Weibo Corp (WB) 2018 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Weibo reports first quarter financial results.

(Operator Instructions)

Now, I would like to hand the conference over to your first speaker for the day, Ms. Wen Li.

Over to you, ma'am.

Thank you, operator.

Welcome to Weibo's 2018 First Quarter Earnings Conference Call.

Joining me today are our Chairman of the Board, Charles Chao; our Chief Executive Officer, Gaofei Wang; and our Interim CFO and VP, Finance, Fei Cao.

The conference call is also being broadcasted on Internet and is available through Weibo's IR website.

Before the management presentation, I'd like to read you the safe harbor statement in connection with today's conference call.

During the course of this conference call, we may make forward-looking statements, statements that are not historical facts, including statements about our beliefs and expectations.

Forward-looking statements involve inherent risks and uncertainties.

A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement.

Weibo assumes no obligation to update our forward-looking statements in this conference call and elsewhere.

Further information regarding those and other risks is included in our Weibo's annual report on Form 20-F and other filings with SEC.

All information provided in this press release is current as of the date hereof, and Weibo assumes no obligation to update such information, except as required under applicable law.

Additionally, I'd like to remind you that our discussion today includes certain non-GAAP measures, which excludes stock-based compensation and certain other expenses.

We use non-GAAP financial measures to gain a better understanding of Weibo's comparative operating performance and the future prospects.

Our non-GAAP financial excludes certain expenses, gains or losses and other items that are not expected to result in future cash payments or that are nonrecurring in nature or will not be indicative of our core operating results and outlook.

Please refer to our press release for more information about our non-GAAP measures.

Following management's prepared remarks, we'll open the lines for a brief Q&A session.

With this, I would like to turn the call over to our Chief Executive Officer, Gaofei Wang.

(foreign language)

Thank you.

Hello, everyone, and welcome to Weibo's First Quarter 2018 Earnings Call.

(foreign language)

On today's call, I will share with you highlights in Weibo's user growth, product and monetization, as well as our key initiatives in 2018.

(foreign language)

But first, let me discuss our first quarter financial results.

We continued to see strong revenue and the user growth this quarter.

Our total revenue in the first quarter reached $349.9 million, up 76% year-over-year.

Advertising and marketing revenue reached $302.9 million, up 79% year-over-year, with 80% of our ad revenue in Q1 from mobile.

Value-added services revenue in the first quarter was $46.9 million, up 57% year-over-year.

(foreign language)

Moving on to the user front, Weibo's monthly active users reached 411 million in March, up 20.7% year-over-year.

Average daily active users in March reached 184 million, up 19.5% year-over-year.

In March, 93% of Weibo's MAUs were from mobile.

(foreign language)

Leveraging the Chinese New Year holiday, we considerably increased our investment activities in user growth and engagement through our cooperation with CCTV's Chinese New Year Gala and a series of platform-wide marketing campaigns and events, such as the red envelope giveaway.

On the monetization front, our customers continued to increase their ad spending on Weibo, much to the credit of our sales force.

Our key accounts ARPA in Q1 reached a historical high.

The persistent growth in Weibo's user base and the business demand for social marketing further solidifies Weibo's leading position among brand advertisers.

(foreign language)

In discussing our operational updates for the first quarter, I will cover Weibo's progress in the area of user content and customer.

(foreign language)

As we saw in the first quarter, the period around the Chinese New Year presents an opportunity for Weibo to accelerate its user growth and increase user engagement.

This year, the competition for promoting Internet product during the Chinese New Year was particularly furious as the growth rate of the mobile Internet users has begun to slow down in China.

However, we were able to leverage the unique product features, our innovative social marketing solutions, and our well-defined joint efforts with the celebrities, self-media, enterprises and the brands to support the execution in contents that focus on the user growth.

More importantly, through such platform events as the red envelope giveaway and the collaboration with CCTV's Chinese New Year Gala, we have demonstrated our capability to generate greater brand exposure and the user growth by partnering with the top IP content providers.

In fact, during the red envelope giveaway event, more than 2 billion red envelopes was received by Weibo user, which were -- which was a nearly 50% increase in the number of envelopes received by Weibo users from last year.

(foreign language)

Specifically, we will form a strategic partnership with the CCTV Chinese New Year Gala, one of the most watched TV show at Chinese New Year Eve, as the exclusive social platform partner.

As a result, Weibo had greater brand exposure, promoted user participation in the discussion of Chinese New Year Gala, and increased user engagement by running marketing activities in a number of interactive formats such as the Chinese New Year live streaming Q&A, Chinese New Year imitation competition and others.

Nearly 100 million users participated in our interactive campaigns, and the Chinese New Year related video were watched more than 3 billion times.

During the 2-week promotion period for the Chinese New Year live streaming Q&A, nearly 24 million users participated in the event, effectively increasing the scale of our recalled users and their engagement.

Collaboration with traditional media and the product innovations that leverage well-known IP content to promote user growth and user engagement are one of Weibo's core competitive strengths as a social media platform.

As such, we plan to reinforce our cooperation with selected TV programs and the variety show content, as well as start up a product innovation this year.

As we look into the rest of 2018, given the current competitive landscape, we believe our product positioning and network effect will continue to support our user growth and provide competitive edge in the industry.

(foreign language)

On the user product front, we continue to improve the user engagement rate of the relationship-based feed and expand the distribution scale of interest-based feed so as to increase the time spent by users on the platform.

In terms of the relationship-based feed, we increased our efficiency in distributing feed based on the user's consumption behavior, effectively promoting user consumption of social content and increasing the user retention rate.

As a result, in March, the users' engagement rate in the relationship-based feeds grew by double digits year-over-year.

For interest-based feed, we enhanced our content mining abilities in every vertical, increasing the exposure of content in long-tail verticals such as education, pet and others.

In March, total impression of the content in both education and pet verticals more than doubled from last year.

Based on the dynamic feedback we received from users, we were able to leverage users' interest to recommend relevant content to other users in real-time.

Subsequently, in March, both the number of users who refreshed interest-based feed and the interest-based feed that were consumed grew double digits from last year.

In addition, we began to promote Weibo Lite in the first quarter, which was mainly targeted toward mobile users who uses relatively low-end smartphones.

In March, the number of new users on Weibo Lite continued to increase, with the user retention rate of Weibo Lite now close to that of the Weibo app.

Weibo Lite not only highlights the regional and the popular feeds on Weibo, but also prioritize the consumption of the video feeds, allowing more users from lower tier cities to access Weibo.

(foreign language)

In the first quarter, the full-screen vertical short video market grew at an explosive pace.

In response to the rapid change in the short video market, we have made number of adjustments to our related products by promoting the media attributes of Weibo Stories to align with Weibo's positioning as a social media.

Specifically for products developments, on the content creation front, we further enhanced Weibo Stories' interactive feature to better meet users' self-expression needs.

On the content consumption front, we canceled the previous 24-hour time limit and enabled Stories to reside on the top of the users' homepage as well as on that users' individual page, promoting the construction of user relationships.

On the operational front, we focused on promoting the Stories generated by celebrities and KOLs, who are providing exemplary content and interactivities that further incentize the general group of users to create and share their story.

For example, in the first quarter, more than 60 celebrities participated in a marketing campaign and posted Stories around the theme of complementing the nation.

This resulted in a significant increased number of users participating in the creation of Stories, and the related Stories reached nearly 150,000 posts.

In addition, allowing users to distribute Stories in the feeds has also promoted the user consumption for similar content.

The number of users who viewed the Stories grew double digits sequentially.

We believe the product realignment and operational adjustments will help Weibo strengthen our vertical screen video creation, provide better user experience in consumption, as well as enable us to capture our share in the vertical video market in a more swift pace.

(foreign language)

Turning to content, we have deepened our collaboration with the government organizations and media outlets over the past 6 months, which has enabled Weibo to play an increasingly important role in the current media landscape in China.

In particular, Weibo's partnership in 2018 with top media outlets to broadcast live streaming and the short videos of China's Two Sessions, the annual sessions of China's top legislative and advisory bodies, generated impressive results.

During the Two Sessions period, Weibo cooperated with national media outlets, such as Xinhua News Agency, People's Daily, and CCTV News, as well as other mainstream media outlets and the government agencies.

This ensured that the content from the Two Sessions was immediately available to users.

Weibo also formed an exclusive partnership with CCTV to promote the Two Sessions related content in the Weibo video information feed, hot information feed, hot search, further expanding the coverage of the event on Weibo.

As a result, the total video views relating to Two Sessions exceeded 3 billion, or up 25% year-over-year.

Weibo was granted the rights to live stream every key conference held during the Two Sessions, which resulted in more than 500 live streams, nearly double the number from the previous year and attracted nearly 200 million users.

Through such strategic partnerships, Weibo is becoming the most important political content consumption platform on the mobile Internet.

Although the investment of Weibo's core traffic in the promotion of Two Sessions has affected users' short video consumption of other content to a certain extent, we believe such investment will help Weibo solidify its competitive edge, amplify Weibo's social impact, and enhance its brand equity in a longer term.

(foreign language)

This quarter, one of our key focus area has been to further verticalize content to build stronger engagement throughout every level of the Weibo platform.

To support this goal, in March, we partnered with about 1,700 MCNs, growing by nearly 400 MCNs from last quarter.

Importantly, daily posts by top content creators and the number of our monthly views both maintained double digit growth from the last year.

Weibo continues to be a key platform for top content creators to create and distribute content.

(foreign language)

Next, let me share an update of our key initiative for the celebrity vertical.

As Weibo has built competitive advantage in this segment in the past few years, Weibo's celebrity vertical has become an indispensable platform for celebrities to distribute their content to a mass audience base, accumulate their fan assets, exercise their influence and interact with fans.

As such, we'll focus our investment in the celebrity vertical through the rest of 2018.

To support these effort, we are taking steps to further reinforce the ecosystem around content, influence and monetization, including initiating a series of projects to help top celebrities to create video programs.

For example, we are going to launch the "celebrity producer" V-project in Q2, where we will work together with celebrities to create video programs that display their lifestyles or show their pursuit of interest.

The project serves the dual purpose of helping those celebrities enrich their content offering and increase their monetization potential on Weibo, while at the same token, promoting Weibo's value to celebrities and engendering a sense of belonging to the Weibo user community.

Based on the preliminary results, the first 3 episodes of the video program developed between Weibo and Yiqian Ye, a celebrity in China, was viewed by more than 30 million users.

We hope this renewed focus on collaborating between celebrities and Weibo will help Weibo to further expand our horizon in the video social media market.

(foreign language)

Lastly on monetization.

KA ad revenue continued to grow rapidly in the first quarter, up 111% year-over-year.

As I mentioned on the previous earnings calls, we continued to leverage Weibo's uniqueness in social marketing to enable advertisers to maximize their marketing effectiveness.

In particular, customer campaigns executed on Weibo were able to raise their brand awareness with younger users, enhance brand satisfaction and increase purchasing intent.

Importantly for Weibo, recurring customers continue to increase their ad spending on the platform as Weibo has become the long-term marketing partner for our advertisers to deploy their brand strategy and executing re-branding campaigns.

As I indicated in the earlier part of our prepared remarks, we deepened our cooperative activities with TV programs and celebrities in 2018.

Weibo's strong influence on breaking news and the celebrity vertical have attracted more new customers who are shifting their marketing efforts on Weibo.

For example, the "Hot Blood Dance Crew" variety show is now virally distributed on Weibo, with William Chan, one of the judges on the show, attracting the attention of many users.

As a result, Levi's, an international apparel brand, leveraged William Chan's popularity with users and choose to conduct its "Live in Levi's" branding campaign on Weibo with a new and a massive stage.

William Chan's related posts were engaged by users for more than 1 million times in total and the total related video views for the campaign reached more than 30 million.

(foreign language)

Turning to SMEs.

In the first quarter, SME revenues increased 47% from the prior year.

In the information feed advertising market, which undergoes fierce competition, we saw 2 primary drivers for SME revenue growth.

First, we continuously enhanced our ad platform through the optimization of our ad algorithm and improved advertising efficiency.

Second, we continued to focus on innovating new ad products and marketing solutions to meet SME customers' marketing demand.

In the first quarter, we tested new advertising inventory in the main page of Weibo feeds to increase monetization.

The incremental inventory spot once fully implemented, will further drive our SME revenue growth.

(foreign language)

Moving onto video ads.

The number of video ad customers continued to grow at a stable rate from last quarter and video ad revenue as a percentage of total ad revenue maintaining its growth trajectory.

We observed more and more customers intend to adopt video ad as their primary advertising campaign format.

Other investment in video ad product has set the stage to meet increasing demand from both KA and SME customers.

Over the past 2 years, we have seen Weibo's video information feeds rapidly gain popularity among users as a way to consume content.

As the consumption of video feed continue to grow rapidly on Weibo, the ad load of video feed still has room to grow.

We have placed our priority in video ad monetization in SME customers.

We are developing tools and providing supporting mechanisms to help improve their marketing effectiveness.

We believe this strategy is crucial for our future video ads sales and revenue growth.

(foreign language)

For example, we launched new ad products on the Super FST ad system for App and E-commerce customers in the first quarter.

The new ad product drive conversion with a mobile lending page that include video, app download and products sales.

Such product features encourage users' action by allowing users to easily download the app and purchasing the product in a visual and immersive way.

This will also help our customers to increase marketing conversion efficiency.

For example, Ctrip, a provider of travel services, purchased our video plus ad download ad and generated impressive marketing results.

The ad engagement rate increased triple digits compared to the rate of the simple video ad and the cost per ad engagement reduced double digits.

In April, we also launched video banner display ads, allowing customers to immediately engage viewers with visually impactful content and providing a better user experience.

We have also developed a new landing type solution, include both the video and H5 to enable better presentation of marketing content, higher sales conversion, and attracts new ad customers in different industries.

(foreign language)

With that, let me turn the call over to Fei Cao for a financial update.

Thank you, Gaofei.

Welcome to Weibo's First Quarter 2018 Earnings Call.

As a specific note, since January 2018, we adopted new revenue guidance, ASC 606, using modified retrospective method.

Under the new accounting standard, we are required to report our revenue in net basis and to account for advertising barter transactions.

However, our historical operating results were not adjusted.

In order to provide investors with more meaningful comparisons, I may also indicate our revenue or expense figures under the old basis, which excludes barter transactions and adds back value added tax to the recorded figures included in our earnings release.

Now, let me go through our financial highlights.

For the first quarter, Weibo's net revenue reached $349.9 million, up 76% year-over-year, or up 81% year-over-year under the old basis, exceeding the previous guidance.

Non-GAAP operating income is $120.6 million, up 81% year-over-year.

Non-GAAP net income attributable to Weibo was $112.6 million, up 95% year-over-year.

Non-GAAP diluted EPS was $0.50 compared to $0.26 a year ago.

Advertising and marketing revenue for the first quarter reached $302.9 million, up 79% year-over-year, or up 83% year-over-year under the old basis.

Even though the first quarter is a typical slow quarter for the year, we managed to adding total advertisers by 10% year-over-year and large brand advertisers by 45% comparing to a year ago.

Mobile ad revenue in the first quarter was $243.3 million, up 105% year-over-year, representing 80% of our total ad revenue.

As a China's leading social media platform, Weibo is continuing to benefit from the secular ad budget shift in China toward mobile, social and video.

As such, given our unique position in the social media industry, Weibo continues to capitalize on the rapid growth of the mobile advertising market in China with 93% of mobile MAUs in March.

Moving on to KAs.

In first quarter, our KA ad revenue reached $128.6 million, up 111% year-over-year, while per customer spending hit historical high.

We were able to carry on the strong momentum we experiences in KA growth for another quarter.

Weibo's leading brand, public platform with young user base and innovative products with differentiated capabilities, such as audience targeting, viral platform effects and the strong influence of breaking news on KOL, are increasingly recognized by advertisers.

As Gaofei mentioned, we saw our KA customers are returning to the platform with higher budget, as Weibo has become the long-term marketing partner for our advertisers to deploy their brand strategy and executing re-branding campaigns, while for new advertisers, Weibo has been set as the default platform to test social marketing campaigns.

Moving on to SMEs.

In the first quarter, Weibo's SME ad business delivered revenue of $148 million, up 47% year-over-year.

The top categories of our SME business include O2O companies, e-commerce, app downloads, which include subcategories such as photography, beauty and wellness, as well as gaming app downloads.

Revenue from Alibaba was $26.3 million, up 238% year-over-year and down 31% quarter-over-quarter.

We note that revenue from Alibaba is highly correlated with their marketing campaigns and initiative spending, which can fluctuate significantly on a sequential and annual basis for any given quarter.

Building on Weibo and Alibaba's successful brand promotion cooperation in the second half of 2017, Alibaba has further increased investment on the Weibo platform for a number of new marketing campaigns for the first quarter, such as Alibaba's brand campaign during 2018 Winter Olympics, Tmall's 2018 Queen's Day and Taobao's Spring Festival marketing campaigns.

Weibo has been an important partner for Alibaba in the fields of e-commerce, marketing, fan accumulation and fan interaction.

Thus, the value that Weibo derives from the partnership is not limited to the ad spending from Alibaba, as well as being the integral element of Ali's ecosystem, including social e-commerce, O2O, payment solutions, entertainment and videos.

Value-added service revenue was $46.9 million in the first quarter, up 57% year-over-year.

Membership fees, which include individual membership, enterprise account verification and V-plus membership, were up 96% year-over-year; and game revenue was up 65% year-over-year.

The two together make up more than 50% of Weibo's VAS revenue.

Turning to costs and expenses.

Total non-GAAP costs and expenses were $229.3 million, up 73% year-over-year, or up 78% year-over-year under the old basis.

Other than the barter transactions related marketing expense of $12.7 million recognized under the new basis, the fast growth in costs and expenses was primarily due to the increase in marketing fees and product development costs.

As we mentioned on the last earnings call, in 2018, we plan to be more aggressive on user acquisition and the retention, as well as user engagement over multiple channels.

As such, during the quarter, sales and marketing expenses grew at a faster pace year-over-year, which can be attributable to increased channel marketing spending, investment on strategic partnership with CCTV Chinese Spring Festival Gala, and investments in series of platform-wide marketing campaigns and events Weibo held in the first quarter, such as the red envelope giveaway.

It's worth mentioning that under the old basis, the non-GAAP sales and the Non-GAAP sales and marketing as percentage of net revenue was 25%, which was up 1% from the level in the second half of last year.

The increase in product development expenditure primarily attributable to an increase in personnel-related cost.

Non-GAAP operating income was $120.6 million in the first quarter, up 81% year-over-year, representing a non-GAAP operating margin on 34%.

Income tax expense was $18.3 million compared to $11.3 million last year, a result of higher profitability.

Non-GAAP net income attributable to Weibo in the first quarter was $112.6 million, or up 95% year-over-year.

Turning to our balance sheet and the cash flow items.

As of March 31, 2018, Weibo's cash, cash equivalent and short-term investments totaled $1.92 billion compared to $444.2 million as of March 31, 2017.

For the first quarter, cash provided by operating activities was $84.8 million; capital expenditures totaled $4.3 million, and depreciation and amortization expenses amounted to $4.7 million.

We delivered free cash flow of $80.5 million for first quarter.

As a leading social media platform in China, Weibo's revenue scale and the brand strength are allowing us to grow the platform efficiently.

According to our ADR depositary firm, as of March 31, 2018, approximately 28% of Weibo's shares outstanding were represented by American Depository Shares, 86% of which were considered floating shares.

Turning to Weibo's second quarter 2018 guidance.

We estimate our second quarter revenue to be between $420 million and $430 million, which assumes a foreign exchange rate of RMB 6.35 to USD 1.00.

With that, let me now turn the call over to the operator to begin the Q&A portion of the call.

(Operator Instructions) The first question comes from the line of Alicia Yap from Citigroup.

My first question is a little bit on the second quarter guidance.

Just wanted to know on the like-for-like growth rate.

We are using the old basis of this ASC 605, what would be the growth rate looks like?

In other words, what is the barter transaction ratio in the second quarter last year?

That's the first question.

And then second question is related to some of the key growth driver for this year.

Will that be driven more by ad load, or will that be the pricing increase for revenue?

And what would be Weibo estimated social ad market share today versus, let's say, a year ago?

And given some regulatory impact on some of the competing apps, recently have you seen any additions of the new ad budget demand going for Weibo?

Alicia, this is Bonnie.

I'm going to take your very first question.

I think at this point, it will be very hard for us to give a clear picture in terms of the impact on the new accounting guidance revenue.

In the midst of a quarter, we will have very little visibility in terms of the barter transaction level for the quarter.

So that number virtually has to be determined by the end of the quarter, depending how much inventory consumed or allocated by barter transaction.

As a result, what we see today, which indicated in the guidance, is what we expected total revenue level we tend to recognize for the second quarter.

So I would not be able to break out the total revenue into different pieces, meaning the cash revenue versus the barter transactions.

(foreign language)

We realize that the market for user growth has been somewhat saturated, or tend to go into a slower pace.

However, we were able to deliver a relative healthy user growth trend in the first quarter.

(foreign language)

The first quarter ad load has been relatively stable compared to the previous quarter with our traffic growth continued to be seen in the interest-based feed and the video feed.

We think we still have some potential in terms to increase the ad load down the road.

In particular, the ad load level in the video feed is only about 50% compared to other main feeds that host our normal feeds.

(foreign language)

From a pricing perspective, for the first quarter, we do raise our CPM price average 10% to 20%, depending on the inventory spot.

Our current eCPM level in the marketplace, we believe, still have some advantage compared to few of our key competitors.

(foreign language)

For your question on the market share, I haven't seen any particular report to specify what was our market share before and after, as a result, it will be pretty hard for me to answer that.

However, if we look at it from the advertiser market point of view, we do look at it from KA and SME, one thing we did notice that for the overall key account market, the social marketing budgets has been an increasing trend for the last couple years.

As I indicated in my prepared remarks, because the positioning we're taking for Weibo and our brand equity, as well as Weibo's influence over the total market, we do have advantage to attract more key accounts to our platform.

(foreign language)

On the SME side, in particular for e-commerce customers, we do have a natural advantage in terms of ad deliver; we tend to have a better performance results in comparing to the other platforms; we are pretty comfortable that with the SME growth down the road, particularly from a revenue point of view.

(foreign language)

And for other segments within SME such as app and game customers, we are not only competing with other social platform, we are also competing with news feed such as Baidu and Toutiao.

As I indicated in my prepared remarks, we are hoping our SMEs to run more campaigns in our video feeds.

At this moment, they were little bit hesitated to do that yet.

However, we're planning to provid more tools and the supporting mechanism so that some of their budgets will move into the video ads site.

(foreign language)

For the first quarter, as we are aware, there is some regulatory activities in the market, but it will be very difficult for us to distinguish what type of customers were transferred or were shifted from other platforms.

(foreign language)

I think we are aware of that.

It is the determined trend and not only happening in China but also overseas.

There will be more and more regulatory activities towards Internet companies.

As I indicated in my script that during the Two Sessions period, we tend to provide more mainstream contents on the platform so that we are more readily adjusted to the current regulatory environment.

(foreign language)

Weibo has been working with government on Internet regulation for more than a decade.

As a result, we believe we have more experience in working with the government in terms of the regulatory changes.

The overall supervision of Weibo and WeChat by the government tend to be much more mature from a government point of view.

As a result, we believe we're more, I won't say comfortable, but we are more experienced working within the government in terms of under the current regulatory changes.

The next question comes from the line of Gregory Zhao from Barclays.

I have several follow-up questions.

The first one is still about the overall online advertising market in China, you can share with us your view about the overall demand for both social and news feed advertising.

And is there any way to quantify, the impact to the advertisers, advertising budget allocation to social and the news feed?

And the second question is about a new advertising system, which was launched second half last year.

So would you please share some recent update of the system and how this is going to help to improve your monetization in 2018.

And the last one is a quick question about your user growth.

So can you give us an update of your 2018 MAU growth outlook?

So shall we expect for MAU net ads to be similar to last year?

(foreign language)

Like I indicated earlier, there is a very clear increase of demand for social ads.

(foreign language)

In terms of SME for this year, we see it's clear there will be more pressure in terms of competition.

Like I indicated earlier that we will working on the ad load potentially to increase the ad load for the video feed will open more inventory to meet the demand for the SME customers.

(foreign language)

In terms of Super FST system, the important character for this new system is converged in our main feeds, which was separately bidding in the past into one gigantic system.

And another factor is that now we are combined or converged our SME bidding along with our key accounts bidding.

So in the longer term, we believe this new system will increase our efficiency in terms of our bidding process.

(foreign language)

I think in the second half of last year, among the SMEs bidding on the system that includes e-commerce, which for them are the peak season, and for the O2O and the gaming.

However, for the first quarter, it's a typical slow season for the e-commerce and also there is downward activity for gaming, and as well as O2O.

As a result, our ECPM price increase was not that substantial on a sequential basis.

(foreign language)

In terms of the growth in gross MAU for this year, we feel pressured with the growth in result of the slower pace in the mobile phone shipments.

We had a step-up our cooperation with handset manufacturers in this year by 30% or 40%, and more handsets will be installed.

However, the shipments has obviously been slow in the first quarter.

(foreign language)

We also noted, in the first quarter, the short video app had explosive growth rate, which had some negative impact for other app growth.

(foreign language)

So the pressure from the growth on short video app, it's particularly obvious on the DAU growth and as well as the growth rate on the time spent.

From a MAU perspective, I think that pressure is more coming from the slower growth in the mobile user in the market.

As a result, we'll be increasing our budgets in the installations as well as to increasing the engagement activity for our current users.

Now I'd like to hand the conference to the speakers for any closing remarks.

That concludes today's conference call.

Thank you for joining us, everyone.

Thank you.

Ladies and gentlemen, that does conclude our conference for today.

Thank you all for your participation.

You may all disconnect your call now.

Thank you.