Hello and thank you for standing-by for Energy Monsters 2022 Fourth Quarter and Fiscal Year 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. 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. Welcome to our 2022 fourth quarter and fiscal year earnings conference call. Joining me on the call today are Mars Cai, Energy Monsters 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 fiscal year 2022. 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. 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 Chief Executive Officer, Mars Cai, for the business and operation highlights.

Thank you, Hansen. Good day, ladies and gentlemen, welcome to our 2022 fourth quarter and full year earnings call. I would like to start-off with an overview of 2022. Last year and during the overall pandemic since 2020 the outbreaks of COVID had a significant impact on offline traffic causing a drastic reduction in number of people moving around the public spaces. It was a period of significant challenge for our industry and a number of other offline retail related industries as COVID resulted in implementation of measures that caused the reduced mobility of the population. With the mobility of offline food traffic being single largest factor determining the result of our operation, COVID has significantly impacted us both in terms of scale and profitability. In the fourth quarter of last year, the impact of COVID continues to affect our operations due to quarantine and lockdown measures which resulted in a decline of revenue per power bank as well. October and November several regions experienced notable COVID outbreaks including Beijing and Xi'an starting from early October, Tongxin from early November, Chengdu from mid-November and Changchun from late November resulting in week-over-week GMV declines of 44%, 34%, 61%, 27% and 34%, respectively. When compared to the week prior to the outbreak. Countermeasures against outbreaks directly impact the amount of food traffic passing our cabinets each day, reducing the revenue efficiency of our cabinets and power banks and increasing the closure rate of location partners. Although these outbreaks have been less severe than those experienced in Shanghai and Beijing during the second quarter of last year, the frequency of these outbreaks has increased throughout the fourth quarter continuing to weigh down our operational and financial performance. Shortly after the lifting of containment regulations in December, there was a massive surge in infections…

Thank you, Mars. Now let me walk you through the fourth quarter and the full year 2022 financial results in greater details. For the fourth quarter of 2022, revenues were RMB 595.6 million, representing a 28.8% year-over-year decrease. Revenues from mobile device charging business was down 29.5% to RMB 572.7 million and accounting for 96.2% of our total revenues for the quarter. Revenues from power bank sales were down 20.1% year-on-year to RMB 4.1 million and accounted for 2.5% of our total revenue for the quarter. The decrease was primarily attributable to the impact of COVID-19 during the fourth quarter of 2022, which resulted in a significant decline in general offline food traffic in China due to COVID-19 restrictions and infections in certain regions of China. Other revenue were up 49.4% year-on-year to RMB 7.8 million and accounted for 1.3% of our total revenues. The increase was primarily attributable to the increase in advertisement efficiency and new business initiatives. Cost of revenues were down 8.5% year-on-year to RMB 141 million for the quarter of 2022. The decrease was primarily due to the decrease in maintenance costs, accessory costs and the cost of the power banks sold, which was partially offset by the increase in depreciation cost. Gross profit was down 33.3% year-on-year to RMB 454.7 million for the fourth quarter of 2022. Operating expenses for the fourth quarter of 2022 was RMB 688.6 million, down 8.4% year-on-year. Excluding share-based compensation, non-GAAP operating expenses were RMB 381.3 million, representing a year-on-year decrease of 8.5%. Research and development expenses for the fourth quarter of 2022 were RMB 15.6 million, down 34.1% year-on-year. The decrease was primarily due to the decrease in personnel-related expenses. Sales and marketing expenses for the fourth quarter of 2022 was RMB 635.2 million, down 9.8% year-on-year. The decrease…

[Operator Instructions] Our first question comes from Vicky Wei from Citi. Please go ahead.

Thanks management for taking my question. Given the current positive trend, can the management share if the company has a real revenue guidance? And will the company be able to gain profitability in 2023? And if so, what is the target margin? Thank you.

Thank you for the question. 2023 has definitely started for a positive fleet for us. We are seeing clear year-on-year growth starting in February, and the growth rate is increasing each month. Well, we do not have better transparency. We do have a better transparency on revenue compared to during the pandemic. We currently will now provide a round guidance for the whole year. However, based on the current trend, we expect a strong rebound in terms of our revenues and GMV this year. So as of your question on profitability, we have started to reach the breakeven point in March, given that so far, GMV year-on-year growth rate in April have been even higher than March. We currently believe if no other external impacts, we are on track to regain profitability for the full year 2023. Again, this is based on the current trend of the company, which may be subject to change. Thank you.

Thank you.

[Operator Instructions] The next question comes from Charlie Chen from China Renaissance. Please go ahead.

Thanks management. Thanks a lot for taking my question. I have two questions here. First, can management share a bit more on the difference between the current market and that of before COVID? Has there been any significant changes in terms of user habits or maybe POI competition? My second question is regarding the two models. Since the recovery process is already relatively clear, how would the company balance between the two models in the future? Thanks.

Thanks, Charlie. Excellent questions. For the first question, our user behavior in terms of ASP has stayed relatively the same. The usage rate of our power bank continues to increase, but have yet to recover to the pre-COVID levels. There is an interesting differences in user behavior, and it's that it is that users tend to go out a bit less during the weekday, but more frequently during the weekend. We believe as people adjust to the complete opening up of the offline economy, this gap between will gradually normalize to pre-COVID levels. As for POI composition compared to pre-COVID, restaurants and shopping malls both increased as a percentage of total POIs, while entertainment and hotel POIs decreased. As for balancing between the two models, our approach is exactly designed for that. Our direct model will be more focused on higher tier cities and large KAs, while our network partner model will complement our direct model to capture the rest of the market, this approach has worked quite well during COVID time. And we continue to leverage this approach because we are the only player within the industry with a full-scale direct model team and also work with the highest quality partners for network partner model. We do believe that the scale and efficiencies of our two models lead the industry and will be a driver in increasing our market share in China's mobile device charging service industry. Thank you.

We are now approaching the end of the conference call. I will 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 for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.