36Kr Holdings Inc (KRKR) 2023 Q3 法說會逐字稿

Hello, ladies and gentlemen. Thank you for standing by for 36Kr Holdings Inc's third quarter 2023 earnings conference call. At this time, all participants are in listen only mode. After management's remarks, there will be a question-and-answer session. Today's conference call is being recorded. I will now turn the call over to your host, Jianan Ding, IR Manager of the company. Please go ahead, Jianan.

Thank you very much. Hello, and welcome to 36Kr Holdings third quarter 2023 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 may 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 note that all amount numbers are in RMB.

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

(spoken in Chinese)

(interpreted) Thank you. Hello, everyone. Thank you for joining our third quarter 2023 earnings conference call.

(spoken in Chinese)

(interpreted) During the third quarter of 2023, we achieved solid progress across all of our business segments, propelling a year-over-year increase of 2.5% in total revenue as we consistently enrich our content ecosystem and sought to diversify and extend our product and service offerings. We also depended the integration of applications across our business amid the evolution of generative AI and large language models. These synchronized endeavors have empowered great strides in our commercialization and further elevated our operating efficiency, effectively reducing overall costs to improve efficiency company-wide.

I'd like to begin with a discussion of this quarter's content initiatives and advancements, followed by a more detailed look at our commercialization progress across each of our business segments.

(spoken in Chinese)

(interpreted) 36Kr's core competitive edge lies in our exceptional content creation prowess. Through years of dedicated effort, we have cultivated an extensive portfolio of premium sub-vertical media. Our multidimensional content matrix covers a broad array of trending topics and fields to connect with diverse user demographics, offering deep insights into industry trends and market dynamics for New Economy participants. During the third quarter, we maintained a continuous flow of high-quality content, with blockbuster articles emerging back-to-back. More than 110 articles achieved over 100,000 page views. We also continued to expand our footprint across the various channels, posting a multi-platform, cross-media circulation matrix. As of the end of the third quarter, the number of our followers surpasses 32 million, rising 20% year-over-year. This achievement reflects 36Kr's substantial market influence and sets the stage for greater business development.

(spoken in Chinese)

(interpreted) In addition to the solid performance of our text- and image-based content portfolio, we also achieved new breakthroughs in content variety during the quarter, spanning short videos, long videos, and podcasts. Let me start with short videos. We have consistently enhanced the value of our short video lineup, creating trendsetting and pioneering content that drives development industry-wide. This quarter, we launched an all-new short video series, "The Pioneers." The debut episode, which recounts the rise, fall and potent comeback of the almost century-old toy industry giants Lego Group, garnered numerous shares and likes by users. Our vertical medium, "36Kr Auto," also continued to strive, gaining momentum in content quantity and engagement with growth in the number of both likes and followers. Overall, short video was pivotal for broadening our customer reach and enhancing user engagement and stickiness. As of the end of the third quarter, we had over 8.5 million short video followers, among which more than 2.15 million were Bilibili users.

(spoken in Chinese)

(interpreted) Moving on to long videos. Our first long video show, "Foreseeing 2033," returned for its second season. This season we extended each episode from 30 minutes to 40 minutes, and elaborated the narrative with greater detail across five segments, including a deep dive into the guest's profile, a review of the historical backdrop, a thought-provoking analysis of the era shaping their business success, key takeaways and insights and an engaging Q&A session. We hosted a stimulating conversation with Charles Li Xiaojia, the former Chief Executive of Hong Kong Exchange and Founder of Micro Connect; William Li Bin, founder of NIO; James Liang, founder of Trip.com Group; and Chen Yanshun, Chairman of BOE. We also had the privileges of sitting down with Kevin Kelly, the founding executive editor of Wired Magazine, who's widely recognized as the "Father of the Silicon Valley Spirit," for an inspiring session. This flagship initiative was livestreamed across various platforms, including WeChat Channels, Youku, and Beijing Radio and Television Stations. It's not only cemented our standing as an innovator in long video production, but also showcase 36Kr's robust brand influence across the industry.

(spoken in Chinese)

(interpreted) In addition, we continued to broaden the horizons of our innovative audio content lineup. Our first live podcast, "Get Off Work, Have Fun," fully leveraged our high-quality content assets and delighted our listeners with a more diverse and a personalized audio experience. Additionally, several of our audio content programs were featured on Himalayas' tech channel, including News Flash Briefings, Business Intelligence Hub, and 36Kr Breaking News. By driving user growth through an enriched content experience, we made solid progress in crafting our comprehensive closed-loop content ecosystem.

(spoken in Chinese)

(interpreted) The vibrant innovation in AI technology is creating intriguing growth opportunities for 36Kr. As we diligently integrate AIGC technology throughout our ecosystem, we further enhanced our content production efficiency through AI applications across image generation, video creations, clip editing, and data collection. Additionally, we launched the 36Kr Media Lab in Silicon Valley, our first unmanned initiative, to further explore the innovative application and development of large language models in the financial industry.

(spoken in Chinese)

(interpreted) Furthermore, we joined hands with top-tier industry players, including Baidu, SenseTime, and iFLYTEK to deepen AIGC applications, including AI-powered deep dives into financial reports and the dynamics of the primary market. Harnessing AI-powered technical tools, we have delivered more comprehensive, more agile, higher-quality offerings to a broader spectrum of companies while optimizing our reports' value-for-money. Similarly, we also implemented a comprehensive, AI-driven transformation company-wide, launching AI-driven upgrades for a wide array of services and products such as the 36Kr Enterprise Services Review Platform, and our venture capital platform, further reducing operating costs and elevating efficiency.

(spoken in Chinese)

(interpreted) I'd also like to specifically highlight our foray into AI empowerment during the quarter. Followed our pioneering AI-powered e-commerce store earlier this year, this quarter, we applied AI technology to create a virtual blogger for the Asian Games on Xiaohongshu, which garnered significant visibility and engagement in just one month. Initiatives like these stand as a resounding testament to our leadership and consistent excellence in AI innovation and application.

(spoken in Chinese)

(interpreted) Thanks to our enriched content ecosystem and AI empowerment, our content and product matrix remains robust with an ever-broadening array of offerings. Furthermore, we continue to diversify our customer demographics. Our stable, high-quantity customer base not only reflects the company's substantial market influence, but also laid the groundwork for consistent and steady growth in key performance metrics. Next, I'd like to share a more detailed progress update on each of our segments, highlighting the role of AI applications in thriving business innovation across various scenarios.

(spoken in Chinese)

(interpreted) First, let's look at advertising, where our revenue increased by 11% year-over-year. Fully leveraging our strengths in content and distribution channels, we deeply engaged the target audiences and achieved a high marketing conversion rate. Furthermore, our continuous service innovation drove our ARPU up by 20% year-over-year during the quarter. Through years of development, 36Kr has accrued extensive advertising service experience spanning multiple industries, including TMT, consumer goods, automotive, real estates, advanced manufacturing, and new energy. As such, we are well-positioned to accommodate the distinct marketing preferences of advertisers across a broad spectrum of industries. For example, we provided a ful-service integrated marketing campaign for the launch event of Haier's wet-dry Space smart robot vacuum cleaner. From pre-event teaser posters and ID videos to customized offerings and live broadcasts during the event, our choreography, of omnichannel content dissemination and curated topics resulted in total online exposure of over 7.94 million views. We also crafted a variety of marketing materials of Baidu AI Cloud utilizing infographics and videos of onsite tours to vividly present its capabilities. We broadcasted this content across our new media matrix to efficiently reach the target audience, receiving widespread acclaim.

Given our premium content, profound insights into user traits and preferences, and the high conversion rate of commercialized content, we expect to attract an increasing number of advertisers for content promotion going forward, as well as achieve sustained revenue growth in advertising.

(spoken in Chinese)

(interpreted) In terms of short video advertising, as our conten continues to gain traction on platforms like BiliBili and Xiaohongshu, we have attracted a more diverse range of advertisers, spending intelligent technology, consumer lifestyle, culture and entertainment, and other sectors. This quarter, we built on our track record of producing permanent content by crafting a compelling video in collaboration with Alibaba Cloud about our AI-driven Asia Games blogger on Xiaohongshu. Infused with unique perspectives, the video garnered 1.62 million views on BiliBili and ranked 30th on Weibo's Trending Topics lists. Also, as I mentioned previously, our sub-vertical media, "36Kr Auto," continued to amplify its brand influence, fostering new partnerships with renowned auto manufacturers including BMW and Mercedes-Benz. Furthermore, we attended the 2023 IAA Mobility event in Munich, and auto shows spanning major cities including Guangzhou and Chengdu, delighting users with firsthand insights into the latest auto market dynamics through the wider variety of content display formats, including images, taxes, short videos, live streaming and more, while further expanding our reach and partnerships in the auto markets.

(spoken in Chinese)

(interpreted) Meanwhile, empowered by AI technology, we set trends in digital human marketing by pioneering live streaming sales sessions featuring digital humans in our Taobao store, an innovative initiative that has attracted the interest of many clients in additional corporation. In addition, we continued to expand and deepen AI applications across diverse scenarios, capitalizing on our underlying technologies' advantages in real-time interaction, visual effects, creative graphics, and other features to offer our users diversified AI marketing solutions, propelling the company's efficient and sustainable growth.

(spoken in Chinese)

(interpreted) With respect to enterprise value-added services, in the third quarter, we remained committed to providing high-quality services, leading to collaborations with additional corporate clients and government institutions. We hosted several industry-specific summits during the quarter, including "36Kr Carbon Summit-Sustainable Value for Green Horizons" and "Vita Digital Innovation Tour," deepening our engagement in these sub-verticals. Notably, at our "36Kr Carbon Summit - Sustainable Value for Green Horizons," experts and scholars, and the stakeholders representing professional institutions, top-tier platforms, and leading consumer goods companies from China and around the globe gathered together to delve into the latest trends shaping low-carbon consumption, policy dynamics and the pioneering practices. The summit achieved total online exposure exceeding 80 million views, underscoring 36Kr's pivotal role in fostering valuable connections among stakeholders in the New Economy sector. Another recent highlight was our annual flagship WISE conference, which successfully concluded last week in Beijing. This year's theme centered on commercialization and cutting-edge AI technologies. While WISE was previously focused solely on New Economy participants, this year we broadened the conference's reach to cover the entire business sector and updated its title accordingly to WISE 2023 "Kings of Business." We hosted over 300 distinguished commercials and economic experts, scholars, business elites, and investors, including Kai-fu Lee, Ya-Qin Zhang, and Qingyou Guan, sparking ideas through thought-provoking discussions. Quite a few of China's traditional industry icons also joined us at the WISE 2023, including Xibei, Joeone and Sun Daily in reaching a event's diversity and offering fresh industry perspectives. WISE 2023 amassed over 1.03 billion views, further showcasing 36Kr's brand influence.

(spoken in Chinese)

(interpreted) Beyond offline events, our consulting services and other enterprise value-added services continued to gain momentum during the quarter. 36Kr Research Institute further deepened its industry insights, elevating our reputation through the publication of industry research reports. On the commercialization front, we forged a collaborative consulting partnerships with government institutions in prominent cities such as Guangzhou, Chongqing, Hangzhou, and Huizhou among others, as well as with industry giants, including Lenovo, Ke Holdings Inc., Unicorn-tech, and Pacific Insurance, among others.

(spoken in Chinese)

(interpreted) Furthermore, we have made consistent and meaningful progress in our regional business expansion. We co-hosted an AI industry development summit titled "AI West Lake" with the Government of Xihu District, Hangzhou, at Apsara conference 2023 to further explore innovative AI applications. Additionally, we launched "Connecting the Dots along Investment Trails," a strategic initiative capitalizing on our extensive resources across large scale, traditional and innovative companies. This program aims to strengthen regional industry chains, address relevant shortfalls, and expedite the integration of industrial ecosystems. Our production of high-quality content for this program has significantly increased user attention and engagement.

(spoken in Chinese)

(interpreted) It's also worth mentioning that with the rise of RMB funds and the evolution of the government-guided funds, stakeholders in the New Economy sector enjoying a plethora of investment options. Maximizing the benefits of our robust brand advantages and adept the resource alignment capabilities, we forged partnerships with funds of funds, extending our reach into regional markets to identify optimal financing channels and approaches for broader spectrum of enterprises. In addition, I'd like to highlight that our fund management subsidiary was recently successfully registered as a fund manager. This strategic move unleashed fresh opportunities for us to facilitate deeper connections among industry stakeholders and investment institutions while exploring envolving possibilities for industry-wide cooperation, steering the company towards a new phase of growth.

(spoken in Chinese)

(interpreted) Regarding subscription services, revenue from subscription services increased by 62% year-over-year to RMB11.51 million during the quarter, bolstering our diversified core offerings and efficient customer acquisition strategies. In addition to upgrades across our traditional training courses such as Funding Observation Camp, we forged ahead with the development and expansion of high-quality degree-based programs. For example, we made great progress on the post-doctoral research program we rolled out in collaboration with Keble College of the University of Oxford, further driving our revenue growth. In the meanwhile, we continued to add new courses to our portfolio and, with a can-do spirit, partnered with top universities worldwide to cultivate a high value-added training ecosystem, providing China-based senior executives with avenues to expand their careers globally.

(spoken in Chinese)

(interpreted) Moreover, with the widespread application of AI and unceasing innovation in product intelligence, market demand for AI expertise is growing increasingly urgent. We are actively embracing the business opportunities arising from this trend in collaboration with more AI-focused partners to expand and enrich our core course offerings and training system with AI related courses. Our strategic partnerships cover AI+ training and innovative talent development, as well as industry-specific large language model solutions. Together with our partners, we are setting a new benchmark of talent development in artificial intelligence, propelling the digital transformation of a wide range of enterprises.

(spoken in Chinese)

(interpreted) Amid macroeconomic uncertainties, there has been a sustained increase in user demand for self-enrichment. Consequently, the training sector outperformed market trends in a countercyclical fashion. Aligned with the wisdom of old saying, "To do a good job, one must first sharpen his tools," our users' self-improvement has translated into overall enhancement of their performance and the efficiency in corporate workplaces. We are confident that as the Company continues to invest in the training field, we will further enrich our course offerings, constantly enhance our training system, and continuously expand our consumer base. We expect significant growth potential for our subscription services as we move forward.

(spoken in Chinese)

(interpreted) In short, we maintained encouraging growth momentum in the third quarter of 2023. Our total revenue increased by 2.5% year-over-year to RMB97 million, with revenue from our advertising business up 11% year-over-year, outpacing market trends. Notably, revenue from our subscription services surged by 62% year-over-year, and our gross margin remained high at a 56%, a compelling testament to the resilience and the vibrance of our business as we adeptly navigated macro challenges. In the meantime, we redoubled our efforts across content formats, including images, texts, short and long videos, audio, podcasts, and live streaming, among others, fostering a sophisticated full-spectrum content matrix. The number of our followers surpassed 32 billion, extending its growth streak for 10 straight quarters. Looking ahead, building on our peerless content, formidable brand influence and keen sense of innovation, we will actively forge new partnerships with global industry leaders, while relentlessly exploring inventive AI applications, propelling the Company's enduring excellence and sustainable growth.

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 third quarter 2023 financial results. Please note, all amount numbers are in RMB unless otherwise stated.

Total revenues increased by 2.5% year-over-year to RMB97 million in the third quarter of 2023, up from RMB94.6 million in the same period of last year.

Online advertising services revenues increased by 11% to RMB71.2 million in the third quarter of 2023, compared to RMB63.9 million in the same period of last year. The increase was primarily attributable to more innovative marketing solutions we provided to our customers.

Enterprise value added services revenues were RMB14.2 million in third quarter of 2023, compared to RMB23.6 million the same period of last year. The decrease was mainly due to the negative impacts of macroeconomic uncertainties. Also, our offline events are not scheduled evenly throughout the year, and it turned out there were relatively fewer events during the third quarter.

Subscription services revenues increased by 62% to RMB11.5 million in the third quarter of 2023, compared to RMB7.1 million in the same period of last year. The increase was primarily attributable to our continuous efforts to offer high quality subscription products and training programs to our subscribers. For example, in the third quarter, we rolled out the postdoctoral research program that we collaborated with the University of Oxford, which was well received by our high-end subscribers and helped boost our subscription revenues growth during the quarter.

Cost of revenues was RMB42.3 million in the third quarter of 2023, compared to RMB35.5 million in the same period of last year. The increase was primarily due to higher fulfillment costs and content costs.

Gross profit was RMB54.6 million in the third quarter of 2023, compared to RMB59.1 million in the same period of last year. Gross profit margin was 56% in the third quarter of 2023, compared to 62% in the same period of last year.

Operating expenses were RMB77.5 million in the third quarter of 2023, compared to RMB62.1 million in the same period of last year.

Sales and marketing expenses were RMB32.4 million in the third quarter of 2023, an increase of 1% from RMB32.2 million in the same period of last year. The slight increase was largely due to the increase in payroll-related expenses, partially offset by the decrease in marketing-related expenses.

G&A expenses was RMB36.9 million in the third quarter of 2023, a 123% increase compared to RMB16.6 million in the same period of last year. The fluctuation was primarily attributable to certain one-off expenses, including severance payments as we optimize our organization and office lease termination fees incurred in the quarter, as well as the increase in allowance for credit losses.

Research and development expenses were RMB8.3 million in the third quarter of 2023, a decrease of 38% from RMB13.4 million in the same period of last year, as we continued to proactively embrace AI technology and streamlined our research and development teams, resulting in a decrease in payroll-related expenses.

Share-based compensation expenses recognized in cost of revenues, sales and the marketing expenses, research and development expenses, as well as G&A expenses totaled RMB1.4 million in the third quarter of 2023, compared to RMB2.6 million in the same period of last year.

Other income was RMB4 million in the third quarter of 2023, compared to RMB5.7 million in the same period of last year.

Net loss was RMB18.9 million in the third quarter of 2023, compared to net income of RMB2.5 million in the same period of last year.

Non-GAAP adjusted net loss was RMB17.5 million in the third quarter of 2023, compared to non-GAAP adjusted net income of RMB5.1 million in the same period of last year.

Net loss attributable to 36Kr's ordinary shareholders was RMB18.9 million in the third quarter of 2023, compared to net income attributable to 36Kr's ordinary shareholders of RMB1.7 million in the same period of last year.

Basic and diluted net loss per ADS were both RMB0.45 in the third quarter of 2023, compared to basic and diluted net income per ADS of RMB0.04 in the same period of last year.

As of September 30, 2023, the Company had cash, cash equivalents, restricted cash, and short-term investments of RMB116 million, compared to RMB136.5 million as of June 30, 2023. The decrease was mainly attributable to small-sized long-term investments in certain New Economy entities in the third quarter of 2023, as well as net cash outflow from operating activities. If we exclude the previously mentioned one-off payments relating to the optimization of our organization and moving our headquarters office, which altogether amounted to over RMB25 million during the third quarter, our cash position actually would have increased quarter over quarter.

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

(Operator Instructions)

[Shan Jiao] CICC.

(spoken in Chinese)

(interpreted) Congratulations to the solid performance in the third quarter. And how does the management view the fourth quarter and next year's advertising revenue trend? Thank you.

(spoken in Chinese)

(interpreted) The fourth quarter brought sustained and robust growth momentum in our advertising business, with year-over-year revenue growth of 11%. As the market gradually stabilized, we noted an encouraging rebound in demand for advertising compared with previous months. Our branding and performance performance-based one-stop advertising solutions have earned substantial trust and support from clients, sparkling steady growth.

Our advertising customer base includes Internet giants and Fortune Global 500 companies as well as China's traditional industry icons, such as Xibei, Joeone, Sun Daily, and Bosideng. Steady growth of advertisement placement by these companies propelled a year-over-year increase in our ARPU of 20%. Meanwhile, we also offered flexible and versatile services to emerging industry players, catering to their diverse advertising and marketing needs with graphics, texts, and long and short videos, among other formats.

For the fourth quarter, we maintain a cautiously optimistic outlook for our advertising business. To drive continued growth in our advertising business, we will further enhance our content's influence, strengthen our in-depth cooperation with advertisers, and actively explore AI marketing and other new marketing channels to create more growth opportunities for advertising.

Thank you. Next question, please.

(Operator Instructions)

Lingyi Zhao, SWS Research.

(spoken in Chinese)

(interpreted) Congrats with the good results. And I have two questions. The first one was both long and short video segments recorded robust growth on a sustained basis. What plans do you have in place to unlock further growth potential? And my second question is the Company's gross margin remained fairly high in Q3. What has the Company achieved in cost reduction and efficiency enhancement? Thank you.

(spoken in Chinese)

(interpreted) We have consistently prioritized content innovation and diversification for short videos. Our lineup already covers diverse topics ranging from technological innovation and business insights to lifestyle, posted across popular short video media platforms, including Bilibili, Douyin and Kuaishou. Our sub-vertical media, 36Kr Auto, is also worth highlighting. Since its launch during the first half of 2023, 36Kr Auto has made great progress in terms of content quantity and user engagement with a surging number of likes and followers. We have also initiated partnerships with top tier automakers such as BMW and Mercedes Benz. As of the end of the quarter, we had over 8.5 million short video followers, up 41% year-over-year, among which more than 2.15 million were Bilibili users.

In the swiftly evolving landscape of social media platforms, short videos have emerged as a crucial channel for user interaction and social engagement, earning widespread favor among advertisers. Short video ads also boast a higher ARPU compared to other advertising formats, further propelling the Company's overall advertising revenue.

Regarding long videos, this year, I hosted a long video show, Foreseeing 2033. The show featured enlightening conversations with visionaries including Wang Shi, Robin Li, Charles Li Xiaojia, James Liang, and Kevin Kelly, which deeply engaged a diverse audience. The first season has successfully concluded with a total online exposure of over 250 million views, and the second season is currently airing on Youku and Beijing Radio & Television Station. Looking ahead at 2024, we will continue to expand our footprint in long videos. We have three to four new programs in our long video pipeline, which are set to further enrich our content ecosystem.

Hi, Lingyi. Thank you for your question on gross margin and the financials. This is Lin. I will take your question.

First of all, we continued to take rigorous cost control measures and optimized our cost structure. That's why we were able to maintain our gross margin at a relatively high level, which was 56% in the third quarter. And on top of gross margin, actually, I want to highlight further that we are also taking initiatives to improve our operating margin as well.

So to cut our spending, actually, in the third quarter, we have taken several measures. For example, we moved our headquarters office to a relatively lower rental building in the third quarter. And secondly, we continued to embrace AI technology, which enabled us to streamline our R&D team, and which resulted in some cost savings in the payroll side as well.

So if you take a look at our operating expenses in Q3, although there were temporarily some one-off impacts in Q3, because we have to pay some severance compensation, as well as terminating the old lease contract, we needed to pay some compensation expenses. So that hit our third quarter, but that's temporary, and that's only a one-off issue.

And if you take a long-term view at these initiatives, those two measures altogether will give us a spending cut of at least RMB30 million on an annual basis. So that's quite an improvement on our operating margin.

And going forward, on one hand, we will continue to grow our revenues, and on the other hand, we will continue to embrace AI technology to more diversified business scenarios, to cut our cost and further cut our spending. Overall, we will improve our gross margin as well as operating leverage.

Thank you.

Peipei Qiu, Industrial Securities.

(spoken in Chinese)

(interpreted) Thank you, management, for taking my question. As you already explained how AI played a very important role in improving efficiency, could you share more details about how eventually AI help make money? So could you share like your monetization plans in this area? Thank you.

(spoken in Chinese)

(interpreted) 36Kr has clearly demonstrated its vision and keen acumen with respect to generative AI. Following last quarter's pioneering AI-powered livestreaming sales sessions featuring digital humans in our Taobao store, during the third quarter, we collaborated with Alibaba Cloud and leveraged its large AI model, Tongyi, to create our Asian Games blogger on Xiaohongshu, garnering significant visibility and engagement.

On the advertising front, we are actively exploring and applying AI technology to enhance marketing effectiveness and craft innovative strategies. This includes personalized advertising content generation and advertising placement, as well as intelligent decision-making based on data analytics. By constantly extending our footprint in AI marketing, we seek to provide our clients with marketing solutions that are smarter, more efficient, and more innovative.

Additionally, we joined hands with top-tier investor players, including Baidu, SenseTime and iFLYTEK to deepen AIGC applications in analyzing financial statements, as well as reporting on the primary market, etc., delivering more comprehensive, more agile, higher quality offerings to a broader spectrum of companies at exceptional cost-to-benefit ratio.

Thank you.

Ruiqi Lu, Sealand Securities.

(spoken in Chinese)

(interpreted) What specific factors contributed to the rapid growth in the Company's subscription services? Any the new growth strategies in plan for this segment?

(spoken in Chinese)

(interpreted) The rapid growth in our subscription services was primarily propelled by the launch of our high-value degree-based programs. This quarter, we joined hands with Keble College of the University of Oxford and co-launched a new degree-based program, vastly boosting our ARPU to over RMB68,000. Meanwhile, we continued to enrich the high-quality training courses offered through our Venture Capital Class and Funding Acceleration Camp. Our diverse and engaging course offerings brought top-tier learning experiences to users, drawing extensive praise.

Looking ahead, we aim for additional partnership with top universities worldwide on more international MBA programs, such as University of Oxford, University of Leeds, Queen Mary University of London, Anglia Ruskin University in the UK, and INSEEC Business School in France, providing China-based senior executive with avenues to expand their careers globally.

Moreover, with the vibrant advancement of AI innovation, we noticed an increase in people's demand for learning and harnessing AI technology. To address this demand, we are actively working with leading AI companies based in China to jointly develop AI-focused training programs, enabling participants to have a better grasp of our technology and practical skills.

Thank you.

Thank you. As there are no further questions, I'd now like to turn the call back over to the company for closing remarks.

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

Thank you. This concludes this conference call. You may now disconnect your lines and have a wonderful day.

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.