Weimob Inc. (2013) Earnings Call Transcript & Summary

Good evening. Welcome to Weimob 2023 Annual Results Announcement Investors and Analysts Conference Call. The annual result announcement can be downloaded from the company's website. [Operator Instructions] This conference call will be conducted in Mandarin with English simultaneous interpretation. Participants can see or read the PPT slides on the screen. The results announcement will be based on IFRS standard, and management in attendance include Chairman and CEO, Mr. Sun Taoyong; CFO, Mr. Cao Yi. So now let me invite Mr. Sun to start the presentation.

Good evening. Welcome to Weimob's results announcement. Let me first present our financial performance. After that, there will be more detailed presentation. In 2023, sales economy has recovered for Weimob. For the whole year, our core metric is high-quality development. So through AI, new technology innovation, we kept on lowering costs and improving efficiency. For the whole year, if you look at the financial data, one very obvious sign is that in terms of gross profit and gross profit margin, we achieved big growth. Revenue was up 21% for the whole year. Gross profit was up 36%. Gross profit margin was up almost 8 points. This is very significant. And in the future, our gross margin will continue to rise. Then if you take a look at reduction of loss, our loss significantly narrowed, adjusted loss RMB 388 million, down 73%. Adjusted EBITDA saw 93% reduction. So this is very obvious. In second half 2023, we can see that our cash flow for operation has turned positive CNY 60 million. Adjusted EBITDA positive also. So for these 2 critical indicators, operating cash flow and adjusted EBITDA, they both turn positive. At the end of the year, cash and cash equivalents comparing with mid last year was more or less the same. Specifically, if you take a look at our subscription solution, up 4.5% year-on-year for the whole year. So you may say that this growth rate has come down, however, for Weimob's net profit gross income, that is gross profit up 16%. So this number is quite a good one as gross profit on subscription solutions. Besides in the first half, we actually removed some business. And in terms of loss or low profit margin, low-quality business, we have contracted the size. Later on, our CFO will explain in greater detail. For Merchant Solutions, last year, there was a big growth, up 60.5%. This is very significant. At the same time, for intelligent or smart retail revenue, excluding hiding consolidation impact, we're up 32%. This is the year-on-year endogenous growth. And then for share of total revenue, up 5 percentage points last year, 40%, now 45%. This is the percentage of Subscription Solution revenue. In 2024, this will go up to 50%. So in terms of our revenue -- share of revenue, it is rising for Subscription Solution revenue. Now let me briefly go through our businesses. For upmarket strategy, just now, I already talked about the Smart Retail revenue up 19.5% year-on-year, endogenous growth, 32% and branded merchants 1,306, then other revenue 19.5. So okay, we maintain significant strength in a number of industries. Last year, we signed contract with Peacebird Group, Embry Group, [indiscernible] and so on. So we also focus on building materials, electrical appliances and so on. And we have a stable cooperation relationship. Last year and this year, we focus on food FMCG industry and also brand empowered DTC. So these will help food FMCG to build its digital solution. For example, we have Baicaowei, [indiscernible] Yanghe, Junlebao, Haitian, [indiscernible] and so on, these are our benchmark customers. This year, in FMCG sector, we will sign more reputable brand customers. And then for superstore and also convenience, again, we have entered into long-term cooperation with some famous companies. In commercial property area, we have both a full digitalized business. So okay, if you look at our strategy, our upmarket strategy, we cultivate deeply into various industries and sectors. So that this year, in FMCG, food, building materials, homeware, we have made new breakthrough. So for our upmarket strategy, we have a big strength, and that is our integrated system or all-in-one system. In the past, we sold WeiMall and then gradually based on online stores and also multiple store shopping malls, we also sold cloud stores. And then gradually, we want to help companies to run the private domain, and so we introduced some new products. For shopping guide, we have smart shopping guide products. And then for our private domain, we have WeCom Assistant. So for these brand companies, we're able to offer all-in-one solutions. There are not many such companies Weimob can satisfy companies' needs in a comprehensive way through our all-in-one solution. So we can work with these big customers. Now for those with 300-plus stores, those are chain enterprises. And then for these customers, Weimob has no competitor. So for a chain with more than 300 stores, our market share is very high, more than 90%. So in this area, there is an important foundation, our WOS system. Now looking at many other brands, they come for our all-in-one system. Besides they have personalized needs. So they meet our WOS. So our WOS system can totally satisfy them. So through the IT people, they can also operate and they can also do it through a third party. So our solution for this kind of medium- to large-sized companies, well, we are very suitable for them. So that's why in smart retail area, we have been in leading position all along. Next, I would like to talk about our marketing business. Last year for our marketing business, it grew fast. Last year, gross income, almost CNY 14.5 billion, that is gross billing, up 63% year-on-year. And then last year, we started some new channels, for example, Kuaishou [indiscernible] last year, growth was very fast. Kuaishou was up 164% and [indiscernible] up 259%. Last year, why is it that marketing business grew so strongly? First, new channels are very important to us in terms of impact. The most important thing is video accounts. For video account last year, we did CNY 2.6 billion, up almost 10x. So at first, the number was not high. But then last year, we increased 10x. This year, we believe it can be doubled, reaching CNY 5 billion. So for video accounts, the commercialization is still at an early stage. There will be big room or potential in the future. Within 5 years, it should go to CNY 100 billion. Right now, market share is 25%. In the future, marketing business slowly video accounts growth will be a big amount. And then for Kuaishou, it's a Read Book. Last year, growth was fast, especially Little Read Book. This year, on Little Read Book, we will be able to achieve CNY 500 million, Kuaishou about CNY 1.5 billion to CNY 2 billion. So for these new channels, they will drive our overall consumption growth. At the same time, we cultivate deeply in different industries. For example, for footwear and fashion up 68% and traveling tourism last year after the pandemic, it recovered up 184.3%. In automobile, health care and medicine, pharmaceutical, big growth as well. So far, Weimob, first of all, we have horizontal layout in media, and we offer vertical services and integrated services through AI plus marketing, we help our customers to improve operational efficiency and improve the overall effect. So in the future, I think this can deliver stable growth. And then now let me turn to efficiency improvement. And I should then focus on AI. Two weeks ago, we organized a small AI interactive session or a communication session. We gave a very detailed explanation. In terms of AI, well, perhaps, in fact, we have done a lot of work in relation to AI. AI can be divided into 2 parts. First, based on SaaS products, we have offered an assistant-like product. So for SaaS customers or merchants, if they have to solve copyright problem or if they need to write some promotion text, then they can make use of our model. Why SaaS? And if they need to write or produce some product service, for example, marketing, pictures, posters and so on, then they can make use of our why to produce these very quickly. So efficiency can be enhanced. And then for merchants, store opening and also data, AI plus BI, we offer many scenarios. Now there are altogether 50 scenarios for merchants to use our AI products to very quickly enhance efficiency and lower cost. At the same time, we are also working on a new segment. This year, in Q2, we will announce it. So for this enterprise version of product, what is it? Now our marketing business needs a lot of advertising materials and pictures and also video materials. In 1 year for merchants, we produce around 1 million advertising materials, 100,000 video materials and labor costs amounted to almost CNY 80 million. Now with our wide enterprise version, it can replace 30% of the labor. So in this way, we can save cost by CNY 10 million to CNY 20 million. In the future, for video, and also multimodal models, they become more mature. And then for video, we can replace a lot more labor up to like 70% or even 80%, then our cost will come down significantly. And then for Weimob, we can help lower cost in this way than our merchants. They may need to do marketing and promotion by means of photos and other materials. They may also have this need. So in the future, our enterprise version can be sold, and we can negotiate price with customers, we can customize a relevant commercial model for them. For our AI, first of all, we do not work on large models. No matter whether it is overseas or in China, definitely, there will be the emergence of many large models. And for large models, there will be different industries and business formats. But for Weimob, we will directly make use of these models. In the past, for pictures, we use a certain model. Now there is a new model playground in terms of quality of pictures, it is very good. And merchant satisfaction is high. For the enterprise version, we have almost over 100 models in the matrix. Now merchants have different business and sales. So for example, they may need certain model for some pictures and text and in some other cases, they may have to work on things like big Bloomberg model. And for [indiscernible] trend, they want some Chinese style materials, so in this way, we can do fine-tuning for them. So we train the model based on past pictures and very quickly, we can create pictures similar to what they need to suit their characteristics. For pictures generated by AI, we gave them to merchants to do promotion and testing. And so the utilization rate is very high. And now for pictures generated by AI, I think the usage is even higher than those pictures produced by ourselves. So that is about AI. Later on, I will talk about commercialization of AI. And then I will turn to WOS. For WOS, well, we attach much importance in this platform with a lot of R&D done in the past, if you look at financial performance, we made a big loss. It is because of our investment into WOS. We invested a lot of resources. But today, you can see that our past investment has started to bear commercial results today. For R&D, people comparing with 2020, the peak in 2020, well, there is a big decrease in the number of R&D people, but overall R&D efficiency has increased significantly. Recently, we are working on an internationalized product. So R&D cost has come down by 80%. And then we shortened time to launch by 67%. So we are able to be much faster. So the whole matrix is very full ready. Now we are doing R&D on new products. We can repeat a lot of middle office products to a large extent, then we can enjoy those functionalities. Next, we will make good use of our ecosystem. For example, now we are working on product solutions. For product solutions, we will make use of ecosystem products together with Weimob's own products to create solutions. Recently, wholesale solution is what we are working on. So we are working with another platform. So very quickly, we have put together a wholesale solution. Merchants are very happy with the product. And in the future, for example, off-line delivery in beauty industry will use external party to very quickly package a product. So in the future, when it comes to technology investment and operation and maintenance, we don't need so many people. So we will make use of our platform capability and use more third-party ISV to do the work, and then we can share the profits. Okay, so just now I have done a business review. Now I will talk about business outlook. First, this year, the most important thing is AI for us. Our future positioning is we want to become an enterprise-grade AI service provider. How should we understand this? For AI, every enterprise would like to produce relevant products. We want to work on AI application. When it comes to large enterprises, if they want to launch AI products, there are 4 steps, first AI consultancy and then AI testing and then AI product launch and then after that, there's the need for continuous upgrading and integration. Now for Weimob marketing, we treated as our customer, we kept on make use of products to satisfy Weimob marketing, advertising, photo materials need. So in the past, we did a lot of research work, and we realized that for any business model, it is difficult to solve customers' problems. In the future, they will definitely need multi-models and matrix, for example, including text, pictures, videos. And in the future for videos, there will be different models. And for pictures, there are also many requirements. And through [indiscernible], we also do brand attribute fine-tuning. So for large enterprises, if they are to launch their AI products, it is not that it will be easy in some scenarios. Well, we have done some good work. We can help customers solve their problems. But if you talk about real commercialization of AI so that it can help enterprise this and then the internal processes can be up to standard, then a lot of work has to be done. I believe that in the future, we will look at the actual needs of enterprises and the scenarios and then we can offer the right models for them. And based on enterprises own characteristics and attributes, we will help refine the models. At the end of the day, each enterprise needs its own model matrix. And there is a lot of AI consultancy and also testing work. For AI products to be launched, well, in the future, there is a need for continuous upgrading and iteration. There are new models coming up, so there is a constant upgrading. In the future, there would be more and more large models. And in China, there are many outstanding large models, many examples. So when it comes to these large models, there are problems in themselves. They may be doing a good job in large models, but they lack scenarios and applications, they would like to build scenarios and applications with us. In the future, when we serve as a SaaS service provider, we have very good scenarios. So in cooperation in large models, we can also form our own products based on the large models. And then we can offer to enterprise this, the AI products that they need. So this is about AI. In the future, if you are interested, we can organize a session on AI, then we can have more in-depth communication. So the second thing I would like to talk about to promote our upmarket strategy to dig deeper into our vertical industries so that we can have bigger share from our key customers. So apart from fashion clothing industry, there's FMCG. This year, FMCG will be our focus. Apart from direct operations, there are also other products. For example, home building materials industry, super store, convenience stores and so on. For video accounts, this year, I think we are still very -- the biggest service provider for video accounts in e-commerce, we will be focusing our energy. So we are a comprehensive service provider for video accounts. When we increase investment in e-commerce, we will also take part in video account e-commerce building, including live streaming operation, video account shop, Internet celebrity live streaming and so on. So in other areas, we will become a very top service provider for video accounts. This year, if you have read our announcement, then you will know that we have arranged webisode channels. You may ask why? First, definitely, it is not that we are following others. As we all know, webisode, the core is 2 capabilities: one, content creation. The other is monetization. And as you know, in terms of monetization, we are a leading service provider. In the past, there are many industries, especially those top industries with high concentration, profit will become thinner and thinner because the top players have very high bargaining power. So if the threshold is not very high, then we can take a look at those industries, and we can do the work ourselves. For example, webisode. Through acquiring the technology, well, in the past, there are companies working on webisode, [indiscernible] webisode and later on, there are others. So the team did a lot of best sellers in the past. But then in the past, they exported their works for platforms. And now for many top webisode players, most webisodes are through many studios and also outsourcing to complete the creation. So through acquisition, we're able to enhance our content creation capability. In the future, for the webisode industry, we believe that profit margin will be higher than before. And then for webisode channel or segment, this year will be our focus and a new revenue growth engine. In the future, when the overall room is bigger, then the whole market will be very big. Last year, the market scale is CNY 35 billion. This year, CNY 50 billion. Last year, China film box office CNY 55 billion. So for webisode, I guess it will exceed the film box office very soon. So in the long run, the potential is huge. Now, we are actually doing a lot of tests and optimization. So this year, we think that webisode revenue has not been included in our guidance yet. Well, in the future, this business is going to be very big, and we won't give too much estimates or guidance. But definitely, it will be a very important growth engine. Last, let me talk about internationalization. Some time ago, you will notice that we have got a super app solution. For the super app solution, what is it? Now in the Middle East, it is very fragmented. In each country, there is population of a few 10 million. And they have many super apps. For example, on banking, on telecom, on top apps. So they would like to copy from China's WeChat and then replicate this kind of ecosystem. And then in -- well, we have got a mini program. So we sell it to these super app providers. But then there is no one doing development work. In the Middle East, there are very few development people, so no development ecosystem. For Weimob, we use our mini program app so that the merchants can use themselves. In the Middle East, there are at least 200 customers that can use this super app technology, banks, telecom companies, top traffic apps and so on. In the future, the potential is huge. It may be like CNY 5 million per customer in revenue, and then there would be other profit sharing. So when we want to go overseas, we will make use of our super app to develop the Middle East market. And so that's about Middle East merchants. In the future, we will develop other business. And then for our app, we are creating a one-stop marketing solution. So Google app and so on Meta app, we are offering overseas solution. Then we also do the DTC plus B2B one-stop solution. And then through AI, stepping and lip synching, AI translation plus subtitles, AI face swap, we can create webisode very quickly with these. And then we can do automated content generation so as to improve our efficiency. So in the future, we will make these attempts on overseas development for webisodes. That's all from me. I will ask our CFO, to present our financial performance. Thank you.

Analysts, investors, good evening. Now I'm going to present to you our overall financial results in 2023. And on revenue change and gross margin change, our cost reduction and efficiency improvement work and also guidance, I will give more details. As we all know, in the past 2 to 3 years in the capital market, there was a big change. So in the beginning, you may be more concerned about high-speed revenue growth and short-term profit will be sacrificed for high-speed growth. Now this model in the past 2 to 3 years have seen changes. There are more and more investors and companies sacrificed -- in the past, sacrificed short-term capability for high-speed growth, but now they have changed. Now more and more companies would like to make ends meet. They would like to go for high-quality revenue growth. In the past 2 years, we also experienced this change. Of course, in the past 2 years, external economy experienced big change. In 2023, macroeconomic environment, after recovery from pandemic, had undergone some volatility. At the beginning of the year, there was a restart bonus. And then in 2023, overall speaking, it is just a weak recovery. For offline consumption, retail industries related to livelihood, that is no exception. After restart from pandemic, the small- to medium-sized merchants started online stores. There is a big trend of that. But because of weak recovery of consumption, these SMEs have, to some extent, disappeared in large number. So before the pandemic, the sell-through was low and then in terms of recovery, there are a lot of difficulties. For brand merchants, they face uncertain economic recovery, and they strictly control marketing and IT budgets. In Smart Retail Solution, in terms of functionality and brand effect, we are #1 in the industry. However, for our key customers, the budget control or the demand side is still weak. So the ASP is also under pressure. We are happy because since the pandemic till now, our key account loss rate is low. So this can show that our smart retail solution has high merchant value and stickiness. When merchants buy private domain SaaS solution and integrated online/off-line solution and IT infrastructure when the budget is tight where they would like to have precise marketing and advertising placement. And so there is a strong need for this in order to boost order. Precise marketing revenue achieved good growth. In 2023 for our group total revenue was up 21%, subscription, CNY 1.35 billion, up 4.5%; merchants, gross revenue, CNY 14.5 billion, up 44.5%. Merchant Solutions revenue, CNY [ 880 ] million, up 60.5%. Merchant advertising strong recovery is such that our Merchant Solutions revenue accounts for 39.4% in share. Paid number of customers share is 41%. Now for retail and consumption in 2023 only recovered in an initial period, overall budget is tight. In 2023, we insisted on upmarket, internationalization strategy. And we ceased bonus from video accounts and adjusted our operating strategy. In terms of business, we cultivated deeply into industry so as to be well prepared for future economic recovery. We make attempts in AI, internationalization and overseas development. And we are in webisode channel to find growth drivers, and we enhanced our SAR service capability and price and value points. In face of uncertainty in the external environment, we refined our operation, and we optimized our organizational structure. We deleted some unprofitable business lines and through all these measures to lower cost and improve efficiency in 2023 at the end, we have 4,500-odd employees, down 27% from last year. Staff costs, CNY 2.09 billion; in 2023, CNY 1.59 billion, down 23.8% year-on-year. To date, for organizational optimization, it has connected various parts of our enterprise. It is a long-term move for us to improve efficiency. In 2024, we are going to lower R&D expenses by CNY 58 million. In 2024, there are a number of organizational optimization moves. So in 2024, salary expenses will decrease further by CNY 270 million, down 18% year-on-year. As of the end of 2023, total assets, RMB 7.87 billion. Cash and cash equivalents, CNY 2.495 billion and then receivables CNY 1.496 billion. We have some debt in our balance sheet, short-term debt. In early June this year, we will have to redeem the CD issued earlier, RMB 1.468 billion. Short-term bank loans, CNY 1.35 billion. For our short-term bank loans, this is for healthy growth of our advertising business and also advanced payment made by customers and so there is some loan from bank. And our company thinks that advertising business is on high-speed growth. Cash flow is healthy. And then our repayment history is very good. There is no risk of renewal of loans. Starting second half 2023, we did a good job in capital management. In the second half 2023, operating cash flow returned positive. And for advertising cash, it has optimized. When gross revenue went up, the cash inflow was CNY 150 million in 2024. We will continue high-quality growth as our core targets. We maintain cash flow, and we want to ensure that we can smoothly redeem the CB. Now let's take a look at revenue. For revenue, after COVID-19, there were shocks in the economy. In 2023, merchants budget is tight, SME's pressure is high -- loss of SME is high. And then for orders backlog, there is a gap. And then in 2022, second half subscription revenue base was relatively high. And in the past 2 years, we did organizational optimization. We phased out low-quality business. So in second half '23, subscription revenue growth slowed down. In 2023, subscription revenue was up 4.5% at CNY 1.35 billion. Number of merchants in new merchants is weaker. So there is some decline. For subscription growth, it is mainly from ARPU, up 8%. In 2021, we started our upmarket strategy, and Merchant Solution is no longer the main driving force. Number of merchants is at 20,000-odd, and it depends on the wastage, especially for SMEs. For ARPU, in the past, subscription gave a strong push. It is the main engine for driving growth in subscription revenue. When the economy starts to recover and consumption and retail recovered, there is more and more retail digitalization work. So ARPU long-term growth trend will not change. And then in relation to SaaS business. Advertising business in 2023 is such that gross revenue up 44.5%, CNY 14.5 billion. For Tencent channel, the traffic accounts for 87%, up 60% year-on-year. Half -- more than half is from video account advertising. Tencent video accounts advertising for 2023, it actually gave us CNY 2.7 billion. Merchants Solution revenue CNY 878 million, up 60.5% year-on-year. This is because of the restart of the economy. So merchants make use of precise marketing to bring back more orders and cash collection. So they are more willing to invest. For Tencent Video accounts advertising commercialization and also retail medical and health care growth, they also led to growth in our gross billing. In 2023, number of merchants went up to 67,000, ARPU was up 29%. Revenue achieved high growth. Advertising rebate rate also returned to a normal level. For the whole year 2023, advertising rebate is almost 5%. And in the second half of the year, in order to achieve more optimization, profit will come down by about CNY 60 million. If we exclude this impact, then there will be a growth in rebates. Gross profits. Because of fluctuations in revenue, gross profit margin also fluctuated. Subscription gross margin in the first half 2021 was at a high 74%. It came down to 59% in second half 2022 and then in '23 second half, 66%. For Merchants, in '21, first half 86%, it came down to second half '22 of 34%. In '23, it started to rebound. In the second half, 64%. So let's take a look at Merchants. Merchant Solutions gross margin. Revenue has high profit margin advertising revenue and financial technology, Fintech was lower in revenue. So these share will affect Merchant Solutions gross margin. In the past year, when advertising revenue grew well, then their share of revenue will go up, then Merchant Solutions gross margin will be better. Apart from that, we can take a look at subscription gross margin fluctuation. For subscription gross margin, it is mainly because of capitalization of R&D affecting cost and expenses and also [indiscernible] ERP impact. On the left chart, you can see subscription gross margin in the past 6 half year. Fluctuation is such that it is stable at 80%-odd to 90% and then for [indiscernible] 50% to 60%. In 2023, we optimized our organization. R&D expenses came down in 2024. Total R&D expenses will be at CNY 430 million; in 2023, CNY 590 million. Capitalization into intangible assets, CNY 140 million for 2024. On the right-hand side, you can see capitalization leading to intangible assets. In 2024 and thereafter, it will come down further. So based on capitalization and allocation of expenses in 2024 and thereafter, intangible assets allocation will come down year after year. So subscription gross profit margin will go up as a result. When revenue stabilizes and rebounds and gross profit margin will improve and in the past 3 years, our profit and loss and cash flow continued to improve. On the left chart, adjusted net loss in 2022 second half, it is at the peak. And in '23, the loss narrowed down significantly. In first half, adjusted net loss was CNY 250 million; in the second half, CNY 138 million. In second half 2023, in order to improve cash flow, we used offshore money and that affected advertising rebate by CNY 60 million. And then because of value-added tax deductible decreased, and then the accumulated deductible value-added tax is affected in the amount of CNY 24 million. After this one-off impact, the loss is around CNY 54 million. Adjusted net loss in second half 2022 was CNY 200-odd million. It came down to CNY 180 million. So it became profitable in 2023. In the first half, for one-off use of the virtual fund and also change in VAT. If this impact is taken away in 2023, sustainable operating profit of advertising can reach CNY 300 million. Now for cash flow, it continues to improve. On the right chart in 2022 first half, outflow CNY 800-odd-million; in '23 second 2nd half, outflow of CNY 400 million; for advertising cash flow fluctuation, it is mainly affected by scale of advertising business. Gross billing grew fast. And so there is a big need for operating or working capital. But in 2022 through some optimization, we kept on improving our cash flow. Cash inflow was CNY 150 million in the first -- in the second half, CNY 400-odd million inflow from advertising. In the second half 2023 with the effort of various business teams, our free cash flow was flat. In 2024, we hope we can also enjoy free cash flow. Looking into 2024 when macro economy continues to recover and we will see healthy growth in consumption, we believe that we can turn loss into profit. A few driving factors: first, we believe that subscription revenue based on 2023 level can see further increase. It will have 10% growth. And for cost, it is rather stable, and then there is capitalization of R&D expenses and allocation comes down year after year. There is increase in operating expenses. With this offsetting, cost is quite stable for core business. In 2023, CNY 1.35 billion subscription revenue. This can increase gross profit by CNY 135 million. For merchant revenue, gross billing for advertising in 2024 will see 20% healthy growth. This should not be a problem. 20% growth can give us an additional almost CNY 3 billion advertising gross billing growth. If rebates remains unchanged, then this can bring CNY 133 million gross profit increase. This assumption is rather conservative. As said at the beginning, in 2023, the difference in rebate is because of lower -- because of use of some funds -- offshore funds. Now because of this, then we continued organization optimization. So salary continued to come down. In 2023, total salary expenses was CNY 1.59 billion. There is CNY 89 million compensation for staff layoff or for staff departure. And then there is CNY 245 million impact that will be seen in 2024. In '24 for confirmed optimization plan, there will be a reduction in R&D expenses by CNY 55 million. So revenue growth and also cost improvement and efficiency improvement. In 2024, total salary expenses will come down by CNY 270 million at CNY 1.23 billion. So when we reduce number of employees, travel expenses and accommodation expenses will also come down by about CNY 20 million to be conservative. So adjusted net profit of CNY 388 million, together with some of the change factors, we think that there is a high chance that in 2024, we can achieve profitability. So regarding our 2023 results, that is my detailed presentation and our 2024 outlook. So now we will open the floor for Q&A.

[Operator Instructions] Now first question is from CICC [indiscernible].

I have 2 questions. First, last year, looking at the macro environment, which is rather weak, especially in the second half of the year, your operating revenue growth faced pressure. So management this year, when it comes to SaaS, how do you see merchants demand? Second, AI. Just now Mr. Sun said that in relation to AI products and services system, last year for WAI, it has started internal testing. So for merchants, internal test, what is the feedback so far in the future for AI product and service commercialization, what will be your plan to path for it?

Thank you for the question. First, this year SaaS growth. As such as now, there are many external objective factors. And for SaaS, last year, there's some pressure. And of course, this is related to our strategies. Overall speaking, we pursue high-quality developments. So in some businesses where loss is bigger for those products and also in some cities, they are loss making. We have contracted them or removed them. So there is some impact as a result. Secondly, as such as now, in 2022, there is the sharing of orders and some businesses were off balance sheet. So there was some impact. So last year in the first half, there was some pressure. This year, for SaaS outlook around 10%. This year for SaaS growth, there will be a few points. First, we will go for upmarket strategy and cultivate deeply into industries. So for some KA customers, they will drive our growth. This year, well, we have to do some research. This year for order growth, it is not quite significant. But if you look at merchants order volume and GMV, the growth is very significant. So there are a large number of merchants who are using our mini programs. The business growth is quite good. So in the future, for commercialization, we will do some innovation. For example, our fees and customers' business model or scale should be packed. In the past for our retail products, subscription software, a certain amount of money every year and so on. But when customer business changes in scale, well, it should also be packed to our revenue model. We have done a lot of studies on commercialization and also quality test. If this can be launched, then in the future for long-term growth of SaaS, it is going to be a good driving force. Right now, we are still working on commercialization. In the future, with more details, we can let you know. But it is not included in our overall revenue growth estimates. This year, we will see perhaps 10% growth should not be a problem. For AI, in the past, just now we said that there are 2 products for us. One is provided by existing merchants. So it is like assistant-style product. In the past, when merchants used it, their positive review is quite good. And we also have multiple channel promotion. So when you post it, it can be shared on WeChat, Little Read Book and many other platforms. So on each channel, it can be shared very fast. And last year, in Q4, there are more smart scenarios, posters and also other things, which are widely used. This year, we will start commercialization. So last year, our models are still being tested. We had not started charging a fee. Price is still on the low side, CNY 4,800 a year. For wide enterprise version, so it will be one product per company. So for an enterprise, if it is to use AI products, then it will have to do AI consultancy, AI quality tests. The models and matrix that it needs, we will have to customize models for them, and there is the need for constant iteration and upgrading. And in the future, based on the need for customized model and also research fees, we will charge a fee. So for wide enterprise version, it will be sold and charged or priced separately. ASP will be based on those bigger customers annual sales will be like CNY 500,000 to CNY 1 million for those type of merchants. So that is an important direction for our enterprise version. That's my answer.

Next question from CLSA, [indiscernible].

I have 2 questions. First, advertising and webisode. In 2023, advertising gross billing rose fast. And this year, for advertising video accounts and various brands, what would be the continuity of your investment? What is your overall annual outlook and guidance on profit? Through acquisition, you entered the webisode business, how do you see the webisode business? And what about your company's strength and synergy? Next question. Recently, many companies did acquisition and dividend to increase return to shareholders. What do you think?

First of all, in relation to advertising last year, our growth was very strong this year. For gross billing for advertising, about 20% to 30% growth, overall growth driving force is from video accounts. For video account this year, there will be 100% growth. Last year, CNY 2.6 billion to CNY 2.7 billion this year, it will exceed CNY 5 billion. And then Kuaishou, Little Red Book, these are new channels, this year. They will maintain strong growth. Overall speaking, this year for our gross revenue CNY 18 billion roughly. Of course, for our advertising gross billing, we will not attach much importance to it. We go for high-quality customers. So if customer has a big need in terms of credit period or if the rebate is lower than we will decline those customers, we won't serve them. So last year, looking at advertising rebate, there is a big increase. So for those low-quality customers, we will not work on them just because of their gross billing. We will see how much profit we can get from serving a customer. Then this year for gross billing, that is not a big need for us. Well, our net revenue is more important. Comparing with last year, we're up 20% to around CNY 360 million. So that is for marketing business and our expectation on merchants. For webisode, in my presentation, I said that for Weimob, we would like to do this business. Many webisode companies have approached us. So in fact, we have strong strength. Together with [indiscernible] our content create -- they have strong content creation capability. In the future, I think we will be able to achieve good results in webisode, will be a good player. In the future, if there are dedicated seminars on this topic, then we will do some projections. Now it is difficult for us to come up with complete projection. For a top service provider in the industry, they did CNY 4 billion of gross billing, 20% profit margin. So to us, our target has not been really set in detail. We have not done detailed projection yet. We want to create the model first and then we'll see how much will be revenue and gross billing in the future. We are perfecting our ecosystem, for example, our content system. We identify more content contractors and together, we will build the ecosystem. And then we will have more detailed estimates. For shareholder return this year, we can see that many companies paid out dividend. For Weimob in the past, we were at a loss. We did not pay dividend. This year, based on our budget, we should be able to achieve a breakeven or even profit. For next year, our profitability will improve much because next year for our SaaS, we will be able to be profitable in 2025 for advertising. We will have net profit of around CNY 400 million. For our future net profit, if we have a good net profit, then we will also pay back to shareholders by paying dividend.

Because of time, we will conclude our meeting here. On behalf of Weimob Management, I would like to thank you all for joining. If you have further questions, please contact the IR team. Thank you very much.