CTK - Earnings call transcript Q4 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to CooTek's Fourth Quarter and Fiscal Year 2020 Unaudited Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Institutional Capital Advisory. Please go ahead.

Jessie Jin

Thank you, operator. you us thank and everyone, for today. joining Hello,

earlier is ir.cootek.com available earnings on release our and distributed was at Our on today IR Newswire. PR and website

your Chairman CooTek On will today Financial discuss during Cui, They company Officer. questions review guidance. Mr. are highlights, and will Chief Chief will Zhang financials available operations Mr. Robert the and Session Cui, Technology from to Q&A both who Karl that business call Mr. followed and Officer; Mr. answer Zhang, the be and by follows.

conditions uncertainties company's and Securities officers, products could mobile of to to not and application statements begin, industry; advertising; for and I'd but statements limited the in results its oral government statements. information this market of the and mobile uncertainties the of remind we Securities about involve in mobile conference cause the employees written expectations, date that financial and All information made differ call, expectations risks and Private third relevant as press U.S. U.S. growth the Before this advertising Litigation this be included statements statements. CooTek's the filed such actual of future, reports or with annual to are does expected company's make in CooTek's please written services; the and industry. in forward-looking U.S. and strategies; the obligation expected its operations; the the that CooTek by directors forward-looking to in contains except Reform filings development; also in other future the regulations that or historic information are parties. statements policies materials as of XXE industry risks intends, and statements like Internet and those Exchange and confident acceptance regarding the Mr. These and Any growth, factors, update beliefs demand to to the the made shareholders, of Karl, composition provisions results following: Zhang. meaning Such by furnished with the factors call of plans, kindly the from and its releases are report missions facts, mobile CooTek of the in other These of is law. introduce you including harbor factors materially SEC, forward-looking provided statements and SEC. industry; advertising statements identified oral relating XXXX growth not or business of of regarding expect, XXXX. are amended. to forward-looking include, within current as and required this is now on is undertake not that risks, Act go can and It similar may the such pleasure ahead. forward-looking to Further terminologies as anticipates, estimates, forward-looking to Karl statements Section my Act any under and believes, safe

Karl Zhang

joining our the Thank call. you fourth for earnings Thank and you. XXXX year everyone full quarter

firmly. from compared revenue expand grew revenue conclude executed our app strategic of annual our above our content our Since US$XXX portfolio cultivated of roadmap growth pleased and with XXXX, We year to million, in representing are reaching US$XXX to ecosystem million. IPO the the the We XXXX global our XXX% pan-entertainment approximately to XX% content XXXX.

and which total our IPO, casual respectively of the since to content developed successfully keeping apps contributed the in from While we scale XX% XX% XXXX. business game our and online revenue scenario-based scratch, our literature

revenue in current estimated, the year had will and been future continue company like growth. full are grow year solid I it Based to result on confident expect very for We this our feel a XXXX. steadily. that delighted announce on to our XXXX would to say we

to is empower mission enjoy everyone Our to relevant content seamlessly.

have literature, apps content strategy focused casual games. our three in scenario-based and We pillars; content online app

user XX.X the of MAUs of reached products user DAUs our and December terms improvements In in with million XX.X million engagement continuous portfolio base, of the ratio. XXXX and

literature me China on terms core consistently for XXXX. let Firstly, address online three in in the free product, the Novel, recap In of which our in of business. the Fengdu ranked our literature number specifically particular market online in literature MAUs online

enriched efficiently number user targeting of further have the partners resources the stickiness. the content improving authors our We the increasing at third-party content signed by and

the of We XXXX. average to December We XXX daily time daily The January intensified reading active daily saw per time The of Fengdu exceeded the to indicators increase in minutes also XXXX. in in actually rates positive see first the encouraged average and increased are further user new Novel community. retention user from reading the month steadily monthly February month twelfth XXXX. the

patient urban male diverse covering than is category, context gender around preferences. that through total authors at books, our in Compared to and signed on authors model is and the the – the readers literature literature content literature of platform by content XX% and preferred metrics XXXX. philosophy authors licensed ever literature time of as XX% launched readers of reading certain We to female X,XXX Fengdu's our signed the our original Fengdu and content original end ecosystem content establishes Fengdu Since more than the stories Fengdu users' content produced December revenue. and is focus production total product customized More content content. the evolving platform obtained develop platform has ecosystem XXXX, categories enrollment. major feedback to Fengdu deemed specialized accumulated a books of adapted build that books. X,XXX between of Our and signed data is so

meet than are Novel from on needs we addition, platform. literature audiobooks in actively to evolving We the book are readers. our Fengdu new original platform. app on based More business a the incorporated diversifying available Audiobook, In feature developed of IT Fengdu Fengdu X,XXX

series content video short literature Fengdu platform created also IT on based and resources. We

had literature based for each. literature Group. same Xigua The to been also video series searching be drama episodes piece XX The into is At on on the running video by Kuaishou, and of redistributed from named short substantial advanced on series can and Chinese among the The sort our we divided version is such TikTok Bilibili video monetization others with or Theater. watched the growth first momentum create have short as Fengdu two the time, exciting minutes Douyin, three additional Wenzhou, major capability sites, drama and Video time with for lines. of and a produced Proud that story platform The of content Fengdu

the investments. the per advertising delivered short, market, overall Although we incurred return on user, average in revenue it satisfactory ARPU volatility see with Internet

the and recorded Fengdu As growth DAUs Novel a the significant the of year-over-year a of XXX% revenues result, in XXXX. XXX% and

in overseas U.S. product achieved online The literature the one we ranked milestone million. with in to development business. addition, one MAUs apps significant of of as in consistently top category close the the our In book

fastest after the contract have improvement acquisition of content monthly series seen new X,XXX inventory also the books authors just the strategy, and content by successfully We user the secured stable Guided have selling a retention our we year's of with operation. reached one rate. unique

literature in competitive to strengthen publishing more our online We are confident global the edge even or market. even

Secondly, XXXX, of profitability in revenue the for which and the contributed delivered the to our mobile game growth business, Group. we record also

literature, shorter successfully optimizing to XX we and games. portfolio reflected partner highly but the high investing to As pipeline. online a our business have of self-distributed synergistic our strive We cycles, which delivering and self-developed casual with They mid-core for casual illustrated than typically teams more ROI, product and by diversified and upgrade game product games. with more strategy games experienced studios product other a rationale

of and that a profitability for stable the serve source still are revenue the can We convinced as business Group.

vibrant been our streamlined content segment Thirdly, the IPO, business the app scenario-based as upgraded. further and since have

fitness, as but the of selected key of ROI on products. to developed and of group. as business focused foundation serve also The such a this the are priority strong verticals the growth new We maintain and is to sports

our As stable. forward XXXX, we remains move in strategy

literature, three synergized pan-entertainment games apps. pillars; online focus scenario-based We and will cultivate ecosystem and content global continue on the to mobile the content

quarter. initiatives community. engaging and cultivating quality Our the by upgrading one, casual product our Four, partnerships. games with Three, expansion and growing core improve achieving profitability. interactive a further key and e-commerce market who the adoption. through strategic the We're Thank revenue attractive to our growth and We model with the experience approach robust will Fengdu the by literature value. With optimizing be; that, I pay internal, our and excited more providing that strongly maximize exploring Novel an results Two, hand our can for strengthening to capability online investments financial our by will develop believe the overseas by segment. intensifying the IP deliver monetization business our and our user shareholder and Robert, delivering we third-party the strength and built assets you walk in balanced user content, CFO, performance long-term you. call will

Robert Cui

everyone. Hello, Thanks joining tonight. us again for Karl. Thanks,

by mentioned, XXXX. of in our in been robust As pan-entertainment demonstrated and ecosystem our strategy content base has our revenue growth firm user the

net new revenues approximately US$XX million revenue period approximately accounted a our are to will enhancement confident further same our that scenario-based casual generated of commitment business the start categories from during our apps our net increase content As basis, contribute The fourth an of of continuous XX% brief approximately and fourth net our million, XX%, To from mainly you literature accounted XX% the with high scale quarter XX% US$XXX.X and product apps. revenue. games year. reached the year to for I'm total of quarter, content-rich last of on going accounted the for XXXX. portfolio. Online three a full for yearly are we was

increase our XX% average XXXX. were portfolio Fengdu XX% excited quarter revenue million, the of the were reflecting company's business, delivered growth of an per The XXXX in literature upgraded the portfolio online daily company's products the monetization with million, in of business of are MAUs an and revenue use December the user, XX.X report to ARPU growth, from XX% in million XX.X fourth average XX.X For increase XX%, sequential products XXXX. XX.X of from million of growth we solid strategy. of that December Novel

from of sequentially was year same XXX were quarter. year. cost million, XX% GAAP were Our same last decrease expenses an last the XX% the Non-GAAP sequentially decrease X% period and and of and a and million, last increase gross a profit period cost XX.X% XX.X% XXX.X about margin year-over-year. up expenses and of compared with in X% XX.X%

of R&D percentage expenses which is with decrease of with GAAP increased same from As year. increased cost period for line and overall were employees, these year share-based as and by G&A increase up We XX% quarter of and technology XX% by and is compared associated last quarter. marketing R&D largest and XX% business. XXX%, a mainly increased expenditures user share-based expenses million. sequentially. US$XX.X operational XX% Sales the compensation. non-GAAP marketing associated consist with due X% sequentially cost, staff last the XX% from expenses. X% employees and costs by mainly compensation a in of sales content-related time revenue, in increases total in XX% component and X% XXX% quarter with the the up decrease our primarily last year-over-year loss accounted ended from due and of from year-over-year to quarter, the expenses and employees, previous represented decreased to quarter. XX% The from cost with the The acquisition full of expenses expenses G&A and R&D an year the expansion by about year-over-year was last same down expenses. XXX were and last staff the sequential net last in

found earnings stock of results. million from a compensation, US$XXX.X quickly will can effects approximately release. revenue increase US$XXX.X be million. XXXX. through details few adjusted key year the loss US$XX Further XXXX was Net the Excluding run in million, I an full net XXX% was now of financial in

from XXXX. margin operating an marketing with XXX% a year casual US$XXX.X XX% XXX% of increase apps for was total for Gross from in XX.X% million, games approximately net the in and Total million US$XXX for approximately As full were basis, XX.X% accounted XXXX. accounted approximately Sales were content of US$XXX.X XXXX. compared XX% cost million accounted of million, expenses US$XXX.X in online XX%, scenario-based an expenses and literature and revenue. increase

staff. costs increased investments marketing As XX%, increase in primarily U.S. of XXXX, the R&D and an technology $XX.X acquisition. million, from a expenses revenue, in total XXXX, mainly accounted XX% an in percentage to the increase sales from were to increase expenses XX% associated with $XX.X for due due million of an in R&D

total million, of bad from expenses primarily due decrease percentage net of X%, XXXX, a a from offset of US$X.X debts million in and US$XX.X an million to decreasing expenses in XX% revenue, a share-based XXXX, R&D professional US$XX As US$X.X in G&A in X% by expenses increase for expenses. accounted staff were provision XXXX. and US$X.X and by compensation associated increase million cost an million in XXXX from decrease in with was partially accrued G&A

share of May we an the up As a during accounted net repurchase form X%, value in Net from and million restricted XXXX. equivalents cash decreasing authorized the end in are of was was total of for of XX, year US$XX.X a in repurchase XXXX, ordinary X% XX-month of loss compared US$XX.X where our program, revenue, cash, million US$XX.X US$XX announced of shares XXXX. Class US$XX to A XXXX, the with XXXX. G&A we about with program, adjusted of million US$XX in million percentage end loss net US$XX.X in Adjusted of with at cash May XXXX. to loss At XXXX. the XXXX loss ADSs with million net the we XX, expenses On net compared XXXX had starting compared period million average million from

this expect We repurchases program existing to under the balance. cash fund with

As aggregate program million repurchase ADSs to an stock. XXXX, of of million of had XXXX year US$X.X the X.X and under treasury used as recorded end we

release available light conference expect of call which US$XX uncertainties, and are of of million. outlook date For reflect and to those COVID-XX the expectations, is on first pandemic. based this ongoing quarter the in press various the subject current total information be and to company's This revenue XXXX, the about change to preliminary we including as of related

are we the approach also steadily XXXX, Operator are At a overall to by ready Vicki well Our and growth now we deliver the take is committed plan same the question profitability. balanced committed we the to continuously Go Citi. operating overall from questions. our improving delivering to focused Instructions] from financial first at Wei growth further structured, leverage. Looking on are attitudes, revenue Operator, achieving time, [Operator dedicated ahead.

Vicky Wei

we've management. Vicky and Good of Alicia my for on Yap, This got taking behalf Wei questions evening, questions. is three Thanks here.

And market Our content of on comment what the market? target share Fengdu? latest have question for to landscape main creators is is sales are So typically what on online can management creators content you. user third is differentiation competition And of the overall the market Thank acquisition latest platform? and What achieve? reading share our of question What second do is, and you these are competitors? type any versus price? the company's marketing spend target

Karl Zhang

Vicky, you, questions. for your Thank

the over the two question. answer answer Robert questions will hand me I last Let to and to first

market regions; landscape So reading question market. free in terms domestic separate of of market, two overseas into competitive I this the China and the the

remains market market raised competition. and So free two the three it from in period the market, China domestic literature Novel number of position Fengdu scratch under years at within

cultivating growth, is the on game more that unique believe competition build eventually. is core up the sustain focus so the our competition to the we is and barrier and long-term win long ecosystem our to the run now So content content ecosystem

market, As free for the we are model. pioneer reading a overseas of

So thanks app literature one become experience, the is strong to our goal in the global long-term multiple community number countries. content to online

talk platform. about Fengdu let's Now literature

contract X,XXX XXXX, books. December Fengdu since X,XXX literature over content signed accumulated authors platform original has So

XX than so compared is So time by as of Fengdu of preferred Fengdu and books and category, to the content. major categories reading of covering platform obtained license literature total our male diverse deemed XX% authors produced more signed books in revenue. readers female total

of romance. to in urban focus content's context than specialized compared Asian XX% gender are So and stories more platform, other

not cultivating usually to on are we which focusing long but worth, are X traditional book format besides, formats online over So million only also meadowland stories.

our So our to we community provides different you. enjoy. are user specialized stories bringing diverse these and content base users Thank

Robert Cui

Yes.

Okay.

third sales So marketing the spend on for the question and targets.

have user But given acquisition of have we the since as casual the user base increased new XXXX business started about a as invested to in our XX% indeed are fourth customer we reaching have result, in we games encouraged marketing build achieved expenses and seen, or of online XXXX, highs. from to literature we our quarter So revenue we and and have sales to our revenue and in XXXX. with milestones important see as XX%

strategy, key have component targeting the growth As forward structure, of optimize toward expense also our we a committed being to cost and and moving profitability.

are several there So this strategy. relation initiatives in to important

of and the diversified user launching been have improve acquisition. we efficiency to new campaigns first, So marketing the innovative

can we which the with of in relation marginal of the retention same online expenses to improvement management and to Second, the the seen the sales the platform, users. literature support we enrichment e-commerce the stable resource our our of rates, with marketing increase time, products also reduction And ARPU contribute online the content paid at our of monetization on are been the existing for And and the diversifying literature user third, adaptation, for ROI of the IT our games to pipeline. and strategy striving content, to have also we will products which the casual and have diversify ROI. growth

casual games all efficiency. represent the products the from ARPU the also investment period, help the Given contribution business return higher operating shorter performing can increase and

same all convinced implemented have time, growth, group with this achieving these we profitability. approach base the balanced efforts, of user So level and that and steadily are revenue at we the

delivering this XX% while decrease we in base revenue. operating XX% growth XXXX, and So marketing the you. user And our of coming the leverage. basis, revenue of reduction the a are the the we of to Thank summarize, in expected yearly is by revenue the stable to in forecast sales expenses of quarters. keeping as and expense momentum the sales for a as and And percentage confident to on marketing

Vicky Wei

you. Thank

Operator

Diamond Equity ahead. Diamond Go Our next from is question Research. from Hunter

Hunter Diamond

Hi.

strong congratulations on the Firstly, earnings.

update expanding get market, additional on whatever just an us you to can that information want your we strategy on the So approach. tell for overseas

Karl Zhang

Okay.

I'm going this So to question. take

our to to with everyone to enjoy relevant will content. In grow priorities. overseas our we will we So continue yes, business empower market stick mission with XXXX

believe opportunity online is we us. a literature global tremendous So for

reach and only on So process, data technology, domestic overseas focused were content this to of the China the our first a by precision goal. to and well. big as the production long market reading market, as efficiency AI but not leveraging we distribution we and get countries the step chance And English-speaking in improve

to cultivate thrive will we So content local ecosystem.

So and priorities. AI our authors local local are enabling partners cooperating with our technology with content

the we mobile market expanding time, overseas same to at our So business as are well. game the

already have market launched we success for have most So mobile nearly and to overseas XX games of achieved them.

we So exploring market. are overseas in mobile and business online between literature the synergy game

strategic establish what mobile synergy really literature Novel we in business with is the a realized as just game So and Thank games connect strong domestic mobile Fengdu China online goal to to and are you. market.

Hunter Diamond

Great. information the additional Thank the approach. you for on

global mobile given obviously Our well, content next is for growth very COVID-XX stimulated experiencing in question was XXXX, as demands XXXX applications. high entertainment-based

wanted we maintain measures the take And in company to the industry it's the CooTek will what of to see expectations for growth the So post-pandemic level and on outlook your after the period. COVID-XX? seeing

Karl Zhang

Yes.

long-term So industry, we entertainment-based especially optimistic post-pandemic on period. are mobile the in of global the content growth apps

time users' users, on on spend mobile – time spent global we find most of if today. at of mobile look the total total the mobile global on spent mobile that on spent we devices if of is But the devices of we growth So devices rates apps distribution mixed. time entertainment-based time at look is users,

in the is declining, countries, in growth but countries, significantly. So increasing it's emerging some rates developed

the are is attention. developed spent So countries, users' apps is, in for dividend competing that and disappearing time

companies quality on the efficiency opportunity the and improving and and the who healthy distributing content So ecosystem precision. – efficiently that focus brings for content cultivating

to the user our user content strive model So both grow our to and and monetize AI on innovate technology effectively base business our ecosystem, cultivate and we develop community.

believe the you. measures our we will drive growth. So continuous Thank

Hunter Diamond

appreciate I the Great. on the No, strategy. additional information

earnings. on congratulations again, So the

Karl Zhang

Thank you.

Operator

Financial Go Ju is Our ahead. Partners. Tigress from next question Aaron from

Aaron Ju

the taking you Thank question. for

two have questions. I So

is question the first The revenue guidance. regarding QX

these regarding for I the business main the what be question second So literature revenue is the And – are say online QX reasons flattish guidance? would the China. in will

the current see the total you this the online literature business China? for China? in what business of do is addressable trend how So you. And Thank market in

Robert Cui

thank Yes, Okay. you.

first second the will and I question. will Karl the So answer answer question

market, as a still in particular, For to or the line with of the for full and user the online base in of for Chinese relevant on we XXXX mobile products, and is or based general in year. Obviously, portfolio steadily for profitability further are first and the monetization particular, relation our continuously year the estimates. we strategy But it's our in current market the the quarter revenue literature for the in seasonality the guidance deliver online upgrade domestic advertising games reminder, the growth to committed achievement business. coming of

current on based for quarterly estimates this – So and this our the guidance. internal plan given is management

Karl Zhang

And to online for yes, literature we think tremendous terms which market online China of the the – new us, opportunity literature the literature business, market has so global in especially is and us. in market, online the free that area

Novel Fengdu very be million base released grown in user the a the XXXX, short DAUs. period, we've and XX we to in over So

we opportunity which believe the means also from potential well. of is that as So the actually us online And for the we literature global market. tremendous great the benefit that,

a content but users' traditional fundamental the online ever reading users, So because is evolving meet need global for industry content long needs. cannot publication

and the technology, precision we leveraging efficiency our big production improve by reading get and a distribution of chance AI process. data long the and to So content

our online AI our global technology feedback for them the big books literature loop we especially the countries, signed and improve app to the help establish for literature data understand assistant U.S. and same authors their deep of So introduced platform consistently art. Fengdu their example, English-speaking thing happened enables on to performance The data on which

to AI content community. base to cultivate develop effectively user our ecosystem, monetize and our grow user So model technology our we on innovate strive and business and both the

model business So we and believe AI such continuous that innovations will growth. the drive on technology both

online addition, opportunity as globally. mentioned, literature a is tremendous in believe I we So

China, market our user in base growth. also overseas expand drive not actively to will only but we So

Aaron Ju

Thank you.

Operator

question is Go Steve Silver ahead. from from Argus. next Our

Steve Silver

the Very but Most have remaining. as questions congratulations well revenue in one year. growth and have my everybody, user Hello, on did impressive of I strong metrics. been answered,

You your given guys you the that technology December in current stocks the on as toward buyback just accessing had was quarter? curious share thinking mentioned could the as downturn provide end you of I any if program the color status XX. of the first to

Robert Cui

Yes, okay. take Thank you. this I question. will

December as mentioned, of So XXXX, as worth we repurchased potential US$X.X – monitor and higher of we and for further be have as and so shares. plan have a we evaluating will for rule, growth the market always, priority million the the But the shareholders. XX, general And the for as for the stock delivering value next founded long-term business we'll our step. the price

So current it don't market our stage. be have really to And subject we details the the to imminent additional and of price. stock at disclosed monitoring is

Steve Silver

great. and again. Thank Okay, you, congratulations

Karl Zhang

you. Thank

Robert Cui

Thank you.

Operator

question-and-answer This Institutional remarks. turn to concludes session. Capital our I for would the Advisory to back like closing over conference

Jessie Jin

again joining of on closing, team of entire would conference CooTek, like call for thank operator. behalf you the we you, this In to management Thank tonight.

you in any please you. or inquiries us If contact to ir@cootek.com cootek@icaasia.com. Thank at the future, feel further free have

Operator

attending now concluded. The presentation. conference has you Thank for today’s

now may You disconnect.

CooTek (Cayman) (CTKYY) 25 Mar 212020 Q4 Earnings call transcript