Hello, ladies and gentlemen. Thank you for standing by for 36Kr Holdings Inc. Second Quarter 2021 Earnings Conference Call. Today’s conference call is being recorded. I’d now like to turn the call over to your host, Yang Li, IR Manager of the company. Please go ahead, Yang.

Thank you very much. Hello, everyone and welcome to 36Kr Holdings second 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. Participants on today’s call will include our Co-Chairman and CEO, Mr. Dagang Feng and our Vice President of Finance and Capital Markets, Mr. Lin Wei . Mr. Feng will start the call by providing an overview of the company and performance highlights of the quarter in Chinese, followed by English translation. Ms. Wei will then provide details on the company’s financial results before opening the call for questions. Before we continue, please note that today’s discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Legislation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company’s results maybe materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company’s prospectus and other public filings as well with the U.S. SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please note that 36Kr’s earnings press release and this conference call includes discussion of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. 36Kr’s press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures. Also, please note that all amounts are in RMB. I will now turn the call over to our Co-Chairman and CEO, Mr. Dagang Feng. Feng, please go ahead.

Thank you. Hello, everyone. Thank you for participating in our 2021 second quarter results conference call. In the second quarter of 2021, we continue to enhance content quality and influence while strategically focusing on enterprise services as our growth driver. These efforts broadened our new economy-focused content offerings and value-added services further developing our core competencies and spearheading business innovation. We have made robust progress in content arrangements with diversified presentation from us to meet the needs of varied user groups. We are also exploring possibilities for innovative services. Moreover, our progress in products and technologies is paving the way for us to empower the growth of new economic participants as well as the digitalization of traditional industries creating a compelling value proposition for more customers, users and investors in this new area of fresh opportunities and challenges. Our second quarter user traffic volume reached a new high of average monthly page views of 846.3 million, up 17% year-over-year. The second quarter of 2021 marks our 17th consecutive quarter of PV growth, reaffirming our strong user resonance and our growing brand awareness. The rising popularity and recognition of 36Kr’s content and platforms largely stems from our continuing innovation in flexible content formats, omni-channel content distribution and our ingenuity in broadening our horizons. Let me walk you through our progress and our strategy in each of these areas. First, with respect to content strategy, we present content in various formats across a wide range of business sectors to address the full spectrum of user demand. Our proprietary platform delivers comprehensive reports and insights across those professional and user-generated content or PGC and UGC. In addition to traditional tax and image format, we have expanded our offerings to audio, short video and live running, etcetera covering that users for – users feedback…

Thank you, Paul, and hello, everyone. We are pleased to have achieved a set of solid financial results in the second quarter of 2021 with a strong year-over-year growth across all of our business segments on a comparable basis. Notably, as Paul just mentioned, our advertising revenues increased by 65.1% this quarter compared to the same period of last year, demonstrating sustained user engagement and customer interest in our premium content and service offerings. Also, thanks to our continued efforts to provide customized and innovative services revenues from our enterprise value-added services more than doubled sequentially and its grand transacted value increased by 35.9% year-over-year. In addition, our commitment to maintaining efficient operations with an increased focus on higher-margin businesses is paying off, with our gross margin expanding to 57.4% from 29% in the same period of last year, and net loss narrowed by 56.8% year-over-year. Looking ahead, we believe we are well positioned to continue on this growth trajectory, serving new economy participants more effectively and expand our monetization channels to seize the vast opportunities ahead of us. Now I’d like to walk you through more details on our second quarter 2021 financial results. Online advertising services revenue increased by 65.1% to RMB51.7 million in the second quarter of 2021 from RMB31.3 million in the same period of last year. The increase was primarily attributable to the strong recovery of market demand as well as more innovative marketing solutions we provided to our customers. The number of advertising customers and the average revenue per advertising customer both achieved strong growth in the second quarter of 2021. Enterprise value-added services revenue of RMB14.3 million in the second quarter of 2021 compared to RMB42.6 million in the same period of last year. The decrease was primarily because we continuously shifted our…

Our first question comes from the line of Vincent Yu from Needham & Company. Please go ahead.

Thank you management for taking my question. I have three questions. The first question is, can management help us understand the impact on our client base as a result of regulatory crackdown on sectors such as online education platforms. My second question is in terms of our video content initiative, do we see any potential impact also from regulation on our video that could cause negative impacts on our ability to monetize these contents? And third question is can management help us break down our top three customers in terms of their respective industries. Thank you.

We embarked on our short-form video initiative because there is great potential in this market. Short-form video enabled users to acquire massive amounts of information efficiently a proud scenario in a timely manner. This better is deep and more popular especially among young people. Short-form video as an efficient dissemination channel will empower us to expand our end user base is digital high content and improved user mental capabilities. Regulations on short-form video are mainly focused on proper content teams, while our short-form video content focus on finance, business and personnel growth in line with national guidelines for regulations and short-form videos have no impact on us. We believe our content will always be supported by the country, even if offshore for video rollout in the future. In the second quarter, our top three customers for our advertising business were in the e-commerce and Internet industry, Alibaba, Baidu and Zhihu. Revenue generated from each of them didn’t reflect the significant proportion of the total advertising revenue. And actually, revenues generated from our top three customers only accounted for 37% of total ad revenue. In addition to the Internet and e-commerce industries, our customers also includes top-tier companies in industries such as artificial intelligence, entertainment and media, automobiles and transportation and consumption and less sales industries. Vincent, can you repeat your first question?

Okay. The first question is about the – in terms of the impact from the regulation crackdown on online education platforms.

So about the education industry impact on our advertising business, revenue from the education industry represents only a small proportion of our total advertising revenue or the education industry contribution to advertising revenue was 0.7% in the second quarter of 2021. And for 2020, quarter two is 1.7%. So therefore, the fluctuations in the education industry have a limited influence on our overall advertising revenue.

Okay. Thank you.

Our next question comes from the line of Shan Jiao from CICC. Please go ahead. Shan, your line is open, please go ahead. Shan please un-mute and go ahead. Alright. We are not getting response. I will move to the next question from from Industrial Securities. Please go ahead.

I will translate for my question. So, could you share some of your main strategies or specific approach to improve your ARPU of the online advertising business? And how long should we expect ARPU to return to the pre-COVID level? Thank you.

Actually, the output of our advertising has increased this quarter compared with the same period last year. For the volume half year remain improved ARPU to two ways was due to our content influence and brand premium, our publication price is rising slightly every year, which is conducted to improvement of the uplift. Therefore, we will continue to improve the quality of content and track more customers from various industries. Second, the rise of short video has greatly increased the growth potential of our ARPU. For example, our recent technology enterprise customer or a single short video advertising and cost are RMB2.25 million. And last quarter, we only have advertisement that cost RMB1 million. So short-form video content has natural advantages that is customer unit price as matched or even exceeds the commercial value of our retail accounts short time. So in the future, we will continue to use various modes to help customers upgrade and base marketing. In that case, the customer app will rest accordingly with the brand influence and marketing quality a return to the pre-pandemic situation, even higher the level before pandemic.

Our next question comes from Shan Jiao from CICC.

Thank you again.

I will translate myself quickly. What is the potential monetization space for the new products such as corporate service products. And what’s our strategy of this product in this year and in the long-term? Thank you.

Okay. Towards 2020, we launched our enterprise service the first comprehensive SaaS platform in China. As of today, the review portal has showcased for 100 enterprise service applications covering software across 15 industries and 20 categories. Additionally, we have received progress of real user comments and invite dozens of industry experts to join the platform, making the industry most comprehensive and standardized enterprise service digital-making platform. We plan to start with three monetization models. The first one takes commission fees from lead generation, which will account for the most significant part of the revenue. We believe our enterprise services review platform will provide our traffic, but finally that helps on a customer more positively. Meanwhile, we expect the cost of customer acquisition to decrease by at least 30%. This business model is similar to auto home of the automobile industry. And – so, of the medical and beauty industry. And the second is to provide marketing management services such as helping to manage enterprise accounts, ranking list, analytical reports of follower management’s votes on our review portal. And the third build the membership service system covering buy side and sell side that offers regular research reports. And this will have a six membership fee will be charged. And for this May, we already have a try on the commercialization. So, we have a SaaS company that gets some lease and we have a really high conversion rate that is 20%. So this is a really good result for us, and it’s better than the competitors in the same industry. And also, we acquired the customer at least much more cheaper than the others. So, we reliably will still refine the product systems or have some – try some better way of the commercialization path. So, the real – the true commercialization path is certainly will be launched at 2022.

Our next question comes from Jay Dong from TH Capital. Please go ahead.

Congratulations on strong revenues, how high operating lines progress in the second half of 2021? And how should we think about that makes an impact on offline events. Thank you.

Okay. So, in the second half of the year, we – it’s really – we will have a lot of the offline events. But we have already signed some collaboration agreements for offline meetings, and the epidemic will help us certain impacts on the holding of offline activities. We will take national policies and epidemic prevention control as the primary consideration. We will negotiate with our partner for delay. And so this impact of recent epidemic will have base impact on the third quarter and some activities may be delayed to the first quarter, but it’s not being canceled. So however, from the perspective of the six months or the half – the next half year, the impact will not be that much great. Also, the epidemic will also have some impact on some real economic entities to a certain extent. So, probably the online advertising revenue will fluctuate a little bit.

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

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

This concludes this conference call. You may disconnect your line now. Thank you.