Hello, and thank you for standing by for Energy Monster's 2021 First Quarter Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference call, Director of Investor Relations, Hansen Shi. Thank you. Please go ahead.

Thank you. Welcome to our 2021 first quarter earnings conference call. Joining me on the call today are Mars Cai, Energy Monster's Chairman and CEO; and Maria Xin, our CFO. For today's agenda, management will discuss business updates, operation highlights and financial performance for the first quarter of 2021. Before we continue, I refer you to our Safe Harbor Statement in the earnings press release, which applies to this call as we will make forward-looking statements. Also, this call includes discussion of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally, please note that unless otherwise stated, all figures mentioned during this call are in RMB. I would now like to turn the call over to our Chairman and CEO, Mars Cai, for the business and operational highlights.

Thank you, Hansen. Good day, everyone. Welcome to Energy Monster 2021 First Quarter Earnings Call. To start off, I would love to give a quick introduction of the Energy Monster. We are a consumer tech company providing mobile device charging service through our network of charging cabinets, which are placed in high-traffic locations, such as entertainment venues, restaurants, shopping centers, hotels, transportation hubs and public spaces across China. Users make the -- use our service by simply scanning the QR code of our cabinet through Alipay or WeChat to borrow our power banks and then return the power banks to any Energy Monster cabinet across China. Our service provide a clear value proposition to both our users, allowing for seamless access to charging service on the go and to our location partners providing value-added service to their customers. As of end of March 2021, we have over 5.6 million power banks and 716,000 POIs. As the #1 player in China's fast-growing mobile charging device industry with 34.4% market share in 2020, we will benefit from the fast growth of the industry. According to iResearch report, China's mobile device charging service industry is poised to grow at a CAGR over 36% from 2020 to 2028, reaching a market size of over RMB 100 billion in 2028. The growth of the industry is expected to be driven by growing demand for our service and the expanding supply through increased location coverage. On the demand side, the increase in smartphone penetration and the continued rapid increase in usage of smartphones, which reached 168 hours per Chinese smartphone users per month are key drivers for growth. The increase in total battery consumption will definitely make the gap bigger between battery consumption and capacity even to be beyond the current gap of 3,000 mAh per…

Thank you, Mars. We are pleased to deliver solid results for the first quarter of 2021. Notably, we achieved strong revenue growth while continuing to be profitable despite the impact of COVID and seasonality in early 2021. With the recovery in March, we expect to continually deliver strong going into the second quarter of this year. Now let me walk you through the financial results in greater detail. For the first quarter of 2021, revenues were CNY 846.9 million, representing 162.5% year-over-year increase. Revenues from mobile device charging business were up 164.5% year-over-year to CNY 816.8 million and accounted for 96.4% of total revenues for the quarter. The increase was primarily on back of the impact of COVID-19 on the first quarter of 2020 and was contributed by the increase in numbers of POIs and available-for-use power banks. Revenues from power bank sales were up 129.2% year-over-year to CNY 25 million and accounted for 3% of our total revenue for the quarter. The increase was primarily on back of the impact of COVID-19 on the first quarter of 2020 and was contribute by the increase in the number of POIs and available-for-use power banks. Other revenues were up 71.5% year-over-year to CNY 5.1 million and accounted for 0.6% of our total revenue. The increase was primarily on the back of the impact of COVID-19 on the first quarter of 2020. Cost of revenues were up by 14.5% year-over-year to CNY 124.6 million for the first quarter of 2021. The increase of cost of revenues was primarily due to the increase in maintenance costs, cost of power banks sold and depreciation. Gross profit was up 237.7% year-over-year to CNY 722.3 million for the first quarter of 2021. The increase was primarily due to the increase in revenue from mobile device charging…

[Operator Instructions] We have the first question from the line of Vicky Wei from Citigroup.

And congrats on the successful IPO. My question is related to the competition landscape. So we saw some new steps and small players consolidate and other industry players who aim to go public, too. Does management see any change in current competition landscape? And under the current competition, will management provide some color about the trend of revenue sharing with partners in fiscal 2021?

Thanks for the question. We do not see a significant change in competitive landscape during the first quarter. Our core advantage in the network scale, operational efficiency in the brand and technologies are still leading the market. And we will see that we are still gaining share with more locations and cities onboard. So we are confident that if we stick to the strategy that we drive both growth and profitability and focus on the customer satisfaction, so we can get more KAs, users and cities or even network partners onboard. So we are very confident. So far, as a conclusion, there is no major change in the dynamics.

Okay. As for your question regarding the revenue sharing percentages, so under the direct model, the incentive fee that we pay to the location partners is flat compared with the last quarter. So the incentive fee that to our network partners increased slightly in the fourth quarter this year due to the launch of the network partner campaigns to help us expand further into the untapped low-tier cities. But unfortunately, we do not give guidance on this sales percentage.

We have our next question from the line from Lucy Li from Goldman Sachs.

This is Lucy from Goldman. So my question is on the post-COVID impact. So can management share with us more details on the impact of COVID-19 during the first quarter and the possible impact going forward to the second quarter, please?

Thanks for the question. In early 2021, the resurgence of COVID occurred in Beijing, Shanghai, Hebei and on the Northeastern regions of China. And if we look at the regions that were affected by the outbreak, the gross revenue of these regions in January and February of 2021 were actually down approximately 25% compared to December 2020 levels. And the other regions are not happening in this way. So in March, the COVID has been contained, and we see a full recovery in terms of gross revenue for these regions. The affected regions stayed flat during these major -- minor outbreaks. Meaning the impact of COVID, our first quarter revenues, we have been 8% to 10% higher even. If we just make it in a normalized situation, the whole national revenue were up 8% to 10%. But unfortunately, due to some of the minor outbreaks, some regions are down 25%. And we hope that the situation getting much, much better and stable. But we do see that in the past weeks, province like Anhui will still have some minor outbreaks. And for example, the city of Hefei at the period, were down about 5% to 10%. But I think it's just for a moment. We will have experience to make the business recover even faster then to operate itself. So that will be the introduction of the impact of the COVID.

We have next question from the line of [ Ryan Bing ] from China Renaissance.

A few questions. The first one is that can you give us color on the new POIs covered this quarter? And is that generally for higher tier cities? And how much percent will run through the direct model or the network partner model?

Yes. Thanks for the question. We actually expanded our POI coverage by more than 50,000 during the quarter. So the total number is increasing and both in higher tier cities and lower tier cities. Due to we are having the strategy to drive faster of the network partner model, so we witnessed an increase of revenue from the network partner model from about 30 all the way grow towards 40. So we see some of the great news happening there. While we're still focusing on the operational excellence, no matter where we go, no matter how many locations more to add on, we are still very confident to make it profitable at the time we are entering this market or location.

[Operator Instructions] We are now approaching the end of the conference call. I will now turn the call over to Energy Monster's CFO, Maria Xin, for closing remarks.

Once again, thank you for joining us today. Please don't hesitate to contact us if you have any further questions. Thank you for your continued support, and we look forward to speaking with you in the coming months. Thank you.

Thank you very much.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day. Thank you all.