Soop Co., Ltd. (A067160) Earnings Call Transcript & Summary

Good morning. Welcome to AfreecaTV Live Conference aka ALCON. I'm BJ Eun-Sang. Great to see you, everybody. Hello. ALCON is open to anyone who's interested in AfreecaTV. However, please understand that since it's related to our earnings, only those preregistered can ask a question via chat window. And today, we are joined by Mr. Jung Chan-Yong, our CEO; Mr. Kim Jiyeon, Head of IR; and Ms. Chan Gyeong-Hui, IR Manager. First off, could you say hello to those who joined us.

Hello, everybody. Great to be back. Thank you. The 2021 was a great year for us, and it's already February. All these things that we planned last year, I feel like these were all accomplished and looking at the results at the end of the year 2021 looks really good. But 2022, that's the new year. And as I mentioned during the awards, we have a 10-year plan ahead of us, and we will aggressively roll out all our plans. Thank you very much.

How about you, Jiyeon?

Good morning. My name is Kim Jiyeon. Once again, thank you very much for all your support and interest in AfreecaTV last year. And I think thanks to all of you, shareholders and our stakeholders, we were able to see some great results. So thank you very much. And we hope that you will also keep track and follow all our endeavors at our IR team.

How about you, Ms. Chan?

Thank you very much. It's great to see everybody back healthy and sound and also with the good results, and we will do our best to be back with even better news next year -- this year. So what's the order of business this morning? First, let me briefly go over the earnings highlights of Q4 and year 2021 and then take your questions.

No, you have to say hi too, BJ Sang-Eun.

Thank you.

Yes, 2022 will be -- the ALCON will be hosted by me, Sang-Eun, and the mobile game, BJ. And she received a special award last year, too. I always do my best. Thank you. Yes, she is an up and coming star, BJ. So it's great to have you. I hope all you can visit her channel and give her Star Balloons too. Thank you.

Thank you. Yes, it's great, great. Thank you. All right. So take us away. Mr. Chan Gyeong-Hui, Manager, will do the briefing.

Here are the business performance and earnings highlights of the Q4 2021. 2021 was a year of extended social distancing measures and fierce competition in the OTT platform market. And during this time, despite all this, AfreecaTV has achieved a remarkable results based on our existing main business as well as by expanding to new markets. For this, I'd like to take this opportunity to thank everyone at AfreecaTV, who worked tirelessly to ensure best possible results, not only in terms of quantity but also quality. As well as our BJs and users who tap on our services in most creative and unique ways. And last but not least, our shareholders and stakeholders who have shown tremendous support as always. All year round in 2021, we never stopped the pouring efforts into boosting our platform ecosystem and strengthening our community. With the aim to diversify the content on the platform, we actively supported the production of BJs individual contents as well as original content such as eSports league, which all in turn, boost the overall platform. Also, we strived in many ways to solidify the community between BJs and users and to improve user convenience by adding and upgrading services such as MultiView and Ad Balloons. Most of all, we continue pouring efforts to ensure our BJs who are our partners essentially can grow and prosper with us. For this, we expanded the branded content, live commerce, prepared AFT market and Freeblocks and more. We established the basis on which the virtuous cycle of our platform ecosystem can further evolve by providing diverse business models to our BJs. In addition, we not only achieved a quantitative growth by improving our ad services as well as diversifying advertiser portfolio, but also achieved a qualitative growth in parallel. In 2022 as well, we will continue pouring efforts to bring forth our new businesses, which will be our next growth engine, such as global business, live commerce and Metaverse platform on top of the continuous growth of existing businesses. We will continue strengthening new content such as commerce and at the same time, creating the environment where BJs individual creativity will be maximized. Such efforts and support will help us secure high-quality contents. And we will further solidify our position as an eSports platform by not only producing our own domestic eSports league, but also jointly produce Asian league with partner game companies. And for this, we will be -- start pouring full-fledged efforts into our global business. In addition, we will strive to maintain our growth trend by developing advertisement products, refining target segments and improving sponsorship sales. The Metaverse business, which will be our future growth engine has launched with the opening of AFT market last November as well as the Freeblocks beta service, which opened in January 2022. AFT market and Freeblocks will make evolution based on our user feedback. Freeblocks will develop into one of our one-of-a-kind user-centered services that ensures free economic activities in a world where anyone can be a creator, and Freeblocks will be a forum for creators, not only in Korea, but also in overseas in the field of broadcasting, game development and culture creation. Please stay tuned to AfreecaTV in 2022, during which we will continue seeing growth challenging ourselves for new adventures, new markets and new endeavor. Now I'd like to walk you through our business results of Q4 and year 2021. The total revenue of Q4 was KRW 75.4 billion, recording 6% growth Q-o-Q and 25% Y-o-Y as the platform and ad revenue grew hand-in-hand. The platform revenue of Q4 recorded KRW 55.9 billion, increasing by 1% Q-o-Q and 25% Y-o-Y. The hiatus of Star BJs has been extended longer than expected, which had an impact on the paying users trend, but those BJs are soon to resume broadcasting. And this year, we have Beijing Winter Olympics, Hangzhou; Asian Games, Qatar; World Cup and such mega events, mega sports events, which will have a positive impact on expansion of our ecosystem. The advertisement revenue recorded KRW 17.8 billion, which is a 23% increase Q-o-Q and 29% growth Y-o-Y. As per platform advertisement, the third quarter was at its peak and after that, its revenue decreased by 3.9% Q-o-Q, but grew by 55% Y-o-Y. Increasing advertisement demand drove the branded contents revenue, which rose by 24% Q-o-Q and 18% Y-o-Y. Yearly revenue of 2021 was KRW 272.3 billion, growing by 39% Y-o-Y. The ad revenue saw a remarkable growth of 82% Y-o-Y and its portion in the overall revenue grew from 15% to 20%. The platform revenue also achieved a fast growth of 33% Y-o-Y despite the high base. We anticipate growth in both platform and advertisement revenues in 2022 and on and step-by-step actions are well underway to ensure this growth. The operating income of Q4 was KRW 24.6 billion, which is a 6% growth Q-o-Q and 43% Y-o-Y. Operating margin was 32.6%. Annual operating income in 2021 was KRW 88.8 billion, recording a 76% growth Y-o-Y and operating margin was 32.6%. The growth in operating income was a result of the leverage effect of rise in revenue. The net income of Q4 was KRW 16.8 billion, which is a 15% drop Q-o-Q and a 74% rise Y-o-Y. The change of the Q4 net income results from the removal of the one-off effect of the dividend payout from stockholdings and selling of classes shares in Q3. Also, the LCK franchise intangible asset impairment loss was recognized, which pushed up in nonoperating expenses. The net income of year 2021 was KRW 78.9 billion, remarkable 95% hike Y-o-Y. Now moving on to expenses. Turning to the operating expenses. The Q4 operating expense recorded KRW 50.8 billion, which is a 6% increase Q-o-Q and an 18% hike Y-o-Y. As for the variable costs, the paying charge linked to the platform revenue posted KRW 7.1 billion inching up by 3% Q-o-Q and 32% Y-o-Y. The increase in revenue of branded contents drove production costs up, so the advertising commission recorded KRW 10.3 billion, a 48% up Q-o-Q and 43% up Y-o-Y. Employment costs, which is more like a fixed cost posted KRW 13.3 billion, which is an increase by 4% Q-o-Q and 25% Y-o-Y, mostly because bonus was recognized additionally. Other commissions for broadcasting rights and others posted KRW 4.4 billion, down by 24% as the impact of Tokyo Olympics phased out, but it is a 0.4% increase Y-o-Y. The annual operating expense for year 2021 was KRW 183.4 billion, a 26% increase Y-o-Y as commissioned, which is variable cost posted KRW 18.6 billion, a 126% hike Y-o-Y, mostly fueled by a sustained growth in the sales of branded contents. Last year's paying charge recorded KRW 26.3 billion, up by 43%, mostly due to the growth in platform revenue. Employment cost is KRW 50.8 billion, up by 19% Y-o-Y. For the other section, it dropped by 11% since the bad debt for the direct carrier billing went down. No other section saw an unusual increase in the operating expense. Now the last slide is the yearly financial statement. Thank you very much.

Thank you very much. And I believe this is time to answer the questions by our investors. If you have any questions, please do ask on the chat room, and please make sure to write down your name and the organization that you belong to. It seems like there aren't any questions yet, why don't I start with a question myself. I think there are new services that have been recently launched. For example, the break time, could you maybe enlighten us of what these are?

Yes. As for the items, we do have the Quick View Plus, that's the new item. And it can allow the users to skip the VOD ads and MultiView is also allowed with this new item. And also during the broadcasting, you know how like you know this more than anybody else. You want to take a bathroom break, a short break. That's why we added what's called the break time. The fans in your room are watching your show, they can have personalized as consumption experiences during this time. We're looking at enhancing the efficiency and convenience on the user's part and also helping the BJs do their job. So right now, we're focused more on the live services and on the VOD, which is growing, we are working to and planning on adding more services. Yes, I hear this break item, a function is pretty good to the BJs. So I think this can be utilized very well.

Any other questions from the investors. Well, if not, I have another question for you. I have a question about the global or overseas broadcasting. Does an AfreecaTV have any plan to go global?

Well, global platform business has already been around for 5 to 6 years. What I mean is that in local countries, there is a platform launched on their own. So the ecosystem could have been established there. We tried that way first. But 3, 4 years back, we tried what's called the Global One Build. So it's a one service, and there's a U.S. service the Japan service and Thai service. They're all in there. And when the local users access, they can first see the local content. So this is a new UI we use with the One Build. But I think it's going to take some time. For example, the Korean BJs can either go to the local -- other countries to do the broadcasting or the Koreans living abroad can be the BJs in those local countries. But again, it really depends on the context. It could be global BJs, could expand depending on what kind of contents that they have. But I know this is going to take some time. So -- that's why we want to approach more from the business side. So globally, I think we have strength in eSports, which is pretty obvious. So production of the eSports can be one way to go or we can also have conferences using the partnerships that we have with other companies. We can be the host of that. And that are some of the businesses that we're looking at for the overseas business. So that means -- current at this point, with this kind of approach, our BJs will not have a direct interaction with this kind of business. But if that builds up over time, in the future, BJs will have some kind of interaction on a global aspect. So yes, that will be great. I will continue to study Chinese to make sure. I just started learning Chinese this year. Okay, there's a first question.

The first question is Incheol Yu from Citi Securities. So for the -- what is the paying ratio ARPU trend for the Q4? And the second question is, can you give us the guidance on the 2022 and e-commerce and Metaverse and your business direction for the new year?

Yes, the paying ratio and ARPU, I can take care of those. The paying ratio was 4.9%. So 0.2 percent point increase since Q3, but it's not like the absolute number has been increased. As per ARPU, also increased a little bit. Compared to Q3, it increased by 4%. And so the Star Balloon revenue growth came from ARPU.

And then how about the guidance for 2022? Should I cover this?

Yes, well, we don't officially give you any guidance, but I can consider the internal communication. Our top line revenue growth will be 30% that will be our target. And if I get into the details, I would say advertisement has been seeing constant growth. So our target is to achieve 60% growth in ad; and in platform, 20% growth target. Of course, after the first half, if we do it really well, then we can adjust our target. But so far, these are our targets.

And in terms of our new business, will you cover that?

Yes, I can cover that. In terms of the new business, well, we want to develop ourselves as a media platform and virtual platform. These 2 were the key words that I mentioned. And media commerce platform. Well, you only talked about the commerce, but I think that needs to be connected to advertisement. That's our big picture. And if I were to focus on commerce, the user activities for the commerce are kind of submerged. They are not visible. Sometimes when there is a banner or when there's an issue or a theme type of issue, then those commerce broadcasting shows that partner with BJs become visible, but these are not consumed by users on a constant basis, and we really want to revitalize this. And this is definitely different from a regular commerce. If you go to the regular commerce company, there is -- by category, there are the products and there's a curation and recommendations. And that is not the way we are heading. We're going to make it a little bit different. And of course, liveness, the live commerce, that's the core of our idea, and what kind of commerce service can be appealed to our users at a media platform like us. That's a big question, and that's the question we're trying to answer. And in terms of the virtual Metaverse, and it's going to take time. I mean we launched the beta for the Freeblocks, but we started, and I'm sure there are some people who see this as a positive because oh, they started. But if they go in there and they could kind of complain that, oh, the graphics are not up to par, what not. But of course, making all these graphics flashy and refined, we can do that. But the core of this idea is that the interactivity between users and BJs and the -- what they can do in our Metaverse. So please stay tuned for what we can do with that.

I've charted myself, and I do see some great positive responses. But some -- like, for example, some say, I want to pay there. So I think there will be the sponsor culture establish there as well. Let's see if there's other questions. Some BJs are in absence right now, and the traffic has gone down from September. What is the MTD thread? And also PU, please.

I guess this is Mr. Kim Dohyoung, right?

He didn't quite identify where he's from.

Well, as for the traffic trend, it's going down, yes, from September last year. And January, February, I do see a rebound, fortunately, that's great news. And in particular, BJs, the famous BJs are now gone, they are doing -- taking an absence right now. And for those non-Doyo users have also not been with the AfreecaTV for some time as these Star BJs are gone or during the absence. But this is -- we're seeing a rebound of that. So this year, the traffic -- when it comes to traffic, there's always up and downs. Yes, that's a trend that is what's happening. But we have a very solid community. So I don't see it's going to be a problem. And in particular, for this year, like I mentioned early on, there is a Winter Olympics and Asian Game, especially for Asian Game, eSports is actually officially recognized as a sport. So that's meaningful, and there's another one, Qatar Olympic. So I believe that's going to drive our traffic up this year. So we look forward to this. And the traffic that will come during that time, we are going to make sure that they stay with us with the VODs, for example, and more participatory experience for the users are allowed -- or going to allow us to keep these people who will come for the first time to AfreecaTV because of the sports events. So we're going to make sure that we retain them. And we're making all our efforts for the preparation. So I believe it's going to be pretty positive going forward.

Now paying user and ARPU was another question, I think it was already mentioned. Now for the traffic, if I were to add, we are a platform company. So traffic is very important. It's a very important index for sure. Now there are 2 determining factors for the traffic. Number 1 is a BJ. No matter what, like it or not, the BJs number is critical. And how many shows and broadcasting they have is a critical factor that determines traffic number. Unfortunately, though, like I mentioned, there are some absences of the BJs, which is out of our control. But what we can do is we can do our best to prevent or maybe to encourage them not to. This is all that we can do, to be honest with you. But -- once we have a very solid and conducive environment for the BJs to come in and flourish, well, one particular outlier is not going to be a problem, but it will happen anyway. So number 2 is contents. The platform's traffic depends heavily on the contents and the quality of the contents. And like Ms. Kim just said, yes, it's about the broadcasting rights, but we're going to see a lot more sporting events and contents. So that's a great news for us. So once these 2 things, BJ and contents are successful, I believe we're in a good way to go, and we have made good preparations for these 2 elements. Now so traffic, we're going to make sure that we get back to our previous level and even grow up further from there.

Can I take the next question? Okay. Lee Chang-Young from Yuanta Securities. Congratulations on the great results and growth in 2021, and we look forward to 2022. First question is about AFT market and Freeblocks, the user number and the GMV. Can you give us some of the indicators?

The AFT market or Freeblocks, these things are better version. We have to admit. So it's too early to tell and disclose this information. So please stay tuned for surprises. And the things that we communicated through our press release is that these are better versions, and it's not like -- the Metaverse market is not full-fledged open yet. So this is something that is going to grow with us, with the company, so it's too early to tell.

The reason why we're saying this is because we have to admit it. It's just at the very fledgling stage, and we cannot really say anything. I mean it will be great if it's all revitalized and boost up, but it's not at that stage yet. The core of the Freeblocks is also BJs. And here, you said you visited there and a lot of BJs -- when a lot of BJs come to our Metaverse and start doing activities there. And that would be the time, good timing when we can disclose the information. Yes, it's a better version, yes.

Next question comes from Kang Minjoo from Daiwa Securities. I believe the Freeblocks preparation can drive the employment cost up? What's your take on this?

As for the employment cost as of last -- end of last year, consolidated, we have 658 headcounts. And that already includes the staff for the Freeblocks to some extent. And for 2022, we are looking at 20% increase for the headcount, but 20%, I mean, that's not going to start from January 1. We have to look at it from January until the end of December. But from our previous experiences, it tells me usually the 20% isn't quite achieved to the maximum. Now on not only the Freeblocks, but we also have new businesses in the preparation. I missed -- I forgot to say, of course, existing businesses have grown and it's going to grow at about 30%. But the new businesses, I believe, is going to have some tangible results even during this year. e-commerce is one and Freeblocks, AFT are going to be some time away. It's going to take more time. But again, there are some tangible new businesses for this year. So having -- so new employees and R&D staff will be always important. So we're going to see about 20% increase in the recruitment. So yes, that's what we're looking at, 20%. And yes, the welfare and the salary increase was something you mentioned, and we will reflect something slightly higher than the inflation. If you look at the portion of the employment cost, which is the largest part of the fixed cost, it's about 16% to 18% of the revenue. I think, though, it will remain around that range. Our revenue is pretty high, as you know. So depending on how revenue grows, we're also going to have to grow this number for the employment cost, but the OP margin isn't going to be affected by this growth.

Just before, can I look at the chat, oh, Mr. Lee Chang-Young from Yuanta Securities. There was another question. So the second question was the MUV dropped a lot in the fourth quarter. What's the reason? And is there any effect from the Winter Olympics and the contents' advertisement also rose greatly. Can you get into the details of that?

Well, we kind of answered that question. Well, that drop in the fourth quarter. I think the biggest factor was the major BJs absence, just a temporary absence. And I mean, we have those awards and we have internal events happening. So the fourth quarter is when we cannot actually fully pay attention to the content. So I think that was one of the reasons. Well, in terms of the Winter Olympics, I mean, you can tell, BJ comes every day, they are working very hard, doing their shows. I mean, at this hour, it's hard to even achieve 10,000 concurrent viewers. I mean a lot of the platforms and terrestrial TV are broadcasting the Olympics Games, but there are many users who come to us to see it.

Yes, comes the BJs, there, he's great, he is the best. It's so much fun. I will take the next question. Next question.

On the contents, branded contents for the third and the fourth quarter, usually, this is the high season, in particular, for the fourth quarter last year, I think you can say that the demand for the ads in general went up. Like I said, the third and the fourth quarter are the high seasons for the ads because for the third quarter, it's the game publishers and the fourth quarter, just like overall, the -- a high season during that time. And also, we now have a higher demand, not only from the game industry, but also nongame companies. So that's one thing. And recently, the NH Co-op Bank had a sponsor -- sponsored our contest event at the end of this year -- last year. So not just the branded contents, but the sponsorships are some of the other avenues within the AfreecaTV. So I have a high expectation for this year.

Well, yes, I'm on mobile game BJ. So this is a great news to me. I believe this year and next year, it's going to get better one by one.

Actually, active BJs number was another question from Kim Dohyoung, I believe. Yes, active BJ number is a very important figure for us as well. The larger the pool of the active BJs, the more helpful it is to us to the platform. To give you more specific information, let's say, BJ Sang-Eun, when did you start?

I think it was 2020 December.

So you've been with us for about a year, right? Okay. So you, over the past year, have had ups and downs, and now you are quite solid already. But let's say, this is not scripted by the way. When you first started, when it comes to profit or number of the users, what was it like?

It was good.

Even from the very beginning?

Yes, the first month was the highest time for me.

What's the secret to it? Well, because your answer is not what I had expected.

It was a great traffic.

Why the great traffic?

Well, let me think because I targeted a time where the non-- that the major BJs did not broadcast. Like early in the hours. So I -- the Star Balloon was my major revenue source, but now it's not -- it's now the ad. So I've come to a very stable point.

Well, she is a very unusual case.

Yes, that is very true. People tell me that.

She is exceptional case and she has a great talent must be that's the reason. But what I'm trying to tell you is that most of the BJs when they first start, selecting the contents or selecting the time slot for the broadcasting or in other words a strategy, it really depends on who the BJ is. But anyways for the newbies, for the first few months, it's really not giving them any money. There are no users. And that's why we see a decreasing number of the active BJs. But for those, what we call them already landed, they are not like that. So for us, it doesn't have a direct impact to the active BJs to us. But the point is how do we retain the active BJ number? What can the platform do? Like you are exceptionally talented. We would love to have people like you, but not everybody is like you. So for these new BJs, they need to land -- have a soft land. We need to find out the hurdles first. The first is now they want to be on AfreecaTV, what do you need, what's the first thing? Equipment, of course, the equipment is one thing. Now how much does the equipment cost? Quite a lot. Of course, depending on the requirements on your side, but how much did it cost for you for the equipment?

Well, for me, I started with 1 phone and then moved on to have -- like I think I spent about a few thousand won already.

A few -- about KRW 10 million or so, quite a lot. Yes, usually, it costs about KRW 2 million to KRW 5 million to begin with. SO what we do from the platform side is rent -- allow the BJs, the newbies to rent and borrow our equipment. So it's a rental service. Also, acquiring those users is very difficult for these new ones. And we need to make sure that we have a chance for them to shine. So usually, we have great sponsored broadcasting shows or the official shows. We use these to allow them to have more exposure to the wider audience. So we're going to expand on that and have more contents for the newbies to become active. Instead of stopping after some time, I think active users, BJ, the standard is 3 months. So we want to make sure that they stay for over 3 months by providing such services. So that's our one of services.

Yes. I also was a beneficiary. When I first joined, there was an equipment rental service that I utilized and also I participated in the -- also I followed the curriculums provided by the AfreecaTV and et cetera. I guess moving on to the next question. Hello, I'm Kim Han Kyung from Kyobo Securities. Your guidance on this year's ad business growth was quite high. Is there any additional change? And also, can you give us the strategies on original contents?

Well, as per the ad, that's the business that needs good care. What I mean by that is that it's different from platform services whenever -- in which when we have the basis, then it's going to identically grow, ads are not like that. We have branded contents and we have a platform ad and the platform ad, it goes hand-in-hand with traffic. So it's kind of how much that it's going to go high because it's not going to go high independent of the traffic. But then, of course, we can adjust the advertisement prices. But then branded content. So that is the one that we can focus on. That we can develop and we can plan and also we have to hire BJs. So there's many things that we have to take care of. So we are also expanding our advertisers and then all these production. So to support the production, we are going to reshuffle our organization too. But our strategies have been growth driven and growth oriented. So I think that business will also -- will unfold dynamically. The original contents, of course, our eSports contents, that's our forte. So what we are looking at is strengthening ourselves in non-eSports arena. So usually, say, when we partner with other companies or other organizations, that's kind of like events or promotion events. If you were to say original contents, there are not many events that happened for the original contents. But based on our diverse BJ pools, I do think the topic would be mukbang or cooking show or music or entertainment variety. For that, we are willing to invest, and we want to revitalize that arena. Thank you so much for the 100 Star Balloons from Kyobo Research.

Wow, I've never given 100 Star Balloons recently, wow. Yes. I mean that is the specific Star Balloons for this show. Thank you so much. Next question again from Kim Dohyoung from CLSA. What is your forecast for the PU and ARPU. And as for PU, past 2 years saw a steep growth, but it seems to slow down now. Now what are your strategies to maintain or grow PU and ARPU?

Kim, you have anything to say?

Well, when we do our research, this market of Korea, the digital consumption size is fifth in the world. And even compared to the size of the economy, the digital consumption is very high in Korea, especially for AfreecaTV, we've been around over 10 years already, and our community is very, very solid. And when we have that, for example, MMORPG is one good example. And when you have a solid community, ARPU never goes down. It will only go up on the contrary. Now our platform like you started in 2020, very recent, meaning we are always seeing an inflow of new BJs, meaning new fans joining us. So -- and in particular, there are those who were in the off-line setting, but now moving to the online. So that's another influx of the new BJs. If you look at the Korean people's digital consumption, patterns plus our strong community. If you look at these 2 factors, ARPU is bound to go up. I'm not able to give you exact number, but the trend is pretty clear. Now for paying user or the PU, the paying rate, I believe, can go up to 2 digits, double digits for contents. Our first target will be around 7% to 8%, but ultimately, we're looking at 2-digit, a 10%. So we are looking at a very long term right now. And but all these basis is definitely the contents. Contents is most important factor and, of course, the contents by the BJ. So what we can do is we support the BJs. So they produce good contents. So that's one thing we can do. And also, we create and produce eSports like the original contents and many others as well. So really -- it really comes down to contents. Even the people that did not pay going to turn to paying users if there are good contents. And ARPU, really, you have to have a solid and very stable community. So 2 things, like I mentioned, but they have always been the pillars of our strategy, and we're going to change even more resources going forward. And this year, we're looking at platform growth by 20%, but ultimately, the paying user will grow by 10%, we estimate.

To add to it, as for ARPU, from the platform's perspective, we're not doing anything specifically for that purpose because Star Balloons' business model, if you look at the Star Balloon users choose to pop out and send out the Star Balloons at their own discretion and it's their choice. So we're not really doing anything to encourage them to do it. But thankfully, it has been very natural and organic growth of the Star Balloons. Thanks to a very friendly relationship between the BJs and the users. Now she mentioned about the digital consumption, the pattern, and it's on our -- in our favor. And now on PU, it's important that we manage this, and we take initiative in this for sure. So the gifting was the first strategy. And I don't believe there is a slowdown, and I agree with you, there has been a downward trend so far recently. Now the second strategy then to top that up is the paying users are the ones who use Ad Balloons, so it's a gift. If the gift item of gift composite isn't working, we can probably expand the horizon of the scope of the paying items. So if you look at the platform companies, some have the membership fees. So we can also try to expand the elements or the items where people can choose to pay. So that's what we're going to do.

Wow, many questions. I'm Yu Incheol from Citi Securities. Could you tell us the January Star Balloon trend compared to last year and last month? Would it be possible? Can we disclose?

I can tell you not the exact number, but well, I mean, yes, it had gone up compared to last year. I mean, yes, for sure, compared to last year. But compared to previous month, January, we had the Korean Lunar New Year, but still the number stayed almost the same as December, so which is quite positive.

No, no, no, the holiday was in February, not -- well the holiday started at the end of January, but February 1 was the Lunar New Year.

And January had some -- and February, it's the holiday and the Valentine's Day, we forgot that.

Oh, yes. I mean you're definitely more keen to that, okay? Wow, Ad Balloon.

Yes, I think that's one of our partner BJ.

Thank you so much for joining us this morning. Thank you. I'm Oh Dong Hwan from Samsung Securities. You said the branded content is something that takes a lot of -- you have to take care of those. What is the impact of the low-margin contents, advertisement portion increase in the overall margin? And what is the guidance and perspective on the margin in the mid to long term?

Yes, the branded contents, that's a very low margin because the directive cost. But when we're working at this business, we never set out any specific target for the margin internally. That means that branded content is something that we have to keep up on learning how to tap on that and we never focus too much on the profit itself. However, looking back, the low margin say if there's like 5% or 7% or 10% events. And I just look at the trend. And I think this year, I think we should start managing the minimum margin. And of course, the branded content's profitability has not a big impact on the overall operating margin. And if it did, I mean, I would have known and taken notice. But once the branded content's pie grows and of course, the impact will also grow. So I think from this year, we have to start managing it. So we -- yes, we have to set up the minimum margin. For the operating income, if you have joined us for a long time in the ALCON, you know how I am. I'm quite aggressive about the margin. When the operating income margin was 20%, I said that's quite valuable. It's sufficient. And when I have to make the financial decisions, I said, I'll make a decision as long as we can defend the 20% margin. And at one point, our margin went over 30%. And I don't want to be greedy, I don't want to tell you or promise you that we're going to reach mid-30%. And of course, I'm not going to be stupid and do some business hurting the margin to below 20% or something. But what I'm saying is that our focus is on expansion of business, not the money or the income itself.

Hello, from CLSA, Kim Dohyoung. He has a lot of questions. What's the guidance for the OP margin for 2022 and for longer term, please?

I just think I answered that question. So OP margin guidance is not going to be a solid number, but we talked about the top line already. And like I mentioned, the OP margins last year, I think, is going to be maintained going forward. So that will be my way of determination. Of course, higher OP margin is better, but really, it will depend on the business situation, but I am willing to be flexible with the OP margin. And even after you asked for long term. So if I were to answer that, let's say, our OP margin is 40%. That's a high profit. That's amazing. That's already pretty symbolic in and off itself. But if it only -- that's one scenario, but I'm not going to set specific targets to bring our OP margin to 40%. But -- and also given the nature of our business, we are not going to have a very low number for the OP margin anyway, and it's going to organically grow anyway. And if you look at the OP margin upper trend over the past 5 years, it's going to continue that way going forward for the next 5 years or 10 years. And by then, the 40% may be the standard, but that's just we will have to watch and see. But this year and next year, I don't want to give you a specific figure for this, and rather, I think this kind of organic growth that we have achieved so far, I can tell you, it's likely to continue going forward. I hope that answered the question. And I have to always get the permission from Kim, if I can say this or not.

Well, if I were to add, like you said, because of the nature of our business, the platform revenue, the Star Balloons, the gifting is one pillar. The other is the Ads. And if these 2 continue to grow, of course, are going to have a great profit no matter obviously. But next 10 years and the new businesses, we will always need to make investments for the future. And we don't want to not invest because solely of the OP margin, we want to make sure that we heavily invest, but it's not going to compromise the OP margin too much. Well, I am a decision-maker, top decision maker of this company. Let's say there's an opportunity, I can grow the OP margin by 3%. But here, in my mind, I am very much passionate and there are certain new business that I want to do in helping BJs, for example. And share -- profit sharing is about 60%, 70%. You're the best BJs, so you get the 70% of the -- 70%, right? And you might want to say, oh, if I can get 2% or 3% more profit, you want -- you would be a lot better off. But think about it, that will -- if I were to give you more share to the profit, then that hurts our OP margin. Let's say, for the newbies, the profit sharing is not 60%, but 65%. It's good for BJs, but not for us, but it helps our ecosystem to a great extent. Now when I have to make a decision like that, I'm not going to look too much at the OP margin because that only hurts our future growth in the long term. So that was the main message. Yes, this company already has a very strong foundation. So this is not a small number, the OP margin, I guess, does not matter. Any other questions?

Yes. I think we kind of covered everything, yes. And yes, it looks like we don't have any further questions. So should I wrap up? Okay. Well, thank you very much for watching and joining us this morning. I hope that the ALCON was informative. And you found it fun as well. If you have any suggestion for the ALCON itself, you can tell us on our chat room right now or give us a feedback to our IR team. We look forward to seeing you again at the next ALCON. Thank you very much. Oh, we have to say goodbye. Oh, I'm sorry, I skipped you guys.

No, you start BJ Sang-Eun. I mean, what is the -- I mean, you've done your own show, but this is your first time in joining us for the ALCON. So how was it?

It was very much a learning experience for me and thinking about buying the shares of our company.

Were you nervous?

Yes, I was a little bit nervous, but I think that will be better next time.

It's different from your own show, right?

Yes, definitely.

Well, I can tell you that this year, the expectation from the market has grown and also the company also grew so much. So I feel definitely feel responsible. But looking into the 3 years and 5 years down the road, the AfreecaTV will be greater, a lot greater than we can imagine right now. So I'm not going to be so bogged down by the sense of responsibility. I'm going to challenge ourselves, and I'm going to try new things. Thank you so much.

Ellen, anything to say?

Yes. So it's already February of 2022. I think it's going to be a busy year as well, and we're going to make sure that the existing businesses take firm routes and for the new businesses, they are going to start showing the results. So stay with us. And hopefully, next year -- by February next year, maybe we can say -- hopefully, we can say, "Oh, last year was amazing, and we did a great job."

Thank you very much for 100 Star Balloons from Choi Myung Hwan. Thank you all very much.

Okay, now this really brings us to the end of the ALCON. Ms. Chan?

Well, this was a great experience, and thank you very much for all the investors and participants. We are going to see the end of the first quarter very soon. And I think we will be back here in a few weeks' time, end of April, actually end of April, so in about 2-month or so. I'll be back then.

Thank you very much. This is the end of the ALCON. See you next time.

Thank you.