Hello, ladies and gentlemen. Thank you for standing by for 51Talk's Online Education Group's First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Mr. David Chung, Investor Relations for the company. Please go ahead, David.

Thank you. Hello, everyone, and welcome to the first quarter 2024 earnings conference call of 51Talk. The company's results were issued by Newswire services earlier today and are posted online. You can download the earnings press release and sign up for the company's distribution list by visiting ir.51talk.com. Mr. Jack Huang, our CEO; and Ms. Cindy Tang, our CFO, will begin with some prepared remarks. Following the prepared remarks, there will be a Q&A session. Before we continue, please note that the discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's Form 20-F and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under the applicable law. Please also note that earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. 51Talk's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to our CEO, Jack Huang. Jack, please go ahead.

Thank you, David. Hello, everyone. Thank you for joining our conference call today. Our business momentum continued in the first quarter of 2024, driven by our diversified portfolio of markets driving us to exceed the high end of the guidance. We have observed significant returns on our earlier investments. Particularly, our branding activities were supportive to increase our student base. We remain confident in our capability in delivering our quality growth. Our over 46,000 quarterly active students, along with numerous participants in free trials, provide us with a substantial pool of potential demand. We have developed new products tailored to their needs, such as test preparation programs for school enrollments. During this quarter, we formally established our AI Research Institute to explore how the latest technologies can enhance our user experience and operational efficiency. We have begun using AI to customize learning progress reports for customers and conduct interviews and trainings for our teachers. With that, I will now turn the call over to Cindy, our CFO.

Thank you, Jack. First quarter net revenues were US$9.4 million, a 17.1% increase from the same quarter last year, largely driven by the increase of active students with attended lesson consumption. Gross margin for the first quarter was 77.5%. Gross billings grew by 55.6% from the same quarter last year to US$12.6 million. Q1 operating expenses were US$11.3 million, an increase of 64.1% compared to the same quarter last year. Specifically, this has been driven by Q1 sales and marketing expenses of US$7.7 million, a 74% increase from the same quarter last year due to higher sales personnel costs related to increases in a number of sales and marketing personnel and higher marketing expenses. Q1 product development expenses were US$0.9 million, a 42.7% increase from the same quarter last year. Finally, Q1 general and administrative expenses were US$2.6 million, a 47.2% increase from the same quarter last year. Overall, Q1 operating loss was US$3.9 million, while net loss was US$3.7 million, a 54.5% and 43.8% decrease from the same quarter last year, respectively. Q1 GAAP and non-GAAP earnings per ADS were negative US$0.65 and US$0.6, respectively. The company total cash, cash equivalents and time deposits were US$21.7 million at the end of the first quarter. Advances from students were US$30.1 million at the end of the first quarter. Looking forward to the second quarter of 2024, we currently expect the net gross billings to be between US$13.5 million and US$14 million. The above outlook is based on our current market conditions and reflect the company's current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change. This concludes our prepared remarks. We will now open the line for questions. Operator, please go ahead.

Thank you. For the benefit of all participants on today's call, please limit yourself to two questions. If you have additional questions, you may reenter the queue. Please ask your question in Chinese first, then follow-up with an English translation. [Operator Instructions] And today's first question comes from [John Banks] of BG Capital Investments. Please go ahead.

Hey, guys. Congratulations. Great quarter, great momentum. Just two questions. One, I know you left the Chinese market, but we're seeing a pretty big rebound with Chinese education stocks. I'm just curious, you have any interest going back into the market going forward? Are you completely out of the Chinese market? And my second question is, your gross billings went from basically almost nothing to $60 million, $80 million, it looks like eventually going to approach $100 million, and the share price hasn't really done anything. Historically, you guys have been trading 2x to 3x gross billings. What are you guys doing to increase awareness in your company's stock? Thank you.

Okay. Thank you very much for your question. I will answer the first one, and I think our CFO can answer your second question. So first one, I want to emphasize that we have our China – Mainland China business has been [indiscernible] outside of the listing company. And because of the regulation issue, as you mentioned, so we are not interested in the Mainland China business anymore. And we found that actually 51Talk's business model actually works outside of the Mainland China as well. So as you can see that we have showing a very successful growth into the several different markets in Southeast Asia, in Japan, in the other area of the world. So we are very confident about international market. Okay, Cindy, you can answer the second question.

Yes. Okay. Thank you for your question. So for our share price, actually, we believe that our operation will ultimately the main factor to drive up our share price. So for now, the company is focusing on diversify the geographic portfolio and we'll help the operation team to make sure that our gross billings will grow as we expected, and making sure that our growth was within a healthy, profitable expectations so that can lay a solid foundation for our share price. At the same time, the company will actively to engage investors. When the time is good enough, we actually will go out to introduce more about ourselves to our potential investors.

All right. Good luck in the future, and great work so far. Hopefully, the momentum continues for you guys.

Thank you.

[Operator Instructions] As we are reaching the end of our conference call, I'd like to turn the call back over to the company for closing remarks. Mr. David, please go ahead.

Thank you once again for joining us today. If you have any further questions, please contact 51Talk's Investor Relations through the contact information provided on our website.

Thank you. This concludes this conference call. You may now disconnect your lines. Thank you.