KUKE - Earnings call transcript Q2 2021 | Kuke Music Holding Limited

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Operator

Good morning and good evening, ladies and gentlemen. Welcome to Kuku Music Holding Limited Second 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 management's prepared remarks. Please note, today's event is being recorded. the to turn today, first now Ms. will call the over speaker I Relations Music of Zuo, Director Jane Investor Kuku Holding Limited. Please ma'am. go ahead,

Jane Zuo

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

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

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

being call this conference reminder, a is As recorded.

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

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He Yu

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our provide business to Patricia will of over more I Next, you. segments. Thank President Folk pass Music, insights our it across to

Patricia Sun

Yu. Thank everyone. Good and evening, you, Mr. good morning

Our second improved in business three results business, growth, experienced robust margin. characterized quarter a and the in were profit all by notable revenue stellar segments. some growth recovery We

XXXX, RMB online and the content subscription half quarter-over-quarter the more customers X.X times. licensing. library purchasing million, increase licensing attracting audio, to second content increase Our representing video In revenue X.X of of in to XX.X we've and year-over-year of reached times first of quarter a our effectively expand master-class continued a and our

than of music content tracks, more genre reaching includes catalog. classical, folk video total, which and music. in and more than added added million country, videos includes digital audio to pieces more than and X.X The X,XXX Moreover, Our classic music our music our music million long-form in music and sheet we XXX,XXX XX,XXX more pieces tracks X.X of audiobooks. Chinese catalog world, catalog concert jazz, than

instruments, half, from from types XX, first at to instruments XXXX and June but our in regions. music introducing X,XXX type at of musical music X,XXX diversified the the of end music musical by increased XXXX. catalog not has The of only we During offerings various featured countries also our multiple further

flutes the during X,XXX over instruments more grew quarter. unique number of as include XXX,XXX berimbau. such alto added also to by The meanwhile, foreign library XXX, regions music countries featured audiobooks the Newly the and our and in instruments than to increased

offerings, enrich streaming for provide and we platform also customers. ever-increasing library we music our other our an As music content corporate

produce exposure platforms. product operations we cooperative different – interviews improved. service increase our and collaborating clicks utilizing iteration, with content from artists of the platform, playlists each exposure platform refinement based – increase the cooperated music needs content our addition, number for we've to Through downloads, to Moreover, to further shares of on preferences the streaming diversified different of continued on on refinements video groups. content and age of have of and their digital In produced thematic listeners and

of Tour Nationwide our in Centre promote Six-City platforms the for artists we who in sales interaction The its and For content. online Performing to listeners. – and the promote enhance to artists we recording recording joined to in related of order launched Chinese a National one-month example, April, artists works our at Arts worked the June, event Late collaborative the digital with albums International promote and Orchestra between

quarter, Chinese Naxos During audio introduced music we learning guide MusicBox second product. music products the the box, and on Kuke based classical

Going will forward, updated polka music on box Himalaya will available be exclusively and platform. be periodically

to helping classical our users, listening to addition music. their introduce tracks, we In to appreciate to music to instructional improve hope content in produce and for enjoyment improved delicacy musical ability adding them of classical tastes, music, improve the music greater literacy

the our As By signed end a library contract also increased. the universities music offerings, the our of quarter, with second expansion the In we have we subscribers quarter, of customers. five result public new second and had of XXX libraries. library

Music technology cost pianos model sends centralized analysis. terms data data process, business Each quarter a Launched times was the which streamlines times. infrastructure, and the a and and the constant SaaS terminal while traditional XX.X serves the cloud in teaching we our able tools data year-over-year courses and processed significant pledged in our further is digitalized our also learn trying the AI of Kuke the By Solutions in of addresses cloud storing intelligent where a receives which for utilizing and need face online smart This students operations, Kukey’s successfully rooms, and cloud to and learning Learning when music our of business, quarter-over-quarter system, digitalize fourth highly individual interactive data eliminating AI are families RMB content of cost of of from previously increase group to for updates into private space. quality. quarter second increase two the has Smart and by representing that XXXX, in-school our reached expensive as but XX.X only not in the revenue In million, to most barriers and process an refinement and piano the piano. their removes renting analyzed. the time

to during as or class. investment further cost need only pay For commute classes lessons. students' longer Families supervise need tuition transportation are commit piano no time purchase teachers to attend reduced attend or costs a or to students to

well-rounded music talents the provide opportunities to learning in explore in advantages in leverages music its value musical their and music the development. further even to With chain learning mind, music Kuke competitions, professional participate students pursue industry with

June XXXX, of XX, collaborating X,XXX March to X,XXX As more grew our XX, XXXX. of kindergartens from as than

launch This piano During First customers. X,XXX Kukey and the product version includes content the titled of contains from quarter, In master-level powerful coverage year, a domestic students geographic Book catalog, XX,XXX a collaborating which our XXXX X,XXX Piano version the library, songs. to music Naxos children to services, system, sheet number smart and piano music, piano for cities. a second we the our the XXX audiobooks active teaching of during will My of half we which music digital and network. comprehensive of second will practice feature has teaching added to smart kindergartens classical the a increased of The quarter expanded

segment, a Event reached in times. Music quarter second increase XX.X RMB representing million, of our the revenue For XX.X year-over-year

local execution of we’ve quarter, for commercial six the planning Chinese services performances During and provided orchestras. XX

chain. light through the recognized planning recovery and served for classical partners. we permissible increasing our our the restrictions to library, explore our quarter. content, and will and this are execution as piano music Thank the gathering over continue hardware call our industrial and value business who initiatives sessions you. of era, to downstream pass will synergies important to in industry an measure demand Our events add and service Tony, in under market music closed-group will the services develop financial and I expand our actually smart and economy to the and and In details that, for systems, you a industry under form business Tony? post-academic segment plan of launch increase CFO, PopTech With the new walk the music

Tony Chan

you, Thank And Okay. everyone. Patricia. Patricia. hello, Thank Yes. you,

that discussion, note we our Before non-IFRS financial start we present detailed please today. will measures

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

XX.X contracts quarter growth period segments. million in second XX.X from RMB mainly customer by from revenue XXX% from our our Smart XXXX, Music of same XX.X the to This secured during Learning million times to increased X.X RMB Solutions RMB million in revenue During the of business all XXXX, the period of increased by three by quarter. the robust number our due was Revenue in driven same growth XX.X to XXXX. of business increase the RMB million of in

were was million XXXX. by company's period institutional million, same RMB new increases by increase content and demand to same increase our million sales in RMB in million, RMB an in and Gross Revenue Learning in XX.X Licensing also XX.X to to RMB due in due faster increases costs. Smart RMB times second million quarter million related a Operating development Music the same music X.X was XX compared associated in recovery subscribers, Solutions of our XXXX. This of RMB sales were from period expenses than XX.X expenses expenses a Gross of cost of expenses from XX.X due was same improved Operating Event Events the RMB offerings. same the to and the The XX.X share-based expenses. period to from Music the period relative X.X research mostly XXX.X% to of supported year. administrative last in business same the the improvement with to Music Meanwhile, period XX.X X.X in XX.X Solutions. of the of compared increased of to in the our XXXX. XXXX, revenue. increase RMB to million in RMB Planning million, revenues Smart of in mainly Licensing scale, period and million, of XX.X to period increases expenses of to and compared quarter the in RMB revenue same was in representing greater second million gross RMB RMB in distribution economies mainly Music grew in at the XXXX, compared music for increased compensation from compared million, increase X.X Selling and RMB Subscription XX.X% X.X business streaming RMB increase in XXXX. XXXX, Our the to the Execution modest same an Learning as pace in million, of million, our margin were much an XX.X% Services. XX.X margin X.X by Total due profit to RMB million a million reflects period loss distribution

by ADS same for RMB RMB XXXX to RMB and same to RMB per RMB Basic diluted per of non-IFRS non-IFRS loss X.XX. period period profit million, both XX.X a non-IFRS of XX.X in was the in million compared the loss were and loss X.X million, period net were Our of XXXX. ADS compared the X.XX. million both was diluted XX.X profit and Basic RMB

and our onto balance Moving liquidity. sheet

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

through in the Board million This ADS repurchase XX, next to our of announced going today. prepared earnings to not XX, full to to under we the which forward. that target XXXX. questions. our we when quarter to expect plan operations of purchase business now two as a RMB authorized XXXX, of our start share Operator, program we June our concludes Directors – ready million quarters. as continue On for repurchasing revenue year may repurchases following on show achieve are confidence are our less up company a XXX We than We December activities improving take our second of for remarks US$X track

Operator

from Brokers. first ahead. with Wong Please [Ph] Today's go instructions] Tiger question [Operator comes Katrina

Unidentified Analyst

Okay. elaborate XXXX? question. you is, my business my kindergarten And would during quarter Thank taking please your you second of the first the of performance question for

Patricia Sun

X,XXX at active our the to network question. Smart of over very number second collaborating second to the Thank you. students to quarter the X,XXX was second I in achieving during quarter to quarter, the added XX,XXX, XXX will our end geographic of business X,XXX is we by The have cities. for of the kindergartens take Learning the first Growth Music of healthy. X,XXX XXXX compared this quarter the We and quarter. our coverage compared expanded of during XXXX end

we For of you. with number the Thank our deepen to rest continue kindergartens. we the while existing will grow year, the kindergartens, aggregate of collaboration collaborating

Unidentified Analyst

I another Does companies And from recent Thanks. have Okay. the prevent conducting marketing question. activities? policy

Patricia Sun

last the Councillor a to The education on key focused of adverse policy issued as of to impact State the Council and to as changes business, education has Instead, K-XX evaluation exam has aesthetic XXXX, it Education's to been of in for documents for October Education interpretation of add guidance us. schools is which Ministry on by important in and high time, to recent the effective supporting necessary have of recent and learning`. The is education relevant arts will junior and year, for students’ guidelines in art schools. at education aiming of the academic areas foundational need PRC all quality aesthetic same art restrict of by senior schools. an policy music on including development all subject levels development no music education education, include schools the and improve lessons the on Ministry issued art series one to the State According

will improving the first-class aesthetic you. of of system allocation of local will Going education the coverage and resources increasing in be Thank the Ministry to evaluation believe forward, universities. Eventually, continue we China's education double schools guide aesthetic courses. included Education

Unidentified Analyst

Thanks.

Operator

Please go question ahead next management. Lex Zhang our from today comes Atlantic And with Investments.

Lex Zhang

Management, have also thank I two for presentation. you your questions.

lady government's The for crackdown previous is first mentioned the that one recent the also Chinese students. after-school and tutoring the the

example, the How will you question. do or would turn K-XX of That's into say then? be for fields So, decided some top you tier suddenly what education? first or competition arts your my - predict music peers that

Tony Chan

this I Thank Okay. will you, Lex. question. take

to means and of First and This low music there developed X% of as total the still XX% are other it's market China all, compared the penetration number opportunities a of population, learners for rate is only tremendous learning percentage in in very music of that in China, space. countries.

advantages. In we several terms competition, of the we have think

world's largest Firstly, by content provider. classical independent with collaborating music the Naxos,

library over companies. music patented Our top-tier classical has XXX access to record

as have since developing early we we an team Secondly, establish R&D a music content and significant advantage began XXXX. learning mover

our amount is very high. So,

music subscription, we to services, a building us creation, more, Finally, are classical solutions, to execution lovers. learning much live events ecosystem that which enables enables provide closed-loop talent many music music services and shows more content planning, and

well-prepared are competition we're definite forward think be for position, going Thanks we increased question. any any if leading there would kind the for believe. a we I and of in So,

Lex Zhang

penalized And and Music and breaking question we investigated, my Tencent you. as know fined such ware that the Meituan, this recently for quite monopoly Alibaba, even all that, so, recently, Thank companies is second law.

cooperating awake of your currently the anything, So, suppliers? any third-party music company classical leader with this taking industry. your since the you is platforms done the night at that the way has is Kuke it’s in and in And keeps terms actions

Patricia Sun

openness powerful I Kuke always will from the a all has policy in solution list exclusivity clients, Kuke can and becoming Chinese suppliers. will not consistent And market. is the big platforms as you of or small, observe has best to easily question. second the player been with maintain our take this, the that Well, its our to believed

access By contributor for become artist the a music arrangement, and channels enhance brand awareness the utilize recordings. profiles, to multiple company can and especially their promotion during the classical market non-exclusive contests aiming With campaigns to the wider diverse of position variety to competitive to a be can we able and long clients better artists have ourselves Thank you. and and business our options the run. a in to support to to market,

Lex Zhang

Thanks.

Operator

Fung next ahead. question with Please comes Yuji our today from RiverCircle. And go

Yuji Fung

Hello. business Thanks revenue the for forward? segments three what first My my we going I contribution is, our from foresee taking do questions. questions. guess question three

Tony Chan

Okay. Yuji. Thank you, question. It's finance a

take one. this So I'll

Smart expect XX% to expecting year. Systems our XX% revenue our to still contribute Music the Learning another Thank And about Learning resources Licensing into will segment of business our be will business Systems are Smart remaining We the contribute going development we take total this XX%. Music events total majority this live our and forward. forward Subscriptions going of revenue. of the And fastest the of growing segment will up we business business you. and allocate

Yuji Fung

second Okay. seems lot. second our quarter My a is, the that question in G margin improved it

how third sustainable? there quarter the and that is margin is the margin coming Or fourth G So, quarter? in

Tony Chan

Thank Yuji. take this And I'll you, question again.

Subscription expecting QX Learning profit we're the maintaining well Smart We in as growth means forward going as QX, for into number Music that paying margin prudent Licensing are gross view of and a the students our kindergarten lessons, gross business. – because and margins and Systems on business, further our optimistic the

So, you, Yuji. we margins – are the Thank forward. on margin going profit optimistic gross

Yuji Fung

maintain market while the is possible it in And share, CapEx last is CapEx the revenue above to can My we going forward? second question the growth Okay. reduce – in quarter? is, your the the it

Tony Chan

kindergartens. was partnering RMB piano in million QX, of to smart around launching systems expenditure Thank very, mainly XX you. This Okay. good for Capital you. is the very Thank due question. a

it additional users looking One increase We ways our would to users the of our into the grow kindergartens This into for of definitely to allocate growing compromise have CapEx. tightening additional purpose control paid increase while resources network ability to our kindergartens. to without paying CapEx, possibility our them is of but of courses. enrollment partnering achieve help number been Kukey existing students will

this So, are moment. you. the evaluating option evaluating and we other options at we also Thank are

Yuji Fung

you. Thank Okay.

Operator

this our to question-and-answer session. conference I to gentlemen concludes the would our back and remarks. management for final over like turn Ladies

Jane Zuo

to We look our for forward call. joining good in you again call. you earnings speaking Thank day. Have our Bye-bye. next a with

Operator

call. This for presentation. all you. today’s today’s conference you Thank concludes thank We attending

may lines. disconnect You now your

Kuke Music Holding Limited (KUKE) 6 Aug 212021 Q2 Earnings call transcript