Earnings call transcript: 36Kr Holdings Q4 2024 sees revenue drop, stock gains

36Kr Holdings Inc. (KRKR) reported its financial results for Q4 2024, revealing a significant decline in revenue but a surprisingly positive stock market reaction. The company saw its total revenue decrease to $231.1 million from $340.2 million in 2023, while its net loss widened to $140.8 million from $89.2 million. Despite these challenges, 36Kr's stock price surged by 6.01% to $4.13 in pre-market trading, driven by optimism around its strategic initiatives and cost-cutting measures. According to InvestingPro analysis, the company currently appears undervalued based on its Fair Value calculations, with a financial health score indicating WEAK overall conditions.

Key Takeaways

• Total revenue fell by 32% year-over-year to $231.1 million.
• Net loss increased to $140.8 million from $89.2 million in 2023.
• Stock price rose 6.01% in pre-market trading following the earnings release.
• The company reduced operating expenses by 31.2% year-over-year.
• 36Kr launched new AI-powered tools and expanded its content ecosystem.

Company Performance

36Kr Holdings faced a challenging year in 2024, with revenue dropping significantly due to reduced spending in the advertising market and macroeconomic pressures affecting small and medium enterprises. Despite these headwinds, the company managed to cut operating expenses by 31.2% and introduced several AI-powered tools to enhance its product offerings. Partnerships with major brands like Alibaba and Apple helped maintain its competitive position.

Financial Highlights

• Total Revenue: $231.1 million (down from $340.2 million in 2023)
• Online Advertising Revenue: $180.6 million (down from $238.7 million in 2023)
• Enterprise Value-Added Services Revenue: $32.8 million (down from $67.3 million in 2023)
• Net Loss: $140.8 million (compared to $89.2 million in 2023)
• Gross Margin: 48.6% (down from 53.5% in 2023)

Market Reaction

Despite the decline in financial performance, 36Kr's stock price increased by 6.01% to $4.13 in pre-market trading. This movement may reflect investor confidence in the company's strategic direction, particularly its focus on AI technology and operational efficiency. While the stock is currently trading closer to its 52-week low of $2.76, InvestingPro data shows a strong 25.08% YTD return, despite a challenging -47.18% one-year performance. Analysts maintain a Strong Buy consensus, suggesting potential upside ahead. Get access to 10+ additional exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription.

Outlook & Guidance

Looking forward, 36Kr is cautiously optimistic about advertising growth in 2025 and plans to expand its global network in regions such as Southeast Asia, Japan, the Middle East, and Europe. The company aims to continue developing its AI content ecosystem and optimize its client structure and product offerings. InvestingPro forecasts suggest a revenue growth of 177% for FY2025, with analysts expecting the company to return to profitability. Dive deeper into 36Kr's growth potential with InvestingPro's exclusive Research Report, part of our coverage of 1,400+ US stocks.

Executive Commentary

CEO Da Gang Feng stated, "2024 marks a year of comprehensive operating efficiency improvements," highlighting the company's efforts to streamline operations and reduce costs. A company spokesperson added, "We are cautiously optimistic about our advertising growth trajectory for 2025," indicating a positive outlook despite current challenges.

Risks and Challenges

• Continued macroeconomic pressures may impact revenue from small and medium enterprises.
• The advertising market remains volatile, with reduced spending from key industries.
• Execution risks associated with global expansion and new product launches.
• Competitive pressures from other content and technology platforms.

Q&A

During the earnings call, analysts questioned the decline in enterprise services revenue, which the company attributed to macroeconomic challenges. Discussions also focused on 36Kr's AI product strategy and the impact of cost-cutting measures on future growth prospects.

Full transcript - 36Kr Holdings Inc (KRKR) Q4 2024:

Conference Operator: Today's conference call is being recorded.

I'll now turn the call over to your host, Shin Huang, IR Manager of the company. Please go ahead, Shin.

Shin Huang, IR Manager, 36Kr Holdings: Thank you very much. Hello, everyone, and welcome to thirty six KR Holdings' Second Half and the Fiscal Year twenty twenty four 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.

Da Gang Feng and our Chief Financial Officer, Mr. Xiang Li. Mr. Feng will start the call by providing an overview of the company and the performance highlights for the second half and the full year in Chinese, followed by an English interpretation. Mr.

Li will then provide details on the company's financial results before opening the call for your questions. Before we continue, please note that today's discussion will contain forward looking statements made under the Safe Harbor provisions of The U. S. Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties.

As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the U.

Xiang Li, Chief Financial Officer, 36Kr Holdings: S.

Shin Huang, IR Manager, 36Kr Holdings: 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 unaudited GAAP financial measures as well as unaudited non GAAP financial measures. 36KR's earnings press release contains a reconciliation of the unaudited non GAAP measures to these unaudited GAAP measures. And please note that all amounts are in RMB.

I will now turn the call over to our Co Chairman and CEO, Mr. Da Sangfeng. Da Sangfeng, please go ahead. Thank you. Hello, everyone.

Thank you for joining our second half and the fiscal year twenty twenty four earnings conference call. Twenty twenty four marks a year of comprehensive operating efficiency improvements for thirty six KR. Notably, our operating expenses in the second half of twenty twenty four decreased by 50% compared to the same period of 2023. Our total operating expenses as a percentage of the total revenues decreased by 17% percentage in the second half of twenty twenty four compared to the second half of twenty twenty three, while our gross profit margin remained about 50% for the second half of twenty twenty four. As a result, we vastly narrowed our operating losses while cash results remain essentially stable, establishing a resilient framework to support company's long term solid business operations.

This operational achievements were primarily driven by our business structure and the workforce efficiency improvements throughout the year. We also consistently fortified our content ecosystem in 2024, leveraging our peerless content creation promise in comprehensive marketing offerings. We continued to optimize our advertising operations while broadening our media reach. We embraced the emerging global expansion trends and remained focused on AGI innovation, further accelerating our implementation of the AI across real world scenarios. These efforts drove significant progress in both our global expansion and AI application.

Let's take a closer look at the company's development from two key perspectives. First, our existing business and second, our growth initiatives. For our existing business, I will start with an update on our content influence in commercialization. In terms of content ecosystem development, we continue to create high quality content on multiple fronts, while maintaining our existing content metrics. Building our flagship channels including 36 ks R and 36 ks R Pro, we broadened our reach in sub verticals, actively expanding high quality content specific accounts like the emergence of intelligence, 36 ks R Auto, future consumption, 36 ks R Games, rates in 36 ks R Finance among others.

This accounts made our metrics more comprehensive by adding both broad content coverage and deep expertise in specialized domains to provide users with invaluable insights into industry trends in evolving business dynamics. We seeing a the lot We the content of company. We are a in industry. We are seeing a lot

the a new content specific account 36 KR games dedicated to exploring gaming products, technology, business value and cultural stories. We utilized a vibrant mix of the text, graphics, live streaming and video formats to capture the vigorous development of the gaming sector and engage its dynamic audience. To date, our accounts cover advanced manufacturing digitalization dual carbon and ESG hardcore technology, highly specialized in innovative enterprises, consumer life science and much more, fostering a sliding content ecosystem. In 2024, our editorial team published 8,090 articles through content specific accounts, of which 2,465 were original, garnering over two twenty million page views, more than 241,000 comments in the 5,253,000 shares.

Notably, on the 36 ks official accounts alone, seven fifty seven of our articles achieved over 100,000 page views. Moving on to our content dissemination network, we steadily expanded our footprint across diverse channels, crossing a comprehensive circulation metrics encompassing major new medium platforms like Weibo, RedNotes, Toutiao, Zhuhubili, Douyin and Kuaishou among others. Broad channel exposure brings us wider overall dissemination and higher visibility for our premium content. Our consistent production of high quality content expanded and diversified our user demographics, further elevating user engagement in the stickiness. As of the end of twenty twenty four, we had over 35,900,000 followers, marking 16 consecutive quarters of growth.

We explore the growing areas for content formats throughout 2024, including text, graphics, short and long form videos, audio and live streaming and reaching our content offerings with a greater diversity of styles. In terms of a short review, our exceptional content creation capabilities earn us widespread visibility in the rate of reviews from users. Our video followers exceeded 9,310,000 by the end of twenty twenty four, including a significant 2,470,000 on Bilibili alone, up by 10% year over year. Our WeChat channels followers surged by 58% year over year. Our short video business continued to excel with its contribution to advertising revenue consistently on the rise.

In the long form video segment, we collaborated with popular short form video platform Douyin to launch a new season of our Elite Talk Show series ForeSeeing 02/1934 in the second quarter. We made notable strides in content creation and channel distribution through this robust partnership. The debut episode of ForeSeeing 02/1934 featuring new founder William Li Bin delved into upcoming shifts in the new energy vehicle sector garnering widespread interest in the ranking of over 84,000,000 views across various platforms. For live streaming, this year we optimized our resources with a streamlined team in the fully elaborated WeChat channels to cultivate an area for content specific accounts, including 36 ks R Pro Plus, global expansion Golden Shovel and thirty six ks R CEO Tips. These efforts not only significantly outweighed our live streaming content influence, but also drove commercial convergence and supplemented our low ARPU offerings.

We hosted two seventy two live streaming sessions in 2024, addressing a diverse spectrum of trending topics, including AI large models and Chinese brands global expansion. Additionally, we launched our first e commerce live streaming in late twenty twenty four. Our debut episode featured 38 tech products and garnered over 1,630,000 views with a live audience of 289,000. Notably, the thirty six ks live streaming channel ranked number one on Douyin's smart device category leader board during the same time period as live streaming. What's more for the full year, our live streaming revenue surged by 68.5 percent year over year.

Moving forward, we will continue to explore new live stream formats in these scenarios, delighting both our users and clients with richer content scenarios in a more diverse service models. Now let's turn to enterprise value added services. In 2024, we achieved a substantial success with the launch of a major event IP, advanced productivity AI partner Summit. In collaboration with industry giants like Alibaba, Baidu, Lenovo and Intel, we delved into the latest trends in AI application, sharing insights on both opportunities and the challenges gleaned from day to day business operations. This summit attracted an impressive 100,000,000 plus views, sparking extensive industry buzz.

Additionally, we held our highly anticipated signature IP event, the Wise twenty twenty four Business Kings Conference in November 2024. The summit focused on 11 trending industry verticals in the future, the two regional sub forums, the Wise twenty twenty four continue to sync, Globalization sub forum Shenzhen and the Wise twenty twenty four Always With You Future Consumption Conference Beijing. The event brought together more than 200 Chinese business leaders and elites representing a wide area of industries, including Li Tai Fu, CEO of Zero1AI and the Chairman of Sino Vision Ventures Lu Wei Bin, Partner and the President of Xiaomi Group Dai Wei, Senior Vice President of Lenovo Group Jiaqing Dong, Vice President of Weibo Yin Yi, CEO of BGI Group and Zhang Kong, CEO of Jipu. Sharing visionary insights into the future of China's business advancement, Our Wise twenty twenty four business teams conference attracted over eight fifty million total views. In addition to offline events, we continued to make strides in our consulting services and other enterprise value added service offerings this year.

For instance, 36 delved into key sectors of points for disruptive growth with a significant upside potential, such as global expansion, embodied artificial intelligence, low altitude economy in artificial intelligence, among others. Their in-depth analysis considered factors like a policy guidance, funding activity, market demand, industry chain structure, competitive landscape, business model and development trends. In 2024, followers of the 36 KR Research Institute increased by over 11%, while workforce productivity ratio significantly improved. On the commercialization front, we strengthened our foundation in industry research in the strategic market planning, while expanding into due diligence, branding consulting and other services. The various efforts I just described have also contributed to client structure optimization.

Our enriched content ecosystem and diverse content distribution channels empowered us to consistently expand our portfolio of services and the products this year, enhancing our commercialization capabilities. This has enabled us to expand our outreach to clients in emerging sectors like new energy vehicles in the luxury goods consumption, while actively broadening partnerships with legacy brands in traditional industries like apparel and food. These coordinated initiatives have meaningfully benefited our existing business through increased productivity, optimized business in the client structures and enhance the sustainability of revenue streams. Going forward, we will continue to expand the boundaries of the media, explore new products in the business models of our global expansion to drive revenue growth in advanced AGI applications to further optimize content production and commercialization efficiency. Turning now to our growth initiatives.

In 2024, global expansion emerged as a crucial opportunity that no Chinese company could afford to meet and thirty six KR is no exception. Thirty six KR has already established a solid presence in Japan through 36 in Southeast Asia, while Asia, building on years of extensive efforts by its overseas teams. Thirty six KR has cultivated significant ties with foreign governments, major industry players, startups in capital ecosystems, amassing a wealth of success stories and experiences in facilitating global business expansion. For years, we have been providing media services in the marketing support to Chinese companies overseas, while our international teams have been helping foreign institutions and enterprises to tap into business opportunities in China. On the content front, we have extensively covered globalization success stories of leading Chinese companies such as Minasol, Novel, Aper, ePropulsion, Nationality Digital and Marich keeping a close eye on the global expansion dynamics of Chinese enterprises.

To the one time global expansion, we launched the thirty six European Central Station in 2024. Currently, thirty six KR Europe mainly features new coverage on startups from the thirty six KR ecosystem, along with our regional content such as a quarter past date, equipping overseas stakeholders with timely and comprehensive information on Chinese businesses. This initiative enabled thirty six KR Europe users to access the same information at the same time as those in China. Additionally, thirty six KR Europe leverages the AIGC technology to empower its content ecosystem, notably improving productivity while lowering content creation cost. It currently supports browsing English German and Chinese with plans to add more languages in country specific channels.

To maximize the synergy of the domestic resources, in December 2024, '50 '6 KR initiated and launched the Beijing International Chamber of Commerce Global Expansion Service Committee under its guidance for China Council for the promotion of international trade Beijing subcouncil. Twenty six leading institutions have joined the committee, including Listing China, China Mobile International, KPMG and End Financial. The committee brings together Beijing's top industry and professional service providers specializing in global expansion related solutions to help local businesses expand into global markets aiming to gradually enhance the international competitiveness of Beijing based companies. Moving on to commercialization. At the beginning of 2025, '30 '6 KR signed an agreement to enter a strategic partnership with Hongjo Tianhua New Area Construction and Investment Group Company for the Chinese Enterprise International Services Center Operations project.

This collaboration will leverage our expertise in organizational operations in online content distribution as well as our vast network of global expansion resources to support Tientang new areas in building a unique service ecosystem in the operational framework for corporate global expansion. This initiative seeks to create a powerful brand for Tiantown New Area and amplify its international influence to empower Chinese enterprises to expand globally. Moving forward, thirty six KR will remain committed to expanding and integrating cooperative resources for strong synergy within an extensive global partnership ecosystem. This will enable us to better serve Chinese businesses and institutions in their international ventures, empowering Chinese businesses global expansion while driving thirty six KR's revenue growth. In addition to exploring global expansion offerings, we continue to focus on artificial intelligence, depending on our innovative AGI applications to further optimize content production and commercialization efficiency.

We also provided intensive coverage of China's AI ecosystem throughout 2024. We are the only tech media outlet worldwide that we have exclusively interviewed DigSeq, the founder, twice. For our first in the industry reports on topics like six AI tigers faced the exit from a pre training in the GPU leasing dilemma for AI computing centers to tracking and swiftly capturing the latest AI developments of the tech giants like Alibaba, Binance and Xiaomi. Our coverage of the Chinese AI community is both broad and deep and by our network's extensive reach. In addition to our broad content rich in the key insights, we have actively integrated AIGC technology into our content ecosystem to enhance efficiency company wide.

In 2024, we launched an area of AI powered tools, including AI text to image, AI web and AI financial report interpretation as well as AI meeting coverage, which fully leverages the large scale AI model technologies and the AI algorithm to produce AI powered interviews in a generated content. The underlying system currently incorporates multiple developers, large AI models such as Douban and Tongjianren models and we integrated Deep Seat in February 2025. AI meeting coverage has covered over three fifty companies since its launch, highlighting their latest initiatives were far reaching ventures. In addition, we launched the 36 KR corporate omni intelligence in October 2024, targeting stock market investors by providing daily sentiment analysis reports for public companies. The service currently covers over 7,800 public companies listed in Mainland China and Hong Kong.

Users can search, filter and subscribe to reports on their preferred companies, receiving daily analysis in a personalized content format. The product's underlying sentiment data is a collaboration between thirty six KR and Softinn, a fully owned subsidiary of BeyondSoft. Currently subscriptions for this daily reported total three twenty four with a cumulative user base of 600 more than 600. Our exploration of AI products and tools further underscores the 36 foresight acumen and outstanding execution capability in AI. Leveraging the inherent synergies between AIGC technology in the content production industry, we maximized AIGC technology utilization in our content production activities this year, including information identification, text processing and image generation.

Moreover, we continued to broaden our business scope by actively promoting AI application across diverse business scenarios. For example, we partnered with SinceTime to jointly launch AI financial report interpretation services by introducing diverse AI products. We broadened the purview in the precision of our customer outreach initiatives effectively connecting with a diverse spectrum of enterprises in the organizations previously beyond which due to resource intensive workloads in the manpower limitations. In summary, thirty six KR comprehensively improved its operating efficiency throughout 2024. Thanks to our Peter's content creation promise, robust IP assets, deeply engaged users, refined customer structure in the diversified product and the service lineup.

Looking ahead to 2025 as a prominent brand in the pioneering platform supporting new economy enterprises, we are poised to hone our competitive edge in content creation, broaden the reach of our products and service offerings and further harness AI technology to empower high quality development among new economy stakeholders.

Xiang Li, Chief Financial Officer, 36Kr Holdings: With that, I will now turn the call over to our CFO, Mr. Shang Li, who will discuss our key financial results. Please go ahead, Xiang. Thank you. Thank you for joining our today's conference call.

We will now review the second half of twenty twenty four and the full year financial performance. Please note that all amounts are in RMB, unless otherwise stated. The company's total revenue were $128,700,000 in the second half of twenty twenty four compared to $200,300,000 in the same period of 2023. The total revenue for the full year of 2024 were $231,100,000 compared to $340,200,000 in the previous year. Online advertising services revenue were $100,200,000 in the second half of twenty twenty four compared to $139,800,000 in the same period of 2023.

For the full year of 2024, our online advertising services revenue were $180,600,000 compared to $238,700,000 in the previous year. The decrease was primarily due to the reduction in advertising spending by advertisers from certain industry and ongoing elimination of underperforming customers as a proactive measure to reduce credit risk. Enterprise value added services revenue were $19,400,000 in the second half of twenty twenty four compared to $40,500,000 in the same period of 2023. For the full year of 2024, our enterprise value added services revenue were $32,800,000 compared to $67,300,000 in the previous year. The decrease was mainly due to strategically refocusing on the core high marketing business through the optimization of underperforming regional operations.

Subscription services revenue were $9,000,000 in the second half of twenty twenty four compared to $20,000,000 in the same period of 2023. For the full year of 2024, our subscription services revenue were $17,600,000 compared to $34,200,000 in the previous year. The decrease was mainly due to the strategically transition in the business model for training services. Cost of revenue was $61,800,000 in the second half of twenty twenty four compared to $88,100,000 in the same period of 2023. For the full year of 2024, our cost of revenue was $180,700,000 compared to $158,200,000 in the previous year.

The decrease was primarily attributable to a decrease in operating costs resulting from our improved efficiency. Gross profit was $66,900,000 in the second half of twenty twenty four compared to $112,200,000 in the same period of 2023. Gross margin was 52% in the second half of twenty twenty four compared to 56% in the same period of 2023. For the full year 2024, our gross profit was million compared to $182,000,000 in the previous year. Gross margin for the full year of 2024 was 48.6% compared to 53.5% in the previous year.

Operating expenses were $73,100,000 in the second half of twenty twenty four compared to $147,500,000 in the same period of 2023, representing a decrease of 50% year over year. For the full year of 2024, our operating expenses were $119,100,000 compared to $276,200,000 in the previous year, representing a decrease of 31.2% year over year. Sales and marketing expenses were RMB33.2 million in the second half of twenty twenty four, a decrease of 40% from $62,700,000 in the same period of 2023. For the full year of 2024, our sales and marketing expenses were $82,600,000 a decrease of 35.2% from RMB127.5 million in the previous year. The decrease was primarily attributable to the decrease in payroll related expenses, rental expenses and marketing and promotional expenses.

General and administrative expenses were $30,300,000 in the second half of twenty twenty four, a 58.8% decrease compared to $72,200,000 in the same period of 2023. For the full year 2024, our general and admin expenses were $93,100,000 and a 30% decrease compared to 107,000,000 in the previous year. The decrease was largely attributable to the decrease in personnel related expenses and partially offset by doubtful account loss. Research and development expenses were $5,600,000 in the second half of twenty twenty four, a decrease of 55.6 percent from $12,600,000 in the same period of 2023. For the full year 2024, our R and D expenses were RMB14.4 million, a decrease of 65.5% from RMB41.7 million in the previous year.

The decrease was primarily due to the workforce restructuring to enhance R and D efficiency. Share based compensation gain recognized in cost of revenue, sales and marketing expenses and R and D expenses as well as the general and admin expenses totaled $220,000 in the second half of twenty twenty four compared to the share based compensation expenses of $970,000 in the same period of 2023. For the full year 2024, the total amount of share based compensation gain were $180,000 compared to $4,700,000 of share based compensation expenses in the previous year. The change were mainly due to the reversal of SBC expenses caused by strategic workforce optimization. Other expenses were $38,600,000 in the second half of twenty twenty four compared to 1,100,000 of other income in the same period of 2023.

For the full year 2024, our other expenses were $53,000,000 compared to RMB4.9 million of other income in previous year. The change was primarily driven by the impairment loss of long term investment. However, the company has proactively responded and upbeat about its future. Income credit was 1,000 in the second half of twenty twenty four compared to 148,000 of income tax expenses in the same period of 2023. For the full year 2024, our income tax expenses were 64,000 compared to $42,000 of income tax credit in previous year.

Net loss was $44,900,000 in the second half of twenty twenty four compared to $36,600,000 in the same period of 2023. For the full year 2024, net loss was $140,800,000 compared to 89,200,000.0 in the previous year. Net loss attributable to thirty six KR Holding, Inc. Ordinary shareholders was RMB42.3 million in the second half of twenty twenty four compared to RMB37.7 million in the same period of 2023. For the full year 2024, the number was RMB136.6 million compared to RMB19 million in the previous year.

Basic and diluted net loss per ADS were about 19.999 in the second half of twenty twenty four compared to 17.977 in the same period of 2023. For the full year 2024, the number was about 64.795 compared to 47.132 in the previous year. As of 12/31/2024, the company has a cash, cash equivalents and short term investments of $92,500,000 Well, this concludes all our prepared remarks today. We will now open the call to questions. Operator, please go ahead.

Conference Operator: Thank

Xiang Li, Chief Financial Officer, 36Kr Holdings: you.

Conference Operator: Your first question comes from Zhang Yunda with SWS Research.

Shin Huang, IR Manager, 36Kr Holdings: Thank you for your question. I will translate your question in English. The company's overall advertising revenue declined this year. What's the company's outlook for its advertising business moving forward? First of all, in 2024, we proactively optimized our advertising products in advertiser customer base, adjusting certain low margin in high risk advertising businesses.

This strategy could move resulted in a greater reduction in relevant costs and expenses, driving continuous improvement in the overall profitability of our advertising business. Although our overall advertising revenue declined slightly, our internet sector key accounts in the leading bank customers remained stable in 2024. We maintained strong partnerships with the key accounts like Alibaba, JD dot com, Lenovo and Huawei. Additionally, leveraging the content influence of our WeChat content specific accounts including OUX and Tide, we continuously accelerated the growth in our high quality customer base. By consistently meeting our customers diverse content and marketing needs, we continue to attract premium customers across the sectors such as food and beverage, restaurant chains, sports and outdoor, busy and personal care, home appliances and more.

We onboarded various premium global brands as partners including Apple, Arteryx, Hubbers, PFC and P and G with the proportion of new customers consistently on the right. We are cautiously optimistic about our advertising growth trajectory for 2025 despite the micro economic headwinds that we continue to deepen our expertise in key content verticals that matter mostly to our clients such as AI and global expansion among others. By empowering customers across our industries with premium content solutions and constantly optimizing our products in the client structure, we are confident we can strengthen our advertising business resilience. Thank you for your question. Any more do you have more questions?

Throughout 2024, what progress has the company made in reducing costs and improving efficiency? Firstly, through rigorous cost control and the cost structure optimization, our gross margin rebounded to over 50% in the second half of the year. Secondly, as for expenses, we implemented an area for cost cutting in the efficiency enhancement initiatives, including relocating to an office building with lower rental costs, streamlining our tech and R and D teams, adjusting unprofitable businesses, improving workforce efficiency in cooperations in upgrading our organizational structure, etcetera. Additionally, we are integrating AI technology in the AI tools on all fronts, effectively saving cost and elevating efficiency. These initiatives led to a significant reduction in our operating expenses in the second half of twenty twenty four, down by over 50% compared to the same period of 2023.

Meanwhile, our operating expense ratio declined by 17% year over year. As a result, we vastly narrowed our operating losses compared to the same period of 2023. In 2025, the company will continue to refine its products customer base in the organizational structure to further enhance overall profitability. That's all for the answer. Thank you for your question.

Do you have more questions?

Conference Operator: Thank you. Your next question comes from Rui Yin with Sealand Securities. Please go ahead.

Shin Huang, IR Manager, 36Kr Holdings: Thank you for your question from Dylan. We what led the decline in the full year revenue from enterprise value added services? Can you share the outlook for future revenue from enterprise value added services? Small and medium enterprises and the government institutions made up the majority of our enterprise value added services clients, and they are relatively more affected by macroeconomic dynamics. Uncertainties at the macro level may prompt us more in the medium enterprises to certain to curtain spending on consulting in offline initiatives, while government institutions may increase in budget cuts.

These factors collectively contributed to the decline in demand for enterprise value added services. Additionally, one more important reason, this year we strategically restructured our existing network of regional outlets in the once again optimized our service architecture and offerings for government in the public services system. As a result, we scaled down low margin unprofitable local government projects, leading to a decline in revenue from enterprise value added services. But on the upside, this strategic adjustment has optimized our business in the product portfolio, reinforcing both sustainability and profitability. In 2025, we plan to carry on many of our legacy IP events, including Wait, our signature gathering designed for individual customers and Wise, our flagship year end summit, along with a variety of industry specific sharing programs in the forums that cater to diverse customer segments like AI partner.

These activities will lay the groundwork for revenue growth in enterprise value added services. Moreover, we will continue to expand the initiatives related to global expansion within our enterprise value added services in 2025, sustaining our strong globalization momentum from 2024. In addition to Southeast Asia, Japan, The Middle East and Europe, we'll further strengthening strengthen our global network in a collaborate with the China Council for the promotion of international trade Beijing subconsult to tap into additional resources from Beijing based service providers specializing in global expansion related solutions and enterprises seeking global expansion. At the beginning of this year, we made our first foray into operating a local government's global service center in our capacity as a leading entity, partnering with Hangzhou, Tianqiao, New Area Construction, an investment group company for the Chinese enterprise international service center operation projects. Moving forward, thirty six KR will remain committed to expanding and integrating cooperated resources, fostering synergy within an extensive global partnership ecosystem.

This will enable us to serve Chinese businesses in institutions in their international ventures, empowering Chinese businesses for the expansion, while driving 36KR's revenue growth. Thank you for your questions. Do you have more questions? How does the company position itself in generative AI across content and the product offerings? Thank you for your question.

Before Deep gained widespread attention, we were the only tech media that were worldwide to have exclusively interviewed the Deep Six founder, Liang Wen Feng, twice. We were also the first in the industry to report on key industry developments like six AI type of face to exit from pre training and the GPU leading for AI computing centers. In 2024, we also hosted a highly influential AI product summit for AI sub verticals. This achievement underscored our broad and deep coverage of China's AI community amplified by our network's extensive reach. As I just mentioned, the company launched an area of AI powered products in 2024, including AI text to image, AI lab, AI financial report interpretation, AI meeting coverage and 36 are corporate only intelligence among others.

Notably, AI meeting coverage has covered over three thirty companies, highlighting their latest initiatives in fundraising ventures. And we integrated the data model in February 2025. Meanwhile, thirty six KR corporate Omni Intelligence currently covers over 7,800 public companies listed in Mainland China and Hong Kong. Subscriptions for its daily reports have reached more than 3,000 and with a cumulative user base of more than 6,000. In 2025, we will continue to develop our AI content ecosystem, maintaining our edge in covering the latest AI trends in consistently delighting users with premium content associated with the AIGC technology.

We will also further integrate AIGC technology with the content production to unlock new avenues for success. Thank you for your question.

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

Shin Huang, IR Manager, 36Kr Holdings: Thank you once again for joining us today. If you have other questions, please feel free to contact thirty six KR's Investor Relations through the contact information provided on our website.

Conference Operator: This concludes this conference call. You may now disconnect your line. Thank you.

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