[2 -> 29] Good day and thank you for standing by. Welcome to the Q1 2023 Kingsoft Cooperation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised.
[30 -> 57] To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Francie Lu. Please go ahead. Hi, thank you, operator. Ladies and gentlemen, good evening and good morning. I would like to welcome everyone to our 2023 first quarter earnings call. I'm Francie Lu, the IR director of Kingsoft.
[58 -> 85] I would like to start by reminding you that some information provided during the earnings call may include forward-looking statements, which may not be relied upon in the future for various reasons. These forward-looking statements are based on our own information and information from other sources, which we believe to be reliable. Please refer to the other publicly disclosed documents for detailed discussion on risk factors, which may affect our business and operations.
[85 -> 114] Having said that, please allow me to introduce our management team who joined us today. Mr. Zou Tao, our executive director and CEO, and Ms. Li Yi, our acting CFO. And now I'm turning the call to Mr. Zou. Zou Zou. Hello, everyone. In the first quarter of 2023, we welcomed a good start. Jinshan Office Group fully promotes the landing of new artificial intelligence technology in the application field.
[115 -> 143] to actively invest in related R&D and continue the digital transformation of rich institutions and individual users. The game industry further enhances the value of original IP and firmly establishes a high-quality strategy. This quarter, the total revenue of the group's overall performance files is RMB19.70 billion, which is 6% higher than the previous year. Office software
[144 -> 168] I'll do the translation for Mr. Zhou. We had a good start in the first quarter of 2023.
[168 -> 194] Kings of Office Group actively explores and promotes the practical application of AI technology, investing related R&D, and continues to empower the digital transformation of institutional and individual users. Online games business further enhances the value of original IPs and remains committed to the strategy of developing premium games. The group's businesses remain steady in this quarter.
[194 -> 224] with total revenue reaching RMB 1,970 million, increasing by 6% year over year. Revenue from office software and services business reached RMB 1,052 million, up 21% year over year. Both domestic individual office subscription and institutional subscription businesses experienced robust growth during this quarter, demonstrating the significant effect of the subscription transformation. Now I'm turning the call to Ms. Lee
[225 -> 254] Thank you, Francine. Ladies and gentlemen, good evening and good morning. In face of the technological transformation brought about by generative AI and large language models, Keysoft Office Group focuses on the AI field, collaborates with companies engaged in the large language model, and concentrates on core business to excel in the application layer. Centering on the needs of organizational users,
[254 -> 282] We continue to leverage the advantages of the digital office platform, actively promote the digital transformation and upgrading for organizations of all sizes, and empower the digital construction. In April, 2023, we launched WPS 365, a comprehensive package of office software suitable for a wide range of institutional users, which includes
[282 -> 309] powerful office software, and collaboration management capabilities, aiming to improve their work efficiency. In order to achieve high quality development of individual office subscriptions of business, we constantly enhance the user experience of our products in cross-platform scenarios, like cloud and collaboration, and reconstructed the membership system in April.
[311 -> 338] Online games business made progress in iterating core IPs. Based on the high quality expansion pack launched in the fourth quarter of 2022, our flagship GX093 achieved an increase in new users, expanding the user base. At the same time, the number of daily active users and revenue of GX093 increased year over year in the first quarter of 2023.
[338 -> 368] At the end of February 2023, a new expansion pack of GX World 3 mobile game release, together with effective marketing and promotion, stimulated the game's vitality and improved user experience. At the end of March 2023, World of S.T.A.L.K.E.'s original mobile game was initially launched in Vietnam. Upon its launch, it topped both the free and gross interest in local L.A. and Android
[368 -> 397] Our anime mobile games, Snow Break, Containment Zone, and The Other Shore are scheduled for launch in the second half of 2023. I will now discuss the first quarter operational and financial results using RMB as currency. Revenue increased 6% year-over-year and decreased 7% quarter-over-quarter to $1,970 million.
[397 -> 426] The revenue speed was 53% for office software and services and 47% for online games and others. Revenue from the office software and services business increased 21% year-over-year and decreased 4% quarter-over-quarter to $1,052 million. The year-over-year increase was mainly due to the robust growth of domestic individual office subscription business
[426 -> 454] and rapid growth of domestic institutional subscription business of Keystone Office Group, partially offset by the decrease in domestic institutional licensing business. The solid growth of domestic individual office subscription business was primarily attributed to the continuous optimization of cloud and collaboration user experience. The fast growth of domestic institutional subscription business
[454 -> 482] was mainly driven by the continuous upgrades of digital office solutions and service quality, as well as the ongoing process of promoting cloud integration and collaborative office in government and enterprises. The decrease in domestic institutional licensed business was mainly due to the relatively high base in the first quarter of 2022 and a reduction in new purchase orders
[482 -> 506] on localization solutions in the current quarter. The slight quarter-on-quarter decrease was mainly due to declined internet advertising promotion business. Revenue from the online games and other business decreased 6% year-over-year and 10% quarter-on-quarter to $990 million.
[506 -> 535] The year-over-year decrease was primarily due to the natural decline in revenue from the mobile games such as GX43 and GX139, which had a relatively high revenue bet in the first quarter of 2022. The decrease was partially offset by the revenue growth from GX093, which was attributed to our continuous efforts in enhancing user engagement and online
[536 -> 562] and in-game consumption through game content updates and operations optimization. The quarter-on-quarter decrease mainly reflected the natural decline of certain existing games. Cost of renewal decreased 2% year-on-year and 9% quarter-on-quarter to $345 million. The quarter-on-quarter decrease was mainly due to the reduced
[563 -> 586] Purchasing cost of products and services of Kingsoft Office Group. Gross profit increased 8% year-over-year and decreased 7% quarter-over-quarter to $1,625 million. Gross profit margin increased 1% point year-over-year and kept flat quarter-over-quarter to 82%.
[587 -> 611] Research and development costs increased 9% year-over-year and kept the flight quarter-over-quarter to $661 million. The year-over-year increase was mainly attributable to higher personnel-related expenses of Kingsport Office Group. Selling and distribution expenses.
[612 -> 639] increased 31% year-over-year and 5% quarter-over-quarter to $351 million. The year-over-year increase mainly reflected greater marketing spending of Kingsclough's office group to expand its presence in the domestic, enterprise, and government market. The quarter-over-quarter increase was mainly due to higher promotional spending on online games. Administrative
[639 -> 666] Administrative expenses increased 2% year-over-year and decreased 8% quarter-over-quarter to $150 million. The quarter-over-quarter decrease was mainly due to the reduction in professional service fees. Share-based compensation costs decreased 2% year-over-year and increased 21% quarter-over-quarter to $73 million. The quarter-over-quarter increase
[666 -> 690] was mainly due to the grounds of awarded shares to the selected employees of certain subsidiaries of the company. Operating profit before share-based compensation costs decreased 7% year-over-year and 21% quarter-over-quarter to $533 million. Next other gains from the first quarter of 2023 were
[690 -> 711] 44 million compared with the gains of 23 million for the first quarter of 2022, and losses of 42 million for the fourth quarter of 2022, respectively. Shared losses of 231 million were recorded for the first quarter of 2023.
[711 -> 736] compared with losses of $275 million and $256 million for the first and fourth quarter of 2022 respectively. Income tax expense decreased 26% year-over-year and 82% quarter-over-quarter to $26 million. As a result of the reasons discussed above, profit
[736 -> 764] attributable to the owners of the parent was 192 million for the first quarter of 2023, compared with the profit of 98 million and 48 million for the first and fourth quarter of 2022 respectively. Profit attributable to owners of parent excluding ESOPT was 236 million for the first quarter of 2023,
[765 -> 789] compared with the profit of $142 million and $83 million for the first and fourth quarter of 2022, respectively. The net profit margin, excluding the effect of share-based compensation costs, was 12%, 8%, and 4% for this quarter, the first quarter, and the fourth quarter of 2022, respectively.
[790 -> 816] The group had a strong cash position towards the end of the reporting period. As at 31st March 2023, the group had cash resources of $21,510 million. Net cash generated from operating activities was $363 million, $189 million, and
[816 -> 841] $1,232 million for this quarter, the first, and the fourth quarter of 2022, respectively. Capital expenditures was $80 million, $85 million, and $206 million for this quarter, the first quarter, and the fourth quarter of 2022, respectively. We adhere to technology-driven business.
[841 -> 870] Looking forward, Keysoft Office Group will continue to cultivate AI, fully leverage new technologies to drive the reconstruction and patent innovation of office products and services. Online games business will continuously adjust and optimize products and services in response to user needs, improve game reputation, introduce more unique game players and content,
[871 -> 896] and further strength user recognition and confidence in our core IT. We are committed to creating long-term value for our shareholders by enhancing our core competencies. Thank you for your attention. Now, I turn the call to Francine. Thank you. Hi, thank you, Ms. Li. Operator, we're now ready for the Q&A session.
[900 -> 926] Thank you. As a reminder to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we call out the Q&A roster. Hi, sorry, operator. One thing to add is that when you ask the question, please ask your question in both English and Chinese Mandarin if possible. Thank you.
[930 -> 945] Thank you. We will take our first question. The first question comes from the line of Zhaodong Zhang from CICC. Please go ahead. Your line is open.
[947 -> 972] Good evening, Mr. Gao, Mr. Li, and Ms. Frenzy. I'm Xiaodan, an analyst from ZTE. Thank you for accepting my question. I have two questions. The first question is about our game business. We see that MoYu 2 has launched a full-blown website at the end of March. Can the management team update us on the data feedback of MoYu 2? In addition, is there any change in the income guidance of our game business throughout the year?
[972 -> 997] My second question is about our office business. Actually, we can see that WPSAI is also under the spotlight, and it continues to update and update its functions. How does the management layer view the progress of the subsequent product update, function update, and commercialization? Let me quickly translate. Thanks, management, for taking my questions, and congrats on a strong quarter. My first question is on the gaming business.
[997 -> 1027] Could you please update us on the performance of MoYu2's full platform release? And also, what is our latest revenue guidance for the gaming segment for full year 2023? As for our office software business, we noticed that WPS AI has launched its beta version. So could you please share your views on the public pipeline function update and also the commercialization plans? Thank you.
[1027 -> 1054] Okay, let me answer. The first question is about MoYu. Let me share a few details with you. In fact, MoYu is slightly worse than we expected in terms of user volume. But its up value is slightly better than we expected in terms of profitability. And we are still tracking the long-term.
[1055 -> 1082] So, in general, I think we have met our expectations for this product. Okay? That's one. Then there are some guidelines. Let me put it this way. We may not have changed our main direction. What do I mean? In general, the first one is Jianwangshan.
[1082 -> 1112] The second is the specific performance after the launch of the new game. And then from the current point of view, there is also the continuity of the old game itself. From the current point of view, I think the old game is far beyond expectations. Yes, of course, I just saw it, too. Like our Q1, there is indeed a slight decline in the comparison.
[1112 -> 1142] I'll check with the finance department. It's mainly from the perspective of financial deficit. But in fact, the growth rate of NetEase 3 itself is very, very good. It's far beyond our expectations. This is the first one. The second one is the overall new game. As we said last week, the current timetable hasn't changed yet. The full-fledged entry is in July, and the closing is in August. In October, it will be NetEase 3's restart 2.0.
[1142 -> 1172] The third part is about the old game. We are mainly referring to World of Warcraft III, which was released at the end of last year. Especially from the recent data, it is better than we expected, in terms of the effect of natural decoupling. So overall, this year,
[1172 -> 1201] We haven't made any changes to the game yet. Yes. The most important thing is that although NetEase 3 has improved a lot, there are still some uncertainties about the release of the new game and how it will work. So we haven't changed the name of the game yet. I just showed Xiao Zhan some of the old games in the NetEase 3 series.
[1202 -> 1227] and the uptrend of the new oil, and the decline of our old game. From the current perspective, the growth of NetEase is better than expected. The decline of the old game is more optimistic than expected. The rest is up to the uptrend of the new oil. Okay? This is the first question. The second question is about AWS AIR.
[1228 -> 1256] I'll translate for Mr. Zou. So for the game question, Udemy 2 was launched, and we will discuss this game in two aspects. The first one is from the user point of view. From the number of users, this game is slightly less than our expectation. But from the R2 point of view,
[1256 -> 1284] the performance is actually slightly better than our expectation. And in the long term, we will continue to monitor the performance of Udemy 2. I think overall, the game itself has met our expectation in general. And the second part of the question is on our full year guidance for the game business. Overall, we did not change the guidance that we have given out in the beginning of the year.
[1284 -> 1311] Our guidance was based on three factors. The first one is the performance of GX Online 3. The second is the performance of the upcoming new games. And lastly, we have the performance of our both mobile games. So for GX Online 3, it has actually exceeded our expectation. Although in the first quarter, the online game business
[1311 -> 1337] It's financial performance has slightly declined quarter over quarter and year over year, but the JX-3 online game itself is actually performing very strong. And for the new game pipeline, we have three upcoming new games. For the first one, Chen Baizhen 2, this one will be launched in July. And this one will be launched in August. And in October, we're launching the 2.0 version for JX-3.
[1338 -> 1365] And lastly, we have the performance of our old mobile games, which is JX World 3. We recently launched the expansion pack. The natural decline of this game is slightly better than our expectation. So overall, we will keep the guidance that we have given out in the beginning of the year. Even though JX Online 3 has performed, exceeded our expectation, but we still have the uncertainty coming from the
[1366 -> 1395] of upcoming new games. So we're not going to change the guidance that we gave out earlier. Thank you.
[1395 -> 1424] So far, our internal observation has exceeded our expectations. The following commercialization progress depends on several factors. One is... Let me explain first. We didn't invest in big models. At this stage, we didn't invest in big models. We mainly cooperate with other big model companies.
[1424 -> 1449] So the progress of the subsequent business part depends on the time it takes for our partner to get the large model cloud. The second thing is that once we get the license, we will carry out a user-open test at different levels.
[1450 -> 1477] So it depends on the user's results after the test and the progress of continuous tuning. And then we will move on to the specific payment part. So from the current timetable, it's probably in June or July. Of course, it depends on the time of the auction. We will do an external test.
[1478 -> 1502] After the test, there will be a round of adjustment, and then we will enter the whole commercialization. That is to say, if some progress goes well, we hope to be more optimistic, maybe Q4. If the adjustment cycle is slightly longer, we will enter the stage of ICO fee next year. Okay, that's the general arrangement.
[1505 -> 1532] Okay, I'll translate for Mr. Zhou. So regarding the second question on WPS AI, starting from the February, we have fully optimized the product. We're going to continue to optimize the product itself. The performance of this product has actually exceeded our internal expectation. Currently, we are not investing in doing the large language models.
[1532 -> 1560] So we're cooperating with other partners in the large language models. So the further monetization of this product will depend on the timing, when our partners will get the license for their models, and also on the future performance and user experience from the products. So we are going to start, our plan is that we're going to start the testing in June or July, but this also will depend on the timing of the license.
[1561 -> 1591] And after testing, we're going to first do the optimization based on the performance and also the user experience. And after the optimization, we will start the monetization of the WPS AI products. So my own expectation is that the monetization will not start until the fourth quarter of this year or maybe next year. Thank you. Hi, operator. We're ready for the next question. Thank you. Please stand by.
[1598 -> 1612] Your next question comes from the line of Linlin Yang. Please go ahead. Your line is open.
[1613 -> 1642] I have two questions to ask. One is about the game industry. I see that there are some new games being released in the Vietnamese market. How big of an increase can this bring? Also, because the overall industry of NetEase is relatively stable, can Q2 see a relatively positive growth?
[1643 -> 1670] Another question is how does AI affect the game? Do you see any obvious effects such as the effect of special effects? And in this area, do you see any products that use AI to make games?
[1670 -> 1691] So what are the company's preparations for this? The second question is about WCS. After the launch of the new membership system, we can see a clear improvement in up-to-date.
[1691 -> 1717] My first question is about the games. We say we launch the new games overseas.
[1717 -> 1745] So how much growth can this new game bring? Can we see positive growth in Q2? What do you think about the impact of AI on games? Are you seeing some cost reduction or efficiency improvement? What preparations do you make
[1749 -> 1768] Hi Linlin, how are you? We cannot hear you. Hi Linlin.
[1775 -> 1801] I'm sorry, I'm done asking. It's a bit noisy here. I'll mute myself first. Okay, I'll answer. I'll answer directly. To be honest, Q2 is already at the end of May. Based on the actual data, I'll answer the question I asked in the first question.
[1802 -> 1830] As I mentioned earlier, our NetEase 3 is actually much better than 7. Because of the income delay, a lot of our income will be delayed to Q2. So from the perspective of NetEase 3, Q2 is very good. Yes. Secondly, when it comes to NetEase 3, after the last two days, we have re-expanded it to a level that we are satisfied with.
[1830 -> 1860] So in general, the decline is slower than we expected at the beginning of the year. So these two factors combined, from the actual data, the performance of our Q2 game, but it's not convenient for us to talk about it now. But in fact, it should be very, very good. So let me add one more thing. The first question I just wanted to add,
[1861 -> 1889] In fact, if you look at QE's financial data alone, the copper-silver-silver ratio has dropped. It doesn't seem to be a good thing. But in fact, I also answered this question at today's board meeting. I said that from the point of view of the actual operation of the game itself, it is beyond my expectations. Yes, it's just because of the reasons for the financial accumulation. In fact, it's just two points. The first is beyond my expectations.
[1890 -> 1919] The decline of World of Warcraft III is less than expected. Of course, the uptrend of the new game is in the second half of the year, and the specific performance has not yet come out. So in terms of the performance of the old game, I think it is much better than expected. So in terms of the game data of the entire Q2, in fact, if you look at the guide in a single quarter, it is beyond our expectations at the beginning of the year.
[1920 -> 1949] The second part is the specific production of the AI game itself, especially when it comes to the cost. I can only say that it has to look at it from a different point of view. Because in fact, in terms of AI, whether it's engineering, art, planning, or even testing,
[1950 -> 1979] or the quality department, we have applications of different levels and widths. So it's not just a reduction in the effect. In fact, in general, in some aspects, it is indeed a reduction in the effect. In some aspects, the cost has not changed fundamentally, but the quality of the user experience
[1980 -> 2009] there will be a big improvement. So, of course, our conclusion is that it really depends on what kind of game you are playing. At the moment, our conclusion is that in the short term, especially in 3D rendering, the current AI does not have this ability.
[2009 -> 2038] Of course, we believe that the future is bright. At present, for large-scale 3D MMORPG games, the improvement in effect is more obvious, but the cost is not significantly improved. Okay? The third point is whether we are already using AI to support game products.
[2039 -> 2068] Let's see what we have prepared. To be honest, we are not preparing anything. The studio of our roommate may launch some games this year using AI technology. Yes. So, these are the questions about games. Let me ask you a question.
[2069 -> 2092] Regarding your question on the Q2 guidance for the game business, for JX3, it actually exceeded our expectation in the first quarter. But even though in the first quarter, our game revenue
[2092 -> 2119] has declined quarter on quarter and year on year, but the actual performance of JX3 actually exceeded our expectations. It's due to the financial revenue deferral problems that some of the results will not show until in the second quarter. And also due to the recent launch of the new expansion pack, the performance of JX World 3 actually also is better than our expectation.
[2120 -> 2150] We expected a nitro decline of this game, but with the new expansion pack release, the decline has not been as severe as what we expected earlier this year. So generally speaking, Q2 will be a very good quarter for the game business, even though we don't have specific numbers yet. In the board meeting, I also asked a similar question. I said that even though the financial result for the first quarter was not as good as expected,
[2150 -> 2177] but the actual performance in the first quarter due to the great performance of JX-Online 3 and also the new expansion path of JX-World 3, the actual performance is actually better than our company's expectation for the first quarter. The new game, Pipeline Lounge, is scheduled in second half of the year, so we don't know the detailed performance yet.
[2177 -> 2203] but for the second quarter specifically, we think the guidance should be better than our expectation. And the second part of the question is on the cost of AI. We do have applied AI technology in the engine visual image and also the testing aspects of the game. So the AI technology not only improve the efficiency of these aspects and also decrease the cost of these aspects,
[2204 -> 2233] And some aspects, if the cost is not significantly decreased, but the quality and also the user experience has improved due to the application of AI technology. And also, it depends on the type of game. For example, for the JX Online 3, with this 3D visual effect, the AI is not very helpful at this point, but we think that this will also improve in the future. And lastly, we have the question on the AI application for the game.
[2233 -> 2262] We have not only applied the AI technology in the game, but our subsidiary, Tianshan Shiyou, will have new games launched, maybe this year, using the AI technology. Thank you. Okay, Mr. Zhou, that's all for the translation. The second question is, W3S has launched a new member, which is for all aspects of the app. Here's the situation.
[2263 -> 2293] To put it simply, after the launch, we are still making some adjustments based on users' feedback. But in fact, we have tested it carefully. It should be long-term, so it will definitely meet our expectations. At this stage, we are still in the adjustment phase. Because after the launch, we are still making some fine-tuning based on users' feedback.
[2293 -> 2323] I'll do the translation for Mr. Zhou.
[2323 -> 2351] So for the new membership system launched for the Kingsoft Office business, the ARPU actually improved. But now we are in the progress of optimizing the system based on its current user experience. In the long term, we have confidence that the new membership system will meet our expectations and also improve the ARPU for the Kingsoft Office business. Thank you. Operator, we're ready for the next question. Thank you.
[2352 -> 2381] We will take our next question. Please stand by. Your next question comes from the line of Brian Gong from Citi. Please go ahead. Your line is open. Thank you, Chairman Zhou. Thank you, Managing Director. I am Brian from Huaxi. I have two questions. Two follow-up questions. First, Chairman Zhou, you just mentioned WPR.
[2381 -> 2407] AI transformation at the end of this year or at the beginning of next year. This is my current opinion. I know it's a bit early, but I'd like to ask Mr. Zhou if you can share with us how big do you think the potential of this future transformation is? The second question is, we also know that there are many different large models in the Chinese market, right? I don't know if you think that
[2407 -> 2437] For example, the application of other competitors in different big models will change the competitive pattern of the office software market in the future. Thank you. This is my question. I will translate myself. Thanks, Zhou Dong and Maxman, for taking my question. I just have two follow-up questions. First, for WPS AI monetization, how does Zhou Dong see the potentials of the monetization in the future?
[2437 -> 2467] for the application of large language models. Will this bring a change to the competitive landscape for, you know, the office software industry in China? Thank you. Okay.
[2467 -> 2495] We can only refer to the products in the industry that are similar to ours. After GPT or the multi-layered model is added, the specific commercialization performance. At present, it seems that only Notion can do it. But Notion itself is not in China.
[2495 -> 2523] If you look at the data from overseas, you can see that it is very optimistic. But after all, the national situation is not quite the same. So we can only think about it. Our current payment users are already members. They are willing to pay an additional amount of money, how much a month,
[2524 -> 2553] Let's say all of our members are using it. It's basically based on Notion's method of 10 dollars a month, 8 dollars a month. 10 dollars a month, 8 dollars a month, and so on. It's quite objective. So I can only say... I can't tell you the exact answer now. I can only tell you that we are...
[2553 -> 2583] It's similar to this. You should probably do some research. Okay? You really need to look at it in detail. You can also look at it and say, let's say half of the people accept a similar price. Then how much is it? How much is one-fourth of the people? Yes. I believe everyone can figure it out by themselves. So, in terms of optimism, there is still a lot of potential. Yes. But even if it's relatively not so optimistic,
[2583 -> 2612] In general, this is a big step for Jianshan Office. I think the whole sky is moving again. This is for sure. Okay? Secondly, I understand what you mean. As we all know, GPT itself is a content generator. These aspects are very strong. I saw that after Microsoft launched its demo, some people said, why do I need your office software when I already have GPT?
[2612 -> 2641] Yes, there is indeed this kind of sound in the market. To be precise, I would say that in order to generate this kind of content, I would say that in order to generate this kind of content, right? In the future, AI will basically be able to replace humans. That is to say, humans basically don't have to write their own trends. From this point of view,
[2642 -> 2671] So, how should I put it? I don't think this is a change in office software. It's more of a change in the way content is generated. It's a process from people to machines, and then from people to algorithms. This is my understanding. It's not an impact on office software. So, indeed, the future of office software
[2672 -> 2701] I understand that the value and significance of its existence must have changed. So, in some of the demos of VSAI that we have launched, you can see that in addition to the content generation, we also include the beautification and extraction of content, and so on.
[2702 -> 2730] It has greatly improved the efficiency of people, especially when it comes to the form factor. You don't even need to learn some complicated formulas for the form factor, such as the formula table, to understand the complex concepts. You can complete complex functions.
[2730 -> 2759] The conclusion is that the content generation is not affected by the office software. It's the way people generate content that changes. After the content is generated, it will be created, shared, and used again. What we can do with DocuSign AI is still a great improvement in the experience.
[2762 -> 2787] No. I'll translate for Mr. Zhou. So for the question on the potential for monetization of the WPS AI, we don't have any specific data yet. You could do the comparison with similar products of peers in the market, for example, like Notion, even though Notion is not in China, but its overseas data looks very optimistic.
[2787 -> 2813] So we could take that for an example. Let's say if all members of WPSAI are waiting to pay a certain extra amount of money every month, let's say, for example, like 10 U.S. dollars or 8 U.S. dollars per month, the potential is actually great if we do this peer comparison. And you can also do your own calculation to say if it's not all members waiting to pay
[2813 -> 2841] what is it, half of the members or one quarter of the members. But even with this data, you can see that optimistically speaking, the potential of the monetization is great. The second question is on the performance of the GPT. It's very strong, especially in content generating aspect. So we think that
[2841 -> 2870] In the future, the AI could replace humans in generating content or data. But change is not an impact on software. It's the way of generating content and data from humans to AI. So the value of the existence of software is not changed, but it's the way of generating data and generating content that's changed.
[2870 -> 2898] So, with WPS AI, in addition to generating content, we also improve the visual impact. We have added Excel. We have added charts. We've added formulas that also greatly improve the efficiency of our users. So, we think that the software itself now changes the way of generating data and the way of sharing and using data that have greatly improved with using the WPS AI functions. Thank you.
[2899 -> 2923] Hi operator, we're ready for the next question. Thank you. Once again, if you do wish to ask a question, please press star 1 and 1 on your telephone. There seems to be no further questions at this time. Please continue.
[2940 -> 2966] There are no further questions at this time. Okay, operator. Okay, thank you for your attendance of our presentation today. And if you have any further questions, you can contact our team of Kingsoft. Thank you. Thank you, operator.
[2967 -> 2973] This concludes today's conference call. Thank you for participating. You may now disconnect.