Kingsoft Cloud Holdings Limited (KC) Q4 2024 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to Kingsoft Cloud's Fourth Quarter and Full-Year 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Nicole Shan, IR Director of Kingsoft Cloud. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us today Kingsoft Cloud's fourth quarter and fiscal year 2024 earnings release was distributed earlier today and is available on our IR website at ir.ksyun.com as well as on GlobeNewswire Services. On the call today from Kingsoft Cloud, we have our Vice Chairman and CEO, Mr. Tao Zou; and the CFO, Mr. Haijian He. Mr. Zou will review our business strategies, operations, and the company highlights, followed by Mr. He, who will discuss the financials and guidance. They will be available to answer your questions during the Q&A session that follows. There will be consecutive interpretations. Our interpretations are for your convenience and reference purpose only. In case of any discrepancy, management's statement in the original language will prevail. Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors are included in the company's filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law. Finally, please note that unless otherwise stated, all financial figures mentioned during this conference call are denominated in RMB. It's now my pleasure to introduce our Vice Chairman and CEO, Mr. Zou. Please go ahead.

Hello, everyone. Thank you, and welcome all for joining Kingsoft Cloud's fourth quarter and fiscal year 2024 earnings call. I am Zou Tao, CEO of Kingsoft Cloud. This quarter, our high-quality and sustainable development strategy continued to bear fruitful results. Our non-GAAP operating profit achieved profitability for the first time and a series of our key financial performance measures reached all-time highs. First, our revenue growth rate has climbed to a new level, building on the 16% year-over-year growth in Q3. We achieved total revenue of RMB2.23 billion this quarter, doubling year-over-year growth rate to 30% leading the industry's growth rate. Among this, Public Cloud revenue grew by 34% year-over-year and Enterprise Cloud revenue grew by 23% year-over-year, achieving a balanced development with dual growth engines. Second, our profitability improvement accelerated. This quarter, we achieved both revenue growth and profitability improvement, marking a turnaround from the company's longstanding history of operating losses and marching towards the goal of net profit breakeven. Non-GAAP operating profit turned positive for the first time with non-GAAP operating margin reaching 1.1%, representing a 12 percentage point improvement compared to a loss of 10.9% [technical difficulty]. Non-GAAP gross profit reached a record-high of RMB427.7 million, up 63% year-over-year. Non-GAAP gross margin was 19.2%. Our non-GAAP EBITDA margin also reached a new high at 16%, representing a year-over-year increase of 17.7 percentage points and a sequential increase of 6.3 percentage points. These are gratifying results of our comprehensive efforts to improve revenue quality, optimize business structure, and implement multiple cost reduction and efficiency enhancement measures simultaneously. Third, we continue to lead our transformation with AI. This quarter, our AI-related business achieved gross billing of RMB474 million, representing nearly 500% year-over-year growth and 31% year-over - quarter-over-quarter growth. Its contribution to Public Cloud revenue further increased to 34%. Fourth, as the sole strategic cloud platform of the Xiaomi and Kingsoft ecosystem, we continue to fully embrace the opportunities brought by the AI era within the ecosystem. Thanks to the unique historical opportunities driven by Xiaomi EV, mobile phones, IoT devices, smart manufacturing, and WPS AI initiatives. This quarter, our revenues from Xiaomi and Kingsoft ecosystem amounted to RMB493 million, up 78% year-over-year with its share of total revenues further increasing to 22%. Now let me walk you through the key business highlights for the fourth quarter of 2024. In terms of Public Cloud services, revenues reached RMB1.4 billion this quarter, representing a year-over-year increase of 34%, capitalizing on the opportunities presented by Xiaomi's Human x Car x Home smart ecosystem, and the WPS AI penetration. As the sole strategic cloud platform within the Xiaomi and Kingsoft ecosystem, we are seeing strong growth potential in the AI era. In December 2024, the shareholders approved a significantly increased revenue contribution from Xiaomi and Kingsoft, from 2025 to 2027 to a total of RMB11.3 billion, representing 10 times the amount in 2023. This quarter, revenue from Xiaomi and Kingsoft increased by 76% year-over-year and we are steadily advancing and executing our business cooperation as we expect the growth momentum to continue in 2025. Meanwhile, our AI-related business continues to gain momentum as well. This quarter, the gross billing of AI-related business reached RMB474 million, increasing by 31% sequentially and contributing 34% of Public Cloud services revenue, leading the industry. Both Xiaomi and Kingsoft ecosystem and external AI customers increased their usage and we made breakthroughs in customer acquisition, including large language model customers and expansion in use cases, including AI application for Internet company customers. In the era of AI cloud computing with in-depth industry insights, advanced R&D investments, and substantial computing power, we have been highly praised in terms of customer service, technology capabilities, and quality assurance by our customers and industry experts. Moreover, our competitive strengths have gained recognition by a top tier in the industry. In this wave of intelligent computing cloud, the company's market share and industry reputation have significantly improved, securing a top position in the industry. In terms of Enterprise Cloud services, revenue amounted to RMB822 million, increasing by 22.7 year-over-year. In Public services space, we promote solutions with standardized operations, leveraging a foundation of model capabilities, big data and collaborative office tools. This quarter, we completed the construction of the Wuhan Optics Valley cloud platform, where as a joint operating partner, we will be fully responsible for the regional implementation, operation, and maintenance, strengthening the management and application development of data resources, so as to achieve the unified planning, construction, and management of digital optics value. In Digital Healthcare space, in December 2024, we completed a significant milestone of the system construction of Ezhou Central Hospital and the KDX, which stands for Kingsoft Cloud Data X, data middle platform has been put into operation. We adopted a cloud-native microservice architecture to solve the multi-campus business collaboration and real-time data integration difficulties of Ezhou Central People's Hospital with a unified data platform supporting more than [8,600] data operations. In addition, in collaboration with Kingsoft Office, we jointly developed an electronic medical record product based on WPS, which has supported 61 medical departments' daily operations of the hospital. In terms of product and technology, we uphold the principle of building success, based on technology and innovation, focusing on delivering best-in-class customer experience across our core product offerings. This quarter, we continued to enhance the product capabilities of our intelligent cloud computing services. We launched the ninth-generation cloud server, which efficiently supports high-performance computing use cases such as AI, machine learning, and inference. It also effectively meets the demand of large-scale databases, real time data analysis and have strengthened data security and encryption processing. We officially released our proprietary training and inference platform, namely [Singular] platform, which supports customers' needs for development, training and customizing images. Meanwhile, our intelligent computing network has significantly reduced the troubleshooting time for large model training from hours to minutes, ensuring service stability. We will continue to strengthen our intelligent cloud computing products and technologies to provide customers with stable and fast computing services. In addition, both our Public Cloud and Enterprise Cloud solutions use cases have achieved compatibility with DeepSeek. In summary, led by the high-quality and sustainable development strategy, our fundamentals have substantially improved and we have entered into a new era of healthy growth. Looking ahead, we aim to simultaneously expand our revenue scale and improve profitability. Deepen cooperation with Xiaomi and Kingsoft ecosystem, comprehensively understand and explore AI opportunities, thereby continuously creating value for our customers, shareholders, employees, and other stakeholders. I will now pass the call to our CFO, Haijian, to go over our financials for the fourth quarter 2024. Thank you.

Thank you, Mr. Zou and thank you all for joining the call today. We are very pleased to conclude 2024 with strong financial performance. I will now walk you through the financial results for the fourth quarter of 2024. I would like to highlight the following four areas of the progress. Regarding the performance of this quarter, first of all, we overturned from loss to profit in non-GAAP operating profit for the first time since our inception in 2012. Demonstrating our strong execution in our high-quality and sustainable development strategy in the past two years. Second, our revenue has been growing for three consecutive quarters year-over-year. And this quarter, we outpaced four other listed public Internet cloud companies and achieved a very good speed growth rate of 30% in total revenue, reaching RMB2,232.1 million. Third, our AI gross billing increased by around 500% year-over-year to RMB474 million, accounting for as high as 34% of the Public Cloud revenue. It has achieved a three-digit year-on-year growth for six consecutive quarters. Fourth, last December, our shareholders approved revenue from connected parties of Xiaomi and Kingsoft Group for next three years of RMB11.3 billion, around 10 times over the revenue of 2023, providing solid support for company's revenue and profit growth. We believe we are well on track to support ecosystem's fast-growing demands and build-up solid cloud infrastructures to support ecosystem AI development. Particularly in this quarter, we are very pleased to see that our revenue from Xiaomi and Kingsoft increased by 76% year-over-year, verifying the effectiveness of our ecosystem strategy. In terms of outlook, we have been firmly executing our AI strategy and the Xiaomi and Kingsoft ecosystem strategy. Going forward, we're expecting our improvements in both revenue scale as well as profitability. First of all, we believe the revenue growth of our both Public Cloud and Enterprise Cloud will accelerate in 2025. Second, we expect our profit profile will continue to expand and we expect to deliver a positive non-GAAP operating profit in the full year of 2025. Now let me dive into the details of our financials. Total revenue of this quarter were RMB2,232.1 million, reflecting a 29.6% year-over-year increase. Of this revenue from Public Cloud services were RMB1,409.8 million, up 34% from RMB1,052 million in the same quarter last year. This growth was primarily driven by a significant increase in AI-related business, whose gross billing reached RMB474 million. Revenues from Enterprise Cloud services reached RMB822.3 million, up from RMB670.3 million in the same quarter last year, primarily driven by increased demand in select verticals and growth in the Camelot IT services. Total cost of revenues was RMB1,806.2 million, up 22.9% year-over-year, which was in line with our revenue expansion. IDC cost dropped by 2.6% year-over-year from RMB740.4 million to RMB721.5 million this quarter, reflecting the strategic scaling down of our CDN services and a better rep utilization. Depreciation and amortization costs increased from RMB146.9 million in the same period last year to RMB343.1 million this quarter, mainly due to the depreciation of newly acquired GPU service. Solution development and service costs rose by 10.8% year-over-year from RMB502.9 million to RMB557 million, driven by expansion in Camelot personnel to support revenue growth. Fulfillment costs and other costs were RMB102.4 million and RMB82.2 million this quarter respectively. We have recorded a higher growth rate in our gross profit than the industry. Our adjusted gross profit for the quarter was RMB427.7 million, up 63% increase year-over-year with an adjusted gross margin of 19.2%. On the expenses side, excluding share-based compensation and impairment of long live assets, our total adjusted operating expenses were RMB446.4 million, a decrease of 9.8% year-over-year and 9.1% quarter-over-quarter. Of which our adjusted R&D expenses were RMB169.6 million, narrowed by 27% from last quarter. Adjusted selling and marketing expenses were RMB107.8 million, down from RMB110.6 million last quarter, representing 4.8% of total revenues. Adjusted G&A expenses were RMB169.1 million, slightly increased compared with last quarter due to fluctuation of credit loss. Our adjusted operating profit for the quarter turned into profit was RMB24.4 million compared with a negative RMB187.6 million in the same period of last year. Our non-GAAP EBITDA profit was RMB359.7 million compared with negative RMB27.7 million in the same quarter last year. Our non-GAAP EBITDA margin achieved 16.1% compared with negative 1.6% in the same quarter last year. We believe that our strong commitment to AI cloud computing development, strategic adjustments of business structure, and our strict control over costs and expenses bear fruits, and we are all well on track to further improve our profitability as well as scalability. As of December 31, 2024, our cash and cash equivalents was totaled RMB2,648.8 million, providing a strong liquidity position to support operations and AI investments. Meanwhile, with healthy accounts receivable arrangement for AI business, in this quarter, we have achieved a net inflow of operating cash flow, reaching RMB570.2 million. We are able to generate cash internally and organically and support part of our further capital expenditure. Looking ahead, we remain committed to the principle of high-quality and sustainable development. We expect accelerated revenue growth on Annual basis and a higher and a more stable profitability in the coming years. Thank you.

This concludes our prepared remarks. Thanks for your attention. And we are now happy to take your questions. Please ask your question in both Mandarin, Chinese, and English, if possible. Operator, please go ahead. Thank you.

[Operator Instructions] Our first question comes from the line of Xiaodan Zhang from CICC. Please go ahead. Your line is open.

So thanks management for taking my questions. And my first question is regarding the industry outlook. So could management share your views on how the recent industry trends in AI are impacting the supply-and-demand structure and also the market landscape of the cloud computing industry? And what opportunities and challenges does Kingsoft Cloud face? And secondly, could management provide an update on the 2025 capital expenditure plan and what measures will the company take to address the possibly more stringent supply-side restriction? Thank you.

Okay. Allow me to quickly translate. So Mr. Zou Tao mentioned that DeepSeek by itself is still a general large language model. But the reason that it has caused such widely received discussion is because it has proved that the technology company in China can also achieve such impact in the world - can also achieve such height in terms of technology and the product, and therefore has helped the revaluation of Chinese technology companies. And secondly, as we all know, the fact of DeepSeek - the advantage of DeepSeek is that it's greatly decreased the deployment cost. And this for Kingsoft Cloud is also a beneficial factor. As we have seen that this round of DeepSeek has also caused the Kingsoft Cloud share price to increase a lot. So I have actually talked about this back in 2023, where I used to say that the advance of AI has essentially removed the glass ceiling of cloud business and therefore the release of DeepSeek R1 actually will accelerate the deployment of large language models in China, and therefore, more enterprises and more individuals will start to use live language models. And then therefore it is a wider pushing kind of power for the advancements and development of AI and cloud industry in China. And Kingsoft Cloud as a active and proactive participant of the market will definitely benefit from it. So in summary, I would say that this is essentially a broader sort of education to individuals and industries about the strategic value of large language models and of AI. So - and therefore, people are increasingly getting to know Kingsoft Cloud as well in that regard. And secondly, as our SVP, Liu Tao mentioned, so from technology perspective, the advance of DeepSeek has achieved optimization in engineering methodologies, which enabled the lowering of costs and increasing the penetration of applications. We have been seeing a lot of potential customers, both from the government and enterprises as well as from the Internet space, have increasing application and adoption of AI and DeepSeek models. And secondly, the DeepSeek success has essentially increased the application of enhanced learning in the large language model and AI industry in China in general. So we are seeing increasing competition and increasing technological improvement in the AI space in China. So that includes enhanced learning as well as multi-model of use cases. Thank you.

Thank you. This is Haijian. Happy to answer your second question regarding the capital expenditures. I understand it's a very important one for many of the investors and analysts. So probably there are - probably a few points I want to address here. First of all, before I go into the numbers, I want to mention, our total investment into AI comprised by two parts. First part is our OpEx, which primarily spending to the data centers, which include the direct rentals electricity payments and other related expenses. And on this part, Kingsoft Cloud adopts a very efficient asset-light model, which means that we don't have to spend huge amount of money upfront to build the warehouse and the real-estate properties ourselves. But we have a very good partnership with long-term arrangements for example with telecom companies and other IDC companies, which can reduce our leverage and increase efficiency. So it is the first part. And the second part, which is our capital expenditures, we buy efficiently acquire the necessary computing powers, i.e., the servers and other network equipment. So basically it's A plus B. So I can share some numbers. In the past four quarters, we have already spent on the Part A, which is OpEx on the data centers around RMB2.9 billion on AI data center, and we spent on Part B of the capital expenditures around RMB5 billion to RMB6 billion to acquire the necessary computing equipment and the network equipment. So if you're putting those two numbers together, in addition to the research and development investment as well, so in the past probably four quarters, we spent around RMB8 billion to RMB10 billion in total. Going forward, I think for the entire investment into the capital expenditures and also the OpEx going forward, I think the RMB1 billion - sorry, the RMB10 billion total AI investment for the full-year 2025 is just a start. So my third point is, given the strong important support from our shareholders, including both Xiaomi and Kingsoft Group as we have already disclosed and approved by the shareholders in December 2024, we have arranged the leasing and other off the balance sheet arrangement to support our ongoing and growing investment into AI on both OpEx and CapEx. And we also want to remind the audience is the existing cash on our balance sheet, it is not the limit of our capacity into AI investment because of the leasing and other alternative financing arrangement we arranged directly with our shareholders. So I think we are in a good position with a strong demand. We basically kind of on par to increase the investment. And I think given the revenue growth rate we have already delivered above the industry average. I think our spending will also catch in pace and maybe also accelerate and above industry average going forward, especially for 2025. Thank you.

Thanks, operator. Next question, please.

Thank you. Please standby. Our next question comes from the line of Brian Gong from Citi. Please go ahead. Your line is open.

Thanks, management for taking my question and congratulations on the solid results. Regarding the expectation for 2025 revenue growth, could you kind of share your thoughts and break down the drivers? And like how much growth we expect for AI-related revenue and how much revenue contribution from Xiaomi and the Kingsoft Group? And our second question is regarding margin with our margin performed quite well in the first quarter and I'm going to share your thoughts on our long-term profitability trend? Thank you.

Thank you, Brian. This is Haijian. Happy to share some color. So as I mentioned in my prepared remarks, I think a few things I just want to emphasize. First of all, in Q4 2024, the 30% top-line on a Y-o-Y growth has exceeded even the top players in the industry. I think that demonstrates all the verticals including both Public Cloud and Enterprise Cloud. And within the Public Cloud, AI and non-AI are all growing at a very healthy rate. Without these fundamental support, it is very difficult to achieve this high growth rate. So that's actually the first point I want to mention. The second part is, given we already completed our business strategy adjustments in the first half of 2024, we do have a very healthy split and the mix of the client structure. And as you may know that, for example, the CDM business used to contribute much higher rates and right now, it's only probably 10% to 15% or even lower going-forward in terms of how you kept looking at that. So I think our growth has been built on a very solid foundation. So that's why in the prepared remarks, I also mentioned that the growth rate, the key words for 2024 is acceleration on a full annual basis. And AI is going to be a very important driver, but other verticals, as I mentioned, in different product lines will contribute healthy growth going forward as well. So it is actually the first question I just want to share. The second part regarding the margin, while we don't have official guidance for the margin, but as you can see, our gross margin has been improving very consistent for the past few quarters. And also want to mention our operating cash flow in the past three quarters, starting from Q2 2024 has been also positive as well. That is going to be a very important leading indicator for our margin expansion. And given the AI contribution of entire margin profile, especially for the EBITDA and OP side. We think the EBITDA and operating profit will grow at more fast pace compared with the gross margin and we're happy to see that our EBITDA margin actually already exceeded the industry average and maybe on the top-tier of industry peers. So I think the EBITDA margin improvements, which is also a leading indicator of the OP cash as well as the free cash flow will drop down to the operating profit side. So I think our intention from management is two things. First of all, our intention is to keep a healthy, steady pace of margin expansion for all three key indicators from gross margin, EBITDA margin, and OP margin. And the EBITDA margin and the OP margin will be accelerated and improved a little bit faster than the gross margin. And the third point, given the cash flow is also important and we are going to keep a very close eye on cash flow margin expansion that will also give us a good momentum and support to recycle the cash to input the investment into the new incremental AI investment. I think these are probably the few points I just want to mention. Thank you, Brian.

Thank you.

Thank you. We'll now move on to our next question. Our next question comes from the line of Linlin Yang from GF Securities. Please go ahead. Your line is open.

[Operator Instructions] My first question is about the AI inference. How do you think about the demand of AI inference and how much contribution of will it be? And my second question is, after the equipment in the legacy Public Cloud business is fully differentiated or will it continue to generate revenue, what is your outlook for this part? Thank you.

Okay, allow me to very quickly translate. So for those demands of inference outside of the Xiaomi and Kingsoft ecosystem, what we have been seeing is, on one hand, as I would responding to the DeepSeek's question earlier. The advent of DeepSeek obviously accelerated the application of large language models and AI to various sectors. So we have been seeing a huge amount of increasing in customer numbers as well as the strong desire and willingness for them to adopt and apply AI applications. However, on the other hand, while if you look at the number of - the amount of actual business, for example, for one single customer, we might be needing a cluster of 128 units or 256 units or even 512 units cluster, this kind of single customer demand we have not been seeing yet. So in summary, the trend of penetration of AI and DeepSeek is very clear for inference, but we think it still might take some time for that to be shown on the financial statements. Now secondly, for your question about the inference demand within the Xiaomi and Kingsoft ecosystem, the answer is that it's going to be very strong. Essentially all of the products and services across the Xiaomi ecosystem, including the cell phones and IoTs, including the electric vehicles, all of them are going to be supported by AI and large language models. And for - on the Kingsoft side, regardless needless to say, actually the Kingsoft's office of AI, the WPS AI user account has also been increasing quite strong. Yes.

Thank you, Yang Linlin. So regarding your question of our asset and depreciation, this is Haijian. I'm happy to offer also some color. So I think first of all, if our audience and investors do some analysis and a comparison of Amazon, AWS, including Google and Microsoft are all using five years of DNA policy for the servers and computing powers. So Kingsoft Cloud, we are conservative in terms of managing the financial policy. So right now regardless of the servers type and equipment, we are using four years of DNA policy, which means that we basically - if we compare with five years, we actually overestimate certain costs. In turn, there is a potential to release certain profitability down the road. So that's actually my first point. My second point is, in the late of 2023 and early 2024, we already at that time forecast that the industry will have a major shift from the traditional ICE to the AI cloud. So by that time, we did a full round of internal review of the asset distribution and our internal resources and we decided to really filter out certain assets from CTUs and the traditional assets. So we did the asset impairments and some of the changes on provisions of asset valuation. And right now, all the assets on the balance sheets, including the RMB5 billion capital expenditures required for the competing power in the past few quarters, which currently sitting on our balance sheets are all healthy and the revenue and profitability generating assets, and it actually can match with our revenue incremental opportunities. So I think right now, we do have a kind of healthy asset balance sheet on the left-hand side and also have a good potential to improve the shareholder return and the profitability and the cash on the return, especially OP cash on the return on the right-hand side. So we think we are in a very good balance on the left to the right and we can improve the foundation of our business model and efficiency going Thank you.

Thank you. Operator, next question, please.

Thank you. Next question comes from the line of Wenting Yu from CLSA. Please go ahead. Your line is open.

I'll translate the question. We've seen that prices for high-performance AI service have been falling in 2024, while inference service are relatively well supplied. And how will this affect our pricing strategy for GPU Cloud revenue and its impact on our AI Cloud revenue and earnings? Thank you.

Thank you, Wenting. First of all, thanks for the very good question. And as you know, on this quarter, we delivered probably I say probably, I put a big disclaimer, but maybe true, the highest growth rate in the industry for all the public companies in the Internet sector, which has cloud business. Number two, given the gross profit, we already reached in probably also on the top-tier across all leading players on this quarter. So you may understand that we want to remain relatively consciousness about our business secrecy and very sensitive information. So we don't want to hurt investor interest because we share too much information on our success tips. So on that backdrop, what I can share is, I think we do have a higher margin compared with traditional CPO-centric ICE services. So I think it's kind of first topic, first point. The second point is, it depends on the client demands. We do have a good mix of all kinds of different computing formats, which can fit into the client demands and we're charging them as the demand goes up. So it's a supply-demand, which actually favor Kingsoft Cloud as a very important supplier in this current market. And number three is the pricing on the GPU as you know, it actually linked to a core production requirements of all our major clients. They use AI and computing as the important production and productivity tools and important embedded functions in their workflow. So in that sense, as you understand, it's always about value. So I think our value proposition has been lifted from a traditional ICE services, which may have limited ceiling of profitability to a much higher potential in the current market because the GPU - because of the GPU AI services become so important for our client internal workflow and for their final products. So they are willing to pay a much higher fees than the pricing because of the necessity of the technology value. So putting all things together, as I mentioned, I think we do have a very different pricing model for the AI-related services, which are higher than the CPU and the traditional AI and we already shift our strategy from a traditional IT cloud services company to an AI cloud and solution services company going forward. So I think that's actually providing very fundamental different changes and approach for the pricing. But as I mentioned, because the pricing is so sensitive and right now, we are doing so good compared with industry average. So we don't want to say too much regarding our strategy because it is a business confidential as you may understand. Thank you.

Thank you, Wenting. This concludes our earnings call today. Thank you all once again for joining us. If you have any further questions, please feel free to contact us. Look forward to speaking with you again next quarter. Have a nice day.

This concludes today's conference call. Thank you for participating. You may now disconnect.