Zhihu Inc

HKEX:2390

Earnings Call Transcript

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Zhihu Inc. First Quarter 2024 Financial Results Conference Call. [Operator Instructions] Today's conference is being recorded.

At this time, I would like to turn the conference over to Yolanda Liu, Director of Investor Relations. Please go ahead, ma'am.

[Yolanda Lian Liu, executive]

Thank you, operator. Hello, everyone. Welcome to our first quarter 2024 financial results conference call.

Joining me today are, Mr. Zhou Yuan, our Founder, Chairman and Chief Executive Officer and Mr. Wang Han, our Chief Financial Officer.

Before we get started, I'd like to remind you 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. These statements involve inherent risks and uncertainties. As such, actual results may be materially different from the views expressed today.

Further information regarding these and other risks and uncertainties is included in our public filings filed with the U.S. SEC and Hong Kong Stock Exchange. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law.

Additionally, the matter we will discuss today will include both GAAP and non-GAAP financial measures for a comparison purpose only. For a definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our website at ir.zhihu.com.

I will now turn the call over to Mr. Wang Han, CFO of Zhihu. Han please go ahead.

[Wang Han, executive]

Thank you, Yolanda. Hello, everyone. Thank you for joining Zhihu's first quarter 2024 earnings call. I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou Yuan, Founder, Chairman and CEO of Zhihu.

The first quarter of 2024 marked a significant turning point for Zhihu. Strategically, we concentrated on our core strengths and the most crucial aspects of our development in the AI area. This involved a series of tactical adjustments, including resource reallocation and organizational optimization. From an operating perspective, our top priority in the short term is to achieve profitability.

The advent of AI has disrupted the traditional internet business model, which relied on expanding user base, enhancing user engagement and boosting user ad value to gain market share. In AI era, the focus has shifted to high-quality content and user value.

Zhihu's core value lies not only in presenting Chinese highest quality content library, but also in our unique content creation mechanism and our community's professional atmosphere, which foster continued emergence of new high-quality content.

Zhihu users are not passive recipients of information, but are active participants in content creation and knowledge sharing. These core strengths provide us with a first mover advantage in exploring new business models and position us uniquely in the market, increasing our pricing power.

Following our proactive reduction in community related user acquisition costs, the size of our user base declined to some degree in line with our expectations. However, engagement among our monthly active users increased. Core user retention sustained its growth momentum and daily active user time spent also increased significantly.

Furthermore, our efforts to enhance trustworthiness within the Zhihu community continue to drive community prosperity. Our strategy for cultivating scenario oriented content ensures a continued stream of authentic, in-depth, high-quality content based on our users' own experiences.

As of the end of the first quarter, the cumulative pieces of content on our platform reached 804.2 million, including 611 million Q&As, up 15.4% year-over-year. Cumulative content creators within Zhihu community reached 73.6 million, an increase of 13% year-over-year.

We also observed a notable year-over-year increase in the proportion of highly active users engaged in creation and a percentage of high-level daily active creators.

Utilizing the power of AI driven technology, we continue to equip our content creators with a variety of user-friendly creation tools, offering a professional and supportive environment to help them break financial rewards.

In first quarter, the total number of content creators who earned income on Zhihu grow by more than 25% year-over-year. Notably, the number of content creators benefiting from our Zhizhi Plan was nearly fourfold compared to the same period last year.

In the AI era, we have continually upgraded our cybersecurity capabilities to ensure better production of user data privacy and intellectual property rights. At the same time, we fully leverage AI model's capability to enhance efficiency of content identification, review and governance within the Zhihu community.

In certain scenarios, AI reviewers can achieve higher accuracy compared to the manual identification and review, allowing us to significantly reduce the number of manual reviewers, while maintaining high efficiency.

We continue to refine and upgrade our existing systems, [ Vali and Wukong ], leveraging our Zhihaitu LLM. These improvements have further enhanced user engagement and effectively combated fake traffic, leading to a continued decline in users' negative feedback and propelling Zhihu 's community sustainable development.

We're progressing steadily towards our goal of achieving quarterly profitability within this year. To that end, we have accelerated our loss reduction through 2 operating tactics. First, was to continually improve employee efficiency, further reducing labor costs.

Second was to reduce community related user acquisition costs. Meanwhile, we have maintained a higher ROI in our paid membership and vocational training businesses, which extended our reach beyond the Zhihu community.

With these efforts, the cost of revenue and total operating expenses in Q1 decreased by over RMB 130 million quarter-over-quarter. Notably, we recorded our sixth consecutive quarter of year-over-year growth in gross profit margins and 3 consecutive quarters of sequential decline in our sales and marketing expenses in the first quarter.

Additionally, we have been accelerating the application of Zhihaitu LLM to further enhance our operating efficiency across every aspect of our businesses. For example, teaching, learning and research aspects for our vocational training business.

By integrating our own knowledge library, we have driven notable efficiency improvements in AI teaching assistants, self-services, homework assessment, and more.

As a leading content centric community, Zhihu serves as a leading platform where professionals engage in the most extensive and in-depth discussions on AI related topics. Since the beginning of this year, the amount of AI related content and the number of creators have continued to surge by double-digit year-over-year growth.

Specifically, the number of AI creators certified by Blue Label has increased by 130% year-over-year. Moreover, tens of thousands of specialized terms related to AI are being discussed within our community.

In 2024, our exploration of an investment in AI will shift to focus on the application layer. Our advancement in AI enables us to enhance operating efficiency across our existing businesses as well as to unlock emerging potential beyond the Zhihu community, all built on the foundation of trustworthiness.

Since the launch of our AI powered search feature in March, we have observed double-digit growth in app active days, user retention rates, and user engagement among users who are using our new AI search feature.

Now, I'd like to dive into more details of the progress we achieved across our multiple business lines for the first quarter. First, our vocational training business continued to grow robustly, with revenue increasing by 35.9% year-over-year to RMB 145.4 million. Its contribution to our total revenue also rose, surpassing 15% for the first time.

As of the end of the first quarter, we established more than 30 subcategory courses through both self-operated business and acquisitions. Notably, our self-operated offerings are closely connected to the Zhihu community, allowing us to address users' needs swiftly and precisely, while yielding higher profits.

Our acquired offerings, on the other hand, meet specific demands and cater to a broader markets. Together, these courses complement each other and broadened our offerings and driving the rapid and sustainable growth of our vocational training business.

In the first quarter, our self-operated offerings grew rapidly, particularly AI, AGI and software exam courses, demonstrating excellent profitability and rapid growth.

Currently, our program tutors are also content creators within the Zhihu community. With this dual role, tutors are deeply involved in the course development while maintaining ongoing interactions with students in the community about real course experiences, skill improvements and other topics. This approach effectively addresses the ever growing new demand of our new users.

Growth from our acquired offerings remained steady during this quarter, further elevating our brand name awareness and service advantages. In April of this year, one of our subsidiaries, Pinzhi Education, hosted a dedicated live broadcast, inviting executives from the CFA Institute.

They provided professional insight into CFA exam reforms, offering firsthand preparation guidance and expert analysis. This initiative garnered significant attention and sustained feedback from both the industry and examinees.

Our paid membership business remain our largest revenue contributor this quarter, reaching RMB 449.7 million. As of the end of this first quarter, our average monthly subscriber members stood at 14.8 million, showing a slight decrease of 0.8% year-over-year, but an increase of 4.1% quarter-over-quarter.

Average revenue per user remained stable compared to the same period last year. Leveraging the support of Zhihu community and our unique positioning, our premium short stories continue to captivate and resonate with our users.

In April, the 123 historically chart topping cases, including Zhihu's exclusive story, [ Sand of Time, Shijian zhi sha and Endless River, SeaWorld's Flows ], [indiscernible] were included in the National Library's digital collection. Zhihu's premium content library, including short stories, continued to expand in the first quarter.

The total volume of premium content increased by 14% year-over-year, attracting new subscribers while encouraging increased consumption among existing subscribers.

On the content creator side, we are delighted to see our creators building a solid market reputation and achieving financial rewards on our platform. In the first quarter, the number of content creators who earned income increased by 78% year-over-year.

In addition to top creators earning substantial income, many mid-tier and long-tail content creators within our community also earned significant income through high-quality content creation this quarter.

As a market leader, Zhihu continues to unlock the monetization potential of our vast array of premium short story IPs, spearheading our expansion into the short drama market and consistently setting new industry benchmark for growth.

In the first quarter, IP monetization revenue increased by 165.7% year-over-year. In April, another short drama Zhi Bi, adapted from a story in Zhihu's content library, achieved a new record high for popularity on its debut day on Tencent's micro-drama platform.

In the long run, the ongoing expansion of our premium content and diverse content consumption formats will continually drive growth in the lifetime value of subscribing members. I'll now shift to our marketing services.

In first quarter, marketing services revenue were RMB 330.5 million, representing a decrease of 15.7% year-over-year. Within this total, revenue from our brand advertising business increased significantly by 40% year-over-year. While our performance based advertising business returned to a growth on a quarter-over-quarter basis. Our key clients in cornerstone verticals continue to demonstrate healthy improvements in retention rates, consumption and ARPU.

Apart from IT, 3C industry, which maintained its year-over-year growth rate of over 40%, the fast moving consumer goods sector also experienced high double-digit year-over-year growth.

We are currently in the process of upgrading our CCS product, including proactively enhancing content governance and reducing the distribution of commercial content that negatively impacts user experience.

As we are striving for quality profitability by the first quarter of 2024, we are deepening our efforts to narrow our losses. Meanwhile, we firmly believe the emerging potential of our AI search and the value we continue to unlock across Zhihu's trustworthy community will provide fresh momentum for our sustainable growth and a clear path to profitability for the remaining quarters of this year. This concludes Mr. Zhou Yuan's remarks.

Now, I will review the details of our first quarter financials. For a complete overview of our first quarter 2024 results, please see our press release issued earlier today.

We have continually optimized our cost structure over the past several quarters. As a result, we recorded our sixth consecutive quarter of year-over-year growth in the gross profit margin.

On expense side, we significantly reduced community related user acquisition costs, while maintaining a prudent level of investment in cutting-edge technology, including AI. This initiative has effectively automized our fixed costs, enhancing our commercialization efficiency. With this proven strategic adjustment, we are confident of achieving quarterly profitability within 2024.

Our marketing services revenue for the Q1 were RMB 330.5 million, a decline of 15.7% year-over-year. This decrease was primarily due to the ongoing refinement of our CCS product to strategically focus on margin improvement.

However, we have observed the recovery in our brand advertising segment in the first quarter. Performance based advertising also demonstrated sequential growth, notably IC and 3C as well as fast moving consumer goods led its growth by vertical.

Pay membership maintained a stable trend in the first quarter, reaching RMB 449.7 million. The number of subscribing members grew to 14.8 million, up 4.1% quarter-over-quarter. Vocational training revenues for the quarter was RMB 145.4 million, increasing by 35.9% year-over-year.

Our soft operated offerings, particularly AI, AGI and software exam courses delivered robust growth, while our acquired business also retained solid momentum.

Benefiting from enhanced operating efficiency, our gross profit for the first quarter increased by 6.1% year-over-year to RMB 543.5 million, propelling a gross profit margin improvement of 5.1 percentage points year-over-year to 56.6%.

Our total operating expenses for the quarter were RMB 768.2 million compared with RMB 729.0 million in the same period last year. Selling and marketing expenses increased to RMB 478 million from RMB 445.6 million in the same period of 2023. Moving forward, we will maintain our prudent financial policies and rigorously maintain ROI across marketing channels.

Our research and development expenses for the quarter increased to RMB 197.4 million from RMB 183 million in the same period of 2023. The increase was primarily due to our increased spending on technology innovation. G&A expenses decreased by 7.5% to RMB 92.9 million. The decrease was primarily due to lower share based compensation expenses combined with improved operating efficiency.

As a result of all above, our GAAP net loss for the first quarter narrowed by 7.4% year-over-year to RMB 165.8 million. Our non-GAAP net loss for the first quarter was RMB 135.7 million.

As of March 31, 2024, the company had cash and cash equivalents, term deposits and short term investments of RMB 1.2 billion, compared with RMB 5.5 billion as of December 31, 2023. In the first quarter, the company repurchased 4.8 million Class A ordinary shares for a total price of USD 8 million.

In summary, as we continue to optimize our costs and expense structure, our operating efficiency is steadily improving. Throughout the remainder of 2024, we are confident that our strong strategic execution will provide a solid foundation for achieving our quarterly profitability goals in the near future.

This concludes my prepared remarks on our financial performance for this quarter. I'll turn the call over to the operator for the Q&A session.

[Operator]

[Operator Instructions] Our first question is from the line of Xueqing Zhang from CICC.

[Xueqing Zhang, analyst]

[Foreign Language]

My question about the breakeven target. Could management update with us on your timetable to achieve a costly breakeven? And what's the latest progress?

[Wang Han, executive]

[Interpreted] This is from Wang Han, CFO of Zhihu. Our profitability target remains unchanged. We expect to achieve a quarterly non-GAAP net profit in the fourth quarter of this year. At the end of the first quarter and start of the second, we strategically refined and restructured our approaches, driving a notable reduction in losses.

Starting from the second quarter, you will see more pronounced improvements across our metrics. The core philosophy behind this lease adjustment is what we shared at last earnings. We will always prioritize user quality over user scale. We are dedicated to protecting and elevating our core users' experience and ensuring continuous flow of high-quality content, or core business.

We believe that our industry is undergoing a fundamental shift as we move from the Internet era to the AI era. In the Internet era, the dominant logic here is to maximize user engagement through large user bases and metrics like AD load and eCPM.

But currently, in AI era, advancements in LLMs and compute power are amplifying the importance of top tier users and high-quality content. So the most crucial factor for Zhihu going forward are, first of all, having sufficient capital to invest in high-performance chips. Second, having the highest quality content and data. And third, having the highest quality and productive content creators.

So Zhihu has been a pioneer in these aspects. First, our substantial investments have made us one of only a select few platforms in China with a license to operate -- to self-operate LLMs.

And second, we already have natural advantages, thanks to our abundant high-quality content and high-quality user base. The advent of AI era presents a golden opportunity for Zhihu to return to what we do best, that is high quality Q&As. This has enabled us to make strategic adjustments with confidence and spontaneity.

Next question, please.

[Operator]

The next question is from the line of Steve Qu from Goldman Sachs.

[Steven Qu, analyst]

[Foreign Language]

I would like to ask about the user trends post your selling and marketing discipline strategy. And what are the future strategy to further improve your user engagement?

[Yuan Zhou, executive]

[Interpreted] Thanks, Steve, for your question. This is Zhou Yuan, Zhihu's CEO. Our sales and marketing strategy adjustment is based on a quality oriented approach. Overall, these adjustments are in line with our expectations. While our core user retention rates maintain its growth momentum, our DAU time spent also increased significantly.

The sales and marketing strategy adjustment is just one part of our broader community strategy. Our efforts to build and enhance the community's content and atmosphere are also crucial to improve the activeness of our users.

The trustworthiness of Zhihu is primarily from our professional users. Many professionals and industry experts whose professional value is often underestimated, have found a platform for discussion and sharing on Zhihu. We have very high penetration rates among professionals in various industries.

For example, Zhihu has the highest concentration of AI industry professionals and senior technical executives from leading LLM companies, who engage in cutting-edge discussions on our platform. The number of our Blue Label certified AI participants grew by 130% year-over-year as of the latest.

Thus, one important aspect of community daily operation is to enhance the experience for our core content creators. For example, recently, our Zhizhi Plan, in the community, in which by optimizing the revenue distribution algos, the revenue in broader range of knowledge related fields such as science and engineering increased by 30% to 50% quarter-over-quarter.

These adjustments have been happening in Q2. Our approach to support creators focuses on operations driven with enhanced efficiency through product development and research. And accordingly, on the content distribution wise, we will prioritize professionals in that and authentic content.

Secondly, it comes from professional, in-depth and authentic content. Zhihu gathers a diverse range of real user experience and gives insights. For example, the recent incident involving [ motorbikes ] in the open-source field became a hot topic on Zhihu, with the chief scientist personally responding.

AI industry professionals, open-source community operators and lawyers from both domestic and international communities participated in the discussion, generating widespread attention and dimension.

The influence generated by this content is not just ordinary traffic from curious onlookers, but rather it empowers more people to gain common knowledge behind the news through professional insights, providing a sense of fulfillment. We will continue to upgrade our operational system in line with our content fulfillment standard.

Thirdly, but not the last, the community culture and atmosphere, in the second quarter, we began integrating and streamlining our operational system and community governance, including the user service team to enhance our community culture of sincerity, expertise, and respect. For example, the proportion of professional in-depth and original content in discussion on training topics is steadily increasing in line with our expectations.

Thanks. Thank you for the question.

[Operator]

Our next question is from the line of Kewei Chen from Haitong International.

[Kewei Chen, analyst]

[Foreign Language] I'd like to -- I have 2 questions about AI. The first one is, I'd like to ask about the recent development of our AI publication such as the AI powered search feature, which was launched last quarter. Do we have any new products? And can management elaborate more about how these products empower the Zhihu community? And for example, does management see any positive impact on the user activity or behaviors?

Following that, I think I have second question. We noted that Reddit had announced the partnership with OpenAI to bring its Q&A content into OpenAI's products. And they also reached out deal with Google to also authorize its data for some AI training that would bring it to roughly over a -- roughly USD 60 million per year for to Reddit's revenue. So my question is about whether we consider a similar business model to add more revenues to the group?

[Yuan Zhou, executive]

[Interpreted] Thanks for your 2 questions. This is Zhou Yuan, Zhihu's CEO. In the late March -- sorry, I will just answer the first question. In the late March, we introduced a beta version of our AI search feature, Discovery -- named Discovery. The initial results of the testing phase has been very promising. User utilizing our AI search become notably more active. We regard this as a positive indicator demonstrating a significant expansion in our users' content consumption scenarios.

So building on the feedback and usage patterns from the past 2 months, we are excited to announce that we will launch a new version of AI search by the end of June. This version will have a fresh product name. And it will initially be available on our PC platform. We believe that our PC platform is a crucial scenario of productivity and efficiency, perfectly complementing the mobile end.

In the AI era, the quality of user and content far overweighs the importance of quantity. Our AI search function relies on the high-quality and trustworthy content within our community, and it enables us to provide users with high-quality search results.

We believe that AI search serves as efficient tool based scenario. While the community offers a multi-user online interaction environment, these 2 have strong complementary characteristics. Integrating AI search with our community ecosystem will be our central product development focus moving forward.

And for the second question, indeed, many companies are interested in acquiring [ Quora ] from us, but we haven't made a decision yet. Thank you. Thanks for the 2 questions.

[Operator]

Our next question is from the line of Cici from CLSA.

[Cici Cheng, analyst]

[Foreign Language]

What's the long term growth outlook for vocational training business and how could company differentiate yourself from other educational institutions?

[Yuan Zhou, executive]

[Interpreted] Thank you for your question, Cici. This is Zhou Yuan, Zhihu's CEO. In the first quarter, our vocational training business continued to outperform the industry with a year-over-year growth rate of 35.9%. This is primarily driven by the robust growth of our community enabled self-operated offering.

Notably, the AI, AGI and software and other vocational skills and interest courses mentioned in the opening remarks, not only received positive feedbacks, but also demonstrated improved profitability.

Unlike other educational institutions, ZhiXueTang is built on the foundation of high-quality content and accumulated knowledge originating from our community, which naturally extends to supervised learning services. This process is primarily driven by the needs of our users who are also potential learners of our vocational training business.

As we shared in last quarter, Zhihu's community mechanism continuously identifies and rapidly validates our users' demands in vocational subsegments, providing us with a significant customer acquisition advantage. Community user and content creators effectively support our core development, resulting in high labor efficiency across existing offerings.

Besides, our community based approach means that when learners' needs are satisfied, they can in turn contribute back to the community, fostering the development of subsequent programs and exempting learners' lifetime value. This helps mitigate the common challenge of low renewal rates in the vocational training industry.

Our future growth strategy targets enhanced profitability. First of all, we will continue to expand into subsegments across 3 main categories: academic improvements, career enhancements and vocational skills and interests. Our primary focus will remain on vocational SKUs and interests, which are with higher certainty and better profit margins. We aim to enhance our learners' renewal and repurchase rate by leveraging Zhihu's unique advantages, thereby increasing our average GMV.

Second of all, we will further improve the ROI of our resources investment and leverage AI to enhance internal operational efficiency. Our goal is to achieve operational breakeven as soon as possible. This is in line with Zhihu's overall top priority. Thanks. Next question, please.

[Operator]

The next question is from the line of Vicky Wei from Citi.

[Yi Jing Wei, analyst]

[Foreign Language]

My question is related to the membership business. How should we think of membership business, competition landscape, and business strategy? Would you please share some color about YinYin's stories, paying user behaviors, and also other business such as IP operations business update?

[Wang Han, executive]

[Interpreted] Thank you, Vicky, for your question. This is Han, Zhihu's CFO. In terms of the competitive landscape, we remain the leader in this segment. While we have experienced competition from other big internet companies, as well as some fluctuations in content creator numbers and submissions.

A significant number of content creator have returned to Zhihu notably, confirming that Zhihu provides the best environment for short story creators to thrive. And I would like to share 2 points on our strategic plan.

Zhihu's excellence in short story segment has been widely recognized. However, some view this negatively as if the presence of stories on our platform dilutes the quality of our content library. So on this, we would like to share some insights.

We believe that literature itself is undeniable valuable content. After all, the Nobel Prize has a literature prize and New York Times has a bestseller list of novels. But we have concluded by separating the display and distribution of story content from non-story content, we can provide better experience for users with different preferences.

The best library and bookstores globally also categorize fiction and non-fiction separately to enhance users' experience. Therefore, we launched the standalone YinYin story app. YinYin story achieved a nearly 40% quarter-over-quarter increase in MAU for Q1 2024, reaching millions of users. This segmentation allows us to optimize each domain for specific user preferences without affecting the experience of the other group of users.

And second of all, Zhihu's short story, Zhi Bi, has become the most popular premium revenue sharing drama on the market. The premium short drama Zhi Bi, adapted from Zhihu's short story, has achieved excellent market results, becoming the highest revenue sharing short drama to date. Its success has raised the major video platforms' awareness of the value of Zhihu's short story copyright.

Premium channels are approaching us for collaboration, further allocating the value of our IPs. How should we understand, short story IPs value? So, in our recent discussion with the academic community, we shared that short story may represent the most advanced format of content evolution as we precisely and quickly showcased the latest authentic and value trends.

Short story maybe as much as 5 years ahead of novels, which in turn, are 5 years ahead of film and television production. We look forward to sharing more Zhihu IP content success story with all of you in the future. Thank you for your question.

[Operator]

The next question is from the line of Thomas Chong from Jefferies.

[Thomas Chong, analyst]

[Foreign Language]

My question is about our marketing services. So, I want to ask about our marketing revenue outlook and our long term strategy.

[Wang Han, executive]

[Interpreted] Thank you for your question. This is Wang Han, Zhihu's CFO. As we mentioned in last quarter, Zhihu is committed to enhancing the community's trustworthiness, even at the cost of satisfying some short term low quality revenue. As such, we proactively refined our commercial content and distribution mechanism, resulting in an expected CCS decrease.

However, our brand advertising increased by 40% year-over-year during the non-peak season, and performance advertising delivered quarter-over-quarter growth compared to Q4 '23. For the rest of '24, we will focus on improving performance advertising through enhancing AI and data infrastructure.

In long term, we believe that Zhihu's commercial potential should be assessed with Zhihu's brand premium, instead of only focusing on in platform traffic. Let's take an example. Many emerging domestic 3C tech brands showcase their R&D technologies and principles on Zhihu. They believe that only on Zhihu can be popularize their tech in a sufficiently professional and in-depth approach and establish market awareness for new product categories. They even integrate and upgrade their product based on Zhihu's data and user feedback.

In the consumer industry, most of the products on the market are actually quite similar. The main difference is the level of investment in advertising and promotion. However, products that can earn a solid reputation among professional users within Zhihu community likely have a genuine competitive edge.

You might have seen phrases like Zhihu high phrase followed by the rest of the title or [ Zhihu KL ]plus rest of the title in many articles. This validate the trust premium and endorsement value of Zhihu's content compared to that of content from other Internet platforms. We are quite confident that, in commercial area Zhihu has great potential to further enhance brand's credibility. Thank you for questions.

[Operator]

That concludes today's question-and-answer session. At this time, I will turn the conference back to Yolanda for any additional or closing remarks.

[Yolanda Lian Liu, executive]

Thank you, operator. Thank you all once again for joining us today. If you have any further questions, please contact our IR team directly or PSN Financial Communications. Thank you.

[Operator]

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.