Kingsoft Cloud Holdings Ltd (KC) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Kingsoft Cloud's Fourth Quarter and Fiscal Year 2020 Earnings Conference Call.

I would now like to turn the call over to your host today, Ms. Nicole Shan. Thank you. Please go ahead, Nicole.

Thank you, operator. Hello, everyone, and thank you for joining us today. Kingsoft Cloud's fourth quarter and fiscal Year 2020 earnings release was distributed earlier today and is available on our IR website at ir.ksyun.com as well as on GlobalNewswire services.

On the call today from Kingsoft Cloud, we have our CEO, Mr. Yulin Wang; and CFO, Mr. Haijian He. Mr. Wang will review our business operations and company highlights, followed by Mr. He, who will discuss the financials and guidance. They will be available to answer your questions during the Q&A session that follows.

There will be a third-party translator to provide [consecutive] translation. All translations are for convenience purposes only. In case of any discrepancy, management's statement in original language will prevail.

Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of 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 relate to events that involve 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. Further information regarding this and other risks are included in the company's filings with the U.S. SEC. The company doesn't 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.

Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in reminbi.

It's now my pleasure to introduce our CEO, Mr. Yulin Wang. Please go ahead.

[Interpreted] Thank you, Nicole, and I thank you all for joining our Fourth Quarter and Fiscal Year 2020 Earnings Call.

We are pleased to have closed the year with a solid performance. And in the fourth quarter, we generated CNY 1.92 billion in total revenues, representing a 63.8% increase from the same quarter of 2019. For the full year 2020, our net revenues reached CNY 6.58 billion, an increase of 66.2% year-over-year. We grew faster than the industry average as a result of the continued successful execution of our strategy as a leading independent cloud service provider. With our dedication to cloud business, we are able to avoid the potential conflicts of interest with our premium customers and enhance our neutral position, which in turn gains additional trust from our customers.

We continue to explore growth opportunities across strategically selected vertical sectors. These include the Internet, public services, financial services and health care sectors. And we have improved and refined our key technologies and deeply dug into these sectors to meet customer demands. Over the past year, we not only expanded our revenue from existing customers, but also cooperated with many new premium customers. This includes Internet companies such as Zhihu, Agora, Huayan, Huya, Bigo, Sogou, [Aoi Digital] and others. Online education companies, such as New Oriental, [We Educate] and others; as well as financial institutions such as CITIC Bank, Hua Xia Bank, Mashang Consumer Finance Company and [Chung Z Bank] as a backbone that supports the IT infrastructure development plan.

Cloud computing have been growing rapidly. We will take the opportunity to further expand our business scheme and to enhance our market position as the first choice in terms of independent cloud service provider.

Firstly, let me talk about the public cloud. According to IDC China Quarterly Public Cloud Services Tracker report, for the third quarter of 2020, we again ranked among top 3 for the Internet cloud service providers in China. We continued to focus on serving our premium customers with safe, stable and comprehensive products and technical services and the [hard power support core] in their key projects.

For example, for must-watch live annual gala, we jointly organized about a leading short video platform and a regional TV station, we have developed a complete support system and emergency resource scheduling plan to quickly respond to changes in customers' needs and ensure a great live-streaming experience.

In addition, we also provided services to a Chinese New Year's eve party jointly organized by [BTB] and [Young She Team] that is a new media platform for China's top TV station, CCTV. The peak number of concurrent users of the last broadcasting party reached 250 million. We worked with the customer 1 month ahead of the event to confirm security measures, resource scheme and redundancy to provide stable cloud delivery and the network security services to ensure the smooth operation of the party.

In terms of new customers, we are engaging some Internet conglomerates to further explore their cloud demand. By deeply digging into and understanding customers' needs. We have laid a solid foundation for reliable revenue growth this year.

Now let's move to product upgrades. We continue to improve our cloud-native product portfolio. We launched a bare metal server to provide high-performance infrastructure services to customers. For example, in December, knowledge-sharing platform, Zhihu, completed the migration of its entire online business to our cloud. This included the deployment of 1,000 bare metal servers, which makes it one of the largest Kubernetes clusters in China.

In addition, we continued to upgrade our storage services. We are able to deliver hundreds of petabytes cloud storage as a standard service. We also launched a high-performance storage product, including file storage, archive storage and others.

In terms of coding and encoding technology developments, we continued to enhance our technical advantage. In December 2020, our KAV1 video encoder technology ranked #1 in the UGC video category as the leading global video algorithm comparison, demonstrating our team's technical strength and innovation.

Looking forward, we will continue to leverage the advantages of our cloud-native products portfolio, strengthening our software capabilities and provide our customers with high-performance, secure, stable and scalable cloud services.

Now let me talk about the enterprise cloud business. China's enterprise cloud service market is growing rapidly. In the public service sector, we signed smart city projects with 22 regions, across more than 10 provinces in China. For example, we kicked off [Ben Zhu's] first pilot project, [Dong Shu Season]. That means conduct the computing in the West China and for the data from the Eastern China, which is a national program that intends to balance the computing resources between the Eastern and Western regions of China. In addition, we also won a project for [Northern Health Medical Big Data Technology Company limited] to help them build a cloud platform for scientific research and testing.

For the financial services segment, more enterprises are gradually turning to distributed databases on cloud. Moreover, cloud deployment models are currently better received than the traditional or conventional deployment models. The company has upgraded its [driving] base system to be 2.0, and this supports distributed transactions, distributed computing, and it features high availability, flexible scalability, security audits and many other important capabilities.

We have already started cooperating with many customers in the sector. For example, we have signed an agreement with China CITIC Bank to build a cutting-edge data lake which will have them store and process a massive amount of data and power the next generation of efficient and intelligent digital financial services. We also provided highly stable and easily scalable public cloud services to a large state-owned bank and to help them connect their network services to cloud servers and deploy public cloud storage.

For the health care sector, we officially kicked off a new project for the Wuhan Municipal Health Commission to help them build an integrated public health information platform. As an important seat in the fight against the COVID-19 pandemic, Wuhan has received the state support in terms of state's treasury bond. Even then, Wuhan has played such a pivotal role in the early fight against COVID-19 pandemic, and it helps infrastructure backed by this.

We believe that our projects will be especially a flagship infrastructure benchmark, and we will have commission with 4 key tasks. The first is to help build medical service supervision systems and to strengthen service quality. The second is to be our regional data center for [ECG authority] and the medical [impacts] to share resources and improve overall medical service capabilities. The third is to develop city-wide health care-related electronic circuit system. The fourth is to build digital emergency system in 60 pilot hospitals.

In the meantime, our cooperation with CEC is well on the track. And so we are jointly promoting the second phase of picture archiving and communication system, or PACS, projects in Chongqing and other cities.

Going forward, we will continue to execute our proven strategy and the focus on the select verticals that I just walked you through. In addition to digging deeper into customer needs, we will actively broaden our customer base, prudently expand into Southeast Asian markets and look for other investment opportunities. And we will also improve our overall technical capabilities to capture the huge growth opportunities in the midst of the current wave of digital transformation.

Lastly, I'd like to very briefly touch on our ESG efforts. We keep focusing on corporate governance, human capital, data security, environmental protection and other social responsibilities. We are working on our internal ESG initiatives and expect to publish the first ESG report in the near future.

I will now pass the call over to Henry to go over our financials of the quarter. Thank you.

Thank you, Yulin. Hello, everyone. I will now discuss our financial performance for the fourth quarter and full year 2020. Please be reminded that all numbers quoted here are in RMB. Please also refer to our earnings release for detailed financial results.

So to begin with, I would like to highlight several points. First of all, we are pleased to report that our total revenue of 2020 were RMB 1.92 billion this quarter, representing a year-over-year growth of 63.8%. Total revenue of financial year 2020 were RMB 6.58 billion, up 66.2% from 2019, which was well above the growth of the cloud industry in China.

Number two. The increasing demand for enterprise cloud services drive our revenue growth. Our enterprise cloud services revenue this quarter were RMB 535.9 million, an increase of 143.1% year-over-year. Enterprise cloud services revenue of 2020 was RMB 1.37 billion, up 182.3% year-over-year and accounting for 20.9% of our total revenue compared with 12.3% last year.

Number three. Benefiting from our premium customer strategy, we are very pleased to see that many large customers have been making multiyear commitments with us.

We are hearing the feedbacks of our shareholders. And in order to let the market better understanding our project pools, we are very happy to share our backlog with you.

Even a large number of projects haven't started the bidding process on the client side or have not finalized agreement yet at the very beginning of each year, the amount of our existing project orders of enterprise cloud revenue already reached RMB 2.8 billion, including a certain part of orders from recurring revenues. And we believe that existing orders will form a solid foundation of our revenue base in 2021.

Number four. Our customer diversification and our revenue mix have been improving continuously. For example, revenue from our top 10 premium customers contributed around 65% of total revenue this quarter compared with 73% in the same period last year. We are seeing the trend of diversification across our major premium customers. In addition, our cloud delivery services, which include value-adding services such as coding, encoding and image enhancement functions, et cetera, contributed below 50% of our total revenue for 2 straight quarters last year. The contribution of the cloud computing services has also increased.

Number five. Our adjusted EBITDA margin was also approaching single-month breakeven in this quarter. Adjusted EBITDA margin for the fourth quarter was negative 0.9% compared with negative 7.6% in the same period of last year, representing an improvement of 6.7 percentage points. Adjusted EBITDA margin also have been seeing improvement for 10 consecutive quarters.

Net loss margin also narrowed to negative 5.5% this quarter, which was a significant improvement from negative 20.4% in the same period last year. Our earnings per share, aka EPS, this quarter was negative RMB 0.03 per share, improving significantly from negative RMB 0.32 in the same period of last year.

Number six. Our business is sufficiently funded at this moment. As of December end 2020, our cash position was RMB 6.12 billion.

Lastly, we were included in 2 major indices at the end of last year, the MSCI China in November and FTSE Russell Global Large Cap Index in December, respectively.

Now I will go through the details of our financial results. Our public cloud services revenue increased by 44.1% year-over-year to RMB 1.36 billion. We are committed to our premium customer strategy. The net dollar retention rate of our premium customers in 2020 was 147%. Meanwhile, we are engaging with certain Internet conglomerates to further explore new opportunities.

During the fourth quarter, enterprise cloud revenue increased by 143.1% to RMB 535.9 million. Our total number of premium customers in 2020 reached 322, up 79 accounts. The ARPU of premium customers also increased from RMB 15.9 million in 2019 to RMB 20 million in 2020. Cost of revenue increased by 63.5% year-over-year to RMB 1.83 billion. IDC costs increased by 49.6% year-over-year to RMB 1.1 billion, as a percentage of total revenue, decreased from 62.7% in Q4 last year to 57.2% this quarter.

We are achieving great economic scale and improving resource efficiency. Depreciation and amortization costs remained relatively stable at around RMB 167.5 million. Other costs consist of third-party software purchases, outsourcing cost and channel costs associated with both public and enterprise cloud as well as other equipment costs related to enterprise cloud services. Other costs were RMB 552.3 million, and the staffing costs were RMB 10.3 million.

Adjusted gross profit was RMB 94.9 million, increased from RMB 56.7 million in Q4 last year. The adjusted gross margin was 4.9% this quarter. Our adjusted gross margin benefit from our continued leverage on economies of scale and cost savings, offsetting by the investment into new business opportunities of strategic verticals, such as health care, financial services and incurred costs for ongoing projects.

Total operating expenses decreased to RMB 337.9 million, down 5.4% from Q4 last year. Excluding share-based compensation, adjusted R&D expenses were RMB 161.3 million, as a percentage of total revenue, decreased from 13.6% in Q4 last year to 8.4% this quarter. Adjusted selling and marketing expenses as a percentage of revenue decreased from 7.3% in Q4 last year to 5.6% this quarter. Adjusted G&A expenses as a percent of revenue decreased from 6.4% in Q4 last year to 0.8% this quarter.

Our adjusted EBITDA were negative RMB 70.5 million compared with negative RMB 89.3 million in Q3 last year. Adjusted EBITDA margin was also approaching single-month breakeven. And was negative 1 -- was negative 0.9% for the fourth quarter.

As of December end 2020, we had cash and cash equivalents of RMB 6.11 billion. During this quarter, capital expenditures was RMB 404.7 million. Thanks to economies of scale and improving our IT efficiency, CapEx as a percentage of total revenue, decreased from 26.6% in 2019 to 21% in 2020.

Moving to the outlook. For the first quarter of 2021, the company expects total revenue to be between RMB 1.83 billion and RMB 1.93 billion. It is based on the company's current and preliminary views of the market and operational conditions, which are subject to change.

To add, the forecast reflects the relatively late timing of Chinese Lunar New Year holiday in the first quarter of 2021 compared with last year and also the typical pattern of the procurement and implementation process of major enterprises and public sector clients in Mainland China in the first quarter of each year.

Meanwhile, we believe our public cloud revenue, we also expect to continue to grow sequentially.

This concludes our prepared remarks. Thanks for your attention. We are now happy to take your question. Operator, please go ahead. Thank you.

(Operator Instructions) Your first question comes from the line of Kyna Wong of Crédit Suisse.

And congratulations for improving, we saw, especially the EBITDA margin approaching breakeven. And I wanted to chat -- I have 2 questions. First is about the first quarter guidance. Because we do see the revenue growth is actually like 40% year-over-year. And somehow that certain like the impact from the Chinese New Year's holiday and also some part going to be pushed out. So can we have more color on what kind of project that actually pushed out into maybe 2Q or some time in the near term? And if like there's any like issue that is like caused by like competition and other things that will affect your original expectations?

And because my second question is actually related to the competition landscape. Because we noted that the others, like giant internet cloud service provider, they're also moving to the enterprise cloud aggressively. And we do see that this area quite fragmented. Maybe on the purpose side, they will compete with you on certain premium customer, offering better pricing or things. On the other hand, enterprise cloud will also see more competition in this area. So I think that's my 2 questions.

(foreign language)

Thank you, Kyna. I will take the first question, and our CEO will answer the second one.

Yes. Thank you, Kyna. I think it probably is going to be a very important question, and I definitely want to share more color in addition to the prepared remarks earlier.

I think the first point, I just want to kind of recap on what happened back in Q1 2020. I think that will lay out the assumption of my answer below. I think for 2020, there are 3 major factors that affecting the pattern in 2020, which actually was a unique year. Obviously, we all know there was COVID-19 happening in Q1 2020 that actually increased the base of the usage on the public cloud side. And that actually carried over for a few quarters last year and also will carryover for this year. I think this is going to be a positive factor for the form -- base of the revenue.

And also, as we mentioned last year, the Chinese Lunar New Year holiday was pretty much early. That was actually didn't affect too much on the Q1 of implementation. And also typically, the Q1 was also a relatively low season for all the major public sector clients implementation and bidding processes.

And also to share a few numbers, in Q1 2020, if you remember, our total revenue is about RMB 1.39 billion. So as a percentage of the total revenue in 2020 of RMB 6.6 billion is roughly about 20% in Q1. And if you look at first half and the second half of the revenue split of last year, it was around about 43% or 45%, and the late part of the second half is around 55% or around that range.

So if you look at the guidance for this year, so assuming we're still around the same target for this year, the first half and the second half of the revenue split is actually very similar to the mathematical split of last year, which is around first half, about 40%, 43%; and the second half is around 55% to 60%. So I think that's kind of laid out the comparison from an analytical perspective.

However, as we mentioned for this year, even right now, as they just finished the 2 sessions at the meetings in Mainland China and all the kind of major projects, especially the bidding process is about to start, even without those considerations, the current backlog, as we shared, of enterprise cloud revenue only, excluding the public cloud revenue, we already have RMB 2.8 billion of the backlog on hand. I think that will form our foundation for the revenue to carry on. And some of that backlog, we're already seeing the recurring revenue nature, especially from high-quality accounts, for example, from health care and financial services and certain major cities of the public sector clients.

So overall, we think that the revenue trend and the pattern across the quarters, actually year-over-year, were very similar. And for Q1, is carried on the potential very same pattern and unique feature for this year, given the 2 factors we mentioned. Thank you, Kyna, and we'll take the second question.

(foreign language)

Okay. And also for the second question, Kyna. I think for the major competitions, I think a few things. We haven't seen any changes. I think the premium customer strategy and our key focus on the neutrality will give us more revenue opportunities. And we understand that in the market, there are maybe other players are still thinking -- still making great efforts to get into the market. But as we know that the total addressable market of the China cloud market is still growing rapidly. And also we are seeing a trend that the clients are actually willing to use more cloud vendors, that actually also the same opportunities not only for us, but also for other peers in the market as well.

So in some situation, as we mentioned, in a few cases, that we become an important multi-cloud vendor for our clients, even though maybe other companies may also have a wallet share. But I think that doesn't prevent us to earning more dollar value from the same client because the market itself is also growing.

To give you more 2 data points. As we mentioned, in the third-party expert IDC stats, that we are clearly ranked as #3 on the Internet public cloud vendors. And also, we are making great progress, especially for the key accounts and clients who have a deep wallets and budget and spending and who have more concerns and considerations when they want to select a neutral player who they -- were more trusted and who may never get into any financial conflict of interest with our clients. Thank you, Kyna.

Your next question comes from the line of Alex Yao of JPMorgan.

(foreign language)

So my first question is regarding 2021 revenue growth outlook. Would you be able to share with us your preliminary thoughts on the 2021 revenue growth outlook? Particularly, what are the growth outlooks for enterprise cloud as well as public cloud?

Secondly, I would like to ask, what will be the key industry drivers to the public cloud business? Would you be able to share with us your revenue exposure from video-based industries in 2020, including long-form video, mid-form video, short-form video and live streaming?

And then as you guys implement a diversification strategy, what are the other industries that could potentially become the new growth driver to your public cloud business in the next 1 to 2 years?

[Interpreted] Thank you, Alex. So for 2021, we have already have a good start. And compared with 2020, we also have good expectation for 2021. As Henry has mentioned, we also have quite a big number of orders in hand.

And with regard to cloud computing, I think, from '21 to 2022, that there's still rapid development of growth in the cloud combating. And we have strong confidence in this.

And with regard to the 3 sectors, public services, financial services and medical health care services, we have developed, for past period, so the [crest] media with the cloud business. And I think the regulatory climate or regulatory measures are also maturing. And so we can see the continued growth in these 3 sectors.

And also with regard to the video business and the public cloud item. In 2021, we think that the good developments in the [venues] there will be not a big change. But with regard to 2022, there will be probably further development in the HD business and also in the immersion video business. And the share of the video business in our public cloud segment, it's quite stable. There's no big change based on our expectation. And so there -- and with regard to the customers, for example, the educational sectors, the -- and the game sectors and also e-commerce sectors, they also start using some videos in their applications.

So generally speaking, in the video business, we do not expect any big change with regards to the prospect for 2022. We do need to wait and observe the further development of the relevant technologies.

Your next question comes from the line of Thompson Wu of UBS.

(foreign language)

I have 2 sets of questions. The first is regarding fourth quarter results. Just the margin trend in the fourth quarter, a little bit of a decline sequentially. Can you walk us through the impact there?

Also on the fourth quarter, G&A expense seems to have declined quite a bit year-on-year. How should we think about G&A expense going into 2021?

And the other question is about just the health care cloud. There seems to be quite an important initiative for both China and, also in my view, the company. Can you just talk a little bit about the outlook for health care cloud and Kingsoft's opportunities there?

Yes. Thank you, [Thomas]. Very happy to respond to questions. I will take the first one, and our CEO, Yulin, will answer the second question.

For -- around the gross margin for Q4. So I think the first point I want to mention that, if you compare on an annual basis, right, from 2019, our gross margin was 0.4%. And 2020, on an annual basis, our gross margin was 5.6%, so -- which is actually already a very significant improved on a year-over-year basis. And also it's going to be a faster pacing even compared with other major peers in the cloud industry in China. So I think that's kind of the layout on the first part.

And especially for the company budgeting perspective internally, we actually need to look at how we invest in our business, into technology to the clients. So if everyone remember, for example, in Q3, in September and October, we just entered, as we mentioned, the health care industry and vertical, and we signed a partnership with CEC Group. And also in Q4, we made a few major breakthrough and also introduced a few new clients, especially in the banking sector, for example, CITIC and Hua Xia. So as you know, those are the new area of high-quality clients who are willing to receive our high-quality technologies.

But the initial, especially the bespoke and some of the customer solutions, we need to tailor into those clients. As you know, on the health care and financial services, they require certain customized implementation of the cloud-native technology. So that's why in Q4, we have incurred certain costs and kind of the investment into those new business areas that will actually incur the cost on the gross margin line that affecting on that.

So if you compare with absolute dollar number from Q3 to Q4, the number itself is actually not widened a lot, it's about RMB 20 million, RMB 30 million, in that range. And that's actually reflecting the dollar value we invest into those new areas.

So for the long term, I would say my third point is, for the long term, we still believe that our gross margin were improving in the long term. Obviously, on a quarter basis, maybe you have a little bit kind of changes. But in the long term, it's -- the fundamental forces support our continuous improvement of the gross margin going forward.

And to a second question on the G&A expenses. So the last year, 2021, so we prepared for our IPO and did our IPO in Q1 and Q2. And in Q3, we also completed a follow-on offering. So that's why there was incurred some part of the transaction-related external and internal expenses.

And for Q4, as you know, we are quite dedicated into our new business. And we were kind of working with our existing clients, so the G&A expenses actually reflecting a reduced base of the underlying needs for those client relationships and the business.

And so going forward, I think, especially for 2021, as a percentage of the total revenue, I think last year's G&A expenses as a total revenue for last year will continue to decline on an annual basis. But again, because on a quarter-over-quarter basis, were kind of related, for example, for the employee bonuses and certain incentive payments and certain projects on an internal/external basis, may have a little bit of fluctuation. But we believe on an annual basis, the percentage of G&A expenses from '19 to '20, to '20 to '21 will continue to decline gradually.

Thank you, Thomas . And now our CEO, Yulin, will introduce and respond to the second question.

[Interpreted] So thank you. With regard to the health care sector, actually, it is important sector plan, one of the priorities for KC. And we actually entered into the health care sector since 4 years ago. And we also started our starting up with the health care sector since 4 years ago. It's quite a competitive sector actually, both health care services, health as government's public service, it also involves the health care arm and the and all, so the health care services and social security services. So basically, it's quite a huge, complex system.

And after 2020, there's big changes in the health care sector. The state has provided strong support to the digitalization of the health care sector. We have actually gained the advantages because we have pioneered in providing cloud services to the health care section.

As you know, in September 2020, we signed partnership agreements with CEC. And we have provided services to clients or customers in Chongqing, Jiangsu and Sichuan. We are actually the first cloud service provider that provided such services to the healthcare sector in China and therefore saw some progress. So we are already in phase 2.

For example, recently, we also have won bid for the Wuhan integrated health care information system. And we have -- we also entered the projects from other cities. So counties in [Hugo] province, basically, we have covered the whole spectrum, from the province, to city, to county and even to medical institutions.

And I shall say, the health care sector is growing very quickly. And I think in the future, it will still play an important role in contributing to our business growth as well as our revenue or income growth.

Your next question comes from the line of Liping Zhao of CICC.

(foreign language)

I have 2 questions for you. First one is related to the premium customer strategy. Can the management share the number of premium customers in 2020? And what's the dollar retention rate of these premium customer?

And my second question is related to the CapEx plan as the company are going to build a new IDC in Tianjin.

Yes. Thank you, Brenda. Happy to take on this question.

So regarding the clients, we do see that our execution quality is very much on track. And in 2020, we have increased the number of the premium customers to 322, which is an improvement of 79 key accounts.

And also in addition to the increase of the total pool of the premium customers, the average revenue contribution, aka ARPU, of the premium customers has also increased, from RMB 15.9 million in 2020 -- or in 2019, to about RMB 20 million in 2020, which is also a significant and a decent improvement. And also, as we mentioned, that the diversification around and within the premium customer, we have also seen that trend as well. I think these are the 2 kind of key indicators that not only indicating the universe of our premium customers, but also the quality and the diversification of that.

So to your second question on the CapEx. Our execution on expanding on the CapEx were well much on track and have been within the budget for 2020 at about RMB 1.5 billion. And for 2021, I think we relatively will keep on the same rate of the CapEx even though we will start and highly likely complete our second data center in Tianjin, as we mentioned. So I think our total CapEx for 2021 will be still around about CNY 1.5 billion, maybe kind of CNY 1.5 billion, CNY 1.6 billion, depends on how the pricing points move around.

But overall, as you probably can notice that, the CapEx as a percentage of total revenue has declined from about 50% a few years ago to about 20% last year, and it will further go down as a percentage of revenue for this year.

And the construction of the Tianjin data center is still where we have much on track. We may seek additional financing sources and the potential leverage or leasing of the Tianjin data center which will not incur for our cash flow from that perspective.

And the Tianjin data center will also serve an important IDC center for the region near Beijing and will continue to serve a better quality of services for the major client we have around the same region.

Your next question comes from the line of Thomas Chong of Jefferies.

Can you comment about the impact to our business about the tension between China and U.S. and how it impacts our procurement?

[Interpreted] So up to now, we have not seen the impact from the U.S.-China relationship. In our sector, it doesn't matter, whether it's cloud computing or our customer services, there's no impact.

Your next question comes from the line of Elsie Cheng of Goldman Sachs.

(foreign language)

I have a few follow-up questions on -- first one is on the public cloud side. Just now, we mentioned that we actually have secured a lot of new customers from the Internet companies and with the continued decline in revenue concentration. So here, my question is more about, so apart from the multi-cloud penetration as industry trend, can we share a little bit more on our new customer acquisition strategy? And what is the competitive edge that we do have that has led to the success in this?

And then the second one is following to the public cloud question. When we think about by product, so what are the some of the new products we're providing to the new customers? And then looking into 2021, together with 5G and other opportunities in the industry, when we're looking at computing, storage and delivery, would there actually be a change in the revenue mix here?

And then the second question is more about the enterprise cloud. So can we have a little bit more understanding into what is the growth rate by enterprise and public cloud into the first quarter guidance?

And then following up on the seasonality we just explained, plus the RMB 2.8 billion backlog into the second quarter or second half of 2021. Can we actually expect an accelerated revenue growth trend?

[Interpreted] So most of the public cloud premium businesses are from the Internet sector, and they are mostly like video game, educational and e-commerce clients. And the market is also -- is already familiar with such customers. And we have won the premium customers from the video and game sectors. Actually, we have won most of them. And now we care more about this customer satisfaction and also retention, revenue retention rate from these existing premium customers, and also the growth in the revenue from these customers.

With regard to other sectors and with the deployment of the cloud into sectors and also our efforts in sales, we believe there's also growth. And we are also expanding our new large clients.

And with regard to the products, mainly using the video products. And there have been high growth. And this will also include such as storage, computing and high-speed network. And I think -- so the share for video business might decrease, but generally, the growth rate remains high.

And third, let me talk about the public cloud business. And Henry has mentioned, we -- in the first quarter, we had already won order worth CNY 2.8 billion. And I think the implementation of these projects could be affected by seasonal factors or COVID-19 pandemic. And so we have considered the overall situation throughout the year. And so looking forward to Q2, Q3 and Q4, we think there will be rapid growth in the enterprise cloud business. The growth rate for the enterprise cloud business is higher than the growth rates of the public cloud and as well as the industry average.

And also with regard to the new customers, we have acquired new customers, such as Zhihu, Agora and Bigo, and also CITIC Bank, Hua Xia Bank, [Tudor] Bank and Mashang Consumer Finance Company.

Your last question comes from the line of [Nelson Cheung] of Citi.

This is Nelson asking on behalf of Brian Gong from Citi. So I have one quick follow-up question. How does management see the possibility of TikTok entering into the infrastructure cloud area, considering their large consumption on CDN as well as strong accumulation of video cloud technologies?

[Interpreted] So actually, last time, there were analysts have already asked the questions with regards to the purchase with the resources by ByteDance. To our knowledge, there are many uses for their internal IT team that is used for their internal technology and product development. So there's no impact on our business with ByteDance.

As we are now approaching the end of the conference call, I will now turn the call over to Nicole Shan for the closing remark.

Thank you, operator. Due to the interest of time, we conclude our earnings call today. Thank you again for joining us today. If you have any further questions, please feel free to contact us. We look forward to speaking with you again next quarter. Have a nice day. Thank you.

Thank you.

Thank you, everyone. Bye-bye.

Ladies and gentlemen, thank you for your participation in today's conference. You may now disconnect. Good day.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]