Hello, ladies and gentlemen. Thank you for standing by for 36Kr Holdings, Inc. Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. Today’s conference call is being recorded. I will now turn the call over to your host, Tu-Cheng Wang , IR Manager of the company. Please go ahead, Tu-Cheng.

Thank you very much. Hello, everyone, and welcome to 36Kr Holdings fourth quarter and fiscal year 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 web section of our website at ir36kr.com. Participants on today’s call will including our Co-Chairman and CEO, Mr. Dagang Feng; and our CFO, Ms. Lin Wei. Mr. Feng will start with call by providing an overview of companies and the performance highlights of the quarter in Chinese, followed by English interpretation. Ms. Wei will then provide details on the company’s financial results before open the call for your question. Before we continue, please note that today’s discussion will contain forward-looking statements made under safe harbor provision of U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company’s results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties including in the company’s prospectus and other public filings as filed with U.S. SEC. The company does not assume any obligation to update any forward-looking statements except as required and applicable law. Please note that 36Kr earnings press release and this conference call including a discussion of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. 36Kr’s earning press release contains a reconciliation of unaudited non-GAAP measures to the unaudited GAAP measures. Please note that all amount numbers 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, and thank you for join our fourth quarter and fiscal year 2021 earnings conference call. 2021 has been an eventful year given the complex environment, a year we face both expansion opportunities and rising challenges. Despite the rapid global change, China’s new economy demonstrated a strong resilience and vitality, commitment to our mission of empower new economic participants to achieve more. We continue to witness as well as our company many new industries and verticals on their journey of development and expansion. In the meantime, 36Kr delivered a solid top line growth in 2021, with our total revenue reaching RMB370 million for the full year. Notably, we also achieved the quarterly profitability in the fourth quarter of 2021 for the first time in the past eight quarters. This robust financial results were driven by the significant accomplishment and breakthrough in many aspect, including content strategy, product development, platform refinement, branding influence and the monetization capability. In the fourth quarter, we delivered another record-setting performance in user traffic, with average monthly page views reached 850 million up to 35% year-over-year. This 15th consecutive quarter of the group demonstrated 36Kr unique leading position with new economy. The release of the blockbuster article such CTL crack in the trillion RMB battery in Kr. Corporate in TRG and intelligent hunters in internet giants and all use white paper stay up late is further evidence of the continued rise of our content influence. These articles attract widen attention and gain popularity with their premier quality. During 2021, near 700 piece of articles published on via WeChat official account has amassed over 100,000 review each, with some of them attract more than 200,000 views. Even more impressively, some of the financial articles achieved a phenomenal level of readership, over 300,000 review and…

Thank you, Feng, and hello, everyone. We are very pleased to report another set of solid financial results for the fourth quarter and fiscal year 2021, despite the intermittent resurgence of COVID-19 and the complex macroeconomic environment. We achieved strong growth across all three business segments on a comparable basis in fiscal year 2021, being worth with consensus on both the top line and bottom line. I want to highlight that our online advertising business grew 24% year-over-year, outperforming most of our peers in the industry. Most importantly, as we continuously improve our operating efficiency, we booked record high gross profit margin of 65% and a net income of RMB15.4 million for the fourth quarter of 2021, the first time of profitability in the past eight quarters. In addition, we ended the year of 2021 with a very strong cash position of RMB216.1 million as we generated a positive operating cash flow in both the fourth quarter and full year of 2021. When we venture further into 2022, we will continue to solidify our core strengths in content production and service offerings while expanding our monetization channels. We believe that we are well positioned to capture the vast opportunities in China’s new economy space and create greater value for our users, customers and shareholders. Now I’d like to walk you through more details of our fourth quarter and fiscal year 2021 financial results. Online advertising services revenue increased 10% year-over-year to RMB76.4 million in the fourth quarter and grew 24% year-over-year to RMB214.7 million for the full year of 2021. The increase was primarily attributable to more innovative marketing solutions we provided to our customers. The number of advertising customers and the average revenue per advertising customer both achieved growth in fourth quarter and full year 2021. Enterprise value-added services…

Thank you. The first question comes from the line of Jing Tang from CICC. Please ask your question.

I have two questions. The first is under the current macroenvironment, how do you view the advertising business in 2022? And my second question is, how did COVID-19 in March affect the company’s offline business in the first quarter? Thank you.

Thanks for your question. For your first question, I would like to say in 2021, advertising revenue grew 24% year-over-year, a relatively high growth rate compared to our peers. As the pandemic comes under control, I believe the economy will – as the pandemic come under control and the economy will gradually recover. And we believe the advertising industry will trend upward as well. From our perspective, our advertising growth mainly comes from two sources, the increasing number of advertisers and the steady growth of ARPU. 36Kr distribution channels became more diversified and target more niche markets and the new forms like short-form videos, we’re expecting both number of advertisers and ARPU will grows. We subsidized the branding advertising, which is currently by stronger leverage and less susceptibility to economy cycles. Therefore, our advertising business were least affected by the inflections in the economy. From the industry side, and it’s more depend on the pandemic situation. I guess I believe the new media will be better than the traditional media. That’s my opinion about the industry. About your second question, the pandemic will indeed impact our off-line events. However, we are planning to communicate with customers about the moving certain events online. We’re aiding the live streaming component, which will help alleviate the pandemic impact. From historical perspective, Q1 is not the peak season for offline events in any cases. So the pandemic should not have too great on impact on revenue. And we also may communicate with our customer about postponing their events. So that even if our Q1 revenue is affected by postponements, full year revenue will remain intact.

Thank you.

Thank you. The next question comes from the line of Peipei Qiu from Industrial Securities. Please ask your question.

I will translate my question. We know that companies start with new economy content, recently making a lot of assets to expand the content boundaries. Could you give us more color of what you’ve achieved? How would you maintain your competitive advantage in content might be? Thank you.

Thank you for the question, Peipei. Yes, you asked a very good question. Yes, in terms of content innovation and the production, we have been doing a lot of initiatives. First of all, we have been expanding our presentation format. For example, we previously only have tax flash information/news and pictures. Now we are expanding to more rich format, including short videos, audio formats as well as live streaming formats. That’s number one on the presentation formats. And number two, on our columns and content productions, we have mentioned in our prepared remarks that we now have many, many WeChat account metrics, including our 36Kr official account and 36Kr Pro and 36 Finance and the 36 – the secondary market WeChat accounts and 36 Research Institute, 36 Carbon and the Wave which target at the institution as well as all use, we’re targeting at the younger generation lifestyle content as well as super review. For example, we provide reviews for the 3C products as well as new consumption products. So overall, our presentation format as well as the coverage of the channels and the verticals are both expanding. That turns out into our commercialization. First of all, our short-form video contributed a lot to our commercialization. We are more – have more C end customers before than we – before, we only have a lot of B end customers, for example, Intel. Now we are expanding into Nike, P&G, a lot of – and the beverage brands. That’s our expanding the category of customers. So that helped us to increase our advertising customers as well as our ARPU. That’s why we are very confident. As Mr. Feng just mentioned, that we expect in 2022, both our advertising revenue as well as our enterprise value-added services revenue will both grow. And we expect we will achieve a full year profitability in 2022. I hope that answers your question, Peipei.

Very clear. Thank you.

Thank you. The next question comes from the line of Don Tang from T.H. Capital. Please ask your question.

Hi, management. Thanks for taking my question. I have a small question regarding margin. So the overall gross margin was a record high at 65%, up about 33 percentage points on year-over-year and nine percentage points quarter-over-quarter. So I wonder what’s the reason for this trends and how should we look at margin outlook in 2022? Thanks.

Thank you for your question, Don. That’s a very good question. Yes, our – for fourth quarter, gross margin of 65% is a record high actually in our history. That’s a very amazing gross margin level. The – actually, the year-over-year increase of gross margin, mainly because we recognize certain revenues on that basis. That gives us almost a 20% raise for gross margin. If you compare every quarter compared to the first three quarters of last year, we basically increased gross margin by almost 20%. That’s the main reason for year on – year-over-year improvement on gross margin. The quarter-over-quarter gross margin improvement mainly comes on the economy of scale, which, in other words, if you look at our revenue for the fourth quarter, due to seasonality, the fourth quarter is the strongest quarter for the entire year. So we achieved almost RMB120 million revenue, that’s a very high level. And our cost remain on a relatively stable level. That’s why you will have a leverage here, which we call it the economy of scale. That’s why, sequentially, our Q4 gross margin also increased a lot. And to a smaller extent, because some of our revenues, we recognize revenue on a cash basis out of prudential accounting policy. And due to our efforts in collecting account receivables, we have improved a lot in the fourth quarter. So before year-end, we collected some revenues on a cash basis that also were recognized in Q4, which we couldn’t recognize in the previous quarter. That also resulted in a higher gross margin in the fourth quarter. I hope that answers your question, Don.

Very clear. Thank you.

Thank you.

Thank you. The next question comes from the line of Lingyi Zhao from SWS Research. Please ask your question.

Thank you for taking my questions. I have two questions. One is Mr. Feng said that never to be a company that lives by advertisement. Currently, the ad business is still the core business of our company. How we see the potential of advertising business and other new business in the future?

Thanks for following my interview. I would like to say, I’m not the very big fan of the advertising business because no matter from the revenue scale and – or the gross margin, they have the limitation there. Of course, from our advertising business perspective, we are confident that in the future, we have at least 30% or 40% growth in the future. But I would like to say this, we would like to put more attention on our new business, like enterprise service review platform. Actually, in 2021, our advertising business and the value-add enterprise service accounted for 60 – 46.6% and 47.2% comparable of the GTV, respectively, which indicating a very healthy revenue mix. In the future, we’ll continue to build our second growth curve enterprise service – enterprise in the short – hope this revenue will be the important part of future revenue. And I – and we believe that, driven by the enterprise service review platform, 36Kr growth will continue upwards along the new curve. Thanks.

As a true provider in the enterprise service industry, what is the advantages of Kr enterprise service platform? Thank you.

Thanks for your second question. 36 to provide enterprise service review platform with three advantages. First, I would like to say is the – it’s the fairness and the objective our enterprise service review platform. And as independent platform, we especially valued authoritative user reviews, which not be . Compare with other large Internet companies with their own SaaS and cloud products, our enterprise service review platform can display user feedback on software application sale and impartially, enhancing decision make efficient for both the sales and the buyers. The second one is about ability and the awareness to serve customers. Then the third one, the last advantage is our completed product system. We originally saw the pinpoint for both seller and buyer in enterprise service market and start to build our presence earlier. Contents such as a software product library, user review library, key person database and knowledge maps contain the magical quadrants in our enterprise service software selection platform. I hope my answer is enough for you. Thanks.

Thank you. We do have any further questions?

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

Thank you, operator. Thank you again for joining us today. If you have any further questions, please feel free to contact 36 Investor Relations through the contact information provided on our website or TPG Investor Relations.

Thank you.

That does conclude our conference for today. Thank you for participating. You may all disconnect. Have a nice day.