Hello, ladies and gentlemen. Thank you for standing by for 36Kr Holdings Inc.'s Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's remarks, there will be a question-and-answer session. Today's conference is being recorded. I will now turn the call over to your host, [Indiscernible], IR Manager of the company. Please go ahead, [Indiscernible].

Thank you very much. Hello everyone and welcome to 36Kr Holdings third quarter 2023 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 Chief Financial Officer, Ms. 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 an English interpretation. Ms. Wei will then provide details on the company's financial results before opening the call for your questions. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor Provisions of the US 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 is included in the company's prospectus and other public filings as filed with the US 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 include discussions of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. 36Kr's earnings press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures. And 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. Pal, please go ahead.

[Foreign Language] Thank you. Hello everyone. Thank you for joining our third quarter 2023 earnings conference call. During the third quarter of 2023, we achieved solid progress across all of our business segments, propelling a year-over-year increase of 2.5% in total revenue as we consistently enrich our content ecosystem and so to diversify and expand our product and service offerings. We also deepened the integration of AI applications across our business and in evolution of generative AI and large language models. These synchronized endeavors have empowered great strides in our commercialization and further elevate our operating efficacy, effectively reducing overall cost to improve efficiency company-wide. I'd like to begin with a discussion of this quarter's content initiatives and advancements, followed by a more detailed look at our commercialization progress across each of our business segments. 36Kr's core competitive edge lies in our exceptional content creation partners. Through years of dedicated effort, we have cultivated an extensive portfolio of premium sub-vertical media. Our multidimensional content matrix covers a broad array of trending topics and [Indiscernible] to connect with diverse user demographics, offering deep insights into industry trends and market dynamics for new economy participants. During the third quarter, we maintained a continuous flow of high quality content with blockbuster articles emerging back-to-back. More than 110 articles achieved over 100,000 page views. We also continue to expand our footprint across various channels, costing a multi-platform across media circulation metrics. As of the end of the third quarter, the number of our followers surpassed 32 million, rising 20% year-over-year. This achievement reflects 36Kr's substantial market influence and set a stage for greater business development. In addition to the solid performance of our text and image business content portfolio, we also achieved a new breakthroughs in content variety during the third quarter, spanning short…

Thank you, Pal. Now, I'd like to walk you through more details of our Q3 financial results. Please note all amount numbers are in RMB unless otherwise stated. Total revenues increased by 2.5% year-over-year to RMB97 million in the Q3 of 2023, up from RMB94.6 million in the same period of last year. Online advertising services revenues increased by 11% RMB71.2 million in the Q3 of 2023 compared to RMB63.9 million in the same period of last year. The increase was primarily attributable to more innovative marketing solutions we provided to our customers. Enterprise value-added services revenues were RMB14.2 million in the third quarter of 2023 compared to RMB23.6 million in the same period of last year. The decrease was mainly due to the negative impact of macroeconomic uncertainties. Also our offline events are not scheduled evenly throughout the year and it turned out there were relatively fewer events during the third quarter. Subscription services revenues increased by 62% to RMB11.5 million in the third quarter of 2023 compared to RMB7.1 million in the same period of last year. The increase was primarily attributable to our continuous efforts to offer high quality subscription products and training programs to our subscribers. For example, in the Q3, we rolled out the postdoctoral research program that we collaborated with the University of Oxford, which was well-received by our high end subscribers and helped boost our subscription revenues growth during the quarter. Cost of revenues was RMB42.3 million in the third quarter of 2023 compared to RMB35.5 million in the same period of last year. The increase was primarily due to higher fulfillment costs and content costs. Gross profit was RMB54.6 million in the third quarter of 2023 compared to RMB59.1 million in the same period of last year. Gross profit margin was 56%…

Thank you. [Operator Instructions] Today's first question comes from Shen [ph] Zhao with CICC. Please go ahead.

[Foreign Language] Congratulations to the solid performance in the Q3. And how does the management view the fourth quarter and next year's advertising revenue trend? Thank you.

[Foreign Language] The third quarter brought sustained and robust growth momentum in our advertising business with year-over-year revenue growth of 11%. As the market gradually stabilized, we noted an encouraging rebound in demand for advertising compared with previous launches. Our branding and performance based one-stop advertising solutions have earned a substantial trust and support from clients, sparkling steady growth. Our advertising consumer base includes [Indiscernible], Internet Giants and the Fortune Global 500 companies as well as China's traditional industrial icons such as [Indiscernible], steady growth of advertisement placement by these companies propelled a year-over-year increase in our ARPU of 20%. Meanwhile, we also offer and a versatile services to emerging industry players, catering to their diverse advertising and marketing needs with graphics, texts and the long and short videos among other formats. For the fourth quarter, we maintained a cautiously optimistic outlook for our advertising business. To drive continued growth in our advertising business, we will further enhance our content influence, strengthen our in-depth cooperation with advertisers, and actively explore AI marketing and other new marketing channels to create more growth opportunities for advertising.

Thank you. Next question, please.

Thank you. [Operator Instructions] Our next question comes from Lingyi Zhao with SWS Research. Please go ahead.

[Foreign Language] Congrats with good results and I have two questions. The first one was both long and short video segments recorded robust growth on a sustained basis, what plan do you have to in place to unlock further growth potential? And my second question is, the company's gross margin remained fairly high in Q3. What has the company achieved in cost reduction and efficiency enhancements? Thank you.

[Foreign Language] We have consistently prioritized content innovation and diversification for short videos. Our lineup already covers diverse topics ranging from technology, innovation, and business insights to lifestyle posted across popular short video media platforms, including BiliBili, Douyin, and Kuaishou. Our subvertical medium, 36Kr is also worth highlighting. Since its launch during the first half of 2023, 36Kr also has made great progress in terms of content quantity and user engagement with a surging number of likes and followers. We have also initiated partnerships with top tier automakers such as BMW and Mercedes-Benz. As of the end of the quarter, we had over 8.5 million short video followers, up 41% year-over-year, among which more than 2.50 million were BiliBili users. In the swiftly involving landscape of social media platforms, short videos have emerged as a crucial channel for user interaction and social engagement, earning widespread favor among advertisers. Short video ad also boasted a higher ARPU compared to other advertising formats further propelling the company's overall advertising revenue. Regarding long videos this year, I hosted a long video show for say in 2023. The show featured enlightening conversations with visionaries including Wang Shi [ph], Robin Li, Charles Dixiao, Jia Jing, Fei Yang and Kevin Kelly, which deeply engage a diverse audience. The first season has successfully concluded with a total online exposure of over 250 million views and the second season is currently arriving on Youku and Beijing radio and the television station. Looking ahead at 2024, we will continue to expand our footprint in long videos. We have three to four new programs in our long video pipeline, which are set to further enrich our content ecosystem.

Hi, Lingyi, thank you for your question on gross margin and the financials. This is Lin. I will take your question. So, first of all, we continue to take rigorous cost control measures and optimize our cost structure. That's why we were able to maintain our gross margin at relatively high level, which is 56% level in the third quarter. And on top of gross margin, actually I want to highlight further that we are also taking initiatives to improve our operating margin as well. So, to cut our spending, actually in the third quarter, we have taken several measures. For example, we moved our headquarter office to a relatively lower rental building in the third quarter. And secondly, we continue to increase AI technology, which enables us to streamline our R&D team and which resulted in some cost savings in the payroll side as well. So, if you take a look at our operating expenses in Q3, although there were temporarily some one-off impact in Q3, because we have to pay some severance compensation, as well as terminating the old lease contract, we need to pay some compensation expenses. So, that hit our third quarter, but that's temporary and that's only a one-off issue. And if you take a long-term view at our these initiatives, those two measures altogether will give us a spending cut of at least RMB30 million on an annual basis. So, that's quite improvement on our operating margin. And going forward, on one hand, we will continue to grow our revenues and on the other hand, we will continue to embrace AI technology to more diversified business scenarios, so to cut our cost and further cut our spending. So, overall, we will improve our gross margin as well as operating leverage. Thank you.

Thank you. And our next question comes from Peipei Qiu with Industrial Securities. Please go ahead.

[Foreign Language] Thank you management for taking my question. As you already explained how AI played a very important role in improving efficiency, but could you share more details about eventually AI helped make money? So, could you share like your monetization counts in this area? Thank you.

[Foreign Language] 36Kr has clearly demonstrated its vision and keen [Indiscernible] with respect to generative AI. Following last quarter's Pioneering AI-powered live streaming sales sessions, featuring digital humans in our Taobao store, during the third quarter, we collaborated with Alibaba Cloud and leveraged its large AI model, Tongyi, to create our Asia Games blogger on Xiaohongshu garnering significant visibility and engagement. On the advertising front, we are actively exploring and applying AI technology to enhance marketing effectiveness and craft innovative strategies. This includes personnel advertising content generation and advertising placement as well as intelligent decision-making based on data analytics. By consistently extending our footprint in AI marketing, we seek to provide our clients with marketing solutions that are smarter, more efficient and more innovative. Additionally, we joined hand with top tier investor players, including [Indiscernible] to deepen AIGC applications in analyzing financial statements as well as reporting on the primary market, delivering more comprehensive, more agile, higher quality offerings to a broad spectrum of companies at exceptional cost to benefit [Indiscernible]. Thank you.

Thank you. And our next question comes from [Indiscernible] with Sealand Securities. Please go ahead.

[Foreign Language] What specific factors contributed to the rapid growth in company's subscription services and new growth strategies in time for this segment?

[Foreign Language] The rapid growth in our subscription services was primarily propelled by the launch of our high-risk [Indiscernible] programs. This quarter, we joint hands with Keble College of the University of Oxford, and launched a new degree-based program, vastly boosting our ARPU to over RMB68,000. Meanwhile, we continue to enrich the high quality training courses offered through our venture capital class and funding acceleration cap. Our diverse and engaging course offerings brought top tier learning experiences to users drawing extensive [Indiscernible]. Looking ahead, we aim for additional partnership with top universities worldwide on more international MBA programs such as University of Oxford, University of Leeds, Queen Marine University of London, [Indiscernible] DraftKings University in the UK and INSEEC Business School in France, providing China based linear with [Indiscernible] to expand their careers globally. Moreover, with the vibrant advancement of AI innovation, we noticed an increase in people's demand for learning and harness AI technology. To address this demand, we are actively working with leading AI companies based in China to jointly develop AI focused training programs, enabling participants to have a better grasp of AI technology and practical skills. Thank you.

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

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

Thank you.

Thank you. This concludes this conference call. You may now disconnect your lines and have a wonderful day.