Kingsoft Cloud Holdings Limited (NASDAQ:KC) Q4 2020 Earnings Conference Call March 17, 2021 8:00 AM ET

Company Participants

Nicole Shan - IR Manager
Yulin Wang - CEO
Haijian He - CFO

Conference Call Participants

Kyna Wong - Credit Suisse
Alexia Quadrani - JPMorgan
Thompson Wu - UBS
Leping Huang - CICC
Thomas Chong - Jeffries
Elsie Cheng - Goldman Sachs

Operator

Ladies and gentlemen, thank you for standing by and welcome to Kingsoft Cloud Fourth Quarter and Fiscal Year 2020 Earnings Conference Call.

I would now like to turn the call over to your host today, Ms. Nicole Shan. Thank you. Please go ahead Nicole.

Nicole Shan

Thank you, operator. Hello, everyone, and thank you for joining us today. Kingsoft Cloud fourth quarter and fiscal year 2020 earnings release was distributed earlier today and is available on our IR website at ir.ksyun.com, as well as on global newswire services. On the call today from Kingsoft Cloud, we have our CEO, Mr. Yulin Wang; and CFO, Mr. Haijian He. Mr. Wang will review our business operations and accompanying highlights, followed by Mr. He, who will discuss financials and guidance. We will be available to answer your questions during the Q&A session that follows.

There will be a third party translator while consecutively for translation. All translation are communicating purpose only. In case of any discrepancy management then in 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 U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectation and the current market and operating condition 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 this and other risks 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 figures mentioned during this conference call are in Renminbi.

It's now my pleasure to introduce our CEO, Mr. Yulin Wang. Please, go ahead.

Yulin Wang

[Foreign Language]

Thank you, Nicole. And thank you all for joining our fourth quarter and fiscal year 2020 earnings call. We are pleased to have closed the year with solid performance and in the fourth quarter, we generated RMB1.92 billion in total revenues representing the 63.8% increase from the same quarter of 2019. For full year 2020, our net revenues reached RMB6.58 billion, an increase of 66.2% year-over-year. We grew faster than the industry average as a result of the continued successful execution of our strategy as leading dependent cloud service provider with our dedication to cloud business, we are able to avoid the potential conflict of the interest with our premium customers and enhance our mutual position, which in turn brings additional thrust for our customers.

We continue to explore [Indiscernible] across strategically selecting vertical sectors, it include the insights of public services, financial services and healthcare sectors and we have improved to refund our key technologies and deeply delve into these sectors to meet the customer demands. Over the past year, we not only expanded our revenue from existing customers but also co-operated with many new premium customers. This includes inside the company such as the Zhihu, Agora, Huya, Bigo, Sogou, UE Digital and the others online education companies such as [Indiscernible] and others as well as financial institutions such as [Indiscernible] consumer finance company and [Indiscernible] as the backbone that supports the IT infrastructure development. Cloud’s computing has been growing rapidly, we would take some opportunity to further expand our business scale and enhance our market position as the first choice in terms of independent cloud service provider.

[Foreign Language]

Certainly when we talk about the public cloud according to IDC China quarterly, public cloud trade report for the third quarter of 2020, we again ranked among top three for the insight cloud service provider in China. We continue to focus on serving our premium customers with safe, stable and the comprehensive products and technical services and support for key projects, for example for the [Indiscernible] we jointly organized a leading short to medium platform and a regional TV station, we have developed a complete and emergency resource scheduling plan to quickly respond to changes in customers’ needs and ensure a great live streaming experience.

In addition, we also provided services to Chinese New Year Eve party jointly organized by [B2BD] and the youngster team that is a new media platform of China's top TV station CCTV. The peak number of [Indiscernible] users, the lack of party reached 215 million, we worked with customers one month ahead of the event to confirm strict measures, resource scaling and redundancy to provide stable cloud delivery and network of security of services to ensure the smooth operation of the party. In terms of the new customers we are engaging some insight conglomerate to further explore their cloud demand by deeply digging into and understanding customers' need we have laid sort of the foundation for reliable revenue group this year.

[Foreign Language]

Now let's move to products operationally, we continue to improve our cloud related product portfolio. We launched the bare metal servers to provide high performance infrastructure services to customers. For example in December, the sharing platform, Zhihu completed the migration of its entire online business to our cloud. This included the deployment of thousands of bare metal servers which makes it one of the largest Kubernetes cluster in China. In addition, we continued to upgrade our storage services, we are able to deliver hundreds of patted packs of cloud storage as extended service.

We also launched a high performance storage product including five stories, archive stories and others in terms of coding and encoding technology development, we continue to enhance our technical advantage. In December 2020 our KAV1 [Indiscernible] encoder technology ranked number one in the UGC legal category at the leading global radio algorithm comparison demonstrating our team's technical advance and innovation. Looking forward, we will continue to leverage the advantages of our cloud enabled product portfolio extending our software capabilities and to provide our customers with high performance, secure, stable and scalable cloud services.

[Foreign Language]

Now let me talk about enterprise cloud business. China's enterprise cloud service market is growing rapidly in the public service sector with funds marked to see the prudent suite 22 regions across more than ten provinces in China. For example, [Indiscernible] conduct the computing in the West China and data from the eastern China, which is the national program that intends to balance the computing resources between the eastern and the western regions of China. In addition, we also won the projects for [Indiscernible] Health Medical Big Data Technology Company Limited to help them build a cloud platform for scientific research and testing.

[Foreign Language]

For the financial services segment, more enterprises are gradually turning to distribute the data base on cloud. Moreover, cloud deployment models are currently fast received than the traditional or conventional deployment models. The company has upgraded its base system to counter [Indiscernible] and these support distributor transactions, distributor computing and it features high availability, flexible scalability, security, audits and many other important capabilities. We have already started co-operating with many customers in the sector. For example, we have signed an agreement with China’s [Indiscernible] Bank to use [Indiscernible] which will help them store and present a massive amount of data and empower the next generation of efficient and intelligent digital financial services. We also provided a highly stable and easily scalable public cloud services to large data and help them connect their network services to cloud servers and deploy public cloud storage.

[Foreign Language]

With the health sector, we officially kicked off new projects -- to have the information so half would be integrated to public health information platform and it's important stating fight against the COVID-19 pandemic and has received the [Indiscernible] in terms of state treasury bond and then we have played the better pictorial in the early parts against COVID-19 and it's healthcare infrastructure backed by the [Indiscernible] side infrastructure benchmark and we will have information with four key tasks.

The first is to help with services of supervision system to end -- service quarter the second is to be regional data center for easy authority and some medical impacts to share resources and improve overall medical service capabilities. The third is to develop state wide healthcare related electronic system. The fourth would -- emergency system in 60 pilot hospitals, in the mean time our corporation with the PEC is well on the track and so we are jointly promoting the second phase of archiving and communication system or PEC Act protecting [Indiscernible] and other cities.

[Foreign Language]

Going forward, we will continue to execute our prudent strategy and the focus on vertical that I just walked you through in addition to digging deeper into customer needs that we will actually broaden our customer base, prudent expense into some of these Asian markets and for other investments opportunities and so we will also improve our overall technical capabilities to capture the huge growth opportunities in the midst of the current wave of digital transformation.

[Foreign Language]

Lastly, I’d like to very briefly touch on our efforts, we keep focusing on corporate governance, human -- data security, implement and protection and other social responsibility. We are working on our internal ESG initiatives and expect to publish the first ESG report in the near future.

[Foreign Language]

I would now pass the call over to Haijian to go over our financial of the quarter. Thank you.

Haijian He

[Foreign Language] Hello everyone, I will now discuss our financial performance for first quarter and the full year 2020. Please be reminded that all numbers recorded here are in RMB. Please also refer to our earnings release for detailed financial results.

So to begin with, I would like to highlight several points. First of all, we are pleased to report that our total revenue of 2020 were RMB1.92 billion this quarter representing a year-over-year growth of 63.8%, total revenue of financial year 2020 were RMB6.58 billion up 66.2% from 2019, which was well above the growth of the cloud industry in China.

Number two, the increasing demand for enterprise cloud services drive our revenue growth. Our enterprise cloud services revenue this quarter were RMB535.9 million, an increase of 143.1% year-over-year. Enterprise cloud services revenue of 2020 was RMB1.37 billion up 182.3% year-over-year and accounting for 20.9% of our total revenue compared with 12.3% last year.

Number three, benefiting from our premium customer strategy, we are very pleased to see that many large customers have been making multi-year commitment with us. We are hearing the feedbacks of our shareholders and in order to let the market better understanding our project for, we are very happy to share our backlog with you.

Even a large number of projects haven't started the bidding process on a client side or have not finalized agreement yet at the very beginning of each year. The amounts of our existing project orders of enterprise credit revenue already reached RMB2.8 billion including a certain part of orders from recurring revenues and we believe that existing orders will form a solid foundation of our revenue base in 2021.

Number four, our customer diversification and revenue mix have been improving continuously. For example, revenue from our top 10 premium customers contributed around 65% of total revenue this quarter compared with 73% in the same period last year. We are seeing the trend of diversification across our major premium customers. In addition, our cloud delivery services, which include value adding services such as coding, encoding and image enhancement functions, etc. contributed below 50% of our total revenue for two straight quarters last year. The contribution of the cloud computing services has also increased.

Number five, our adjusted EBITDA margin was also approaching single month breakeven in this quarter. Adjusted EBITDA margin for the fourth quarter was negative 0.9% compared with negative 7.6% in the same period of last year representing an improvement of 6.7percentage points. Adjusted EBITDA margin also have been seen improvement for 10 consecutive quarters. Net loss margin also narrowed to negative 5.5% this quarter which was a significant improvement from negative 20.4% in the same period last year. Our earnings per share aka EPS this quarter was negative $0.03 per share improving significantly from negative $0.32 in the same period of last year.

Number six, our business is sufficiently funded at this moment as of December end 2020. Our cash position was RMB6.12 billion. Lastly, we were included in two major indices at the end of last year, the MSDI China in November and FTSE Russell Global Large Capital Index in December respectively.

Now I will go through the details of our financial results. Our public cloud services revenue increased by 44.1% year-over-year to RMB1.36 billion. We are committed to our premium customer strategy. The net dollar retention rate of our premium customers in 2020 was 147%, meanwhile we are engaging with certain internet conglomerates to further explore new opportunities.

During the first quarter enterprise cloud revenue increased by 143.1% to RMB535.9 million. Our total number of premium customers in 2020 reached 322 up 79 accounts. The ARPU of premium customers also increased from RMB15.9 million in 2019 to RMB20 million in 2020. Cost of revenue increased by 63.5% year-over-year to RMB1.83 billion. IDC cost increased by 49.6% year-over-year to RMB1.1 billion as a percentage of total revenue decreased from 62.7% in Q4 last year to 57.2% in this quarter.

We are achieving great economic scale and improving resource efficiency. Depreciation and amortization costs remain relatively stable at around RMB167.5 million. Other costs consist of third-party software purchases, all sourcing costs and channel costs associated with both public and enterprise cloud as well as other equipment costs related to enterprise cloud services. Other costs were RMB552.3 million and the starting costs were RMB10.3 million. Adjusted gross profit was RMB94.9 million increased from 56.7 million in Q4 last year. The adjusted growth margin was 4.9% this quarter. Our adjusted gross margin benefit from our continued leverage on economy scale and cost savings offsetting by the investment into new business opportunities of strategic verticals such as healthcare, financial services and incurred costs for ongoing projects.

Total operating expenses decreased to RMB337.9 million down 5.4% from Q4 last year excluding share based compensation adjusted R&D expenses were RMB161.3 million. As a percentage of total revenue decreased from 13.6% in Q4 last year to 8.4% this quarter. Adjusted selling and marketing expenses as a percentage of revenue decreased from 7.3% in Q4 last year to 5.6% this quarter. Adjusted G&A expenses as a percentage revenue decreased from 6.4% in Q4 last year to 0.8% this quarter.

Our adjusted EBITDA were RMB negative RMB70.5 million compared with negative RMB89.3 million in Q3 last year. Adjusted EBITDA margin was also approaching single month breakeven and it was negative 0.9% for the first quarter.

As of December end 2020, we had a cash and a cash equivalent of RMB6.11 billion. During this quarter capital expenditures was RMB404.7 million. Thanks to economic scale and improving of IT efficiency CapEx as a percentage of total revenue decreased from 26.6% in 2019 to 21% in 2020.

Moving to the outlook. For the first quarter of 2021, the company expects the total revenue to be between RMB1.83 billion and RMB1.93 billion. It is based on accompanying current and preliminary views of the market and operation conditions which are subject to change. To add, the forecast reflects the relatively late timing of Chinese Lunar New Year holiday in the first quarter of 2021 compared with last year and also the typical pattern of the procurement and implementation process of major enterprises and public sector clients in Mainland China in the first quarter of each year. Meanwhile, we believe our public cloud revenue will also expect continued growth sequentially.

Nicole Shan

This concludes our preparation. Thanks for your attention. We are now happy to take your questions. Operator please go ahead. Thank you.

Question-and-Answer Session

Operator

Ladies and gentlemen we will now begin the question and answer session. [Operator Instructions] Your first question comes from the line of Kyna Wong of Credit Suisse. Please ask your question.

Kyna Wong

Thanks for taking my question. And congratulations for increasing especially the EBITDA margin [Indiscernible] and I wanted to tell if, I have two questions. First, it's about the first quarter guidance because we do see the revenue growth is actually like 40% year-over-year and somehow EBITDA certain like the impact on the Chinese New Year holiday and also some parts going to be pushed out. So can we like have more color on what kind of project that actually push out into maybe 2Q or sometime in the near term and is like, there's any like issue that is like caused by like competition and all the things will affect your original expectation?

And my second question is actually related to the competition that’s got because we noted that the others like giant intellect cloud service provider they are also moving to the enterprise cloud I mean, aggressively and we do see that these are where we are quite fragmented, but maybe on the perfect side they will compete with you on certain premium customers offering better pricing and all things on the other hand the enterprise cloud will also see more competition in this area. So I think that's my two questions. Thanks.

Haijian He

[Foreign Language]

Thank you Kyna, I will take the first question and I will also address the second one. Kyna I think that probably it's going to be very important question and I definitely want to share more color in addition to the prepared remarks early. I think the first point, I just want to kind of recap on what happened back in Q1 2020. I think that will lay out assumption of my answer below. I think for 2020, there are three major factors that affect the pattern in 2020 which actually was an unique year. Obviously we all know that when COVID-19 happened in Q1 2020 that actually increased the base of the usage of public cloud side and that actually carried over for few quarters last year and also it carried over for this year. I think this is going to be a positive factor for the form base of the revenue.

And also as we mentioned last year, the Chinese Lunar New Year holiday was pretty much early. That was actually didn't affect too much on Q1 in terms of patient and also typically the Q1 was also relatively low season for all the major public sector clients implementation of bidding process. And also to share some few numbers. In Q1 2020, if you remember, our total revenue is about 1.39 billion. So as a percentage of the total revenue in 2020 up 6.6 is roughly about 20% of Q1. And if you look at first half and the second half of the revenue split of the last year its worth around about 43% or 45% and the late part of second half is around 55% or around that range.

So if you look at the guidance for this year, so assuming with due around the same target for this year the first half and the second half of the revenue split is actually very similar to the mathematical splits of last year, which is around first half about 40% to 43% and the second half is around 55% to 60%. So I think that's kind of laid out the comparison from an analytical perspective.

However, as we mentioned for this year even right now, we just finished the two session meetings in Mainland, China and all the kind of major projects especially the bidding process is about to start. Even without considerations that current backlog as we shared of enterprise cloud revenue only excluding the public cloud revenue, we already have RMB2.8 billion of the backlog ahead. I think that will form our foundation for the revenue to carry out and sum of that backlog we already seeing in the recurring revenue nature especially from high quality accounts, example from healthcare and financial services and certain major cities of the public sector clients.

So overall, we think that the revenue trend and the pattern across the quarters actually year-over-year is very similar and for Q1 it's carrying on the potential very same pattern and unique feature for this year given two factors we mentioned. Thank you Kyna and we will take the second question.

Okay and also for the second question Kyna, I think for the major competitions, I think few things we haven't seen any changes. I think the premium customer strategy and our key focus on the neutrality will give us more revenue alternatives and we understand that in the market there may be -- other players are still making great efforts to getting to the market. As we know that the total addressable market [Indiscernible] rapidly and also we are seeing the trend and that the clients are actually willing to use more cloud bandwidths that actually also the same opportunities not only for us, but also for other peers in the market as well.

So in some situations as we mentioned in few cases that we become important cloud vendor for our clients even though maybe other company may also have a wallet share, but I think that doesn’t prove enough to earning more dollar value from the same client because market itself is also growing. To give you more true data point as we mentioned, in the third party as per IDC stats that we are clearly ranked as number three of the internet public cloud vendors and also we are making the way progress especially for the key accounts in the clients who have a deep wallet and budget and spending and who have more concern and considerations when they want to select a mutual player, where they were more trusted, and who may -- never getting any financial -- with our client. Thank you Kyna.

Kyna Wong

Thank you.

Operator

Your next question comes from the line of Alexia Quadrani of JPMorgan. Please ask your question.

Alexia Quadrani

[Foreign Language]

So my first question is regarding 2021 revenue gross outlook. Would you be able to share with us your preliminary thoughts on the 2021 revenue gross outlook particularly what are the gross outlook for enterprise cloud as well as the public cloud?

Secondly, I would like to ask what will be the key industry drivers to the public cloud business? Would you be able to share with us your revenue exposure from view based industries in 2020 including long form video, new form video, short form video and live streaming? And as you guys implement diversification strategy what are the other industries that potential become the new gross driver to your public cloud business in the next one to two years? Thank you.

Yulin Wang

[Foreign Language]

Thank you Alex. So for 2021, we already have a good start and compared with 2020, we also have good expectations for 2021, as Haijian has mentioned. We also have quite a big number of orders in hands and with regard to the cloud computing, I think from 2021 to 2022 that the still rapid development of growth in the cloud computing and we have a strong confidence in this.

And with regard to the three sectors public services, financial services and medical healthcare services, we have developed for better period. So they are quite familiar with the clouds business and I think as a regulatory climate or regulatory measures are also maturing and so we can see the continued growth in these three sectors. And also with regards to the video business and the public cloud question, in 2021 we think the developments in the short videos that will be not a big change, but with regard to 2022 there will be probably further development in the HD business and also in the video business and the share of the video business in our public cloud segments is quite a stable. There is no big change based on our expectation and those are -- and with regards to the customers for example, the educational sectors, under the green sectors and also e-commerce sectors, we also start using some videos in their applications. So generously speaking, in the video business we do not expect any big change with granted to prospect for 2022. We still need to read and observe the further developments of the relevant technologies.

Operator

Your next question comes from the line of Thompson Wu of UBS. Please ask your question.

Thompson Wu

[Foreign Language]

I’ve two sets of questions. The first is regarding fourth quarter results. Just the margin trend in fourth quarter a little bit of a decline sequentially. Can you walk us through the impact there? Also in fourth quarter G&A expense things have declined quite a bit year-on-year. How should we think about G&A expense going into 2021 and the other question is about just the healthcare cloud. This seems to be quite an important initiative for both China and also in my view the company. Can you just talk a little bit about the outlook for healthcare cloud and kickstarts opportunities there?

Haijian He

Yes. Thank you Thomas. We are very happy to respond to questions. I will take the first one and our CEO Yulin Wang will answer the second question. Around the gross margin of Q4, the first point I want to mention that if you compare on annual basis from 2019, our gross margin was 0.4% and 2020 on annual basis our gross margin was 5.6%, which is actually already very significant improve on year-over-year basis. Also it's going to be a faster phase even compared with other major peers in the cloud industry in China. So I think that's kind of lay out first part.

And especially for the company budgeting perspective internally, we actually need to look at how we expand our business into technology into the cloud, so if everyone remember for example in Q3 in September and October, we just entered as we mentioned the healthcare industry vertical and we find the partnership with CEC group and also in Q4, we made a few major breakthrough and also introduce a few new clients especially in the banking sector for example [Indiscernible]. So as you know, those are the new area of high quality clients who are willing to be seen in high quality technologies, but the initial especially the [Indiscernible] customer solutions we need to tailor into those clients as you know the healthcare and the financial services they require certain implementation of the cloud native technology. So that's why in Q4 we have incurred certain cost and kind of the investment into those new business areas that will actually incur the cost on the gross margin line affecting on that.

So if you compare with absolute dollar number from Q3 to Q4, the number itself is actually not widened a lot. It's about RMB12 million - RMB13 million range and that's actually reflecting the dollar value we’re investing into those new areas.

So for the long term, I would say my third point is for the long term, we do believe that our gross margins were improving in the long term, but obviously on the quarter basis maybe have a little bit kind of changes. But in the long term, it’s the fundamental forces support our continuous improvement on the gross margin going forward.

And to your second question on the G&A expenses so the last year 2021, so we prepared for IPO and did our IPO in Q1 and Q2 and in Q3 we also completed our offerings. So that's why there was incurred some part of the transaction related external and internal expenses and for Q4 as you know, we are quite dedicated into our new business and we are kind of working with existing clients. The G&A expense is actually reflecting a reduced base down the line needs for those client relationships and the business. So going forward I think especially for 2021 as a percentage of the total revenue, I think last year's G&A expenses as the total revenue for last year will continue to decline on annual basis but again, because our quarter-over-quarter basis we will kind of relate for example for employee bonuses and certain incentive payments and certain projects on internal, external basis may have a little bit fluctuation, but we believe on a annual basis the percentage of G&A expenses from 2019 to 2020 to 2020 to 2021 will continue to decline. Thank you Thomas and now our CEO Yulin Wang will introduce in response to the second question.

Yulin Wang

[Foreign Language]

So thank you. Good evening. With regard to the healthcare sector, actually it is important sector one of the priorities for KC and we actually entered into the healthcare sector since four years ago and we also started our study up with the healthcare sector since four years ago. It's quite some complicated section actually both healthcare service itself is a government or public service it also involves the healthcare R&D and also some healthcare safeties and social security services. So basically it's quite a huge complex system and after 2020 or the big changes in the healthcare sector, the states has provided transport that shows digitalization of the healthcare sector. We have actually gained the advantages because we have pioneered in providing cloud services to the healthcare sector.

As you know in September 2020, we signed partnership agreements with the CEC and we have provided services to clients or customers in Chongqing, [Indiscernible] and Sichuan we are actually the first class service provider that provides cloud services to the healthcare sector in China and for some projects we are already in Phase 2. For example, recently we also had one space for the integrated healthcare information system and we also gained the projects from other cities or counties, in [Indiscernible] province basically we have covered the whole spectrum from the province to city to county and even to medical institutions and I should say the healthcare sector is growing very quickly and I think in future it will still play an important role in contributing to our business growth as well as our revenue or income growth.

Operator

Your next question comes from the line of Leping Huang of CICC. Please ask your question.

Leping Huang

[Foreign Language]

I have two questions for you. First one is related to the premium customers’ strategy. Can the management share the number of premium customer in 2020 and what's the dollar retention rate of these premium customers? And my second question is related to the CapEx claim as the company is going to give some more IDC intentions? Thank you.

Haijian He

Yes. Thank you Huang, happy to take the question. So regarding the clients would you say that our execution quality is very much on track and in 2020, we have increased the number of the premium customers to 322 which is an improvement of 79 key accounts and also in addition to the increase of the total pool of the premium customers. The average revenue contribution aka ARPU of the premium customers has also increased from RMB15.9 million in 2019 to about RMB20 million in 2020, which is also a significant and a decent improvement and also as we mentioned that the diversification around and within the premium customer we have also seen that trend as well. I think these are the two kind of key indicators not only kind of indicating the universe of dollar premium customers but also quality and the diversification of that.

So to your second question on CapEx. Our execution spending on the CapEx were well much on track and are being within the budget for 2020 as RMB1.5 billion and for 2021 I think relatively will keep on the same rate of the CapEx even though we will start and highly likely to complete our second data center in [Indiscernible] as mentioned. So I think our total CapEx for 2021 will be still around about 1.5 maybe kind of 1.5 -1.6 depending on how the pricing points move around. But overall, as you probably can notice that the CapEx as a percentage of total revenue has declined from over 50% few years ago to about 20% last year and will further go down as a percentage of revenue for this year.

And the construction of the Chongqing data-center is still very out much on track. We may seek additional financing sources and potential leverage or leasing of the Chongqing data-center, which will not incur for our cash flow from that perspective. And the Chongqing data center will also serve an important IDC center for the region near Beijing and will continue to serve a better quality of services for the major cloud we have around the same region. Thank you Huang.

Operator

Your next question comes from the line of Thomas Chong of Jeffries. Please ask your question.

Thomas Chong

Can you comment about the impact to our business about the tension between China and U.S. and how it impacts our portfolio? Thank you.

Yulin Wang

[Foreign Language]

So up to now we have not seen the impact from the U.S. - China relationship on our sector. It doesn't matter whether it is cloud, computing or customer services that has no impact.

Operator

Your next question comes from the line of Elsie Cheng of Goldman Sachs. Please ask your question.

Elsie Cheng

[Foreign Language]

I thank management for taking my questions. And I have a few follow-up questions. First one is on the public cloud side. Just now you mentioned that we actually have secured a lot of new customers from the internet companies and with the continued decline in November concentration. So here my question is more about so apart from the multi-cloud penetration as industry trend, can we share a little bit more on our new customers acquisition strategy and what is the competitive edge that we do have that has led to and expect the success in this?

And then the second one is, following to the public cloud question. When we think about byproduct, so what are the some of the new products we're providing to the new customers and then looking into 2021 together with 5G and other opportunities in industry when we're looking at computing, storage and delivery will there actually be a change in the revenue mix here?

And then the second question is more about the enterprise cloud, so can we have a little bit more understanding into what is the growth rate by enterprise and public cloud into the first quarter guidance? And then following up on the seasonality which is explained plus the 2.8 billion backlog into the second quarter or second half of 2021, can we actually expect an accelerated revenue growth trend? Thank you.

Yulin Wang

[Foreign Language]

So most of the public cloud premium businesses are from the internet sector and they are mostly like a video game, educational and e-commerce clients and the market is also already familiar with such customers and we have when the premium customers from the video and game sectors, actually we have most of them and now we can more about this as a customer satisfaction and also the retention, revenue retention rate from these existing premium customers and also the revenue from these customers. With regard to other sectors and with the deployment of the cloud and the sectors and also our efforts in sales, we believe there's also growth and we are also expanding our new large clients.

And with regard to products mainly using the video products and they are being high growth and this will also include such as storage, computing and high speed network and I think, so the center of the video business might decrease, but generally the growth rate remains high. And further let me talk about the public cloud business as Haijian has mentioned in the first quarter, we have all ready win the worth RMB2.8 billion and I think the implementation of these projects could be affected by seasonal factors or COVID-19 pandemic.

So we have considered the overall situation throughout the year and so looking forward to Q2, Q3 and Q4, we think that there will be rapid growth in the enterprise cloud business. The growth rate for the enterprise, the cloud business is higher than the growth rates of the public cloud as well as the industry average and also with regards to the new customers we have acquired a new customers such as Zhihu, Agora, Huya, Bigo, Sogou and also Citi Bank, Scotia Bank, [Indiscernible]consumer financial company.

Operator

Your last question comes from the line of [Indiscernible]. Please ask your questions.

Unidentified Analyst

Hi management and thank you for taking my question. This is Nathan on behalf of Brian Gong from Citi. So I have one quick follow-up question. How does management see the possibility of Tik Tok entering into the infrastructure cloud area considering the large consumption of CDN through strong accumulation of video cloud technologies. Thank you.

Yulin Wang

[Foreign Language]

Actually the last time that we have already answered the question with regard to purchase of the resources -- to our knowledge there are many uses for the internal IT team that is the user -- internal technology and product development so there is no impact on our business with that.

Operator

As we are now approaching the end of the conference call, I will now turn the call over to Nicole Shan for the closing remarks.

Nicole Shan

Thank you operators. Due to the interest of time we conclude our earnings for today. Thank you again for joining us today. If you have any further questions please feel free to contact. We look forward to speaking with you again next quarter. Have a nice day. Thank you.

Yulin Wang

Thank you.

Haijian He

Thank you everyone. Bye-bye.

Operator

Ladies and gentlemen thank you for your participation in today's conference. You may now disconnect. Good day.