36Kr Holdings Inc. (KRKR) Earnings Call Transcript & Summary

Hello, ladies and gentlemen. Thank you for standing by for 36Kr Holdings Inc.'s Third Quarter 2021 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host, Yang Li, IR Manager for the company. Please go ahead, Yang.

Well, thank you very much. Welcome to 36Kr Holding's Third Quarter 2020 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 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 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 these and other risks and uncertainties is included in the company's perspective 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 include discussion of the audited 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. Feng, please go ahead.

[Foreign Language]

[Interpreted] Thank you, all, everyone. Thank you for joining our third quarter earnings conference call.

[Foreign Language]

[Interpreted] In the third quarter, as the prominent brand and pioneering platform dedicated to the New Economy participants in China, we witnessed the rise of mining new industry segments, including hardcore technologies, new consumption, the new carbon economy and Metaverse are hot topic globally. The world of venture capital is as exciting as experience as ever. In particular, the establishment of the Beijing Stock Exchange has created a more favorable capital raising environment for small and medium-sized enterprises, especially for the specialized sophisticated, indistinctive and innovative enterprises in China against the backdrop of uncertainties related to COVID-19 with surges and heavy flooding in some regions of China, we outsourced many industry leaders actively embracing these changes quickly adjusting to the challenging micro environment and currently undertaking their cooperate social responsibilities as we have been for the past 11 years. 36Kr [indiscernible] during the quarter, building connections and communications for industry participants and providing our customers and users with a complete ecosystem of innovative service and content.

[Foreign Language]

[Interpreted] In the third quarter, our total user traffic remained at historically high levels, with average monthly PVs jumping to RMB 849 million, up 50% year-over-year. This marks our 14th consecutive quarter of PV growth, a powerful testament to our content's continued user renaissance and our growing brand influence. We have suspended our content presentation for mass as well as topic coverage to further broaden our [indiscernible] platform with unique innovative products and service offerings.

[Foreign Language]

[Interpreted] In terms of corona's strategy, our view and focus is on PGC and UGC continue to cater to diverse preference and even more user groups needs across multiple formats, including image, text, audio, short form video and live streaming. In third quarter, 185 pieces of content published on 36Kr's regional official accounts had each accumulated more than 100,000 views. More excitingly, the number of content pieces with leadership exceeding 200,000 views experienced strong growth, up 124% quarter-over-quarter.

[Foreign Language]

[Interpreted] We also continue to expand our content matrix during the quarter and launched digital 36Kr, our official retail accounts dedicated to digital transformation phenomenon and dynamics. In addition, our retail account appealing to younger users or youth [indiscernible] for the [indiscernible]of trending topic content, further diversifying our user group. Recently, China's official media outlets, Global Times, picked up our content for the first time. They exerted and translated our OUS report white paper on staying up late and published to foreign media, which demonstrated our content's rising influence. As of the end of the quarter, we have spent over high-quality content offerings have extended to a wider range of areas, including new consumption, auto, real estate, advanced manufacturing, artificial intelligence, new energy, autonomous routing, enterprise services, medical and health care as well as primary and secondary markets related content, all providing the feasibility with the ability, quality and usefulness that cater to user needs.

[Foreign Language]

[Interpreted] We have been working carefully to develop our short-form video business, which we believe will be a new growth engine for both commercialization and user base expansion. We published datas of short-form videos during the third quarter, attracting more than 6 million followers across all of our online channels. Particularly our short form video on in-depth analysis of China's telecommunications industry demonstrated a standout success. Accumulating 10 million radios reworks across all channels. It was among Bilibili's most popular radios overall and one of the top 3 hardest video in the knowledge section during the week of this launch. We also created videos in conjunction with all use stemming the less sales of the young generation that attracted an enormous number of video viewership and create Internet buzz.

[Foreign Language]

[Interpreted] We also continue to make positive progress in lab streaming. For instance, our new knowledge program launched in collaboration with Kuaishou features finance and business breaking news as well as capital market stories. To this end, we will upstream export discussion on latest developments in industries such as commercial aerospace, new e-commerce, new consumption, film and TV entertainment, which engage a broader use base and generated massive attention to illustrate the number of new followers gained from a single lab streaming session of new knowledge program was 30x higher than our average daily add of new followers, making us an indispensable pan commercial content provider of Kuaishou.

[Foreign Language]

[Interpreted] High quality content request omni channel distribution comment. This has been our philosophy from day 1. In third quarter, we produced multiple blockbuster content pieces with our training topic content on Zhihu accumulating over 10 million PVs. During the mid-Autumn Festival, we collaborated with People Daily, the top official medium outlets nationwide to produce the HTML class piece on world exploration, which garnered 50 million total user exposures. In addition to well-known platforms, such as WeChat, Weibo, Zhihu, Douyin and Kuaishou, we have also been exploring collaborations with new distribution partners. In the third quarter, we cooperated with known mobile phone brands such as Huawei, Xiaomi, Oppo and Vivo to enhance our presence on their display channels and news piece, which help the cell phone brands expand pan commercial content and increase our user exposure among target customers.

[Foreign Language]

[Interpreted] We are also making steady progress with our new products, our secondary market products launched in the second quarter of 2021 continue to perform well in the third quarter. Following the new energy vehicle industry summit held in partnership with Industrial Securities, we team up with [indiscernible] Securities to host the Forum [indiscernible] as e-commerce 4.1, the rise of national brands in the age of new consumption. In addition, one of our new products, 36Kr Capital Pie features multiple domestic situated companies such as CICC, Industrial Securities and [indiscernible] Securities to share their investment interest.

[Foreign Language]

[Interpreted] Furthermore, we accelerated our coverage of Metaverse content in the third quarter. On November 24, 2021, at our dual headquarters in Shenzhen, we held 36Kr's fourth Metaverse focus Industry Conference leading with discussion on the extended reality ecosystem and value chain, new social networking in the virtual world and AI the virtual beings. The conference attracted a lot cohort of Metaverse followers and facilitated connections and communication between Metaverse investors and companies. At this conference, we also announced that 36Kr will launch limited addition digital collectibles in collaboration with Tencent's global app. 1,124 lucky users will receive a digital collectible to commemorate November 24, an important milestone in our evolution, the day we start our journey into the exciting new Metaverse concept.

[Foreign Language]

[Interpreted] On the international front, we continue to explore overseas business opportunities through our subsidiary, 36Kr Global. In addition to Southeastern Asian markets, 36Kr Global made its first [indiscernible] into Europe, Australia and New Zealand in the third quarter. These horizon expansions are tied to facilitate more New Economy and tech companies' entry into new international markets. It will also help boost all of these companies' access to Asian markets that's promoting deeper commercial collaboration between Asia and the rest of the world. Moreover, following our proprietary content inclusion on the Bloomberg terminal, 36Kr Asia Content was also adopted by Douyin, a testament to our growing influence beyond China.

[Foreign Language]

[Interpreted] In summary, we are delighted to see 36Kr's product and service offerings has powered the entire enterprise life cycle, spanning from a [indiscernible] exposure, investment financing, prelisting consultation and IPO, through that follows post IPO such as recent stock visibility and building shareholder value, supporting customer acquisition, government incentives and overseas expansion. We have helped 6 major customer communities consisting of the uniform start-ups PMP giants, investment institutions, local governments, traditional enterprises and individual clients connect and succeed. On top of our full-scale presence and sustained development efforts, more and more entrepreneurs and industry leaders value our brand influence, and we have firmly established our position as a leading New Economy service provider.

[Foreign Language]

[Interpreted] Next, I'd like to share our latest updates with respect to commercialization. During the third quarter, our 3 major business segments each delivered solid performance, and our innovative new business continue making steady strides.

[Foreign Language]

[Interpreted] Despite multiple headwinds in the third quarter, including COVID-19 resurgence and macroeconomic uncertainties, our advertising business demonstrated its resilience and vitality achieving solid year-over-year growth in each of the number of advertising customers and average revenue per customer.

[Foreign Language]

[Interpreted] We have taken a twofold approach to our advertising business. First, we leverage our content and brand influence to gain market recognition. Second, we continuously explore innovative forms of company promotion to efficiently increase both the number of advertising customers and average revenue for advertising customers. For instance, in the third quarter, we helped Intel promote its EVO platform-based laptops with short-form videos. Our short-form video team brought the complex technology to live with simple, easy-to-understand refill language earning [indiscernible] from Intel's global team. This collaboration with Intel set a record in our average revenue per advertising customer in a standalone short-form video working campaign. We believe that a short-form video model can support us to rise up and through our commercial collaborations with more prominent international and domestic brands.

[Foreign Language]

[Interpreted] In addition to short-form video, we have also been proactively pouring ways to better improve our various brands for live streaming content. Our cooperation with [indiscernible] in the third quarter is a perfect sample by turning a live streaming technical discussion into what looks like [indiscernible], the new format utilize fun-filled discussions to present complicated and upward technologies, facilitating [indiscernible] user comprehension. Meanwhile, we cooperated with Intel to advertise its corporate lines practical applications of this technology via live streaming interviews with its channels' partners. This innovative form of live streaming, in turn, boosts our commercialization capabilities.

[Foreign Language]

[Interpreted] During the third quarter, we also attracted new advertising partners through overall [indiscernible] accounts. For example, we worked with Zhihu to advertise this new program help ITE to promote their new video program, further amplifying each brand's presence in the marketplace. All use is desirably as an advertising partner just shortly after its launch, while it is our -- while it is that our influence on younger generation has well received and recognized by branded customers.

[Foreign Language]

[Interpreted] Turning to our enterprise value-added services, we maintained steady performance during the third quarter while making meaningful progress in innovative new service offerings.

[Foreign Language]

[Interpreted] Our third quarter off-line activities include this September's China Investor Future Summit, which achieved double success in terms of revenue influence. We invited a distinguished group of mainstream investment institutions to discuss on a set of leading industry sectors, including new consumption, hardcore technologies, medical care, carbon neutralization and enterprise services. We also selected 56 ordinary investors under the age of 66 with our proprietary IP 56 under 56 survey. With our unique IPs, we effectively establish our own VAS investor community, while also enhancing user stickiness and repurchase rate.

[Foreign Language]

[Interpreted] We also expanded the boundaries of traditional value-added services with our new innovation and entrepreneurship competition service model, targeting government clients and [indiscernible] industry leaders. For example, we collaborated with BYD to off-line its developer innovation contest, which attracted numerous applications from talented developers and produced company's new solutions for the smart automobile industry. This content was BYD's first step in the direction of opening up the innovation process, supporting developers to access BYD's resources and its smart open ecosystem with a [indiscernible] arrangement.

[Foreign Language]

[Interpreted] On December 13, we will hold our annual voice New Economy Conference in Shanghai with [indiscernible]. The conference will feature a comprehensive summary and review of the technology and venture capital industry in 2021. We've highly [indiscernible] from the venture capital growth uniforms and other well-known companies. At the same time, [indiscernible] and regulatory authorities will be gathering to share their view. Not only we are collaborating exclusively with the OEM to promote this conference, the OEM will provide a high level for platform cost promotion resources, package and traffic support, including KOL [indiscernible]. With 36Kr's leading position in the pan commercial content industry, our premium content matrix and OEMs massive traffic, we believe that this year's voice conference will, again, be a major industry influencer and enhance our brand stickiness and commercialization capabilities.

[Foreign Language]

[Interpreted] In addition to off-line events, consulting service business is also an important component of our enterprise value-added services. 36Kr Research Institute assisted government and corporate clients in targeted industry research and provide customized solutions based on client needs. On the coverage side, we released a smart mobility report in cooperation with Alibaba and it helped leading high-tech companies such as [indiscernible] and Xiaomi issue industry research report. On the government side, we produce research reports on investment promotion and new developments on construction planning for local governments in [indiscernible], among others, providing enhanced decision-making support. Not only in late November, our 36Kr Research Institutes become a member of the Arithmetic Research Alliance, which is composed of the People's Data, Boston Consulting Group, [indiscernible] Group, [indiscernible] Construction Investment Research Institute, China International E-Commerce and Giant Engines. Being part of this alliance is a testimony to our professional research capabilities with recognition from factional authorities.

[Foreign Language]

[Interpreted] I'd like to share the latest updates on our new business, 36Kr Enterprise service review portal. Since its launch in August 2020, we have made continuous efforts to expand into China's top enterprise service review platform tailored to company's digital transformation needs. As of the end of September 2021, we have grown the platform to power nearly 5,000 software applications, readily broadening its diversity and inclusion.

[Foreign Language]

[Interpreted] We also launched new features for the review portal in September, allowing more chance to manage product profiles, publish contents, view lease data and contact prospective customers. As of the end of the quarter, close to 400 merchants have had established a presence on the enterprise service review portal, including well-known manufacturers such as [indiscernible], [indiscernible] Kingsoft Office and Basins. The merchant-oriented features essentially transform us from a content-producing platform to a marketplace platform as more and more channels and third participants and are contributing only to our platform, which is facilitating our [indiscernible] of efforts and commercialization.

[Foreign Language]

[Interpreted] Looking at operating data metrics, average daily active user increased by 109% sequentially and the net of review comments increased by 57% sequentially in the third quarter, primarily due to our platform software expansion and content matrix engagement. During the quarter, we published a research report on social customer relationship management, private domain traffic operation and marketing design, which showed that customer of products covered in our reports were, on average, of 10x more willing to leave their personal information on the port hold and customer of products not covered in our reports. In third quarter, the average conversion rate of potential customers that provided their personal information rose from 0.08% to 0.24%, a 200% increase. To date, the conversion rate for lease generated under review portal is already twice than that of lease from public domain traffic. We are convinced that future refinement of the platform will improve customer acquisition efficiency for enterprise and help them better optimize their product based on the growing number of real user reviews.

[Foreign Language]

[Interpreted] Last but not least, let's turn to our subscription service. Throughout our 11-year history, we have both observed and provided exceptional service [indiscernible] business development. Now we can collaborate our expertise and customized service offerings to expedite entrepreneurs' empowerment. To this end, we continue building our comprehensive training system for enterprise and individual entrepreneurs during the third quarter, recording 52% subscription revenue growth with a 14% year-over-year increase in the number of institutional customers and a 48% year-over-year increase in average revenue per customer.

[Foreign Language]

[Interpreted] Harnessing our commercial experience, we have been working tirelessly to imply our trainings business as well as our premium knowledge content leverage for institutional and individual subscribers. We offer online [indiscernible] to improve their professional expertising in management [indiscernible] and career development. We also offer very specialized training program for institutional subscribers. For example, we launched venture capital class at the end of October to provide a learning platform that accelerates underpriced employment and helps enterprises to become industry frontrunners.

[Foreign Language]

[Interpreted] In an era of rapid technological change, despite the evolving impact of COVID-19, business will never stop innovating and growing. As a witness to this era, 36Kr has been fortunate to accompany a multitude of Internet companies on their development and expansion journey, and we will continue to grow alongside them as we bear witness to the advance of the age of digitalization, hardcore technology and Metaverse. The Beijing Stock Exchange will provide a better capital environment for specialized refined differentiated and innovative companies, facilitating their growth with a broader playing field and raise the ceiling of the New Economy service sector. As an outstanding brand and innovative platform serving New Economy participants, we believe that 36Kr is well positioned to capitalize on trends in the new era ahead and unlock commercialization potential as we empower more and more New Economy enterprises. We are confident that we will help our industry partners right this wave to future success.

[Foreign Language]

[Interpreted] With that, I will now turn the call over to our CFO, Miss Lin Wei, who will discuss our key financial results. Please go ahead, Lin.

Thank you, Fend, and hello, everyone. We are very pleased to have achieved another quarter of solid financial results across all of our business segments, despite multiple headwinds, including COVID-19 resurgences and macroeconomic challenges. As Feng mentioned earlier, our advertising revenues grew steadily year-over-year in the third quarter, with increases in both the number of customers and the average revenue per advertising customer. Also, thanks to our relentless efforts to provide customized and innovative enterprise value-added services, revenues from this segment increased by 57% sequentially. Notably, our ongoing subscription product optimization resulted in a strong 52% year-over-year increase in our subscription services revenues in the third quarter. In addition, as we continue to shift our resources and focus on higher-margin businesses, we saw continuous improvement in both gross profit and gross profit margin, which expanded to 56.1% from 37.9% in the same period of last year. I would also like to highlight that we ended the third quarter with a very strong cash position as we achieved positive cash flow from operations. Going forward, we will continue to solidify our industry presence and expand our monetization approaches to cultivate sustainable long-term growth. Now I will walk you through more details of our third quarter 2021 financial results. Online advertising services revenues increased by 4% to RMB 53.4 million in the third quarter of 2021 from RMB 51.1 million in the same period of 2020. 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 the third quarter of 2021. Enterprise value-added services revenue were RMB 22.5 million in the third quarter of 2021 compared to RMB 66.4 million in the same period of 2020. The decrease was primarily due to our continuous shift and focus towards higher-margin businesses. Starting from the first quarter of 2021, we ceased to act as a principal in certain low gross margin businesses and acted solely as an agent. As a result, revenues of such businesses were recognized on a net basis from the first quarter of 2021 onwards. To increase comparability of operating results and help inventors better understand our business performance and operating trends, we introduced gross transaction value as a supplemental metric to describe our business. Growth transaction value of enterprise value-added services was RMB 66.3 million in the third quarter of 2021 compared to RMB 66.4 million in the same period of last year. In particular, our consulting services revenues and off-line events revenues increased by 14% and 72% year-over-year, respectively, reflecting our expansion efforts in enterprise value-added services have gradually paid off. Subscription services revenues were RMB 9 million in the third quarter of 2021, representing 52% growth compared to RMB 6 million in the same period of 2020. The increase was primarily attributable to our continuous efforts to offer high-quality subscription products to our subscribers. Total revenues were RMB 84.9 million in the third quarter of 2021 compared to RMB 123.5 million in the same period of last year. Taking into consideration of the aforementioned change in revenue recognition for our enterprise value-added services, where there was RMB 43 million variance between net revenues and gross transaction value, investors can actually find out that our overall business trend is upward and demonstrated solid year-over-year growth on a comparable basis. Cost of revenues were RMB 37.3 million in the third quarter of 2021 compared to RMB 76.6 million in the same period of 2020. The decrease was primarily due to our continued shift and focus towards higher-margin businesses and recognition of certain revenues on a net basis. Gross profit was RMB 47.6 million in the third quarter of 2021 compared to RMB 46.8 million in the same period of 2020. Gross profit margin was 56.1% in the third quarter of 2021 compared to 37.9% in the same period last year. The increase was again primarily due to our continued shift in our focus towards higher-margin businesses as well as recognition of certain revenues on a net basis. Operating expenses were RMB 80.3 million in the third quarter of 2021 compared to RMB 63.2 million in the same period of 2020. Sales and marketing expenses were RMB 35.5 million in the third quarter of 2021 compared to RMB 31.6 million in the same period of 2020. The increase was primarily attributable to an increase in payroll-related expenses. G&A expenses were RMB 30.9 million in the third quarter of 2021 compared to RMB 20.5 million in the same period of last year. The increase was primarily attributable to an increase in the allowance for credit losses and payroll-related expenses, partially offset by the decrease in share-based compensation expenses. Research and development expenses were RMB 13.9 million in the third quarter of 2021 compared to RMB 11.2 million in the same period of last year. The increase was primarily attributable to the increase in payroll-related expenses as we bolstered our research and development capabilities. Share-based compensation expenses recognized in cost of revenues, sales and marketing expenses, research and development expenses as well as G&A expenses totaled RMB 4.9 million in the third quarter of 2021 compared to RMB 4.6 million in the same period of 2020. Other income was RMB 1.5 million in the third quarter of 2021 compared to other income of RMB 2.5 million in the same period of 2020. The decrease was primarily attributable to a decrease in the amount of government grant received in the third quarter of 2021. Income tax expenses were RMB 14,000 in the third quarter of 2021 compared to income tax expenses of RMB 21,000 in the same period last year. Net loss was RMB 31.3 million in the third quarter of 2021 compared to RMB 14 million in the same period of last year. Non-GAAP adjusted net loss was RMB 26.4 million in the third quarter of 2021 compared to RMB 9.3 million in the same period last year. Net loss attributable to 36Kr Holdings' honored shareholders was RMB 30.5 million in the third quarter of 2021 compared to RMB 14 million in the same period last year. Basic and diluted net loss per share were both RMB 0.03 in the third quarter of 2021 compared to RMB 0.014 in the same period last year. As of September 30, 2021, the company had cash, cash equivalents and short-term investments of RMB 178 million compared to RMB 149.6 million as of June 30, 2021. The increase was mainly attributable to cash inflow from operating activities. Lastly, let me provide some updates on our share repurchase program. On May 6, 2020, the company announced that its Board of Directors authorized a share repurchase program under which the company may repurchase up to a total of 1 million of its American depository shares, each representing 25 Class A ordinary shares. As of September 30, 2021, the company has repurchased approximately 786,000 ADSs for approximately RMB 17.5 million under this program. This concludes our prepared remarks today. We will now open the call to questions.

[Operator Instructions] We have the first question coming from the line of Vincent Yu from Needham & Co. Our first question comes from the line of Vincent Yu from Needham & Co.

Vincent. We cannot hear you. Operator, maybe we go to the next question, please, and we can go back to Vincent later. Thank you.

Certainly. The next question comes from the line of [ Xing Chen ] from CICC.

[Foreign Language] My first question is enterprise value-added services cover many items, which one contributes more to the company's revenue and will be the main growth point in the future? And the second question is under the current macro environment, how is the advertising business in the fourth quarter?

This is Lin. I will answer your first question, and then Mr. Feng will give you more color on the growth strategies and the second question. Yes, you are correct that our enterprise VAS revenues include basically 3 subcategories, namely integrated marketing, consulting and off-line events. From the third quarter perspective, you can see that our biggest component for this enterprise VAS revenue actually is consulting and followed by off-line events. Consulting services and off-line events services account for around 60% and 30% of the total enterprise VAS revenue, respectively. And these 2 revenues also grow on a very fast pace. For example, the consulting services grew actually 14% year-over-year, and the off-line events revenue grew further -- even faster with a 72% year-over-year growth rate. So going forward, I think, in the near term to midterm, this 2 will be the driver for our enterprise via revenue. And certainly, we have been mentioning that our enterprise service review portal a few times, and this is a new, very innovative and promising services that we have been incubating since last August. And this quarter, as Feng mentioned, that this business has achieved a very good performance on all kinds of operating metrics. And this business hasn't been really commercialized, only with very minimal monetization. But in the future, I think, once it's ready and once we commercialize this product, we will -- it will be another very big and important growth engine for us. And then, Mr. Feng will give you more color on your second question.

[Foreign Language]

[Interpreted] So the main growth drivers of our enterprise value-added service will be consulting and off-line events. Our main target clients are enterprises and governments, and we already have a mature and scalable business model. We will continue to optimize and innovate products and service offerings to achieve a higher average revenue per customer. In addition, we will continue to increase the coverage of new industries and new segments to expand our customer base. Our local sites will also play through their regional advantages and penetrate the markets of lower-tier cities. It is worth noting that our newly incubated enterprise service review portal is in a process of continuous optimization. We believe it will become one of our growth drivers in enterprise value-added services. As of the end of the third quarter, our portal had 15 major categories and more than 200 segments. Nearly 400 merchants have established a presence on the portal, are increased 109% than the second quarter. The portal has showed nearly 5,000 software applications. The average BAU increased by 109% sequentially, and the number of review comments increased by 50% sequentially in the third quarter. All of these operational statistics demonstrated the influence of our platform.

[Foreign Language]

[Interpreted] Our challenging macroeconomic environment, we remain consciously optimistic about the fourth quarter. In the third quarter, the entire advertising industry was under pressure as evidenced by the varying degrees of slowdown or decline in our competitors' advertising business. In contrast, despite the overall industry's loan, our advertising business achieved solid growth year-over-year and quarter-over-quarter in both the number of advertising clients and average revenue per customer, a powerful testament to our brand influence and customer recognition.

[Foreign Language]

[Interpreted] The main growth points of our advertising business will be expanding the customer base and increasing the average revenue per user, while we will consistently increase our coverage of new industries and new segments, which will help expand our user base. In addition, we will keep diversifying our content and advertising formats such as review and live streaming while we will benefit our customer, which also continue to rise the ARPU.

[Foreign Language]

[Interpreted] If there's no large scale COVID-19 resurgence by the end of this year, we believe our advertising revenue for this fourth quarter will continue to grow.

We have the next question coming from the line of Vincent Yu from Needham & Company.

[Foreign Language] I have 2 questions. One is, can management share what are our key revenue contributors in terms of industries as we are seeing that overall, the China advertising are seeing some weakness due to various reasons? What do we think our revenue stream come from this quarter and for the next few quarters? And my second question is on the enterprise value-added service. So for the number of enterprise value-added service customers, even though they are lower than last year, but for the past 3 quarters, we are seeing they're steadily improving. Can management shed some light on what's the driver behind this improvement, and what we see these trends in fourth quarter and next year?

[Foreign Language]

[Interpreted] In terms of total revenue, the top 5 industries were consumption lifestyle, investment institutions, entertainment and media for e-commerce and government, totally contributed 57% of total revenue. The top 5 industry for our advertising lines are consumption lab sales, social networking, hardware, e-commerce and entertainment and media, which contributed a total 91% of our revenue. No matter from total revenue side or advertising business side, we have a very healthy mix of customers. When you mentioned here some weakness in the overall China Internet sector, not sure if you mean our education sector and online game sector. These 2 industries are very small part of our business and have no impact on us. New Economy companies do make up a considerable portion of our customer base, but a significant part of our revenue also comes from Fortune 500 companies and solution companies such as Intel, Huawei, CATL, Haier, Eli and Media. We have a very healthy mix of our advertising clients. The temporary volatility in one sector or industry segment will not have an impact on cost. We will consistently increase our coverage of new industries. Demand for new economic companies emerging from promising industries such as high-end manufacturing and health care will be strong and sustained. We will also provide new service and products such as short video, live streaming and the service review portal that we mentioned before.

Vincent, for your second question -- this is, Lin. Actually, I will be answering your second question regarding the enterprise VAS revenue. It's understandable that you got a little bit confusion on the number of enterprise VAS customers and ARPU over there. I think if you compare on a year-over-year basis, it's not exactly apple-to-apple comparison because if you find out from our prepared remarks, starting from this year, we actually changed our revenue recognition. Last year, we have a big portion of enterprise VAS revenue, namely integrated marketing revenue, actually, we recognized that on a gross basis, and this year, we recognized on a net basis. And we even introduced the GTV growth transaction value to be a more comparable indicator. But if you see from our earnings release, it's not exactly comparable if you look at the number of customers and the ARPU. But you are also correct that if you are looking at a sequential basis from Q1 to Q2 and from Q2 to Q3, that number, both numbers have been increasing very obviously. That's because we have been shifting away our focus from integrated marketing business, which is a low gross margin business to more higher-margin business, which namely consulting services and off-line events services. And I just mentioned on my answer to the CICC analyst that consulting services and off-line events account for around 60% and 30%, respectively, of enterprise VAS revenues. And these 2 also grow very strongly. One, the consulting services grew 14% year-over-year. And the other -- the off-line events grew 72% year-over-year. So that's why this sector has been very strong. We put a lot of emphasis on that. If you are asking about the trend in Q4, Q4, as you -- I understand you are in the States so you might not exactly familiar with the situation in China. In Q4, there are some upsurge of COVID-19 again there might be some impact on our off-line events. But overall, I think, Q4 is our strong season. So we should have been -- still expect growth in this category. But if you look at next year, the full year 2022, that will be very obvious, this category will be upward trend again, especially with the -- our new businesses enterprise services review portal, once that's been commercialized, there will be additional streams revenues coming from these new businesses that will be in the enterprise VAS category as well. Hope this answers your question, Vincent. Thank you.

[Operator Instructions] We have the next question coming from the line of PeiPei Qiu from Industrial Securities.

[Foreign Language] Could management give us more color on the development of the [indiscernible] live stream parts? And how much does these 2 new forms contribute to the advertisement sector, with -- how much is ARPU now of these 2 new forms?

[Foreign Language]

[Interpreted] So [indiscernible] by the third quarter revenue, over revenue from short video and live streaming, both achieved year-over-year growth. So given the considerable macroeconomic challenges faced by the entire advertising industry, we are quite satisfied with our performance. Our short video business continued to be a bright spot in the third quarter. So we helped some customers like Intel promote it's product with short-form video feedback upgrade. And the over RMB 2 million revenues at a record on the short video advertisement averaged revenue per customer. So also other customers like IBM and Financial also start to cooperate with us. So the short video revenue will be higher than the revenue we earn from the WeChat account. So in the future, we will be able to raise the ARPU with the short-from video model and thus, to facilitate our penetration among individual customers, also the younger customers, and expand our customer base. So the next, we will let our CFO to answer some of the proportion of the short video form of the revenue.

PeiPei, this is Lin. I think the short form media and live streaming are new forms of advertising and grow very quickly now. But in terms of revenue scale, because it's very new and even not yet a year since we launched these businesses. So right now, they account around maybe less than 10% of total advertising revenue. But the growth rate, again, is definitely outgrowing -- outperforming the average growth rate of advertising revenue. So in the future, it will grow and it will be a bigger percentage of total advertising revenue very soon.

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

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