36Kr Holdings Inc (KRKR) 2022 Q4 法說會逐字稿

Hello ladies and gentlemen. Thank you for standing by for 36Kr Holdings Inc.'s fourth quarter and fiscal year 2022 earnings conference call. (Operator Instructions) Today's conference call is being recorded. I will now turn the call over to your host, Jianan Ding, IR representative for the company. Please go ahead, Jianan.

Thank you very much. Hello, everyone, and welcome to 36Kr Holdings' fourth quarter and fiscal year 2022 earnings conference call. The company's financial and operational results were released earlier today and have been made available online. You can also view the earnings press release by visiting the IR section of our website at ir.36kr.com. Participants on today's call will include our Co-Chairman and CEO, Mr. Dagang Feng, and our Chief Financial Officer, Ms. Lin Wei.

Mr. Feng will start the call by providing an overview of the company and performance highlights of the quarter in Chinese, followed by an English interpretation. Ms. Wei will then provide details on the Company's financial results before opening the call for your questions.

Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results will be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the U.S. SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law.

Please note that 36Kr's earnings press release and this conference call include discussions of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. 36Kr's earnings press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures. And please note that all amount numbers are in RMB.

I will now turn the call over to our Co-Chairman and CEO, Mr. Dagang Feng. Pal, please go ahead.

(interpreted) Thank you. Hello, everyone. Thank you for joining our fourth quarter and fiscal year 2022 earnings conference call.

2022 was a year full of challenges. Against the backdrop of uncertainties brought about by COVID-19 resurgences and the macro headwinds, we delivered solid performance. Our full-year revenue reached RMB322 million, growing 2% year over year, with a profit of RMB22.64 million, marking our first full-year profit since our listing thanks to our refined operations and the professional expertise we have acquired over our years of dedication to the New Economy sector. Driven by our dual-engine strategy fueled by content and products, we have developed a diversified business model and a comprehensive content ecosystem focusing on business, technology, and lifestyle through continuous innovation across our content, products, and services. Next, I'd like to share a more detailed progress update on each of our segments in 2022.

I will begin with the enrichment of our content ecosystem. We continued to elevate our content-generating capabilities to meet users' diverse needs, with high-quality content spanning a broad variety of topics. In 2022, we launched a series of sub-vertical media, including "Digital Kr," "Kr Carbon," "Hardcore Kr" and "Waves," providing deep insight across popular fields in the investment circles, such as digitalization, dual carbon and ESG, hardcore technology, and specialized and innovative enterprises. We also created youth-centric content verticals based on topics related to the younger generation's lifestyles, including "Oh! Youth," "Super Review" and "Career Bonus," achieving differentiated user coverage. Meanwhile, we produced a varied slate of content programs, including "CEO Tips," "Scale," "Foreseeing 2033," "Long China 50" and "Super Factory," facilitating broad dissemination of New Economy content. These efforts enabled us to keep producing a considerable number of blockbuster articles throughout the year, with nearly 700 articles racking up page views exceeding 100,000. The launch of these sub-vertical media also brought us revenue upside amounting to tens of millions of RMB. For instance, by venturing deeper into the enterprise digitalization field with "Digital Kr," we will expand our presence in this huge market worth hundreds of billions of RMB. "Waves," another popular program from this sub-vertical, will also raise our revenue ceiling by increasing our influence among financial institutions.

Furthermore, we made continuous efforts to launch content in diverse formats, including text, graphics, short-form video, audio, and live streaming, through both our own platform and external channels. By working with new media platforms such as Weibo, Xiaohongshu, Toutiao, Zhihu, Bilibili, Douyin, and Kuaishou, among others, we have built a multi-dimensional content dissemination system with comprehensive coverage and full access to users and New Economy players, elevating our content influence.

On a related note, 36Kr has always prioritized application of artificial intelligence technology in content production and aggregation and has adopted the latest AIGC and ChatGPT technologies in our content ecosystem. Recently, we were invited as one of the first batch of companies to partner with Baidu's ChatGPT-style Ernie Bot ecosystem. We believe this partnership will further elevate our content production efficiency and quality, thereby enhancing user interaction and stickiness.

Second, new user expansion. Our diversified content ecosystem has spurred continuous growth of our user base. In terms of user number, as of the end of 2022, the number of our followers exceeded 28 million, up 23% year over year, of which short video followers accounted for 7.75 million, rising by 43% year over year. User quality also remains robust, with an ever-broadening array of user profiles, spanning investment gurus, entrepreneurial elites, government officials, key employees in large enterprises, workplace novices, and young people chasing their dreams. Furthermore, we have effectively fortified user loyalty and engagement with our high-quality professional content verticals.

Third, our new IP incubation. Over the past years since our inception, we have continuously pioneered industry benchmark IPs in the New Economy sector. Along with our flagship WISE New Economy Kings Conference in 2022, we created "X·360 Entrepreneur Carnival and China Investor Summit" with the theme "Maintaining the Miracle," an innovative IP which efficiently empowered startup companies to connect with investment institutions. Moreover, the creation of our "Unexpected" and "Marvelous" series of IPs, which integrate consumption and entertainment, drove C-end user growth and customer acquisition for enterprises. Notably, the "Marvelous" IP made a successful foray into lower-tier markets in 2022 with its exclusive "The Marvelous Taste of Bashu" event, jointly created with our regional offices in Sichuan and Chongqing. We worked with hundreds of CEOs, government representatives, and investors throughout the course of this event to unlock opportunities in the local new consumer industry, which also helped our brand influence and service system to penetrate further into the region.

Fourth, innovation on digital tools. In November 2022, we launched 36Kr Venture Capital platform, reaffirming our commitment to "extending media's boundaries" and marking our further expansion to digital tools services. By integrating information and data, we provide standardized solutions and precise financing exposure to facilitate the discovery of high-quality early-stage projects, while offering our matching services to connect projects with potential investors. Up to now, the 36Kr Venture Capital platform has collected tens of thousands of outstanding projects, of which 80% have finished at least one round of financing. Having attracted the attention of over a thousand investors from hundreds of top-tier investment institutions, we completed up to a thousand venture capital matches per week on average. Currently, our Venture Capital platform is still in the product refinement stage, but we do expect to begin commercialization in the second quarter of 2023. To give you a point of reference, a pair of similar products, PEdata along with PEdata Max, have achieved annual revenue exceeding RMB60 million. Therefore, we believe the 36Kr Venture Capital platform, with its integrated functionality spanning resources connection, services and analysis, is poised to bring us considerable revenue upside.

Last but not least, product upgrades. Service productization was an important theme for us in 2022, and as such, we iterated and upgraded some of our relatively mature product series. For example, 36Kr Research Institute continued to expand its industry coverage, with a consistent focus on industry verticals development, capital trends, and policy orientations. We also enhanced its research depth and level of professionalism, which helped the company as a whole improve its customer acquisition and commercialization performance through its distinct product portfolio, clear customer positioning and evident advantages.

36Kr Business School is a business training product that we revamped in 2022. We designed its Venture Capital Class and related training programs to provide insights for small- and medium-sized enterprises in varying stages of development and connect them with capital and other resources, contributing to their sustainable development. During the COVID-19 outbreaks in the second half of 2022, 36Kr Business School held training sessions and public courses on financing in various class formats, such as our Funding Acceleration Camp, which contributed to our commercialization revenue. We have observed that the thriving venture capital market is fueling increased demand for entrepreneurship training. In fact, some of our peers have reached RMB100 million of annual revenues in this area. For 36Kr, we plan to launch a wide variety of courses and expand sales channels in 2023 to realize greater growth.

I also want to specifically highlight that we continued to upgrade and iterate our platform product, the 36Kr Enterprise Service Review platform, in 2022. In addition to creating a "Quadrant" encompassing product databases, user review libraries, key industry person databases and knowledge graph libraries, we have further refined its industry products evaluation system and standards. The platform fosters deep connections between sellers and buyers, helping enterprises acquire customers with precision and enhance their brand influence. I will elaborate on the development of the Enterprise Services Review Platform a bit later.

In summary, we built on our enriched [content] (added by company after the call) ecosystem, accumulated product advantages, and enhanced our operational capabilities throughout 2022, consistently strengthening our commercialization capabilities. This empowered us to steadily grow our revenue and realize our first full-year profit since listing. Next, I'd like to share the details of our commercialization progress.

We achieved solid results across all of our business segments in 2022. Notably, our advertising revenue reached RMB222 million, up 3% year-over-year. The number of our advertising customers grew to 532, with ARPU remaining relatively stable year-over-year.

We continued to leverage the advantages of our advertising business centered on branding and efficacy, while also exploring new scenarios and solutions for content marketing and commercial integration. Along with graphics and text, we tapped into innovative advertising formats, such as short video, live streaming and vlogging, offering customers a diverse selection of media-rich products. In terms of industry expansion, we broadened our advertiser base in 2022 from our core industries, such as TMT, consumer, automobile, real estate, advanced manufacturing and new energy, to include the medical industry, health and wellness, banks, and other financial institutions. We also formed partnerships with leading industry players, including Johnson & Johnson and Huatai Securities, among others. At the same time, our advertising commercialization channels have become increasingly diverse and well-balanced, and we have expanded our monetization scale across more traffic platforms, such as Bilibili, Zhihu, and Xiaohongshu and WeChat Video Account, in addition to our 36Kr webpage, 36Kr app, WeChat, and Weibo.

Notably, our short video revenue in 2022 more than doubled year over year to reach tens of million RMB on a full-year basis, accounting for 17% of total advertising revenue. Our short videos have raked a massive user traffic with high-quality original content, attracting the attention of numerous young users and advertisers. Many renowned companies have become repeat customers of our short video advertising services, such as Intel, iQIYI, Huawei, JD.com, and Zhihu. In the fourth quarter, we customized a mini-variety show video for the Honor 80 smartphone, entitled "Pangbo! Time to Study Vlog!." The video featured an array of young opinion leaders, such as talk show actors, hosts, and travel bloggers, explaining and demonstrating the product's functions and highlights in vlog form, boosting the customer's contract size to a new high.

With respect to enterprise value-added services, we hosted nearly 30 industry summits covering hot topics, including new technology, new energy, and new consumption. During the COVID-19 outbreaks, we adopted an integrated online and offline format leveraging video and live streaming, among other formats, to connect more New Economy players through digital conferences. Notably, our WISE event achieved total exposure exceeding 4.5 billion, while "X·360 Entrepreneur Carnival," our new IP event, attracted 350 million views from simultaneous live streaming on a total of 24 platforms, further demonstrating our strong influence and service capabilities in the New Economy.

Regarding consulting services, our full-year revenue grew by 17% year over year in 2022. 36Kr Research Institute published research reports in various formats, serving many local government customers, and established in-depth collaborations with a wide range of well-known enterprises, including Volkswagen Group China, Suning.com, Ctrip, JD.com, NetEase, Zhuan Zhuan, ByteDance, Haier Capital, Hongtai Aplus, and Beijing Shougang Fund, garnering widespread acclaim from industry professionals.

At the same time, we continued to broaden the scope of our regional expansion. Thus far, we have built a regional operating network covering 12 key provinces and [municipalities] (corrected by company after the call) and established mutually beneficial relationships with both local governments and enterprises. This has enabled us to empower New Economy players as they expand regionally and enter lower-tier markets. In 2022, the number of our regional customers increased significantly, creating a more balanced mix of government and enterprise customers, laying a solid foundation for exploring the wider enterprise value-added services market in the future.

As for our subscription services, our full-year subscription revenue amounted to RMB28 million in 2022, rising by 1% year over year. Notably, the number of institution and enterprise subscribers, as well as ARPU, both improved, while the ARPU of individual subscription services also grew substantially thanks to the growing popularity of our 36Kr Business School's new courses.

Last but not least, I'd like to share an update on our second growth engine, the 36Kr Enterprise Service Review Platform. In 2022, we remained focused on growing our platform's influence and further optimizing its service system. Regarding product functions, we launched Enterprise Service Review Report to compare products and recommend models based on users' actual needs, while generating independent, objective data analysis, ranking reports and charts, efficiently optimizing users' decision-making scenarios. We also refined the Enterprise Services Review Platform's search function, adding search paths for product functions and articles, increasing the accuracy of users' searches. In addition, we improved our product charts' algorithms and display measures to help users better understand product information, user views, and industry ranking, elevating convenience and usability. In terms of customer acquisition formats, we built a variety of content products and IPs across graphics, livestreaming, offline salons, and other formats from users' perspectives to consistently reach decision makers in every industry, which further enhanced the Enterprise Service Review Platform's brand awareness and influence.

Through relentless efforts in our online and offline operations, we achieved rapid growth in the Enterprise Service Review Platform's operating metrics across the board. As of the fourth quarter of 2022, the number of leads has grown 700% compared with the same period of last year, and the cumulative number of products on the platform exceeded 8,000, a year-over-year increase of 52%, with the total number of reviews surpassing 60,000 cumulatively, up 264% year-over-year. The number of merchants on the platform exceeded 1,200, double the number in the same period of 2021. Additionally, in terms of commercialization, as of now, the Enterprise Service Review Platform's contracted sales exceed RMB10 million, with orders from an extensive roster of well-known SaaS suppliers, such as Belsen, Kingdee, Tencent tapd, Google Cloud, and ZTE. We also established strategic marketing cooperation with Volcano Engine under its ByteDance brand, as well as the SMB unit of Lenovo, a Fortune Global 500 company in 2022. Going forward, the Enterprise Service Review Platform will serve a growing cohort of enterprises in need of digital transformation and upgrades, unleashing our platform's value and greatly boosting our commercialization capability.

As we embark upon the post-pandemic era in 2023, we have observed many positive market signals emerge. Entrepreneurs' and investors' confidence continues to strengthen accordingly, leading to increasing business vitality throughout the New Economy sector. We will seize the commercialization opportunities afforded by the economic recovery to keep exploring media's boundaries and build a richer portfolio of products and services. We expect to see continued revenue growth and deliver another full-year profit in 2023. With darkness giving way to light as COVID-19 recedes, we believe we are well-positioned to consistently unlock more growth potential and enterprise value, differentiating ourselves as we accompany and empower our New Economy partners and creating long-term sustainable value for society and shareholders along the way.

With that, I will now turn the call over to our CFO, Ms. Lin Wei, who will discuss our key financial results. Please go ahead, Lin.

Thank you, Pal. Now, I'd like to walk you through more details of our fourth quarter and fiscal year 2022 financial results.

Total revenues for the fourth quarter of 2022 were RMB96.6 million, a sequential increase of 2%. Total revenues for the full year of 2022 were RMB322.5 million, a year-over-year increase of 2% compared to the full year of 2021.

Online advertising services revenues were RMB62.2 million in the fourth quarter of 2022, compared to RMB76.4 million in the same period of last year. The decrease was primarily attributable to relatively weak advertising spending caused by the negative impact of COVID-19 control measures and infections across China during the quarter.

For the full year of 2022, our online advertising services grew by 3% year over year to RMB221.6 million. The increase was primarily attributable to more innovative marketing solutions we provided to our customers, as well as proactive sales strategies we adopted to navigate the challenging environment during the year.

Enterprise value-added services revenues were RMB25.4 million in the fourth quarter of 2022, compared to RMB30.3 million in the same period of 2021.

For the full year of 2022, our enterprise value-added services were RMB72.6 million, compared to RMB74 million in the previous year. The 2% decrease was primarily because some of our offline events were delayed or downscaled due to disruptions from COVID-19.

Subscription services revenues were RMB8.9 million in the fourth quarter of 2022, compared to RMB9.6 million in the same period of 2021. The decrease was primarily attributable to the negative impact of COVID-19.

For the full year of 2022, our subscription services revenues were RMB28.2 million, representing an increase of 1%, compared to RMB28 million in the same period in the previous year. The increase was primarily attributable to our continuous efforts to offer high-quality subscription products to our subscribers during 2022.

Cost of revenues was RMB47.6 million in the fourth quarter of 2022, compared to RMB40.7 million in the same period of last year. The increase was primarily attributable to higher content costs related to expansion of our commercial-oriented content program. For the full year of 2022, our cost of revenues was RMB137.8 million, compared to RMB128.8 million in the previous year. The increase was primarily attributable to the increase in content-related costs, partially offset by the decrease in costs of our offline events.

Gross profit was RMB48.9 million in the fourth quarter of 2022, compared to RMB75.6 million in the same period of last year. For the full year of 2022, our gross profit was RMB184.6 million, compared to RMB187.9 million in the previous year. Gross profit margin for the full year of 2022 was 57.3%, compared to 59.3% in the previous year.

Operating expenses were RMB69 million in the fourth quarter of 2022, compared to RMB61.6 million in the same period of last year. For the full year of 2022, operating expenses were RMB229.2 million, compared to RMB282 million in the previous year.

Sales and marketing expenses were RMB32.8 million in the fourth quarter of 2022, a decrease of 16.5% from the same period of last year, primarily attributable to the decrease in marketing-related expenses. For full year 2022, sales and marketing expenses were RMB122.1 million, a contraction of 15% compared to the previous year, primarily attributable to the decrease in payroll-related expenses, share-based extension expenses, and marketing expenses.

G&A expenses were RMB21.7 million in the fourth quarter of 2022, compared to RMB9.6 million in the same period of last year. The increase was primarily attributable to the release of allowance for credit losses recognized in the fourth quarter of last year. For the full year of 2022, G&A expenses were RMB52.1 million, compared to RMB90.6 million in the previous year. The decrease was primarily attributable to the release of allowance for credit losses and the decrease in professional fees. The release of allowance for credit losses was mainly due to improved collection of accounts receivables.

Research and development expenses were RMB14.5 million in the fourth quarter of 2022, compared to RMB12.6 million in the same period of 2021. For the full year of 2022, our research and development expenses were RMB55 million, compared to RMB47.5 million in the previous year. The increase was primarily attributable to the increase in payroll-related expenses as we bolstered our R&D capabilities for new products and services.

Share-based compensation expenses recognized in cost of revenues, sales and marketing expenses, research and development expenses, as well as G&A expenses totaled RMB4.6 million in the fourth quarter of 2022, compared to RMB4.1 million in the same period of last year. For full year 2022, the total amount of share-based compensation expenses were RMB13.9 million, compared to RMB15 million in the previous year.

Other expenses were RMB1.2 million in the fourth quarter of 2022, compared to other income of RMB1.5 million in the same period of last year. For full year 2022, other income was RMB67.5 million, compared to other income of RMB3.6 million in the previous year. The increase was primarily attributable to gain arising from disposal of a subsidiary and investment income arising from fair value changes of long-term investments, as well as income generated from write-offs of accounts payable.

Net loss was RMB21.5 million in the fourth quarter of 2022, compared to net income of RMB15.4 million in the same period of 2021. For full year 2022, our net income was RMB22.6 million, compared to net loss of RMB90.6 million in the previous year. This is the first time we achieved full-year profitability since our IPO in 2019.

Non-GAAP adjusted net [loss] (corrected by company after the call) was RMB16.9 million in the fourth quarter of 2022, compared to non-GAAP adjusted net income of RMB19.6 million in the same period of last year. For full year 2022, non-GAAP adjusted net income was RMB36.5 million, compared to non-GAAP adjusted net loss of RMB75.6 million in the previous year.

Net loss attributable to 36Kr's ordinary shareholders was RMB20.8 million in the fourth quarter of 2022, compared to net income attributable to 36Kr's ordinary shareholders of RMB14.6 million in the same period of last year. For full year 2022, net income attributable to 36Kr's ordinary shareholders was RMB21.9 million, compared to net loss attributable to 36Kr's ordinary shareholders of RMB89.6 million in the previous year.

Basic and diluted net loss per ADS were both RMB0.498 in the fourth quarter of 2022, compared to net income per ADS of RMB0.356 in the same period of last year. For full year 2022, basic and diluted net income per ADS were both RMB0.53, compared to basic and diluted net loss per ADS of RMB2.2 in the previous year.

As of December 31, 2022, the company had cash, cash equivalents, restricted cash, and short-term investments of RMB184.9 million, compared to RMB164 million as of September 30, 2022. The increase was mainly attributable to positive cash flow from operating activities, partially offset by the long-term investment in a New Economy start-up company we made in the fourth quarter of 2022.

This concludes all of our prepared remarks today. We will now open the call to questions. Operator, please go ahead.

(Operator Instructions) Jing Tang, CICC.

(spoken in Chinese) As we see improvements of the environment, what are the company's strategic priorities and plans for this year? Thank you.

(interpreted) Okay. As we've mentioned many times before, we will continue to enrich our content ecosystem and tap into more vertical industries, such as artificial intelligence, new electric vehicles, and industry capital.

And also, on our product front, apart from our existing advertising and enterprise value-added services, we will also explore several new product initiatives. For example, 36Kr Enterprise Service Review Platform, as our second growth engine, we will refine our platform and products and continue to pursue commercialization. 36Kr Business School will enrich course designs to empower more small- and medium-sized companies. This training product has been proven by our peers to be a market with RMB hundreds of millions of market size. Also, 36Kr Research Institute will enhance its professionalism and industry coverage, providing more in-depth reports to more enterprises.

And of course, we will keep investing in AIGC technology. We will continue to advance the application of the AIGC technology in production and aggregation of high-quality content to further improve our content production efficiency. And through AIGC's personalized dialogue function, we will strengthen our user interaction and stickiness. (spoken in Chinese)

Lingyi Zhao, SWS Research.

(spoken in Chinese) The advertising industry is the foresight of economy. What changes have taken place in the willingness of advertisers to invest recently? Can you tell us about the degree of economy recovery and prospects based on the advertising business? Thank you.

(interpreted) Okay. Based on the Q1 2023's current situation, our ad business is already recovering steadily. However, it will take some time for advertising to return to a relatively high level, while market confidence continues to recover. And we have witnessed that a lot of our clients have rebound their confidence in ad placement, but still, they still have a limited budget for their advertising business. So this is why I feel it takes time for us to recover to a relatively high level.

Okay. Based on market feedback and actual business performance so far, the entire advertising industry has been recovering at a steady pace. Businesses in some popular industries, such as automobile and e-commerce, have been very active in brand promotions and marketing activities, with relatively stable ad placement budget. In Q1 2023, we made further progress in both commercialization channels and industry coverage. For instance, we completed JD.com's first commercialization order on Xiaohongshu and achieved our first breakthrough in the luxury goods sector. As such, we expect a fair level of growth, generally, in advertising in both Q1 and the full year 2023.

Looking ahead at the full year 2023, we remain optimistic as business activities and people's daily lives come back to normal in the post-pandemic era, we'll see a significant rebound in our ad business.

(Operator Instructions) Rui Yin, Sealand Securities.

(spoken in Chinese) Hi, management. I have two questions. The first question is about the enterprise value-added business segment. So the future growth come more from the increase in the number of paying companies or their increase in the level of corporate payments. What new actions will the company take for enterprise value-added service segment this year?

And my second question is about margin ratio. How should we expect the company's expense ratio and profit margin this year? Thank you.

(interpreted) Actually, during the past years, both of our number of clients and our ARPU have increased significantly, and we believe they will grow this year as well. On ARPU side, we will provide diversified enterprise value-added services, including offline events, consulting services, and integrated agency operations services, to both growths in this segment. On the number of clients, we will tap into broader vertical sector and penetrate to lower-tier markets by expanding our presence in 12 or more regional offices.

In 2023, we will also leverage more products to develop our enterprise value-added services. In addition to 36Kr Enterprise Review platform, we also launched 36Kr Venture Capital platform, as well as 36Kr Research Institute, to further grow our business.

Hi, Yin Rui. I think this is your first time to join the earnings call of 36Kr. We really give you our warmest welcome. And this is Lin, I will answer your second question regarding the expense ratio and margin question.

I think, for the full year of 2022, you can see from our result that our gross margin is at a relatively stable level of 57%. I think, in 2023, we will be able to maintain that level or even have further gross margin expansion because, as our CEO just mentioned, given the AIGC and the more AI-related technology application, we will be able to have higher efficiency of operation and have some cost-saving effect in our business.

And secondly, I will highlight that, I think, for '23, the margin expansion, as well as operating margin and gross margin, will come more from the revenue rebound or revenue growth. Although in 2022, we are proud that we have been growing our revenue given the very challenging environment in 2022, but we achieved a positive 2% growth. But that ratio will be much higher in '23, I think.

And also, we mentioned several times that our cost structure and expense structure have been very stable. Given that, it will not be a linear growth pattern as the revenue growth; that means we will have a lot of leverage. To give you some quantity implication, now, if we say that in '23, our gross margin can be stabilized at around 60% level, then our OpEx ratio will be, I mean, let's say around 50%, then we'll give you an operating margin of around 10%. I think that will even have some upside if our top line of revenue can grow at a much higher growth rate than in 2022.

Hope that answers the question, Yin Rui.

(spoken in Chinese) What is the business connection between the company and AIGC or GPT large model? And what is the plan for AI? Thank you.

(interpreted) Actually, content production quality and efficiency have always been our priority, and we have been adopting AIGC for quite a while. Content execution and classification are key component of AIGC technology. By applying AIGC, 36Kr can classify articles in various fields using labeling, thus optimizing the accuracy of user research. In addition, for some in-depth articles, AIGC will summarize the content of the articles to facilitate users' efficient understanding while also improving the user experience.

On the product front, using 36Kr Enterprise Review platform as an example, AIGC technology will assist the users to better obtain detailed information, such as price and users' evaluation of products, more efficiently, so as to understand products more accurately and make better purchasing decisions. Also, AIGC helps us provide better customer services through more effective user interaction and communications. According to our initial analysis, AIGC has helped improve our user interaction by 90% and improve our current production efficiency by three times.

Recently, we became one of the first batch of companies to join Baidu's ChatGPT-style Ernie Bot ecosystem. We have achieved the code for internal testing and are launching the first run of our internal test, with no doubt that 36Kr will be the first mover in applying AIGC technology in our content production and business expansion. Thanks for your questions.

(Operator Instructions) As there are no further questions, I'd like to turn the call back over to the company for closing remarks.

Thank you once again for joining us today. If you have any further questions, please feel free to contact 36Kr's Investor Relations through our contact information provided on our website.

Thank you, and see you next time.

Thank you, operator. Thank you, everyone.

That does conclude our conference for today. Thank you for participating. You may now disconnect.

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.