Hello and thank you for standing by for Energy Monster’s 2023 First Quarter Earnings Conference Call. At this time, all participants are in a 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, Director of Investor Relations, Hansen Shi. Please go ahead.

Thank you. Welcome to our 2023 first quarter earnings conference call. Joining me on the call today 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 first quarter of 2023. 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 Chief Executive Officer, Mars Cai, for the business and operation highlights.

Thank you, Hansen. Good day everyone. Welcome to our 2023 first quarter earnings call. We are delighted to announce a strong 2023 first quarter results with both revenues and profitability making strong recoveries both on a year-over-year and quarter-over-quarter basis. Revenues increased 11.6% year-over-year as the challenges that impact the mobile device charging service industry in the past few years' subsides. The rapid recovery of the food traffic is cleared throughout the first quarter. In the month of February – in January, February, and March of 2023, our mobile device charging service GMV increased by 3%, 14%, and 34%, respectively, driven by the sequential recovery in revenue per power bank. By March, we believe that the vast majority of the impact from COVID on offline food traffic has recovered making the official turning point as we head back to normalization. In the first quarter of this year, mobile device charging service GMV increased by 16% year-over-year and 35% quarter-over-quarter. These recovery towards normalization are significant, and [spend] [ph] 1:40 from drivers across the board. Recovery can be seen across all city tiers and all POI types during the first quarter. First tier cities saw a year-over-year growth in GMV of 24%, while all the rest of other city tiers, 15%. In terms of POI types, GMV of retail locations restaurants and transportation hubs increased by 25%, 19%, and 44% year-over-year, respectively. This robust growth across the board reflects the recovery in the industry, driven by the restoration of food traffic, as well as our team's dedication to excellence in increasing Energy Monster’s coverage. As the impact of pandemic decreases, our profitability has also made a significant recovery. The recovery in revenue allows us to reach a scale that can better cover fixed costs. Our non-GAAP net profit for the quarter…

Thank you, Mars. Now, let me walk you through the first quarter 2023 financial results in greater detail. For the first quarter of 2023, revenues were 822.8 million, representing 11.6% year-over-year increase. Revenues from mobile device charging business were up 10.7% to 796.5 million and accounted for [96.6%] [ph] of our total revenue for the quarter. The increase was primarily due to the general recovery in offline food traffic in China during the quarter. Revenues from power bank sales were up 43.7% year-on-year to 18.6 million and accounted for 2.3% of our total revenues for the quarter. The increase was primarily due to the general recurring in offline food traffic in China during the quarter. Other revenues were up 52.8% year-over-year to 9.8 million and accounted for 1.2% of our total revenue. The increase was primarily attributable to the increase in advertisement efficiency and new business initiatives. Cost of revenue was down 0.1% year-on-year to 127.4 million for the first quarter of 2023. The decrease was primarily due to the decrease in maintenance costs and disposal cost, which was partially offset by the increase in depreciation and the cost of power banks sold. Gross profit was up 14.1% year-over-year to 695.4 million for the first quarter of 2023. Operating expenses for the first quarter of 2023 were 711.2 million, up 0.3% year-over-year. Excluding share-based compensation, non-GAAP operating expenses were 704.9 million, representing a year-over-year increase of 0.4%. Research and development expenses for the first quarter of 2023 was 21.4 million, down 20.8% year-over-year, the increase was primarily due to the decrease in personnel-related expenses. Sales and marketing expenses for the first quarter of 2023 were 665.3 million, up 0.8% year-over-year. The increase was primarily due to the increase in incentive fees paid to network partners, which was partially offset by…

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

Good evening, management. Thanks for taking my questions. So, I have one small question. So, given the current positive recovery trend that you have seen, would you please provide some color about the outlook for the second quarter and for the whole year, for example, in terms of revenue and margin profile? Thank you.

Thanks for your question. The first quarter's recovery trends will continue as we [head back] [ph] towards normalization during the second quarter of 2023. In April, mobile device charging service GMV increased by 64% year-over-year and [59%] [ph] in May. We are also able to reach new historical highs during the Labor Day first of all, in early May. That's why we are optimistic about the overall recurring during the second quarter of 2023, given the current trend. In terms of our net margin, we have regained probability this quarter. We are confident that going forward, we will be profitable for the full-year 2023 based on the [indiscernible]. Thanks.

Thank you. Your next question comes from Violet Yi with China Renaissance. Please go ahead.

Hi management. Thanks for taking my question and congratulations on the recovery for the quarter. So, I have a question on the POI count for the quarter. It seems like the overall growth in POI is lower than previous quarter. Can management share the exact reason for the lower than usual growth and possibly provide any guidance on POI target by the end of the year? Thanks.

Thank you for your question. It's a very good one. Actually, this quarter is a bit special because it is the first quarter coming out of the COVID control, because of the lower than usual food traffic in China in the past years, a number of locations under the direct model will enable to meet the revenue standards of our operation before COVID. That's why in the first quarter of this year, we've made an adjustment of our POIs under the direct model as the offline food traffic in China continues to normalize. We actually removed approximately 100,000 POIs under the direct model that are considered in our system to be underperforming during the normal food traffic levels. This move has lowered the number of POIs under the direct model as of the end of the first quarter of this year. However, we believe that this adjustment is really needed as we fully emerge from the impact of COVID and position ourselves for the future. As for the POI target for the end of the year, we do not offer any specific guidance on the POI given that our approach to POI is market driven, meaning that we expand into POIs only if they fit the standards of the company. On the other side, I [will say] [ph] something very positive. Even with the lower – huge growth of POIs, we see the demand of users is strong. We have 1 million POIs. And also, we acquired about 13.5 million accumulated users – registered users for the first quarter that brings number up to 347.2 million as of the end of the first quarter. So, we see that this adjustment of the POI will make the direct model more healthy. And also given the POI location expansion, we see more users coming to the services, which also shows a very strong recovery of the demand in the market. Thank you very much for the question.

Your next question comes from [Victor Tang] [ph] with Goldman Sachs. Please go ahead.

Thank you management. Can management provide a bit more insight on the competitive landscape in-light of the recovery in the industry? Are we seeing more competition? I also have a quick question on the POI for network partner model. Is there any growing trends of network partner model contributing going forward? Thank you.

Thanks a lot for the great question. From our perspective, the competition is actually a lot less intense in the first quarter. Even after the general recovery, this is a bit counterintuitive, but the general landscape of the industry has changed a lot in the past few years. Let's see before COVID, a number of our peers in the industry and Energy Monster relied heavily on the direct model. Competition tends to be higher where all of the players within the industry are expanding using the direct model. However, during the COVID, most of our competitors shipped almost completely to network partner model, while we maintained our strong direct model capabilities. The current industry landscape is a lot different because of the general shift towards the network partner because network partners are profit-driven. That's why we are not seeing an uptick in incentive fees for the new signings in the first quarter. So, I see the competitive landscape is not as strong as usual before COVID. As for your question on the network partner model, our network partner model continues to be the main driver of the growth of the POI account during the first quarter, mainly because of the increase in network partners count in the past year. Because of this significant increase, one of our main goals this quarter and this year actually is to work alongside our network partners to operationally support them so that they are able to grow alongside us. At the same time, we expect the number of POIs operated under the network partner model to continuously grow but the increase in percentage of POI managed under the network partner model, this quarter is mainly because of the adjustment in our direct model POI portfolio. Going forward, we will continue leveraging our both models to expand our network coverage and further increase our market share within the industry. Thanks a lot.

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