00:04 Hello, and thank you for standing by for Energy Monster’s 2021 Fourth Quarter and Full-Year Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference is being recorded. If you have any objections you may disconnect at this time. 00:26 I would now like to turn the meeting over to your host for today's conference call, Director of Investor Relations, Hansen Shi.

00:34 Thank you. Welcome to our 2021 Fourth Quarter and Full-Year Earnings Conference Call. Joining me today on the call are Mars Cai, Energy Monster’s Chairman and Chief Executive Officer; and Maria Xin, Chief Financial Officer. For today's agenda, management will discuss business updates, operation highlights and financial performance for the fourth quarter and full-year 2021. 01:00 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 conference call are in RMB. 01:28 I would now like to turn the call over to our Chairman and Chief Executive Officer, Mars Cai for the business and operation highlights.

01:37 Thank you, Hansen. Good day everyone, welcome to our 2021 fourth quarter and full-year earnings call. We are pleased to announce fourth quarter results above our guidance with revenues reaching over RMB836 million for the fourth quarter of 2021, despite the continuous negative impact of COVID on our operations. During the fourth quarter a number of regional COVID outbreaks just to name a few Chengdu in November, which resulted in a 41% decline in revenue during the 15-day period after the initial case. Sichuan in December, down 59%, Ningbo in December was down also 57% and Dalian in November, down 53%, continue to bring challenges to our operation. 02:35 This COVID outbreaks are generally followed by significant drop in offline foot traffic as people are more likely to stay at home and due to containment measures implemented by the government. Although these regions do recover once the outbreak is contained, it generally takes anywhere between one to two months to fully normalize depending on the scale of the outbreak. The higher frequency and larger scale occurrence of outbreaks are resulting in a general decline in offline user traffic across the board in impacted regions, but most notably in the entertainment, hospitality and transportation categories which declined year-over-year by 24%, 25% and 27%, respectively, in terms of the average revenue per POI. 03:35 During the fourth quarter of 2021 same-store revenue decreased by approximately 30% year-over-year as a result of these outbreaks. Based on industry information, even KA brands in the chain restaurant, hospitality and entertainment industries were significantly impacted during the quarter, although to a lesser extent, compared to a smaller brands. As we continue to face the increasing headwinds from larger and higher frequency regional COVID outbreaks, we are actively implementing measures to lessen our exposure to such…

19:41 Thank you, Mars. Now let me walk you through the fourth quarter and the full-year 2021 financial results in greater detail. For the fourth quarter of 2021, revenues were RMB836.2 million, representing 9.7% year-over-year decrease. Revenues from mobile device charging business was done 9% to RMB812.1 million and accounted for 97.1% of our total revenues for the quarter. The decrease was primarily attributable to the impact of COVID-19 during the fourth quarter of 2021. 20:20 Revenues from power bank sales were down 25.7% year-over-year to RMB18.9 million and accounted for 2.3% of our total revenues for the quarter. The decrease was primarily attributable to the impact of COVID-19 during the fourth quarter of 2021. Other revenues were down 34.7% year-over-year to RMB5.2 million and accounted for 0.6% of our total revenues. The decrease was primarily attributable to the decrease in user traffic as a result of impact of COVID-19 during the fourth quarter of 2021. 21:03 Cost of revenues was up 39.7% year-over-year to RMB154.1 million for the fourth quarter of 2021. The increase of cost of revenue was primarily due to the increase in operational scale resulting in increase in maintenance cost and depreciation. Gross profit was down 16.4% year-over-year to RMB682.1 million for the fourth quarter of 2021. Operating expenses for the fourth quarter of 2021 was RMB731.5 million, up 5.2% year-over-year. Excluding share-based compensation, non-GAAP operating expenses were RMB744.4 million, representing a year-over-year increase of 5.5%. 22:00 Research and the development expenses for the fourth quarter of 2021 was RMB23.6 million, up 15.5% year-over-year. The increase was primarily due to the increase in personnel related expenses. Sales and marketing expenses for the fourth quarter of 2021 was RMB704.3 million, up 4.2% year-over-year. The increase was primarily due to the increase in personnel related expenses and the…

28:57 [Operator Instructions] Our first question comes from Vicky Wei with Citigroup. Your line is open.

29:30 Good evening management and thanks for taking my question. So would management share some color on the latest competition landscape during the tough macro conditions? Does management witness any escape of other players or consolidation in the industry? Any color for the industry outlook would be great. Thank you.

29:54 Thanks for the question. As I mentioned, the competitive landscape has really started to ease down starting in the second half of ‘21. We are seeing a number of our peers scale down their direct model and aggressively cutting down their business development personnel. Similar to what happened in early 2020 when the COVID first broke out. It was also during that time when Energy Monster was able to quickly increase its market share. This current shift in competitive atmosphere has resulted in less competition across the board for new locations. And we are seeing a continuous decrease in incentive fee rates for new signings. 30:44 For energy Monster, we continue to maintain a strong cash flow and cash reserve and we strive to deliver long-term results to our stakeholders. That's what we will continue to maintain, our direct model at it's current stage. We believe that the direct model's ability to quickly execute the expansion of our POI network and advantage in acquiring KA brands will be a key differentiator, both during and post COVID. 31:18 On the other side of the equation is our network partners. We continue to quickly acquire new high-quality partners as well as providing additional support for their operations. Our new cabinets in mid-2022 will greatly enhance our ability to acquire new network partners as it reduces their payback period. Overall, I believe our core strategies and measures taken will collectively define our competitive advantage. 31:51 In terms of consolidations, we continue to increase our market share in 2021 and we will continue to do so this year. We see that a number of players are scaling down and especially they are direct operation. This is an opportunity for us to further expand our market share, especially given our strength in both the direct and network partner mode. We believe once COVID outbreaks slows we will be best positioned to gain additional market share. Thank you very much.

32:26 Our next question comes from Charlie Chen with China Renaissance. Your line is open.

32:32 Thank you management for taking my questions. I have a question about the COVID situation. So how does the management view the current COVID situation in China, and going forward into 2022? What's the impact going forward? And if the outbreak continues for like, mid or long duration, so how would that -- how would company adjust your strategy or tactic to battle against the situation? 33:00 And also can you share with us some of your developments outside of your energy renting business, like, more a new business initiatives and other things, can you share with us some color on that? Thank you.

33:16 Sure. Thank you for the question. Yeah, I should say, we are ready. We currently prepare ourselves for all scenarios with COVID from short-term to long run. While we don't expect this to last for the longer term for sure, we still have to be prepared, namely, we have to continue to expand our location networks so that our service can reach more customers throughout China. To do so, we will leverage both our direct and network partner models to quickly expand our presence in both existing and new regions. 33:52 We will also open up more regions to both the direct and network partners in order to further extract the potential of each region and improve our market share. We are also implementing a number of new measures that help us reduce our fixed expenses. Things such as the improvements of our asset utilization through both the power bank optimization programs, as well as the capital cost reduction and the transition away from the fixed incentive fees will all improve our operations, especially during period of external impact. These adjustment will help us mitigate COVID-related impact in the long run. 34:39 As for the new business segment, we continue to actively explore opportunities in a number of different sectors. We will disclose more additional information once our new segment reaches more meaningful scale. Thank you.

34:58 Our next question comes from Lucy Li with Goldman Sachs. Your line is open.

35:04 Thank you, Mars and Maria. So related to the previous question on COVID situation, can management also share with us what the current outlook for 2022 in terms of revenue, profitability and operating metrics? And maybe more color on the near-term in the first quarter as well?

35:32 Thank you. Yeah, I wish I could, honestly. But I have to -- I mentioned that, it is important to note the COVID outbreak is the most significant factor negatively impacting our operations in terms of revenue, profit and operation metrics. Say for revenue, the decreased foot traffic to offline locations as a result of the outbreak results in people more likely stay at home and tempory COVID protocol implemented by the government. And when the top line is impacted, the fixed cost will take a larger portion for sure, that will affect the bottom line. That's why we strive to push the efficiency everywhere. 36:16 And for the operation -- operating metrics, COVID impacts to their. The offline sector results in higher closure rate of smaller location partners. At this time, I have to say what we are going to focus is to get ready. So I think we're ready. We are unable to provide guidance on revenue and profitability, operating metrics for the full-year 2022, because it is impossible to predict the frequency and size of the COVID outbreaks in any given time period. We have to prepare ourselves at all time for all COVID scenarios. That's why we continue to focus on strengthening Energy Monster core advantages so that we can better navigate ourselves during the COVID outbreaks and increase our market expansion rate. Thank you. 37:13 And then I'll move to Maria for the guidance part.

37:17 Thanks, Mars. I would like to share you more recent trend about our first quarter. The increase of frequency and set of impact of this outbreak continue to generate hiring in during the first quarter of 2022. For example outbreaks in Xi'an, Tianjin, Zhuhai in January, Chengdu, Suzhou, Wuhan in February resulted in the decline ranging between 20% to 70% in the weeks following the initial case, when compared to the normalized level. 37:49 The most recent outbreak in the past week in Shanghai is also resulting in a significant drop in our revenue within the region. This external factors continue to impact our asset efficiency, resulting in around 20% decline in revenue per power bank. However, we remain confident in the long-term development for both Energy Monster and the mobile device charging service industry. Thank you for your question.

38:22 We are now approaching the end of the conference call. I will now turn the call over to Energy Monsters CFO, Maria Xin for closing remarks.

38:33 Once again, thank you for joining us today. Please don't the 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.

38:49 Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.