果你還記得上個季度，我們為前三個垂直領域共創造了約 6 億元人民幣的收入。

But I'd probably encourage you to look at into the sectors. Because in Q4, we delivered around RMB 784 million revenue, which is actually on a net to net on a Q-on-Q basis, it's about RMB 180 million increase.

但我可能會鼓勵你研究這些領域。因為在第四季度，我們實現了約7.84億元的收入，實際上按季度環比增長了約1.8億元。

And if you remember, in December last year in Beijing, as everyone probably remember, people on station at home and the city was basically affected by the COVID and pandemic in December last year. So if you put that into context, you will see that given that we have a solid relationship with our customers and we have a lot of constraints from an operational perspective, but we're still increasing on a quarterly basis, that actually prove our capability in a difficult time of execute, deliver and bolting on revenue on enterprise card, which actually demonstrate our technology and the client relationships.

如果你還記得的話，去年 12 月在北京，大家可能還記得，當時人們都待在家裡，這座城市基本上在去年 12 月受到了 COVID 和疫情的影響。因此，如果你把它放在上下文中，你會發現，鑑於我們與客戶保持著牢固的關係，而且從營運角度來看，我們面臨很多限制，但我們仍然按季度增長，這實際上證明了我們在困難時期執行、交付和增加企業卡收入的能力，這實際上證明了我們的技術和客戶關係。

The second point I also want to mention is while on this quarter, we didn't provide a color on the backlog, and I appreciate you didn't answer that question, but we are hoping that going forward, we'll disclose more information, especially in the backlog and new signing on the contracts on the enterprise cloud revenues. But I'm happy to provide some color is if we see the backlog at this moment, at this time, the backlog we have today will fully cover our potential budget for the NPS Cloud in the year 2023 for this year. And we're still in Q1, so we're hoping we'll be increasing the backlog this year. And we do have the confidence that we're going to move into the more balancing of the growth and quality model, but the potential and the capability of the growth, we do have that confidence.

我還想提到的第二點是，雖然在本季度，我們沒有提供積壓訂單的具體情況，我很感激您沒有回答這個問題，但我們希望今後能夠披露更多信息，特別是企業雲收入的積壓訂單和新簽署合同的情況。但我很樂意提供一些信息，如果我們看到此刻的積壓情況，此時，我們今天的積壓將完全覆蓋我們 2023 年 NPS 雲的潛在預算。目前我們仍處於第一季度，因此我們希望今年的積壓訂單能夠增加。我們確實有信心我們將進入更平衡的成長和品質模式，但對於成長的潛力和能力，我們確實有信心。

And the third point, we also didn't mention that in the prepared remarks is given we focus on the vertical and the customers, repeating -- the percentage of the repeating customers in Q4 and Q3 last year has been increasing quite a lot, which means that even though you see about RMB 700 million revenue on a quality basis, but the percentage of that number coming from the same customer, but on a different phases of projects is increasing quite a lot and also give us a base that for next year and this year, next year, we can have the potential incremental revenue build on a solid basis. And hopefully, for the next time in a quarterly earnings calls, we can help provide some color on the backlog as well as the percentage of customers going forward. We have that plan for the budgeting disclosure process going forward. Hopefully it will be helpful.

第三點，我們在準備好的評論中也沒有提到，我們專注於垂直領域和客戶，去年第四季度和第三季度的回頭客比例一直在大幅增加，這意味著，儘管你看到大約7億元人民幣的收入是質量基礎，但這個數字的百分比來自同一個客戶，但在項目的不同階段，這個數字正在大幅增加，這也為我們明年、明年、明年希望在下一次季度收益電話會議上，我們能夠提供有關積壓訂單以及未來客戶百分比的資訊。我們對未來的預算揭露流程有規劃。希望這會有所幫助。

We'll take out next question. This is from the line of Timothy Zhao from Goldman Sachs.

我們將討論下一個問題。這是高盛的 Timothy Zhao 發來的消息。

(foreign language) I have 2 questions. First, could management share your outlook on the public cloud demand into '23? And between the big enterprise companies and the small SMEs, which kind of companies do you think have a bigger amount on public health for this year?

（外語）我有 2 個問題。首先，管理階層能否分享您對23年公有雲需求的展望？那麼在大型企業和中小企業中，您認為哪一類公司今年在公共衛生上的投入較大？

And secondly, we saw that last year, company has very good execution on profitability in both gross margin and EBITDA margin. Could management share your updated outlook for the gross margin and EBITDA margin for coming year, thank you.

其次，我們看到去年公司的毛利率和 EBITDA 利潤率都表現得非常出色。管理層能否分享您對明年毛利率和 EBITDA 利潤率的最新展望，謝謝。

[Interpreted] Just quickly translate for CEO. So as it relates to your first question, because I think the public cloud services and products are really just centered around some of the core components, including computing, storage and a network. So I do not necessarily think that demand has to do like differs and have to do with the size of the enterprise that we serve.

[翻譯] 只需為 CEO 快速翻譯一下。所以關於您的第一個問題，因為我認為公有雲服務和產品實際上只是圍繞著一些核心元件，包括運算、儲存和網路。因此，我並不認為需求一定有所不同，也與我們服務的企業規模有關。

So everything really depends on the particular application scenario and the business situation of our customer enterprise. So for example, we would have our video company customers with their core demand coming from our CDN and storage business, and we will also have customers, for example, like in the AI industry that would really demand the computing as their core demand. So that is the general response I have to translate your first question.

所以一切實際上取決於特定的應用場景和我們客戶企業的業務狀況。舉例來說，我們的視訊公司客戶的核心需求來自我們的 CDN 和儲存業務，我們也會有一些客戶，例如人工智慧產業的客戶，他們的核心需求是運算。這就是我對你的第一個問題的整體回答。

Thank you. I'll take on the second one. So before I go in there about the 2023 target, I just want to lay out the 3 major reasons for 2022.

謝謝。我將接受第二個。因此，在我談論 2023 年的目標之前，我只想列出 2022 年的三個主要原因。

First of all, for the PP&E, we booked on balance sheet, we did try our efforts to reduce redundancy and other kind of misallocation of the revenue and the resources. So that's actually the effort has been taken for 2 or 3 quarters since the middle of 2022. And I don't think those are going to be the onetime off impact because, one, to increase the utilization ratio for the assets and resources, those benefits on the gross margin will be gradually released over time. So that will build first layer of the margin expansion for this year.

首先，對於我們在資產負債表上記帳的廠房和設備，我們確實盡力減少冗餘以及其他類型的收入和資源的錯誤分配。所以實際上從 2022 年中期開始，我們已經努力了 2 到 3 個季度。而且我認為這些不會是一次性的影響，因為首先，為了提高資產和資源的利用率，這些對毛利率的好處將隨著時間的推移而逐漸釋放。因此這將建構今年利潤率擴張的第一層。

Second of all is given we -- as a team, we're together changed the combination of the customer base. So right now, as our CEO mentioned, our midsized client base has been increasing sequentially as a total percentage of total revenue. And I would say that the pricing and the profitability from those buckets of the customer are definitely much better than we are serving a single client basis, right? So that's going to be 2 benefits, reduce the client competition risk, but also improving profitability as a whole. And those benefits were built in the second layer or the gross margin for 2022.

其次，作為一個團隊，我們共同改變了客戶群的組合。因此，正如我們的執行長所提到的，我們的中型客戶群在總收入中所佔的百分比一直在連續增長。我想說的是，從這些客戶群中獲得的定價和盈利能力肯定比我們為單一客戶提供服務要好得多，對嗎？因此這將帶來兩個好處，降低客戶競爭風險，同時提高整體獲利能力。這些好處是建立在第二層或2022年的毛利率中的。

And the third, obviously, is the variable expenses control, as I mentioned in the prepared remarks. Very basic since the travel expenses accommodation, how we pay people and how we change the mix of incentives, the cash plus the stocks and a lot of things like during the past year. And I would say that only part of the benefit has been reflected in the Q4 number because we see a lot of things return in Q4. And hopefully, those change our policy on expenses, including the share-based compensation, including cash flow so on and so forth will be reflected in Q1, Q2 going forward in 2023 in the new year.

第三，顯然是變動費用控制，正如我在準備好的發言中所提到的。非常基本，因為旅行費用住宿，我們如何支付員工工資以及我們如何改變激勵措施的組合，現金加股票以及過去一年中的許多事情。我想說，只有部分收益反映在了第四季的數據中，因為我們看到很多東西都在第四季回歸。希望這些改變我們的費用政策，包括股權激勵、現金流量等，能反映在 2023 年第一季、第二季以及新年期間。

So as a result, our operating expenses and operating margin will be better than last year. The reason is gross margin is lifted and the variable cost is reduced. So while I'm sorry I cannot give you a very clear numerical target of the EBITDA margin and operating profits, but I would say 2 things.

因此，我們的營業費用和營業利潤率將比去年更好。原因是毛利率提高，變動成本降低。因此，雖然很抱歉我無法給您一個非常明確的 EBITDA 利潤率和營業利潤的數字目標，但我要說兩件事。

First of all, we are hoping to increasing our gross margin percentage on a sequential basis quarter-over-quarter. So hopefully, you can see the expansion, very stable, I would say, stable relatively in the next 2 quarters, the point #1.

首先，我們希望毛利率百分比能夠逐季提高。所以希望你能看到擴張，非常穩定，我想說，在接下來的兩個季度相對穩定，這是第一點。

Point #2 is, given we controlled expenses and the variable cost. So hopefully, we can be more visible and can be faster to reach the breakeven profitability of the EBITDA margin for this year. I think these are the 2 major objectives for us.

要點＃2是，假設我們控制了費用和變動成本。因此，希望我們能夠更清晰地了解情況並更快地實現今年 EBITDA 利潤率的損益平衡。我認為這是我們的兩個主要目標。

But if you're asking about operational margin and breakeven net margin side, I think we obviously will see the balance of the growth, and we also need to very nimble to make investments on our CapEx and also on the growth side to make money and put our investment to serve our high-quality customers. So we do not prevent the opportunity to give us a little kind of flexibility to balancing on the operational margin and EBITDA margin. So hopefully, we can be more visible to getting to a point that our EBITDA margins will be breakeven in a more kind of foreseeable future. Thank you.

但如果你問的是營業利潤率和損益平衡淨利潤率，我認為我們顯然會看到成長的平衡，而且我們還需要非常靈活地對我們的資本支出和成長方面進行投資，以賺錢並將我們的投資用於服務我們的優質客戶。因此，我們不會阻止給我們一點彈性來平衡營業利潤率和 EBITDA 利潤率的機會。因此，希望我們能夠更清楚地認識到，我們的 EBITDA 利潤率將在可預見的未來實現收支平衡。謝謝。

We'll now take our next question. Please stand by. And this is from Allen Li from JPMorgan.

我們現在回答下一個問題。請稍候。這是由摩根大通的 Allen Li 提供的。

(foreign language) Let me quickly translate my question. My question is regarding the CapEx. We preinvested in CapEx in past few years. But due to all kinds of macro headwinds, our overall utilization rate seems not very high and it also negatively impacted our margins. So looking into this year, given the potentially huge opportunity generated by AI industries, so how should we think about our CapEx plan in 2023? And we will take a more proactive approach or a reactive approach in terms of AI-related CapEx investing?

（外語）讓我快速翻譯一下我的問題。我的問題是關於資本支出的。我們在過去幾年中對資本支出進行了預先投資。但由於各種宏觀不利因素，我們的整體利用率似乎不是很高，這也對我們的利潤率產生了負面影響。那麼展望今年，考慮到人工智慧產業可能創造的巨大機遇，我們該如何考慮2023年的資本支出計畫？在人工智慧相關的資本支出投資方面，我們將採取更主動的方式還是被動的方式？

[Interpreted] So as you rightly pointed out, with the new generation AI technology namely the GPT eruption or disruption, we have had actually already preemptive actions in terms of reserve in both technology and resources.

[解讀]所以正如您所指出的，隨著新一代人工智慧技術，也就是GPT的爆發或顛覆，我們其實在技術和資源儲備方面已經採取了先發製人的措施。

However, I would summarize our attitude as cautiously optimistic rather than blindly pursuing this potential opportunity. Because based on our experience with a larger generation of AI industry trajectory, we do think that currently, the market tends to be or seems to be overheated and we expect it to actually enter into a more sustainable but slower growth kind of both.

然而，我認為我們的態度是謹慎樂觀，而不是盲目地追求這個潛在的機會。因為根據我們對更大一代人工智慧產業發展軌蹟的經驗，我們確實認為，目前，市場趨向於或似乎過熱，我們預期它實際上會進入一種更可持續但成長速度較慢的狀態。

What we will continue to do in this, we'll adopt a kind of approach like run with small steps and with quick iteration. I also want to point out that in terms of the hardware, there's also the more (inaudible), which essentially means that the development -- the development and upgrade of such hardware will actually going to get back. So we do not see if it makes a lot of sense to massively affording the last generation of such chips and servers. Thank you.

我們將繼續採取小步前進和快速迭代的方法。我還想指出，在硬體方面，還有更多的（聽不清楚），這基本上意味著這種硬體的開發和升級實際上將會恢復。因此，我們認為大規模購買最新一代晶片和伺服器是否有意義。謝謝。

(foreign language) I'll probably put some additional color on this question as well. So if you remember on the year IPO 2020, we spent about RMB 1 billion on the CapEx.

（外語）我可能也會對這個問題做一些補充說明。所以如果你還記得的話，2020 年 IPO 時，我們在資本支出上花了約 10 億元。

So first of all, my point is as a company, we do have capacity and experience to managing spending RMB 1 billion, whatever with purpose, and we do have a very experienced team. And we do know the supply chain. And also, we have a good partnership with our ecosystem partner, including our shareholders, for group as well as Xiaomi, managing the complexity of buying those big chunk of assets at a reasonable price given the past experience. That's the first point.

首先，我的觀點是，作為一家公司，我們確實有能力和經驗來管理 10 億元的支出，無論出於何種目的，而且我們確實擁有一支經驗豐富的團隊。我們確實了解供應鏈。此外，我們與集團和小米的生態系統合作夥伴（包括我們的股東）都建立了良好的合作關係，根據過去的經驗，我們可以以合理的價格購買大量資產。這是第一點。

The second point is, I think your question is coming from more about investments, not only about products. If you look at the investment, we're putting into 2 buckets. The team, the technology R&D team, which our senior people as a team managing today, we have quite a lot of very experienced engineering programmers. And those expenses is not a CapEx. And expenses are booked on our P&L income statement.

第二點，我認為你的問題更多的是關於投資，而不僅僅是關於產品。如果你看一下投資，你會發現我們將其分為兩個部分。這個團隊，這個由我們的高階領導作為一個團隊來管理的技術研發團隊，我們有相當多非常有經驗的工程程式設計師。這些費用不屬於資本支出。且費用已記入我們的損益表。

And as we mentioned, we spent over RMB 1 billion every year on those expenses and R&D investment. So I think we do not hesitate to invest into R&D and products. So I think that's very clear. However, if you are looking into the cash flow item on the capital expenditures, which I want to say, also going to have a different model because as our CEO has also mentioned, we see the great financial opportunities were coming from both Internet clients as well as implementation and application of the user cases from a lot of diversified and non-Internet clients, especially from traditional enterprises.

正如我們所提到的，我們每年在這些費用和研發投入上花費超過10億元。所以我認為我們不會猶豫投資研發和產品。所以我認為這非常清楚。然而，如果你正在研究資本支出的現金流項目，我想說，也會有一個不同的模型，因為正如我們的首席執行官所提到的，我們看到巨大的財務機會來自互聯網客戶以及來自許多多元化和非互聯網客戶（尤其是傳統企業）的用戶案例的實施和應用。

And those business model will not pursue Kingsoft Cloud on capital because they will build their own environment and providing the whole computing capabilities. And we call it as an OpEx model. So I think we are not going to wait to see those good business opportunities, but we will balance out. We need to spend money ourselves on our IDC or we build a computing environment and help our enterprise cloud clients use the AI capability and then using their money to create revenue for us. I think those are the 2 choices we both have our hand and is not costing ourselves on 1 side.

而且這種商業模式不會在資本上追求金山雲，因為他們會建立自己的環境並提供整個運算能力。我們稱之為 OpEx 模型。因此我認為我們不會等待那些好的商機，而是會取得平衡。我們需要自己花錢做IDC或建立一個運算環境，幫助我們的企業雲端客戶使用AI的能力，然後用他們的錢為我們創造收入。 我認為這是我們雙方都擁有的兩種選擇，我們不會在任何一方身上付出代價。

And the last point I would put us way is I think the question is not really about whether to spend a lot is about who we spend for. So I think selecting the right clients is also very important. I think it's our partner, including our shareholders, for example, Xiaomi and the (inaudible) office to build for the (inaudible) and for Xiaomi the EV cars, we will go 100% to make investment and spend CapEx.

我要說的最後一點是，我認為問題其實不在於是否要花很多錢，而是我們為誰花。所以我認為選擇正確的客戶也非常重要。我認為我們的合作夥伴，包括我們的股東，例如小米和（聽不清楚）辦公室，為（聽不清楚）和小米建造電動車，我們將 100％ 進行投資並花費資本支出。

However, for the company and the customers which do not fall into the criteria that you mentioned, repeating customers (inaudible) technology we probably will step back a little bit. So I think this last question about who we spend money for, also very important. And hopefully, it's helpful for you. Thank you.

然而，對於不符合您所提到的標準的公司和客戶，回頭客（聽不清楚）技術，我們可能會稍微退後一步。所以我認為最後一個關於我們為誰花錢的問題也非常重要。希望這對你有幫助。謝謝。

And at this point, I would now hand back to Nicole Shan for closing remarks.

現在，我將把發言權交給 Nicole Shan 做結束語。

Thank you, operator. Thanks, everyone. This concludes our earnings call. Thank you again for joining us today. If you have any other customers, please feel free to contact us. Look forward to speaking with you the next quarter. Have a nice day. Bye-bye.

謝謝您，接線生。謝謝大家。我們的收益電話會議到此結束。再次感謝您今天的參與。如果您有其他客戶，請隨時與我們聯繫。期待下個季度與您交談。祝你今天過得愉快。再見。

This does conclude the conference for today. Thank you for participating, and you may now disconnect. .

今天的會議就到此結束。感謝您的參與，您現在可以斷開連接。 。

[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。 ]