KUKE - Earnings call transcript Q1 2021 | Kuke Music Holding Limited

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Operator

Good morning and good evening, ladies and gentlemen. Welcome to Kuke Music Holding Limited First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode.

We will be hosting a question-and-answer session after managements’ prepared remarks. I will now turn the call over to the first speaker today, Ms. Relations Kuke Investor Holding [ph], Zuo Director Music of Limited. Jane ahead, ma'am. go Please

Unidentified Company Representative

Thank our Welcome earnings everyone. you, Hello, operator. to call. first XXXX quarter

from Founder, we'll Mrs. Tony then our Chen, audience. On Mr. CFO first, of the Mrs. me and with Mr. the take review Sun, Chairman, Yu financial our Music. Yu, operations and Patricia Mr. the discuss and will and details. Tony and today, President; questions will Kuke Afterwards, CEO; Sun call He are business

Before under expectations statements those on expectations from to may and different that entirety provision which cautionary call materially be and qualified Reform statement, in risk are the by by made company after selected risks, the filings company or forward-looking The the no the Private events we forward-looking that cause contain may All this their to and Litigation These actual the start, the known please factors performance, the or revise this forward-looking any statements update results, not or of SEC. duty note expressly health circumstances implied forward-looking of involve statements company's results, forward-looking conference statements observations to management's of the the are Act company or Securities date performance, control, uncertainties, current for undertakes call. statements. with unknown for pursuant of XXXX. achievements Harbor based factors and Safe other the

reminder, As being call this a recorded. conference is

at ir.kuke.com. available of call be website Kuke archived on Investor webcast and live Relations a conference addition, In will

It's and to Mr. on Kuke You CEO earnings He our Yu, can now check as release full Chairman well. introduce our of Music. Founder, IR pleasure my out website

He Yu

revenue first good earnings strong you, morning, Thank we everyone. as our educational policy In us joining Thanks we evening and changes. maintained to call. our welcome a to growth, quarter, adapted and for first quarter Good Okay. Jane.

our to good our by our our period and business, with and increased XX.X deep market grew shows to improve the which educational the revenue to year-over-year XX% smart Our famous X.X and ability publishers. music times adapt RMB our relationships music expands million, maintain content This labels world digital assets, total same year. technology, trends, from education last

the So tell our year and industry environment let me more economic more students business. about impact back-to-school. current recovery, is on its as of a XXXX

Our education in to the with over of growing -- smart Smart of continue using classrooms over kindergartens this to our the benefit paying expanding had XX,XXX Systems. business and we XXX At XXXX the quarter, music XX,XXX from in demand over Kuke end market. first pianos Kuke students

to demanXd education In lessons government’s policy music addition more create their more Education secondary to China's a schools new and for economic to recovery, Ministry upgrade directive services. students. for for will of school primary the education arts has provide

deep to industry As a opportunity our forward. of education music classes combined need and education knowledge provide going partnership, forever an with provide music music us introduction music resources our important be advantage to a the general expect for licensing services. technology, This music result, gives will growth to better an instruments. in With a the the a segment we to better

will it Music. will highlights. President Kuke over our give President of to pass I next, -- Patricia, So more

Patricia Sun

year, advanced bolster cost distribution kindergarten our simplified experience and point in we noticeable To make and research grow customer our completed require during base improved the elaborate also also morning curriculum networks. and We digital an quarter. order such to invest cost in impact to are on further mainly advancements like longer Thank due that quarter overall on stronger a classrooms This lay no This our generated has the of new and customers, this business improvements generate the by decreased expand recently savings. we our everyone, in piano reduced to the technology. in revenue scope first I classrooms. some you services. server take but year an Good for system assets customers would of site – XXXX. installation future to It evening first Meanwhile, over to us savings. to growth, we to of In foundation continue our our Kuke designed deliver micro development allows continued noteworthy and growth, only pandemic the XX.X%, hardware He installation. Licensing and good on the necessary not Yu. subscription to and education to for opportunity to our our end our restructuring

class During completed curriculum Kuke kindergarten. the development for we quarter, of year the our – second first

also We students. with strengthen alliances many strategic museum local our Kuke catalog to digital sheet our resources of formed publishers for

our music provide from able music by education leading of books digitization, this to best one published partner, globally publishers some resources in and educational In music and an the for book, us is Through evaluate series expand growth. first world's our music assets We help the selling to vast assets class partnerships to culture view, our first to our literacy, advantages piano services. all are education topics my with hard adding digitization also music need catalog world these renowned working curriculum with our in our book of of for incredible establish across for to Naxos. our content. history, are leverage educational theory, partnerships we new to to classrooms we more. Recently, provide existing music us including many resources provide and my and resource our use to completed world we labels China. We long-standing Leveraging addition services continuously the localization cover

is family, to resources. our industry at Composition, signifies the winners Classical influential music from Best quality one the strategic level one Annual most such and In of world's March, in more. partnership awarded of and Contemporary with Naxos Performance, and GRAMMY awards This the recognition different Best assets Our XXrd five content potential Awards Choral Naxos of the including bodies from were partnership. the digital

and artists masterclass internationally world's many providers, leave the all trade to with solos world This conservatories. For travel renowned With content opportunity to instrument Europe's partnerships segments. Cart Series with home. this for masterclass both to of are online most to class an across influential online ever of and get our which we provides creates pandemic, [ph] without international access iClassical halt, resources links students program, of masterclass two Academy, due has established students to most having recognized their educational the the

Raptor Radio, launching concert a with are very broadcast noon, series. at concert several currently series For new are on our will projects BMS Beijing at audience trendy musicians in the we elegant This to and aims format. make drawing accessible through music we to jointly lunchtime achieve and Music to have theory performances the selected exciting our working public. of carefully live been pipeline, more business, be a goal and eliminating new partnering classical live The the types, music

industry capitalize continued content, project make partnerships. another well-recognized scope on This our technology, applied expand we as have world-class which services advancements details negotiation and in platforms, will continued for summary, premium are and more is online in to positioned economic music our up education with quality well us soon we the to has provide services recovery. and build rapidly expanding finalized. agreements We In education our as accumulate

amplifying impact that, financial uphold to classical China. in CFO, will mission our of I the enriching Tony, we quarter. lives call forward, people's will of Looking you for pass over the music who details will our continue the walk by our With through

Tony Chen

everyone. hello and Patricia, you, Thank

detailed financial our start that will discussions, measures we Before non-IFRS be we please presenting today. note

otherwise basis, are first for press all Please expenses, and non-cash XXXX our which in reconciliation of on Our today our core represent financial the note are these exclude be numbers expenses otherwise the terms. are quarter on unless RMB non-IFRS year-on-year in measures stated, the can not that of Details All certain of operations. comparisons results part are found tables stated. unless release.

increased services. significant education to was increase revenue enrollment period XXXX. X.X of RMB XX.X driven This music revenue as of from education we our student from by mainly in accelerated smart Our the kindergarten services, increase same which XX% in growth RMB expansion by saw a the million million

XXX.X% a the period million same X.X increased from As education RMB revenue music by result, RMBX.X in our million business XXXX. of from smart to

million, with decrease COVID-XX reflected sales This same and first the upstream mostly was in providers. of the compared were to in Our response revenue XXXX. X.X base, quarter education same of XXXX. by terms from to expansion our XX.X% The increased X.X activities administrative RMB our us in of gross cost RMB X.X X.X restructuring million, narrowed RMB for the XX.X expenses. RMB the Gross XXXX. of increase period of expenses and was compared X.X to Total bargaining XXXX, profit loss improved better content XX.X the million to of of mainly subscription compared RMB RMB to million the X.X was customer the to period licensing which same in pandemic XXXX. kindergarten distribution line of the in power, Meanwhile, in margin during million to compensation were million, networks Gross the XX.X RMB same in compared Selling period an period XX.X period secure million, from expenses impact representing the in were distribution in XX.X share-based same mainly due revenue period growth. million margin million was XX.X% promotional due RMB the our in RMB improvement same million XX.X% to RMB increase XXXX. increase RMB expenses million our XXX.X%. with an to allows XX.X Operating of enhanced the services. in and due to million, of in XXXX, RMB of Operating an to to

X.XX and diluted Our in Basic narrowed XXXX. net RMB and ADS basic million both were was XX.X of loss ADS XX million balance same RMB to loss million period the our X.XX non-IFRS of sheet RMB RMB XX.X period narrowed period on and same from liquidity. XXXX XX.X million and per RMB loss to were loss diluted RMB both to in from per and Moving non-IFRS for the the

XXXX, have As we a cash XXX.X of and March in cash equivalents. of total RMB million XX,

and favorable market market demand to the by rising our Given content technology, partnerships. segment address library, differentiated expand services, continue education environment we the music the to will leading effective leveraging for

education the of the take This technology our now we're services over concludes our our active maintain capabilities of to varieties assets, assets continue questions. prepared the and focus ready to with new explore Operator, in As We investments music believe we on world-class make performance to benefit for dialogue expansion. also will today. our will and remarks for financial long-term. our our and digital sustainable opportunities content partners development expanding we that

Operator

with Li ahead. We begin [Operator the Instructions] question-and-answer session. will Brian question Group. first will Please The AMTD go from now come

Sorry Brian, your line might muted. be

Brian Li

thanks about has the your times. thank for question. management, education question my you regarding jumped is My revenue eight noticed for by taking that Sorry, I segment on revenue. the

Thanks. So, main what's driver this? the behind

Tony Chen

Okay, more music they brought with the classes. Brian. to put Yes, the with increased the thank quarter. us the quarter more support you the distributors and and in -- for kindergarten to during working We were segment revenue students for we enroll educational our for work more in kindergarteners into

that's So, significantly this the revenue for for quarter. the why education increased segment

We to for strong, this enrolled. continue our kindergartens the in the Thank push more distributors, as you. and market a also work number will growth year. service year, and continue confident of the that think, coverage were So, in with to we'll number this increase of to students pretty I so

Brian Li

you. Thank you. Thank

Operator

with Our Capital. come will next Please go [ph] ahead. Clara Z Johns from question

Unidentified Analyst

Hi is Clara. This thanks taking my for question.

performances seems we year. festival So, observed Revenue music each Beijing they is on live currently business haven't very to is the to segment that that segment held be forward going the diversify? concentrated, very in and October focused for

Patricia Sun

you it Sorry, low. your repeat very plus you. voice Thank could is please again,

Unidentified Analyst

hear you can Hi, me?

Patricia Sun

Yes, please.

Unidentified Analyst

Hello? Okay.

Patricia Sun

Yes, please.

Unidentified Analyst

A that currently held Okay. concentrated. year. going focused plans this - the business the Music any to Revenue to Thank very very you Sun diversify? segment Festival is observed performance Do October Beijing have in Patricia is and that live we seems forward you. for have each be So, on business

schedules each an Concerts in held with into been Since broadcasting. year During times add folk the concert concert running at venues of all is traditional program, to itself month, artists genres, concert music to Chinese series wider embrace XXXX, Festival, while radio local all year marketing the the XXXX campaign live near general. will audience of settings, maybe closer one Beijing range in and Lunchtime the music series jazz, maybe or the step transformed have year rock branding is the such doubt, program Lunchtime different concert for in month, compared designed we Music the this a in every a every different series it’s featuring no or more all BMF of music stations future future. and are as or collaboration for is month has ongoing twice traditional music, to

video programs a and app of the music business for The music to able artists. with the Although on By last Beijing combination significant hundreds of has a XXXX video classical last rich owned performing strategy content. guest XX festival. radio run that's BMF provides launch lovers, the accordingly. was a collection and of and professionals Club play application base programs name fourth during the pandemic collection rich of non-stop of a audio featured year, end BMF audio audio hit the BMF arts was the quarter, the Festival and for of under also with Music membership application and the year hours of the

So provider role BMF these in near programs the of license future. you. out contents plays and the also third-party the content and audio Thank to these platforms

Unidentified Analyst

management target to revenue of target Thank total one of have achieved this How you. I issued this company The team. this million be has more year. year? also was an question. RMBXXX Thank you,

Tony Chen

The business not targeting from this we're more segment. than last XXX% in from RMBXXX Yes, year. growth Okay. represents the less year. million than education growth music come mainly will revenues It

expecting by student have enrollment mentioned our the will revenue with and of surface distributors a speeding more year up As smart education music up kindergartens. more We're this it significantly result, services we as and on coverage are we year. this push earlier, working

our and As try subscription look licensing growth services new segments, We'll the -- live That's Thank more engines. be new of product for question. the segment this performances year. relatively for segment and or my stable there'll forms for for this response you. to

Unidentified Analyst

Thank much. you you. very Thank Okay.

Operator

Yuji will next Fung question Our come ‎RiverCircle Please Investments. with from go ahead.

Yuji Fung

question. regulatory China that up Thanks direction my My question in the is Hello. is education to currently, the stable very picking for changing environment in not companies.

limiting of and order China health is mental As extra of after of Department are the the to that students. in available promote classes Education improve provision widely the school curricular

academic companies of core now seems a subjects are it focusing space that the education So mainly subjects lot policy. moving were of the other traditional in following on state

and with coping the the how change environment you. compensation? So Thank in is Kuke regulatory increased

He Yu

this have a question. They is this Wow, question. Okay. very thoughtful several aspects to

For provided traditional languages, outside mainly academic related are subjects, mathematics, and and are change, focused schools, that the to it's regulatory mainly of classes etcetera. core on as subjects such science

the Department time, to same of balanced Education and the China. order the students art in at or to provide holistic a more While encouraging Ministry is Education in education education

as are provided impact environment, the material this kindergartens do believe our change we classes in the inside on regulatory because us, outside. have So a classes are not compared all that to other provided

these of regulatory we the So, are education. And not our music on direction focus classes new changes.

the by is encouraged again, being state. is, that this So, area an

don't area. this we see overall, So much on impact

other increased companies trying As into to a area. this or do see of art announcing the competition, lot education we education get for

this is library, or not the of them don't of large course to the advantages. these our huge but kind like competitive leading have most of core materials of While music, as start classic copyrights are And with. music collection easy, number

-- can we're an we of or to the happy we so ecosystem do. were also open better some business with discussions to approached will fact, getting space, the form students that options. kind performance to been are all discuss live of kind welcome. operators music hopefully, a like We beneficial. into any But business potential the happy parents. that ecosystem cooperation more have don't companies were We build we anyway, see And this cooperation But copyrights together, they So, have education of we some market to already. mutually for kinds by for and choices more be in that like

a benefit response businesses -- whole. the long our As and also industry will question. as benefit as concludes my That the for it our

Yuji Fung

you. Thank

Operator

will Our [ph] Wang come from Please Tiger Brokers. next question go with Kerina ahead.

Unidentified Analyst

tech mature this taking technology at resources has would kind of and is, for that your the my my you plan company services, development, put the area? Thanks. high question you Thank very will and into products Hi. future And question. you how

He Yu

Okay.

We a have of underway. developments series

theme learning are level, students theme. For to practice plays enhance provide main and and fun wherein system And developing this compose at skill to then system will a piece, music the an new and a we musical student's this and and this the of AI pick the we as musical to main regenerate along start new on reach the classes, will theme tracking the example, with. new main to And adaptive play experience -- functions system accompaniment student, background a whole to student according with according initiates piece. learning the piece, the this musical

So it's new every for experience totally the students. time AI and facilitated learning process it's a

will that Yeah. the the So increase -- process. learning learning of we whole hope the student's this enjoyment system

this one. that So are few other systems a developing. And AI is

is audio the that alongside For -- system can easier that to books spoken scripts, students materials along languages. example, one spoken about will the -- foreign for That's our the for one. audiobooks, will learn display with materials, we students so

location, these on passengers is, a playlist one is second to while time the a weather -- about be driver system. a the to EV the and we'll the the enjoy we'll dimensions for There entertainment conditions combination combination that and be automatically one four using using journey. of Another fits speed, generate music or

accordingly. posture corrective system that monitor students, playing system issue So, graphics smart they're while the piano finger of we're technology the that will position detection another and notifications developing is and a

AI our their tracking posture performance of the the and keyboard. that student's system finger position. correcting of level on tracking also their another is this top We're So on

our every concludes function for That music education the this smart question. system of So, we're day. answer our enhancing

Unidentified Analyst

Thank you.

He Yu

Thank you.

Operator

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

Patricia Sun

joining us Thank you again for today.

further have questions, day. request IR you. website. to If feel or contact Thank free us Thank a please you through good our any you everyone. us Have

He Yu

you. Thank

Operator

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

You disconnect. may now

Kuke Music Holding Limited (KUKE) 21 May 212021 Q1 Earnings call transcript