| Dagang Feng | executive |
| Lin Wei | executive |
| Lingyi Zhao | analyst |
Hello, ladies and gentlemen. Thank you for standing by for 36Kr Holdings Inc.'s 2024 first half year earnings conference call. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host [ Jianan Ding ] IR Manager of the company. Please go ahead, Ding.
Thank you very much. Hello, everyone, and welcome to 36Kr Holdings First Half 2024 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, Mr. Xiang Li. Mr. Feng will start the call by providing an overview of the company and the performance highlights of the first half in Chinese, followed by English interpretation. Mr. Li 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 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 is included in the company's prospectus and other public filings as filed 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 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 numbers are in RMB. I will now turn the call over to our Co-chairman and CEO, Mr. Dagang Feng. Pal, please go ahead.
[Interpreted] Thank you. Hello, everyone. Thank you for joining our first half 2024 earnings conference call. [Interpreted] Despite persistent market challenges, in the first half of 2024, we delivered a solid operational performance.
Our online advertising services ARPU rose by 22% year-over-year, while subscription services ARPU among institutional customers increased by 8% year-over-year, underscoring our competitive market spending.
As of the end of second quarter, we had over 33.28 million followers, sustaining our growth momentum with an increase of 9% year-over-year. These achievements were largely attributable to the effective execution of our 3-step strategy, positioning, expansion and collaboration.
Specifically, we are deepening our focus on premium original content, enhancing our original content supply capabilities, expanding our customer base in the segments to meet the diverse customer needs and collaboratively exploring AI applications to empower a variety of business scenarios. These synchronized initiatives are boosting our operating efficiency in propelling us towards a new phase of diversifying development. [Interpreted] Let me walk you through our major programs in each of these three steps, starting with positioning. [Interpreted] First, we continue to enhance our content creation [ promise ], strengthening our text and graphic content ecosystem. Harnessing 36Kr the effect of a content dissemination network, we have built a robust content circulation mode. In the first half of this year, nearly 400 of our articles achieved over 100,000 page views.
Our [Technical Difficulty] content has garnered extensive industrial claim, solidifying our industry-wide leadership in insight and influence.
We also extended our appeal to younger audiences with sub-vertical media channels like [ CIDE ] and Oh! Youth, steadily diversifying our user demographic.
With the launch of all new specialized accounts, 36Kr games, we meaningfully enriched our content sub-verticals, extending our process segment reach beyond the new economy users to a broad spectrum of knowledge and entertainment audiences. [Interpreted] Our short video business also performed exceptionally well in the first half of the year. We actively expanded our presence across leading short video platforms like Bilibili, Douyin, and Kuaishou, driving my increase in our short video followers to over $9.2 million with a notable 2.3 million on Bili alone. Guided by our dual focus on in-depth content and the high-quality IP, we consistently impressed our audience with professional, specialized, insightful, original videos.
Additionally, we unveiled the AI car, a fresh program on the auto industry's application and development of AI.
We also rolled out AI map, which attracts the latest trend in AI and constructs new blueprints for the intelligent world. This initiative notably elevated user engagement and the overall experience, reinforcing our position as a top content IP creator. [Interpreted] In the long-form leading segment, we collaborated with popular short-form video platform Douyin to launch a new season of our elite talk show series.
Foreseeing 2034, in the second quarter, we made notable strides in content creation and the channel distribution through this robust partnership. The debuted episode of Foreseeing 2034, featuring new founder [ William Bing ] delved into upcoming shifts in the new energy vehicle sector, garnering widespread interest in the racking of over 84 million views across various platforms. [Interpreted] Next, live streaming, where we continually optimize our innovative offerings during the first half of the year.
Joining hands with the industry veterans, we launched an area of entertaining live streaming programs that facilitated greater interaction and real-time connections, elevating user engagement and stickiness. One prime example is our new series [ The Big Deal ] which features insightful conversations between industry insiders and the medium curators and the content creators.
Another is [ VC Insights Hub ], a new show that focuses on capital dynamics and innovative initiatives, offering investor professional market intelligence.
We also debuted [indiscernible] a series of face to face exchanges with emerging business leaders designed to enlighten users with deep multidimensional insights. [Interpreted] Last but not least, events IP. In the first half of 2024, we achieved a substantial success with the launch of a major event IP advanced productivity AI partners summit. In collaboration with industry giants like Alibaba, Baidu, Lenovo and Intel, we delved into the latest trends in AI applications, sharing insights on both opportunities in the challenges gleaned from day-to-day business operations. This summit attracted an impressive 100 million-plus views sparking extensive industry buzz.
Additionally, our highly anticipated signature event IP Waves Summit returned in June 2024, offering a rich variety of features across the venture capital, technology, culture and music sectors, among others. Waves served as a bustling hub, fostering connections among young entrepreneurs and investors, racking up 150 million views and precisely engaging the younger demographic. [Interpreted] By consistently crafting high quality original programs in [ distinctive ] events IP, we have ensured a steady flow of premium content, garnering broad visibility and inspiring lively discussions. The approach has significantly amplified our brand power advertising potential in the commercial value.
Our holistic upgrade our content and event lineup has enriched our content vehicle system, expanded our user base and cultivated more diverse content scenarios in the service models for users and the customers alike, further solid defining our leadership across industry segments and boosting user stickiness. [Interpreted] Now let's turn to the expansion piece of our 3-step strategy. [Interpreted] Our strategic innovative content and event layout has empowered us to forge closer ties with top global brands like Alibaba, JD, ByteDance [ Huawei ] while also accelerating growth in our customer base.
We are well positioned to consistently meet our customers' diverse content marketing needs. In 2024, we made remarkable progress in broadening our customer segments and reaching relevant service offerings in sectors such as food and beverage, restaurant chains, sports and outdoor, beauty and personal care, home appliances and more. Notably, the proportion of the new customers in the sports and outdoor category, topped 60%. Meanwhile, beauty and personal care's new customer ratio exceeded 40% and food and beverage, along with restaurant chains recorded a new customer ratio with surpassing 20%. [Interpreted] Moreover, we ventured into the energy storage sector, crafting a specialized documentary for Ampace, a globally renowned manufacturer of advanced lithium batteries.
We also provided integrated marketing services for a major player in global mobile payments, including customized solutions such as [ thematic submit index ], brand promotion, customer acquisition support and interactive marketing.
Our tailored approach effectively accelerating its global expansion and enhanced its position in the mobile payment sector, while further strengthening its brand influence. [Interpreted] Meanwhile, capitalizing on 36Kr's substantial media influence and expertise on [Technical Difficulty] and 36Kr Research Institute, we continuously refined our service architecture for governmental and public services system, harnessing our best understanding as to the intricacy of all levels of government operations, along with our broad-based service experience, we offer customers an integrated suite of services, including facilitating industry-specific partnerships, investment inflows in the global expansion service hubs to meet their varied needs.
Our diverse fleet of premium services continues to attract new clients, expanding our government customer base in both Yangtze River Delta and the Pearl River Delta regions. [Interpreted] Leveraging 36Kr's platform, resources and expertise, we have impressed our customers with more precise market insights in end-to-end marketing solutions.
Our stable and high-quality customer base, coupled with a broad and varied customer demographic, underscores our ongoing commercialization enhancements and pace way for sustaining the business growth. [Interpreted] Last but not least, collaboration the final piece of our 3-step strategy. In the first half of 2024, we deepened and broadened our collaborative efforts as we integrated the technology across our business segments, achieving positive outcomes. [Interpreted] One note, for example, is our in-depth strategic partnership with [ Sense ] for advanced applications of the AI technology. We jointly launched an area for AI driven offerings, including AI median spotlight seeker, AI financial report interpretation and AI one click image generation, delighting users with smarter, more efficient content service offerings and expanding 36Kr's audience reach. By integrating 36Kr content creation promise with Sense's advanced AI technology, we aim to create the promote in all new AI chief content officer concept, steering traditional medium towards a more intelligent and interconnected future.
We are confident that our enhanced content ecosystem in AI advancements will drive continued expansion in our product metrics and consistently improve our operating efficiency. [Interpreted] In summary, during the first half of 2024, our 3-step strategy offering positioning, expansion and collaboration ensured solid operation while laying a robust foundation for growth in the latter half of the year. With our innovative spirit embrace of the next-generation technology and the wide range partnerships with global frontrunners, we are poised to enhance our content influence in advanced commercialization, propelling the company's high-quality sustainable growth. With that, I will now turn the call over to our CFO, Mr. Lin Wei, who will discuss to our key financial results. Please go ahead, Lin.
Thank you.
Now I'd like to walk you through the detail of our first half of 2024 financial results. Please note, all amounts are in RMB, unless otherwise stated.
Okay.
First, total revenue were RMB 102.4 million in the first half of 2024 compared to RMB 139.9 million in the same period of last year. Online advertising services revenue were RMB 80.4 million in the first half of 2024 compared to RMB 98.9 million in the same period of last year. The decrease was mainly due to the reduction in advertising spending by advertiser from certain industries and challenging external environment.
In addition, we optimized our customer structure to control credit risk, which lead to a decrease in revenue score. Enterprise value-added service revenue were RMB 13.4 million in the first half of 2024 compared to RMB 26.8 million in the same period of last year. The decrease was mainly due to our ongoing service offering refinements, which involved reducing several regional offices activities to strategically focus on our cash flow and efficiency optimization. Subscription service revenues were RMB 8.6 million in the first half of 2024 compared to RMB 14.2 million in the same period of last year. The decrease was mainly due to the blended evolution of our training service business model. Cost of the revenue were RMB 57 million in the first half of 2024 compared to RMB 70 million in the same period of last year. The decrease was mainly attributable to a decrease in operating costs in connect with a decline in our revenues. Gross profit were RMB 45.5 million in the first half of 2024 compared to RMB 69.8 million in the same period of last year. Gross profit margin were 44.4% in the first half of 2024 compared to 49.9% in the same page of last year. Operating expenses were RMB 117 million in the first half of 2024, decreasing by 9% compared to RMB 128.7 million in the same period of last year. Sales and marketing expenses were RMB 45.4 million in the first half of 2024, a decrease of 29.9% from RMB 64.8 million in the same period of last year. The decrease was mainly attributable to the decrease in payroll-related expenses, rental expenses, marketing and promotional expenses and share-based compensation expenses. G&A expenses were RMB 62.8 million in the first half of 2024, a 79.9% increase compared to RMB 34.9 million in the same period of last year. The increase was mainly attributable to the increase in allowance of [ thoughtful ] accounts and partially offside by the decrease in share-based compensation expenses. Research and development expenses were RMB 8.8 million in the first half of 2024, a decrease of 69.7% from RMB 29 million in the same period of last year. The decrease was mainly attributable to the decrease in average compensation level for research and development personnel at the restructure or R&D team. Share-based compensation expenses rationalized in cost of revenue, sales and marketing expenses. Research and development expenses and G&A totaled RMB 0.05 million in the first half of 2024 compared to RMB 3.7 million in the same period of last year. Other expenses were RMB 24.3 million in the first half of 2024 compared to RMB 6 million of other income in the same period of last year. The increase was mainly because the company recognized about RMB 25.5 million of investment loss as we seen for fair value change of long-term investment this year. Net loss was RMB 95.9 million in the first half of 2024 compared to net loss of RMB 52.7 million in the same period of last year. Non-GAAP adjusted net loss were RMB 95.9 million in the first half of 2024 compared to non-GAAP adjusted net loss of RMB 49 million in the same period of last year. Net loss attributable to 36Kr ordinary shareholders was RMB 94.4 million in the first half of 2024 compared to RMB 52.3 million in the same period of last year. Basic and diluted net loss per ADS were both 2.245 in the first half of 2024, compared to basic and diluted net loss per ADS of 1.258 in the same period of last year.
As of June 30, 2024, the company has cash, cash equivalents, and short-term investments of RMB 96.9 million compared to RMB 116.9 million as of December 31, 2023. The decrease was mainly attributable to net cash outflow from operating activities. This concludes all our prepared remarks today.
We will now open the call to questions. Operator, please go ahead.
[Operator Instructions] As we are showing no questions, I'll turn the call over to the company for closing remarks.
Your first question comes from [ Mengzhu ] with Sealand Securities.
[Interpreted] Could management outline the expected growth trajectory for the advertising business? How will the company strategize moving forward?
[Interpreted] We remain cautiously optimistic about future advertising growth.
In terms of the strategy, we have proactively optimized our products and the services to navigate ongoing macroeconomic challenges, providing deeper support to core customers, including leading Internet giants in the Fortune 500 companies. This approach has proven highly effective, driving a 20% increase in ARPU in the first half of the year. We believe there is a few potential for future growth. [Interpreted] We will also continue to enrich our content ecosystem, expand our reach to new channels, and diversify our content-specific accounts to cover more sub-verticals.
We are also actively defending the integration of the [ AIDC ] technology with the content production rolling out more AI driven offerings will allow us to engage with a broader range of companies and institutions that were previously out of reach due to bandwidth and staffing constraints. [Interpreted] Our ongoing content development efforts has expanded and diversified our user base in the service scenarios while strengthening our stable partnerships with key accounts like Alibaba, JD, ByteDance, and [ Huawei ].
We are also consistently finding high-value new customers as we cater to company's separate content marketing needs. In 2024, we continue to broaden our premium customer segment in sectors such as food and beverage, restaurant chains, sports and outdoor, beauty and the personal care, home appliances and more, making great strides. We onboarded various premium global brands as partners, including [indiscernible] [ PFC ] and the [ PNP ]. Notably, the proportion of new customers in the sport and outdoor category topped 60%. Meanwhile, beauty and the personal care's new customer ratio exceeded 40%, and the food and beverage along with restaurant teams recorded new customer ratios surpassing 20%.
Your next question comes from Ling with SWS Research.
[Interpreted] What are the latest developments in short and long video segments? How does the company plan to expand their growth potential?
[Interpreted] In the first half of 2024, we delved deeper into the short and long video sectors, consistently providing diverse content offerings while expanding our range of the 2C products.
Our short video content lineup now covers a broad spectrum of 2C, including technological innovation, business insights, lifestyle and more delighting users with rich and varied content options. [Interpreted] As we mentioned before, relative to other advertising channels, short video advertising boasts of broader customer appeal and higher ARPU, which has contributed significantly to the company's advertising revenue growth. In 2024, leveraging our content creation promise and the substantial platform influence, we established a high visibility commercialization collaborations with multiple leading brands. Revenue performance was on track with our forecast for the year.
Additionally, our finance and used lifestyle content has garnered widespread visibility and user interest across major platforms like Bilibili, Douyin, and Kuaishou. We launched a fresh program like AI Car and AI Map substantially elevating user engagement and overall experience and reinforcing our position as a top content IP creator. By mid-year 2024 our short video followers surpassed 9.2 million and notable 2.3 million on Bili alone, which is difficult for an institution and median company. [Interpreted] Regarding long-form video, we collaborated with popular short-form video platform [ Xiaohongshu ] to launch a new season of our elite talk show series Foreseeing 2034 in second quarter. We made notable strides in content creation and the channel distribution through this robust partnership. Its debut episode featuring new founder William Bing racked up over 84 million views across various platforms. Thank you for your question.
That conclude -- there are no further questions. I'd like to turn the call over back to the company for closing remarks. Apologies, we have another question from Ling with SWS Research.
[Interpreted] What key strategies will the company implement to drive growth in enterprise value-added services and subscription services in the second half of the year?
[Interpreted] First, in response to market dynamics and evolving customer needs, we launched a major event IP advanced productivity AI Partners Summit during the first half of the year. The event was quite successful, attracting an impressive 100 million plus views and sparking extensive industry buzz.
We also supported Lenovo in organizing the Lenovo New Business Innovation for System Series roadshow, leveraging diverse channels such as 36Kr official accounts, Weibo and the community platforms for high-impact promotion. This initiative empowered the elite start-ups across the sectors, including artificial intelligence, application software, smart devices in advance manufacturing with end-to-end services.
Moving forward, we will focus on enriching our product metrics and service scenarios to meet our customers evolving needs. [Interpreted] In addition, we will launch our Waves Summit in October this year, and we will have more innovative services for our customers and audiences.
In addition to offline events, we have consistently enhanced our value-added consulting services. In the first half of the year, 36Kr Research Institute conducted in-depth studies on emerging business models, commercial structures in the industries within the new economic sector, issuing a range of industry research reports that offered a thorough analysis and insights on the trends in the prospects in artificial intelligence, digitalization, global expansion in the customer sectors.
We also refined our service architecture for governmental and the public service system this year, harnessing our best understanding of the intricacy of governmental customers, along with our broad-based service experience. We delivered a host of top tier services, including facilitating industry specific partnerships, investment inflows in the global expansion service to fulfill our customers' very needs. [Interpreted] Given that globalization is an irreversible trend, we are channeling considerable strategic resources to our overseas ventures this year.
For instance, we are establishing leading operations targeting Europe in September, leveraging 36Kr's existing strength in original content and the integrating AI technology to enable real-time dissemination of a high volume of content to Europe, while also bringing the latest European needs back to China.
As we expand our network worldwide, we will work with the Chinese government entities and businesses to establish the 36Kr global expansion service centers. Thank you for your questions. Thank you once again for joining us today.
If you have further questions, please feel free to contact 36Kr's Investor Relations [Technical Difficulty] contact information provided on our website.
This concludes our conference today.
You may now disconnect your line. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]