Autohome Inc. (NYSE:ATHM) Q2 2022 Earnings Conference Call August 3, 2022 8:00 AM ET

Company Participants

Sterling Song - Director, Investor Relations

Quan Long - Chairman & Chief Executive Officer

Craig Yan Zeng - Chief Financial Officer

Conference Call Participants

Robin Leung - Daiwa

Liping Zhao - CICC

Ritchie Sun - HSBC

Brian Gong - Citigroup

Thomas Chong - Jefferies

Operator

Ladies and gentlemen, thank you for standing by for Autohome’s Second Quarter and Interim 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference call is being recorded. If you have any objection, you may disconnect at this time.

It is now my pleasure to introduce your host, Sterling Song, Autohome’s IR Director, Mr. Song. Please go ahead.

Sterling Song

Thank you, operator. Hello, everyone. I'm Sterling Song. Welcome to Autohome’s second quarter and interim 2022 earnings conference call. Earlier today Autohome distributed its earnings press release and you may find a copy on the company's website at www.autohome.com.cn.

On today's call, we have Chairman and Chief Executive Officer, Mr. Quan Long; and Chief Financial Officer, Craig Yan Zeng. After our prepared remarks, our management team will be available to answer all your questions.

Before we begin, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.

Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the Securities and Exchange Commission. Autohome doesn't undertake any obligation to update any forward-looking statements, except as required under applicable law.

The earnings press release in this call also includes discussions of certain unaudited non-GAAP financial measures. Our press release contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures, and is available on Autohome's IR website. As a reminder, this conference is being recorded. In addition, a live and archived webcast of this earnings conference call will also be available on Autohome's IR website.

I will now turn the call over to Autohome's Chairman and CEO, Mr. Long for opening remarks. Please go ahead, Mr. Long.

Quan Long

[Foreign Language]

Thank you, Sterling. Hello, everyone. This is Quan Long, Chairman and CEO of Autohome. Thank you for joining us today for our second quarter 2022 earnings conference call.

We are pleased to report a strong operational performance in the second quarter of 2022. Our total revenues for the second quarter were RMB 1.73 billion and adjusted net income attributable to Autohome was RMB 472 million with adjusted net margin of 27.2%.

The challenging macro environment and particularly, the pandemic upgrades in multiple cities in China in Q2, has impacted the supply chain and sales in the automotive industry. Although the market began to recover in June with passenger vehicle sales nationwide increasing by 22% year-over-year, the overall passenger vehicle sales volume fell by about 10% in the second quarter.

Against the backdrop of macro headwinds, our solid overall performance clearly demonstrates our strong growth momentum, and we achieved substantial sequential growth in operating results in the second quarter and continued to maintain good profitability as well as high profit margin level, a testament to our ability to navigate evolving market cycles.

COVID-19 resurgence repeatedly affected the Chinese auto market during the quarter. Despite this, the automotive industry remains a key pillar of the national economy with cars updating strategies in people's lives. The industry typically has a long life cycle, and there is tremendous potential as China's automotive consumption continues to upgrade.

Autohome has also constantly adjusted its business model, expanded its business boundary and launched more new products and services during the pandemic to address customers' pain points and meet their demands.

We have continued to empower customers, keeping those commercial contacts with them and have gained their trust and appreciation. Bolstered by steady operations and the solid business fundamentals, Autohome outperformed the wider market in the first half of this year.

In the second half, as China's automotive market quickly revamped aided by the implementation of various favorable policies, Autohome will continue to enhance its performance and deliver satisfactory results to the market.

With that, I will now turn the call over to our CFO, Craig Zeng, for a closer look at our second quarter operating and financial results.

Craig Yan Zeng

Thank you, Mr. Long. Now, I'd like to give you an overview of our second quarter highlights. During the second quarter, we continue to augment our private entities by building our online test align, covering more users across various scenarios to accelerate traffic growth. According to QuestMobile, Autohome's aggregate average daily users grew by 8.1% year-over-year to RMB 47.63 million in June.

User composition-wise, the proportion of our high-value users utilizing smartphones was over RMB 5000 [ph], 37%, surpassing that of all our competitors, which demonstrates the value of our user traffic. Furthermore, we continue to diverse our content ecosystem and executed our video-based strategy. To this end, we launched regular cloud auto shows and our brand-new EV car model database to expand our product service and offerings, providing a wider range of prices and a better experience for our customers.

During the first half year, its response to the pandemic reserve we proactively helped more than 300 national and local online auto shows covering over 70 million people throughout China. Meanwhile, we also initiated our safety to store campaign, our new promotional model empowering users to safely review and buy part during the pandemic, while also helping dealers, clients increase sales and upgrade the experience they offer users.

Going on to the full year, with respect to new business, our digital products have gradually penetrated the market since their launch covering over half of all mainstream automakers in China. Furthermore, we achieved double-digit year-over-year growth in all of our dealer digital products, key indicators. Our energy business also continued to improve with revenue growth rates accelerating and still outperforming the average market level.

The ecosystem synergies we are building between Autohome and Ping Group are progressing according to the plan and we continue to leverage our unique advantages to bring better services and experiences to Autohome's users.

[Foreign Language]

Moving on to content development, by leveraging our big IP brand we've steadily advanced our strategy of promoting our video-based content transformation. For example we all amended the content on our show Super PAC with Crossover Luxury Automobile content to its motorcycle reveals enabling us to achieve a breakthrough effort to expand our IP content from passenger vehicles only to other transportation methods. In the first half of this year, our full original IP series accumulated over 148 million views of Autohome's platform and over 207 million on the entire network.

We also launched our brand NEV car model database in June. Meanwhile, we'll continue to upgrade our NEV platform, greatly shortening our path to reach users and helping users make better decisions with more refined content category and the search tools as well as real data on NEV's driving range, energy consumption, charging efficiency and other NEVspecific statistics.

[Foreign Language]

Autohome attaches great importance to the developing economies of the company's brand and is committed to the sustained building and upgrading of the brand in the long-term. This year, driven by the targeted needs of our users for car search purchase and use as well as the overall condition of the automobile market, we've signed Eileen Gu the 2022 Beijing Winter Olympic champion as our brand ambassador.

We'll use her digital image widely in our online auto-shows and that user-interaction through cutting-edge technologies such as, VR.

Eileen Gu is an excellent representative at tennis' younger generation. With her as our brand ambassador, we believe, Autohome will attract more younger and female users going forward.

[Foreign Language]

Now turning to our traditional business segment. Given the pandemic and the marketwide changes, we promptly launched a new operational model, while proactively helping our clients to overcome their difficulties. In response to the cancellation of local offline auto shows and events, travel inconveniences and disruption to automakers sales activities and offline store operations, Autohome reacted by launching a regular online auto shows and safety to store services. The former enables users to search and select cars anywhere at any time and allows automakers to release localized promotional messages through our platform.

The latter offered ride vouchers to help users to get fresh stores solving their last-mile problem during the car buying process. For our lead generation business, our dealers membership products include various tools and services to help dealers connect with potential customers. In the second quarter, over 12,000 clients purchased our premium version and over 6,000 clients purchased our tech version with the number of clients particularly high-end versions remaining high.

[Foreign language]

On our data products front we rely on our data and tech as our backdrop and continue to push forward on innovation to enhance our core competitiveness. We've expanded our product lineups with digital products and VR car search products, helping dealers achieve positive operation and conduct sales safely during the pandemic.

In the second quarter, revenue generated by dealers digital products surged by over 40% year-over-year with more than 18,000 clients. During the first half of 2022, number of products purchased per store and average revenue per store increased vastly, achieving 32% and 20% year-over-year growth respectively.

In addition, driving on the development opportunities arising from the digital transformations within the auto industry, our acquired intelligence solutions tackles pain points and the core demands from automakers, aiding traditional auto companies throughout the digitalization process.

Since we launched our first -- the digital and technology product in late 2021, we have continuously upgraded them and has now collaborated our -- with over 30 automakers, representing an enormous step forward in our efforts to expand our business beyond the vertical media industry. We believe our digital business will continue to grow and generate future revenue as well as help us achieve our second growth curve.

[Foreign language]

For our NEV business, we focus on providing comprehensive branding solutions for automakers organizing activities and events for car owners reflecting each manufacturer's brand image to promote their brand's unique car lifestyle. Combining online and offline operating matters, we help automakers to promote their messages, increase user interaction and reduce the thickness, and diversify our income streams.

In the second quarter revenue generated from NEV brands greatly increased year-over-year and continued to outperform the sales growth rate of the market. Furthermore, as the penetration rate of NEV increases, we have also expedited our development in this sector resuming construction works our new sales models stores as the pandemic eased.

We expect to launch these stores in Beijing and Shanghai within the third quarter exploring an unprecedented auto sales model by using high-tech -- physical store setting. Our goal is to help new NEV automakers expand their exposure through, our unique cutting-edge sales model and channels. We expect this operation to generate revenues for the company within 2022.

[Foreign language]

From the used car front, we upgraded our full chain used service ecosystem by consolidating resources from Autohome, TTP and the Ping An Group. Leveraging their resources, we built a one stop cloud based platform, but crafted used car services, which seamlessly connect users and clients and provide value added and digital services in addition to leads generation services. With the support of diversified content, our platform and Ping An's offline channel resources, we will continue to expand the platform scale to cover more car seller.

Furthermore, we continue to deepen business synergies with TTP through consolidation and auction services. In the second quarter, our platform accounted for around 23% of all used car trading volume in China, an increase of three percentage points quarter-over-quarter and six percentage points year-over-year. We also made tax building, our certified used car system, which has been launched in 47 cities in the country. The number of our certified car sources has grown by leaps and bounds and we expect it will continue to grow steadily in the future.

In the second quarter, China State Council removed relocation restrictions for all small sized, not upgrading used cars that meet the national safe emission standards and refined certain used car management regulations, including vehicle registration, trading registries and the filings. This will boost used car sales and accelerate car replacement, leading to a smoother circulation of used car overall. The series of new policies will benefit the development of the used car market in China by encouraging more trading activities, which will positively impact used car consumption and the used car market.

To summarize, we are pleased to have made progress in all of our business segments during a challenging quarter, since June with the pandemic slowly easing and the government announcing a series of economic stimulus policies to boost the economy and promote auto sales, delayed car consumption demand has greatly been relieved. We anticipate that these factors will positively affect the auto market and promote its recovery. Passenger vehicle sales increased by over 22% year-over-year in June and the multiple sales on the manufacturer indicators are exhibiting significant signs of recovery. As most factories suspended production in April and May, market demand in June led to a significantly higher trading volume.

The auto industry is one of the most important pillars in China's economy is recovering at a steady pace. With Autohomes act intact strong business foundations and the perilous financial performance we have been actively seeking new development opportunities in various sectors. We believe Autohome will continue to lead the development of China's auto industry and propel a steady long-term growth while creating lasting value for all of our stakeholders with outstanding performance that navigates market cycles.

Next, let me walk you through the key financials for the second quarter of 2022. Please note that as with prior calls I'll reference RMB only in my discussion today unless otherwise stated. Net revenues for the second quarter were RMB 1.73 billion for a detailed breakdown, media services revenue came in at RMB 531 million. This generation services revenues towards RMB 753 million and online marketplace and others revenues were RMB 450 million.

Moving on to costs. Cost of revenue in the second quarter was RMB 279 million compared to RMB 262 million in Q2 2021. The increase was primarily attributable to our continuous investment in content. Gross margin in the second quarter was 83.9% and compared to 86.5% in Q2 2021.

Turning to operating expenses. Sales and marketing expenses in the second quarter was RMB 739 million compared to RMB 562 million in Q2 2021. The increase was primarily attributable to the escalation of marketing on the promotional spending. Product and development expenses were RMB 362 million compared to RMB 335 million in Q2 2021. The increase was primarily attributable to greater investments in research and development activities for digital products.

Finally, general and administrative expenses were RMB127 million, compared to RMB177 million in Q2 2021. The decrease was primarily attributable to the reduction of expected credit losses.

[Foreign Language] Overall, we delivered operating profit of RMB301 million in the second quarter, compared to RMB673 million in the corresponding period of 2021. Adjusted net income attributable to Autohome Inc. was RMB472 million in the second quarter, compared to RMB795 million in the corresponding period of 2021.

[Foreign Language] Non-GAAP basis on diluted earnings per share in the second quarter were both RMB0.94 compared to RMB1.58 and RMB1.57 respectively in the corresponding period of 2021. Non-GAAP basic and diluted earnings per ADS in the second quarter were both RMB3.77 compared to RMB 6.31 and RMB6.30 respectively in the corresponding period of 2021.

[Foreign Language] As of June 30th, 2022, our balance sheet remains very strong with cash, cash equivalents and short-term investments of RMB20.94 billion. We generated net operating cash flow of RMB488 million in the second quarter of 2022.

[Foreign Language] On November 18th, 2021, our Board of Directors authorized a share repurchase program under which we may repurchase up to US$200 million of Autohome ADS for a period not to exceed 12 months thereafter. As of July 31st, 2022, we have repurchased approximately 1.88 million ADS for a total cost of approximately US$54.2 million.

[Foreign Language] With that, we are ready to take your questions. Operator, please open the line for the Q&A session.

Question-and-Answer Session

Operator

Thank you, management. [Operator Instructions] Our first question is Robin Leung from Daiwa. Please go ahead.

Robin Leung

Hi. Thanks management for taking my question and congratulations on a solid set of results. Could management gives us some color on the auto market trend in second half of this year? And how the impacts from the government stimulus policy and chipset supply situation affects auto supplier willingness to allocate their marketing budgets? Thank you. [Foreign Language]

Quan Long

[Foreign language] Let me take this question. I'm the president of Autohome. My name is Long Quan. So, actually your question covers two parts. The first part is about the auto market. The second is about the chip supply.

Why is this a case? Actually starting from March, we can see that Shanghai and Changchun, they were under very serious lockdown. Shanghai and Changchun both are very important to car OEM cities. So, that's why in April, you can see the car retail data dropped by 35%, out of the whole sales. In May, the number dropped by 16.9%. So roughly speaking, in the second quarter the retail market for the passenger car really declined a lot.

As you know, the auto consumption accounts for a very important pillar industry for the consumption market in China. It accounts for about 10% of the national total retail consumption. So, that's why the government starting from April adopted a lot of stimulus policies to boost its auto market. So, that's why we can see a lot of large consumption policies has been released.

So, luckily in April, the State Council released -- opinions on the policies -- boost and release the consumption power in auto markets. And actually in May, the government had cut a lot of tax, especially the purchasing tax for the cars. And we -- in April -- and actually starting from April, we still see a lot of government associated with other agencies.

In July, the Ministry of Commerce, starting with 17 departments, have released aggressive consumption-boosting policies to further boost the market. As a result, we can see in June, the market consumption had already increased by 22.6%. And in July, the data increased by 17%, which means the auto market retail has really turned around.

We are very confident that the Chinese auto market has a huge market potential to be further released. Actually we do see that on the second half of this year, we would expect the consumption market would be very strong for the auto market.

According to the latest forecast made by the China Auto Association, in 2022, the total car sales in China can reach 27 million units which would be 3% up over the same period of last year. And also the passenger car of the total sales can be expected to reach to 23 million, which is 7% up.

For the NEV, it will grow very robustly. The total sales can reach to 5.5 million units and the growth rate can be 56%. So, you can see that we are very optimistic about the future of the Chinese Car Association and auto industry. We believe the market potential would be huge, and we are very confident that we would enjoy a bright future in the Chinese car auto market.

Now let me take the second part of your question, which is about the chips. Actually, according to the prewarning made by the Passenger Car Association of China in January, and this year, there will be about 1 million cars, which would enjoy the lack of chip supply. Actually, if you look at Toyota, the Toyota from Japan, they already cut production due to the lack of supply of chips. So, this would affect the production feed of the carmakers.

Now, let's look at the domestic OEMs in China. Actually, compared with the second half of 2021, we believe the situation has been eased, and it's already been improved in terms of the supply of the chips. We do not think, we would encounter the massive scale lack of chip supply. So, which means, we are more optimistic than the beginning of the year's forecast.

Actually, according to the MIIT, which they made a speech in early of July, they said they will keep a close eye on monitoring the whole industry and ensure that the chip supply and the raw material supply can be very smooth for the auto industry. They would try their best to protect the smooth of the supply chain management for the whole industry. So this laid a solid foundation to help the chip supply to be better improved. We believe that for the later half of this year, the new car would gradually launch to the market in a steady way and especially for the second half of the year, there will be a series of very important auto shows and events will be held. So in this way, this provide more opportunities for the OEMs to showcase their latest models. We believe that, the chip supply would no longer be the bottleneck for the OEMs

That’s all. Thank you.

Robin Leung

Thank you. It’s very helpful. Thanks.

Operator

Our next question is Liping Zhao, CICC.

LipingZhao

[Foreign Language] Thanks for taking my questions. I have two questions here. First, could you please give more color on the data products growth momentum in the second half of this year? And second, because there will be more offline computing in the second half, such as your overstatement [ph] accessible, how should we expect the sales and marketing expenses in third and fourth quarter of this year? Thank you.

Craig Yan Zeng

[Foreign language] Well, thank you very much for the question. As for the second question -- first question which is data product. That's true, because in Q1 there was some postponing of the new car launch and also some of the events has been canceled. So that's why this has delayed and actually created a headwind for our data product revenue, especially, some of the smart new car launch has been postponed.

We believe that in second quarter, if the COVID pandemic can be better controlled, the OEMs would quicken the steps in launching the new car model. So that's why for the second half of the year, we would be back to the data product revenue to increase and to climb up.

Now the second question, which is about the sales and marketing expenditure. That's true for the second half of the year, we would have the 818 August 18 auto show. We also have the online auto shows and online 4S [ph] store, et cetera. So we believe that in third quarter our revenue from advertising and – but the revenue would turn positive. So, which would it be very clear for Q3. For Q4, we have to look at some other factors. But for Q3, which is very clear that the revenue from the media and advertising would turn positive. [Foreign Language] Operator?

Operator

Next question is Ritchie Sun, HSBC.

Ritchie Sun

Thank you management, for taking my questions. I've got two questions. First of all, is we've seen video accounts Weibo and Bilibili, are getting more auto ad budgets than before. So how do you say, view the competition from these other non-vertical platforms? And what is our strategy to tackle that? Second part is, can you share the progress made in our traffic and content investments, such as short video and livestreaming? [Foreign Language]

Quan Long

[Foreign Language] Well, thank you, for the question. Yeah. That's, true. You mentioned that to Weibo or Bilibili also includes TikTok, Douyin. They all have more and more car advertising business. That's very normal, because the media has been diversified, and that naturally attracted a lot of car advertising, which is beyond -- which is felt in our expectations. However, I have a few statements to make. Firstly, for Autohome, we are still the major stakeholder, in this vertical auto industry -- media industry.

Secondly, our business is not-only-limited to the vertical media, but we also launched diversified business including the digital product, the leads generation business etcetera, so that's why we are more diversified in terms of our revenue, rather than a single media company.

Well actually as you know for Rose [ph] Media they are more entertainment-based content. For us we also invested heavily into the content for example, special effect and our core IP. We have four major original IPs which generated about 200 million view clicks and we're also in a leading position in a lot of our content. For example, the 3D modeling we're in a leading position and we also provided the tools which would be practical tools for people to purchase a car.

For example, we have the car model database which our traffic would be very different from Rose Media or entertainment-based content. So, we are more professional car purchasing tools provider. We also established the traffic alliance with a lot of our partners except TikTok, Douyin and the Tencent. So, in this way by collaborating with road traffic providers, we would continue to be in the leading position especially when providing the professional content and providing the effective tools for people to purchase a car.

For example in the second quarter, if you check the QuestMobile data released, you can see our user has grown by 8.1% over last year, which is a very significant result. Okay. Thank you. Next question please.

Operator

Next question is Brian Gong, Citigroup.

Brian Gong

I'd like to translate myself. Management shared the last revenue share for TTP units second quarter and with government stimulate policy, what's our expectation on TTP for the second half this year? Thank you.

Quan Long

[Foreign language] Thank you for the question. Tell me about the used car. Actually according to the forecast made in January of 2022, the yield around used car transaction can be 90 million units, which would it be 8% growth rate.

However, starting from second quarter, especially the lockdown of Shanghai that has been greatly impacted the used car transaction. So, that's why the real transaction volume in second quarter is negative growth. And starting from June, with the better management of the COVID-19, we can see the used car market is gradually picking up.

Now tell me about to the used car business. Currently the used car transaction volume and the total revenue still accounts for a very small portion of our total revenue. And we believe that for the second half of the year the used car business would continue to grow. The growth can be 23%, so it will continue to grow, especially on the second half of this year.

According to the National State Council, they issued a policy, which would boost the circulation of the used car market in China. Actually, each of the vendor, can only work for a portion of the value chain, leveraging on Autohome TTP and Ping An. If we combine the three together, we can consolidate all the married resources, which we can provide a one-stop solution for the car users and the car purchases. So in this way, we can better provide value-added services and digitalized services for the used car business.

So we would expect that with the implementation of WFOE supportive policies and the consolidation of the three players, next year the used car business would generate a higher portion out of the total revenue.

Brian Gong

[Foreign language] Okay. Thank you.

Operator

Next question is Thomas Chong. Please go ahead.

Thomas Chong

[Foreign language] I'll translate my questions. First, congratulations on the really strong set of results. And for new energy vehicle, we are seeing very fast revenue growth during the second quarter. May I ask about the competitive landscape at the moment? And in the next couple of years, how should we think about the revenue contribution from these segment in the future? Thank you.

Craig Yan Zeng

[Foreign language] Well, thank you for the question. Talking about the competition, as you know, Autohome continued to be a market leader in this market. Actually, we are not only limited to media business. If you look at the overall trend, the media providers had always been more diversified. That's a market trend. So that's why Autohome had already been diversifying our revenue rather than only relying on the media and advertising. We diversified our revenue by providing leads generation business, digitized products, the auto ecosystem, and auto lifestyle or car lifestyle product.

So in this way, we are trying to reshape the value chain for the whole industry and to digitize the whole value chain. We provide a CRM Plus business model, which we provide the lead generation, the clicks management, the first store management and the CRM system. So maybe some of the competitors they are very strong in a certain area. However, if you look at the combined strengths, we are definitely a very solid market-leading position.

[Foreign language]

Now talking about the NEV market. We are continuing in a very strong position and the NEV has become a very strong power in the auto market. However the NEV sales is a brand new marketing and sales model, which they do not adopt the traditional threat for model. That's why we are already prepared to mostly suitable for this NEV sales, which we call it a new retail sales model. We provide a virtual reality technology or hybrid virtual reality technology to boost the car sales for the NEV OEMs. And in the third quarter we are going to launch some of the experience stores. And we welcome you to visit the experience stores to feel by yourself.

[Foreign language]

Okay. Due to time limit, let's allow the last question. Thank you.

Operator, please.

Operator

Our last question is Steven Tsai [ph] Morgan Stanley.

Unidentified Analyst

[Foreign language]

Thank you management for taking my questions. My question is about your media service segment. This segment revenue saw around 100% “growth” despite some city lockdowns and supply chain impact. Could you kindly show us the underlying drivers behind such growth? What did you do differently than media entertainment and other vertical platforms? Also, looking into the second half how should we think about the media service revenue growth trajectory? As you mentioned that, it is expected that PV sales is likely to reach a four-year high level. Any structural reason that the revenue line cannot go back to their previous high levels that we saw in 2019 and 2020? Thank you.

Craig Yan Zeng

[Foreign Language] Well, thank you for the question. What are the major drivers? Actually, if you look at Q1, we believe there are some seasonality factors, because there was Spring Festival, which is the biggest festival in China, and also the COVID pandemic. So that's why the media expenditure has been postponed, due to those factors. However, after Q2 Shanghai and Jiling they gradually have completed the city lockdown. As they gradually reopened. So that's why – expenditure improved.

[Foreign Language] Now, looking into the future, whether we are -- we will be as good as what happened between 2019 and 2020, we have to say the current situation is very different from what happened in 2019 to 2020 because we are not only providing a single service, rather we are providing a more comprehensive and more combined services. Because all the services to OEMs and the dealers all have been improved to a comprehensive service. So we may revise some of our accounting in the financial reports and the financial statements to better reflect our business model change, which we provide a combined and comprehensive services, including the NEV, the car lifestyle, the OEMs plus used car business, which we are not only providing a single service, but rather we are providing comprehensive service. Our service has been deepened and broadened.

Sterling Song

Operator, this is the end of the Q&A. Please go ahead.

Operator

Thank you. This is the end of Q&A session. So I'll turn the conference back to the management for closing remarks.

Quan Long

Thank you everyone for joining us today for the earnings conference call. We appreciate your support and we look forward to updating you on our next quarter conference call in a few months' time. In the meantime, please feel free to contact us, if you have any further questions or comments. Thank you very much and good-bye.