Hello, ladies and gentlemen, thank you for standing by for 36Kr Holdings Incorporation's First Quarter 2021 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 call is being recorded. I will now turn the call over to your host, Jing Li , IR Manager of the company. Please go ahead, Jing. Thank you.

Thank you very much. Hello, everyone, and welcome to 36Kr Holdings' first quarter 2021 earnings conference call. The company's financial and operational results were released earlier today and have been made available online. You can also view the earnings press release by visiting the IR section of our website at ir.36kr.com.

Thank you. Hello, everyone. Thank you for joining us today. As we venture further into 2021, China's economy is gearing up for a new normal as we steadily emerges from the COVID-19 pandemic. In this context, we are stepping regaining growth momentum and fixing our core competitors as the leading platform for new economy growth focus business content and service offerings in China with continued long-term investments and our content production and technology. We believe we are well-positioned to see the immerse commercialization opportunities in the digital transformation of traditional enterprises. The rise of enterprise service markets, the further integration of private equity and public equity markets. As it ship to work shop from video across digital counter industry for the unlocking -- for the unlocking values public customers, users, and investors. During the first quarter events again delivered record steady performance in total user traffic with average monthly PV jumping to a new high of 829.3 million, representing a 75% year-over-year increase and the 32% sequential climb. This dramatic represents fourth consecutive quarter of PV growth, underscoring our exceptional ability to generate new economy content appealing to a broader and growing audience base.

Thank you, Paul and hello everyone. Our first quarter results got the year off to a solid start. As Paul mentioned earlier, the rebound in market demand and being a strong 58% year-over-year growth in our advertising revenues in the first quarter. Also, as we continue to shift our resources and focus towards higher margin businesses, we saw substantial year-over-year increase in both gross profit and gross profit margin. In addition, net loss, net order substantially in this quarter compared to the same period of last year. Going forward, we remain dedicated to building on our content strength and growing monetization channels to seize immense new economy opportunities. Now, I'd like to walk you through more details on our first quarter of 2021 financial results. Online advertising services revenue increased by 58% to RMB33.2 million in the first quarter of 2021 compared to RMB21 million in the same period of last year. The increase was primarily attributable to the strong recovery and growth of market demand in the first quarter of 2021. Enterprise value-added services revenue were RMB6.9 million in the first quarter of 2021 compared to RMB42.8 million in the same period last year. The decrease was primarily because we continuously shifted our focus toward higher margin businesses, and starting from this quarter, we cease to act as a principal in certain low gross margin businesses and the only active as an agent. As a result revenues of such businesses were recognized on net basis from this quarter onward.

Thank you. Thank you. We have the first question from the line of Vincent Yu from Needham & Co. Please go ahead. Vincent, your line is open. You can ask your question now. Once again, Vincent from Needham & Company, your line is open. You can ask your question now. Thank you.

Thank you management for taking my question. I have question -- I have two questions. First question is, can you able to share the comment on overall market recovery in first quarter 2021. And have we seen any chance that we can share for the rest of the year? And so, second question is, can you share a comment on the clients spend with 36Kr? It was mentioned that some international clients have reduced their spending, have they -- have returned and how all spending, and engagement by client this quarter? Yes, thank you, management.

As the worst of the pandemic appears to be behind us, we are seeing solid economic recovery and gradual improvement across various industries. More specifically, a few new economy companies spearheaded the growth in the aftermath of the pandemic. As such our advertising business gathered strong momentum in the first quarter with year-over-year revenue growth of 58%. Our advertising services for our new economy customers continue to grow both in terms of number of advertising customers and average revenue per advertising customer. And we achieved more than a hundred percent growth each in advertising services for several verticals, such as consumer and lifestyle, e-commerce, artificial intelligence and healthcare. In particular advertising services for healthcare customers delivered explosive growth. We're actively managing to tap into rising opportunities in the artificial intelligence and healthcare space and brand new customers. And looking forward to 2021, we expect advertising demand from branded customers, especially in multinational brands to increase compared with last year. Okay. I'll do a quick translation. With categories, our advertising customers into traditional customers and new economy customers, the multinational companies accounting for the majority off traditional customers. In the first quarter we saw average revenue per traditional customer increased 11% year-over-year. Since the first quarter is traditional slow season for advertising demand. We expect the average revenue per traditional customer to see substantial year-over-year growth in the following quarters. And along this global recovery from the pandemic, we saw advertising demands from multinational customers rapidly rebounded. We also saw a stronger growth in advertising needs from domestic new economy companies, such as both in the new customer and add sections. Meanwhile, we are making progress in improving our advertising products, such as video advertisement to attract more customers. Some consumer brands have 36Kr interest in this kind of product as they let reach to more new customers risk order to 36Kr video content. In addition, customers who are rebuilding their brands expect to complete a transformation of brand identity by leverage 36Kr video advertising products. In this regard, 36Kr has become a important partner for traditional brands that are in their transition towards new economy companies.

Thank you.

Thank you.

Thank you. We have our next question from the line of Joan Bing from Credit Suisse. Please go ahead.

Thank you. Good meeting the management. I have a question here on behalf of Kevin. Can you comment for this quarter's gross profit margin in relation to the business change nature and also the outlook for the GPM income in 2021, because I understand that they've changed the accounting recognition to the net basis and also the business for is shifting from . Thank you, management.

Hi, Joan. This is Lynn. I will take your questions. Yes. You can see that our Q1 gross margin actually was substantial increase compared to the same time last year our gross margin climb to 54% this quarter compared to 8.4% last year. I think there are a couple of reasons here. First of all, obviously, we have been shifting our focus towards higher margin businesses that was said earlier, and also we implementing some cost control measures. So, this helped our gross profit and gross profit margin to increase. And secondly, as you also mentioned that starting from this quarter, we starting -- net revenue for our enterprise value-added services. So this will not affect our gross profit, but it will definitely help increase our gross profit margins to some extent. And I also want to highlight that as you mentioned, yes, we changed the revenue recommendation for our enterprise value-added services revenue from this quarter onward. And actually if you take that into consideration and if you do the math, you will see that our overall business trend is upward compared to the same period last year and have demonstrated solid growth. And the reason we explained in our earnings release as well as in our prepared remarks is because we shifted our focus on resources to higher margin business. So as a result for some lower margin businesses, we only act as an agent and where previously we act as a principal in these businesses. That's why we started to recognize net revenue for those businesses. And also for your question on the outlook of gross margin trends for the remaining -- remainder of the 20 -- year 2021, I can assure you that our gross margin will be on a continuous improvement trend for the rest of the year. Hope this answers your question. Thank you.

Sure. Thank you. That's really helpful.

Thank you. We have our next question from the line of from CICC. Please go ahead.

Okay. I'll translation myself quickly. Can the management share more color on the details and strategy of the new products such as enterprise service review portal. Thank you.

Okay. I will do a quick translation. Our enterprise service review portal has been our latest temp in the field of enterprise value-added services. We better launched -- last year B2B additional definition to discover and select enterprise services in China. The review portal has showcased more than 3000 enterprise service applications, mainly in the field of BI, CRM and the collaborative posts. This year, we expect more enterprise service suppliers to come to our platform. By addressing enterprises, this whole transformation demand we aim to further leverage our stellar brands, high quality content offerings, and data insights to provide enterprise service providers with a platform to approach our customers. Thank you.

Thank you. Thank you very much.

Thank you. Can we move to the next question?

Yes, please.

Thank you. We have the next question from the line of Jay Dagang from T.H. Capital. Please go ahead.

Yeah. Thanks management for taking my one question. I have one question here. How is the process of product? Thank you.

We recently launched a brand new public equity markets production providing spot for working editorial and commentary. Insightful analysis reports and premium offline activities to participants in the public equity markets, including pre-IPO companies, listed companies, firms and securities companies. Our public equity markets product has gained popularity since its launch, which proves our ability to drive growth in this promising future and we are confidence this new product will become a classic product in content that's the risk offering, which strengthens our current content and service offerings in the private markets and extend to a broader field. We believe in the great potential in the public equity markets. Thank you.

Thank you.

Thank you. Can we move to the next question?

Yes, please.

Thank you. We have the next question from the line of from Industrial Securities. Please go ahead.

I will translate my question. Management, I have a question about business. Could you explain more about monetization progress by the new infrastructure? And is it the combination advertising and enterprise service? Thank you.

I'll do a quick translation. We launched our short-form video initiative within a year. And we are happy to see that we are getting growing number of followers, our accounts on Bidibidi, Douyin and recently in . I share some numbers of our current short-form video. During the first quarter, our self operated video content gained over 4.4 million followers on the third-party traffic platform at the end of first quarter up 53% sequentially. We attracted more than 647,000 followers Bidibidi with our video content gathering over 60 million total views. On Douyin our Kr finance account attracted around 3.6 million followers, spread about our high performance training, video content. And recently we also created content distribution account on And currently, we have cooperated with some elite print for example, like, Yili, Huawei and HP and our current marketing service model while our short form video is mainly advertising, but, we will expand our current sources to a more comprehensive services, including Trini and contest our customers to better serve their needs in this new economy content space. Thank you.

Thank you.

Thank you. Our next question comes from the line of Brain Lee from AMCD. Please go ahead.

Hello. Thanks for taking my question. I want to know all about the enterprises services. How the progress of your offline activities and which industry will be the most attracted or the popular this year? Thanks.

Okay. I will do a quick transition. Our offline events recovering readily. Recently in May we successfully hosted China Fund Partners Future Summit in the 2021 Wise Innovation Leader Conference in Shenzhen where we discussed investments and financing trends in the private and public equity markets after our latest industry trends in three major fields, including 5G technology, new costumer and healthcare. The also made events successful via live stream and received a positive feedback and recognition from many events attendees. We see various sectors taking up digital transformation, including digital information, digital merchandise, digital service, and digital benefits. We think within the next 20 years, most of the business activities will be eventually go digital. As broader, this investment go digital. It will generate tremendous opportunities. Moving to the hot industries, we think a new costumer is most health industry, and has gained great -- attract all the potentials from -- attention from the capital and also 5G technology, healthcare -- new healthcare and new infrastructure -- healthcare again, attention across capital markets. 36Kr stands out the frontier of new economy focus information, and it remains committed to providing more readily to new economy with high quality content offerings and value-added services. And we think we can provide better services to our clients, our customers in the new economy business space. Thank you.

Thank you. Thank you so much.

Thank you. As there are no further questions now. I would like to turn the call back to company for any closing remarks. Thank you.

Thank you once again for joining us today. If you have further questions, please feel free to contact 36Kr's Investor Relations, so the contact information provided on our website.

Thank you. This concludes today's conference call. You may now disconnect your line. Thank you.