Agora, Inc. (API) on Q2 2021 Results - Earnings Call Transcript
Operator: Good day and thank you for standing by and welcome to the Agora Incorporated Second Quarter 2021 Financial Results. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today Ms. Fionna Chen. Thank you. Please go ahead.
Fionna Chen: Thank you, operator. Good morning everyone and thank you for joining us for Agora second quarter 2021 earnings conference call. Our earnings results press release, SEC filings, and a replay of today's call can be found on our IR website at investor.agora.io. Joining me today are Tony Zhao, Founder, Chairman, and CEO; Jingbo Wang, CFO. Reconciliations between our GAAP and non-GAAP results can be found in our earnings press release. During this call, we will make forward-looking statements about our future financial performance and other future events and the trends. These statements are only predictions that are based on what we believe today and actual results may differ materially. These forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that could affect our financial results and performance of our business and which we discuss in detail in our filings with the SEC including today's earnings press release and the risk factors and other information contained in the final prospectus relating to our initial public offering. Agora remains no obligation to update any forward-looking statements we may make on today's call. With that let me turn it over to Tony.
Tony Zhao: Thanks, Fionna and welcome everyone to our earnings call. Time flies Agora has been a public company for one year now. Before walking through our Q2 performance and highlights, please let me spend a few moments looking back on Agora's accomplishments over the last year. We have reached the milestone of powering 50 billion minutes of video and audio engagements each month and we have expanded our product portfolio to include interactive whiteboard, instant messaging, flexible classroom, and many others. More importantly, together with developers on our platform, we are changing the way people work, study, and how they play and lead their lives. Let's start with work. According to a study from Gartner, 82% of the business leaders plan to let employees continue to work remotely at least some of the time, while 47% plan to allow employees to do so permanently. This means modern enterprise must embrace technologies that enable employees to stay productive from anywhere, anytime. In the past year, virtual office, collaboration tools, and virtual events are among the most rapidly growing use cases on our platform. How we play has also evolved. We're seeing a strong convergence of video games and live streaming where the virtual world and real world are combined to create even more immersive experiences. Movies and TV shows are no longer restricted to the living room is just as likely to watch a program with your friends across the country as with your family in the living room. Developers are using Agora from the most thorough applications to the most highly regulated and mission-critical use cases. Today, our technology is used by doctors and the license for therapeutist to provide patients instant access to professional health care services. With Agora's keypad-complaint and low latency network, patients and doctors can talk about any sensitive topics anywhere anytime. We are extremely proud that our customers continue to put their trust and confidence in Agora. Now, let's shift to our Q2 performance. I'm pleased to report that, our revenue for the second quarter was $42 million, up 25% year-over-year. At the end of June, we had more than 330,000 registered apps on our platform. Our number of active customers reached 2,400 adding 65 year-over-year – 65% year-over-year. Let's take a moment now to discuss the recent regulations in China that will impact K12 academic tutoring service. This new policy requires such services in China to be non-profit and not to be provided on vacant or public holidays among other things. We anticipate the new regulation will have a negative impact on our revenue from the China K12 tutoring sector in the near term. It does not, however, change our long-term vision or business fundamentals. K12 academic tutoring is just one of the many use cases of our technology. In fact, online education is here to stay, and will grow in the long term. Our commitment to the global education industry remains unchanged. Agora is dedicated to continue to provide the technology that enables online learning and make quality education more accessible. To manage the short-term implication, we will be making some adjustments. In China, we will shift our resource previously focused on K12 academic tutoring towards the public school education system and non-traditional academics such as music, art, computer programming and adult education. We will also continue to strengthen our go-to-market efforts in the US, European and Asia-Pacific, where we are seeing tremendous growth momentum, and more diversity in demand. Next, I want to highlight, our advancements in – on product technology and users in Q2. In this quarter, we launched Agora App Builder, which allows developers to create their own video chat and streaming apps with customizable functionalities and UI, without any coding required. Since launch, we have seen very strong adoption from both developers and the producers with no technical background. Their positive feedback motivates us to make continued efforts in the local and local direction, to make it even easier for creators to connect with audience, engage with customers and drive more business outcomes. On the technology front, we recently announced Agora Silver, our proprietary audio codec using artificial intelligence to optimize quality of experience under poor network conditions compared with traditional audio codecs. Agora Silver achieved superior quality at extremely low bit rates. Even compared with leading AI-based audio products such as Google Learn. Agora Silver enjoys lower computational complexity and a more robust noise suppression. With Agora Silver, we will be able to offer developers and end users an immersive experience under challenging network conditions. It is a perfect example of our commitment to cutting-edge innovation at Agora. We also made solid progress on enabling innovative new use cases using our technology. With patent -- we partnered with Migu, a leading music and digital content platform to develop a one-stop solution for online karaoke. The solution includes both the technology enabling people to sing songs together remotely and usage-based copyright solution for the soundtrack. We believe social singing will become a key feature in many social apps, just like live streaming did in the past few years. In gaming, we teamed up with HP to power real-time engagement for HP Omen gaming PCs. Our voice, video messaging and interactive live streaming capabilities are pre-installed on all Omen PCs, which allow gamers to engage during gameplay and turn game into watch parties enabling players and viewers to share the excitement. We also work with a leading e-commerce platform in Southeast Asia to introduce interactive shopping to their vast user base. In the app, the merchandise is demonstrated by a host through live streaming. The audience can place orders and interact with the host through real-time video or voice chat. Sales conversions have increased significantly as a result of interactive experience. Now, I want to talk about our developer community. Just about this time last year, we announced our new global start-up program designed to support our early-stage start-ups, no matter where they are and who they are. Now we have over 200 start-ups from six continents and 24 countries participating in our program. And we have seen so many innovative ideas that will profoundly change our lifestyle. As our developer base continue to grow rapidly globally, we have been working on our own internal diversity and inclusion programs. I'm proud to see that our employees now support 24 different languages. I also want to take this opportunity to invite you to join me at RTE2021, the annual real-time engagement industry event hosted by Agora will be showcased -- we will showcase exciting announcements feature many amazing industry leaders and unique RTE innovation that are changing our lifestyles all over the world. The U.S. time zone live event will be on September 1st and 2nd and the China time zone event will be on October 22 and 23 followed by October 24, as long as the programmer start to roll. I look forward to seeing you there. Lastly I would like to thank our developers customers and partners for their trust in us. I also want to say thank you to all agents for their hard work and dedication to our customers' success. We will continue to invest in enabling meaningful human connections and creating more real-time engagement possibilities. Now let me turn things over to Jingbo who will review our financial results.
Jingbo Wang: Thank you. Hello everyone. Let me start by first reviewing financial results for Q2 and then I will discuss our outlook for the full year. Total revenues grew 25% year-over-year and 5% quarter-over-quarter to $42.3 million in the second quarter of 2021. Number of active customers reached more than 2400 excluding those for Easemob, up 65% year-over-year. The growth in revenue and active customers was mainly driven by continued adoption of our technology by developers and merchants and growth of new use cases. We reached more than 330,000 registered apps at the end of June excluding those for Easemob adding over 10,000 per month in the quarter. Additionally, Easemob contributed over $3 million to our top line. As we continue -- as we mentioned in previous earnings calls in order to help investors better understand our organic growth the excluding impact from one-off events such as the complete lockdown in China in the first half of 2020 due to COVID-19, we calculated adjusted total revenues for this period. When comparing to adjusted total revenues in Q2 last year, our total revenues grew 57% year-over-year in this quarter. Our trailing 12 months constant currency dollar-based net expansion rate is 110% excluding Easemob. If we use adjusted total revenues, the adjusted expansion rate would be 140%. Moving to cost and expenses. For my following comments, I will focus on non-GAAP results which exclude share-based compensation expense, acquisition-related expenses, amortization expense of acquired intangible assets and income tax related to acquired intangible assets. Non-GAAP gross margin for the second quarter was 61.5% which was 5.3% lower than Q2 last year and 3.1% higher than Q1 this year. The quarter-over-quarter increase was mainly driven by technical implementations and advancement, we have been implemented -- we have been implementing since the beginning of this year. The year-over-year decrease was mainly due to the continuous growth in new international markets that we are expanding into where infrastructure costs are higher. Non-GAAP R&D expenses, were $20.8 million in Q2 up 113% year-over-year as we continue to hire talented employees and strengthen our R&D team as well as the consolidation of Easemob's R&D team. Non-GAAP R&D expenses were 49.2% of total revenues in the quarter compared to 28.8% in Q2 last year. Again, our strategy is to focus on long-term growth opportunities and innovation instead of maximizing short-term profitability. We have been investing significant resources in our R&D capabilities, in order to further strengthen our technology leadership provide a more diverse portfolio and empower emerging use cases around the world. Non-GAAP sales and marketing expenses were $9.3 million in Q2, up 72% year-over-year mainly attributable to team expansion and increased advertising and event expenses. Sales and marketing expenses represented 22% of total revenues in the quarter compared to 16% in Q2 last year. Non-GAAP G&A expenses were $5.6 million in Q2, up 140% year-over-year mainly due to team expansion and professional service fees. G&A expense represented 13.3% of total revenues in the quarter compared to 6.9% in Q2 last year. Non-GAAP operating loss was $9.4 million translating to a 22.3% non-GAAP operating loss margin for the quarter compared to operating loss margin of 13.9% in Q1 this year and an operating income margin of 17.4% in Q2 last year. Turning to cash flow. Operating cash flow was negative $8.3 million in Q2 compared to positive $7.5 million last year. Free cash flow was negative $11.5 million compared to positive $3.6 million last year. Moving on to balance sheet. We ended Q2, with $827 million in cash, cash equivalents and short-term investments compared to $877 million at the end of Q1. In net cash outflow in the quarter was mainly due to negative operating cash flow, capital expenditure and the consideration paid for Easemob acquisition and long-term investments. Now turning to guidance. COVID-19 is still an unprecedented variable to our business model where historical experience may not apply. Our guidance on full-year revenues, reflect various assumptions that are subject to change based on the uncertainties related to the impact of the COVID-19 pandemic. In addition, as Tony mentioned earlier, we expect that the new regulation on K12 academic tutoring sector will have a negative impact on our revenue in the near-term. With that, for the full year 2021, we have adjusted our previous guidance and now expect total revenues for the full year to be in the range of $159 million to $161 million. In closing, we are proud of the strong performance in Q2 and continue to be confident about the long-term prospects of our business. We'll continue to implement our technical optimization add to further reduced infrastructure costs, investing, innovation and R&D capability, and support our developers and customers around the world. Thank you to the entire Agora team and everyone attending the call today and hope you're healthy and safe. Operator, let's open it up for questions.
Operator: Thank you. We’ll now begin the question-and-answer session. We have multiple questions in queue. Our first telephone question is from the line of Yang Liu from Morgan Stanley. Please ask your question Yang.
Yang Liu: Thanks for the option, did you ask questions. Two questions from my side. The first one is about the overseas revenue, can management share what is the contribution in second quarter from the overseas market and what is the growth driver in the overseas market especially, which are the key regions that contribute growth and what is the key use cases that drive the volume growth? That's the first question. And the second one is on the gross margin. We see a pretty good Q-on-Q gross margin turnaround. I guess Jingbo mentioned several times that the optimization on the infrastructure side contribute to that. Could you please share about the future outlook? And is this trend sustainable going into the second half specially given part of the K12 related revenue will be gone due to the regulation issue? Is this infrastructure level optimization can continue to help on the margin? Thank you.
Jingbo Wang: Sure. So I'll take the first part of the first question. So revenue from US and rest of the world market in the quarter contributed about 27% of the total revenues that's similar to the ratio in Q1. However, I want to highlight that in this quarter, we fully consolidate the results from Easemob and where the revenue is 100% in China. So if we exclude this market, the actual ratio of revenue from the US and rest of the world actually continue to increase. And Tony can you talk about the revenue drivers?
Tony Zhao: Right. So we are actually as always very excited about the opportunity from US and the rest of the world market. I think two days ago, dating was -- two, three years ago dating was by then our largest uses by revenue in US and rest of the world market. Today, we have many more use cases, many of which emerged in the past 12 -- past 18 months and we have a much more balanced revenue mix now. Our fast-growing use cases can be roughly grouped under three themes. The first one is what we call future of work. Obviously the pandemic has permanently changed how people work, collaborate and study. We now have several large future event customers that hold all kinds of events from free shows to celebrity Jim Coss, through our platform. And I'm -- we’re happy to see that they enjoy the benefit of our QOE advantage brought by our services. Recently, there's also a leading collaborative design platform from our voice and chat feature to its users so that they can have a live discussion while working on design projects. We are working with also some virtual office platforms, such as Loop and Virbela to define how distributed teams will work together in the future. We recently also pared a global education giant, those originate from China market to teach foreign languages to adult and children around the world. And the list goes on and on. I think that the future of work is definitely not just a one size fits all video conferencing. With Agora, we can have video, voice and all the workflow tools deeply integrated, creating a more immersive and effective remote working experience. And the second thing is future of media. In the past decade, we have all witnessed the transformation from TV and radio station to Netflix and Podcast. I think the next phase of involvement of media is real-time interactivity. Audio live chat, for example, has created a brand and more engaging experience compared with traditional podcast. We now have several large customers who are working with us to either launch a standalone LIVECAST app or introduce LIVECAST to their existing apps. Another important direction is interactive TV. Currently, we are designing with several interactive TV provider to bring audience interactivity to game shows similar to who wants to be millionaire. Here, the audience can answer questions in real time on their mobile phone and even have the chance of jumping on stage to participate in the show itself. We're also working with sports betting companies to offer real-time betting alongside video live streaming of the match. Here, the key to make sure the video latency is both were low and uniform across all users, so that they all have a fair chance to -- at winning the bets. And the third thing is future offtake. We see a clear trend of convergence of games and live streaming. More and more games are adding live streaming functions so that players can interact and share their game experience with others. On the other hand, live streaming platform are adding gaming features to live streaming sessions to boost interactivity between the host and audience. In fact, I think, the convergence of game and live streaming is an important step towards creating a new networks. Our technology is perfectly positioned to help developers make this happen. In short, I think you can see our future growth through those three lanes. There's a question about gross margin, right?
Jingbo Wang: So in terms of the gross margin, yes. So the sequential improvement in GP margin was mainly reflect our efforts in optimizing the technical architecture and also utilization rates. And this is a continuous effort. So we do believe we will be able to make additional savings in the future gradually. However, there are several factors at play. You mentioned the education policy change. It's true that the chain will likely reduce traffic coming from the sector, especially, during weekend and summer winter vacations. Typically, this type of reduction in traffic from one sector would cause pressure on the GP margin, but it will reduce bandwidth utilization rate. But in this case, it's actually a little more complex. If the education traffic is more concentrated during weekdays and other traffic, like social gaming is more concentrated on weekends, actually the utilization rate might potentially even improve. So if we take all these factors into consideration, we actually expect that we are working to ensure that we can have a relatively stable GP margin in the next few quarters.
Yang Liu: Thank you.
Operator: Our next telephone question is from Emerson Chan from BofA Securities. Please ask your question, Emerson.
Emerson Chan: Hi. Thank you, management. I have three questions. Firstly, for our new guidance. What revenue assumptions do we have on both academic and nonacademic in total in the second half? And how much revenue impact on education we have already seen in the second quarter? And secondly, I just want to get some color on the growth rate for non-education vertical in China in the second quarter. And what were the key growth drivers behind, as we may see tight regulation on media content? Do we think our noneducation sector in China will slow down in the future? And my last question is regarding our active customers, where we see net adds slow down Q-on-Q in the second quarter. So just wonder what are the key reasons behind, whether it was due to the education regulation, non-education vertical or anything else? Thank you.
Jingbo Wang: Sure. I guess, the first two questions are kind of related. So maybe I will start by sharing more information on the education situation. So in Q2, K12, academic tutoring contributed by 25% of total revenues. The actual revenue we saw in Q2 was already below our initial estimate before the policy since the education companies already started to cater advertising spending and their expansion student sign-ups. So there was already some impact in Q2. However, we expect to see further impact in Q3, because some local governments have already started to enforce a new policy in August. And we expect the most impact will be seen in Q4 at the time against most local governments will really enforce all the policies. And by the end of Q4, I guess, we will see kind of new norm and what people might see a new base or new clear base. But at this point it's really hard to estimate what that new base will be given uncertainties around the interpretation and enforcement of the policy. So when we give the guidance we try to make a balanced estimate, obviously, there are uncertainties involved. Ex-K12 education in China, we do not expect a slowdown. Actually, we see quite a few exciting opportunities. For example, Tony mentioned, social thing IoT, we actually are working with several customers adding this feature into their apps. And we do believe this like live streaming, like tour is going to be both opportunity for standalone apps and also opportunity to become currently by default a standard feature in many, many social apps. So in China I think the broader or the penetration of mobile Internet is already very high. There's not much room for user growth. However, the penetration of real-time engagement within apps still has a lot of room to grow. For example, a user might spend 60 minutes on mobile per day, but most of the minutes are used for one-way content consumption and only one or two minutes are used for user interaction to video or voice. So here this penetration is really driven by new ways of interaction. So the same is one way. And there are other possibilities like convergence of game and live streaming. So we do think -- we do not expect any slowdown for the other sectors. On the active customers, actually we've seen the growth in this quarter is still pretty healthy, as we added about 120 active customers quarter-on-quarter, and because we define customers based on LTM last 12 months, you might see a sharper growth rate several quarters back earlier. And that's because as during the peak of the pandemic, obviously, there were more emergency use cases, emergency sign-ups. And I actually do think the recent growth in customers is still pretty healthy.
Emerson Chan: Thank you.
Operator: Our next telephone question comes from the line of Vincent Yu from Needham & Company. Please ask your question, Vincent.
Vincent Yu: Thank you, management. I have two questions also like quite about regulation. The first one is in terms of live streaming, we do see there's discussions like potential more regulations on live streaming side. And what's our view towards that? Yes. And what's the worst scenario we think it could be? The second question is actually also about education. But in the policy, it says, the government is encouraging public school to provide platform or free classes online to interact with the students. So do we think we can take some share on that front? Thank you.
Tony Zhao: Okay. So on live streaming side, we are actually not aware of new regulations coming out on live streaming. But in fact, the regulatory environment in China has been very strict for social and live streaming apps for quite some time from I think a few years ago, which is actually a good thing, as it makes the whole industry healthier. Now if you are actually talking about some activities or voice on gaming, there might be some regulation on gaming for primary school students, some public discussions. But we don't expect this to have a significant impact on our revenue. We don't have a bigger base on that. And no question around – you have a second part of the question?
Vincent Yu: Yes. The same question is about like on the regulation part, you mentioned encouraged the local schools or the public schools to provide online classes to students free. But I think that – could we gain some government contracts on that part or we don't see it yet?
Tony Zhao: Yes, that it often to go actually not just us but a lot of education institutions or companies are also looking at those directions. As I think we mentioned briefly including public education adult education and some non-academic tutoring services like music and art and even on oversea – going overseas market for some Chinese education companies all the directions they're trying to go. And I might want to mention that it's – as said, non-profit education are not necessarily free education. There's many such practices in the industry in the past already. We will definitely participate in those trends and we are working actively with several partners, many partners on such experiments as well.
Vincent Yu: Okay. Thank you.
Operator: And our next question is from Bing Duan from Nomura. Please ask your question, Bing.
Bing Duan: Hi. Thank you management for letting me asking questions. I also have two questions. So first about the net dollar retention rate, so this quarter it has been moderated to around 110. So could you elaborate on -- more on the reasons behind that? And how do you see the trend in the next few quarters? The second question is about our -- you talked about our -- some new emerging use cases. For example, the e-shopping, live streaming, use cases, cooperated with E-commerce Company in Southeast Asia. So I just wonder, how do you see the trend the -- how do you see the trend of the volume and the revenue growth in the future in this client or in a broader sense for the e-commerce sector in overseas market? Thank you.
Jingbo Wang: Sure. So, in terms of the expansion rate, so we define expansion rate based on the LTM. So it's -- so we look at the active customers in the previous LTM. So 24 months ago to 13 months ago, we focused on the same cohort of customers, see comparative revenue from that period was revenue in the most recent 12 months. And if you think about this calculation for this quarter, the most recent 12 months would be July last year to June this year. And the previous 12 months will be July 2019 to June 2020. And so the 24-to-13-month period would include a peak of the pandemic in China, during total lockdown, where the revenue base was abnormally high included a lot of the one-off revenue contribution. And the most recent 12 months is actually more on normal working base. And that's why direct comparison would lead to a low expansion rate. And we actually don't think that expansion rate is very meaningful. And that's why we also provided the adjusted expansion rate, where we remove the one-off revenue from the previous 24-to-13-month period. And if we remove that, the expansion rate would be 140%, which is more meaningful. And we do expect if we go to next quarter, if we follow the same calculation the unadjusted expansion rate will remain at a lower level. And the adjusted expansion rate will be more meaningful. And on the second question on e-commerce, actually what we talked about is, kind of interactive e-commerce, live stream e-commerce is already quite prevalent in China. The trend really started about one year ago, 1.5 years ago. Outside China it's less prevalent. But we do think it's definitely going to be the direction -- the future direction. And we are working with several customers. But as many things takes time for the user behavior and user habit to change and involve. So that will take time. And also the other opportunity there is right now with several customers, the user technology for interactive part when the audience want to jump on stage and interact with the host, but they still use traditional CDN technology towards the live streaming part to the whole live streaming broadcast to hundreds of users. That part is to -- through CDA. But now what we are trying to do is we want we to persuade customers to use the -- to use our technology for the entire experience for interactive part and also the audience part. And we have seen some early success there. If that can become the in extent their revenue potential is much more significant because obviously, we have more audience than host and then the participating all audience that's kind of the opportunity we are seeing in the future.
Bing Duan: Thank you very much.
Operator: Our next telephone question is from John Wang from Macquarie. Please ask your question John.
John Wang: Hi. Thank you management for giving me a chance to ask question. So, firstly, we have seen Chinese government is becoming more and more stringent on data securities. And what would we expect as the worst scenarios? And do we have any contingency plans for that? And secondly, also on DBNR, can you give us more colors on the DBNR in the next couple of quarters? And any colors on differences between the China and non-China clients and on different vertical clients? Thanks.
Tony Zhao: Okay. About the regulation from China government, I think a lot of the policy or regulation, so seems to be like rolling out all of a sudden. But some -- if you look into the direction have certain traces back to their long-term discussions around how they're going to manage those areas of services. And it's not just about education, it could be also like housing and medical services. But I think a lot of those is still at the direction of trying to create a healthier economic environment overall. And it's not really against any new technology kind of being leveraged to create a more accessible or better services in all industries where we are actually in that direction, for example, on the execution side. On one side, the commercial academic tutoring service is right now being heavily regulated, but before that, you can see even on government policy side, they are promoting the so-called street class initiative where is trying to leverage online education technologies or tools to make sure the good teacher or good kind of elite teachers contents can be shared across the country. So we think overall the regulation would not heavily just reduce or limit our future growth. But near-term, it will impact which customer or which, kind of, use case would be more healthier for our growth.
Jingbo Wang: And on data security actually, we don't think that will have a significant impact on us. Actually we have been very, very careful when it comes to user data. We have always had a policy what we call minimal data collection. So we intentionally do not try to collect any more data than the absolutely necessary. When we work with a customer we work with when the app. The app ask us to connect to of its users active users are anonymous. We don't know who they are. Always see their IP address which is required for us to make the connection and nothing else. So we don't collect data. And we actually -- we have spend a lot of time and resources and working with consultants to enhance our overall data security and privacy practice. In fact, we are fully GDPR-compliant. We have many other certifications if you look at our website which is necessary for us to operate in Europe and US. So if we -- you compare us with many companies in China we are probably the most advanced in terms of security and data protection. So actually if anything, I think, that's going to be interesting for us as we have already very advance in compliant. So on DPR as I mentioned actually we think if -- we do not adjust the one-off revenue spike in Q1 and Q2 last year in the next few quarters you will continue to see a relatively low level of DPR and that's really caused by that spike. But if you just remove that one-off revenue contribution you will see more meaningful numbers. And we have always guided something around 130% as kind of the normal DPR for this business. And in terms of China versus US rest world and verticals obviously in the past 18 months the US rest of the world business has been particularly strong. So the numbers there would look stronger.
John Wang: Great. Thanks.
Operator: Pardon me. There's no further questions at this time. I would like to hand the call back to the speakers for closing remarks. Please go ahead.
Fionna Chen: Thank you, operator and thank you, everyone for attending this meeting today. Again, our presentation -- the copy of presentation and also our -- the remarks of this call will be uploaded on our IR website. So please feel free, if you need that and feel free to contact us if you have any further questions. Thank you all.
Jingbo Wang: Thank you.
Tony Zhao: Thank you.
Operator: Thank you all. You may all disconnect. Have a great day. Goodbye.
