Earnings Call Transcript - KRKR Q2 2025

Operator, Operator

Hello, ladies and gentlemen. Thank you for standing by for 36Kr Holdings Inc.'s 2025 First Half Earnings Conference Call. Today's conference call is being recorded. I will now turn the call over to your host, Xin Wang, IR Manager of the company. Please go ahead, Xin.

Xin Wang, IR Manager

Thank you very much. Hello, everyone, and welcome to 36Kr Holdings First Half 2025 Earnings Conference Call. The company's financial and operational results were released earlier today and they 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 Chairman and CEO, Mr. Dagang 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 of the first half 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 this and other risks and uncertainties is included in the company's perspective in other public filings as filed with the U.S. 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 discussions 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 the unaudited GAAP measures. And please note that all amount numbers are in RMB. I will now turn the call over to our Chairman and CEO, Mr. Dagang Feng. Please go ahead.

Dagang Feng, Chairman & CEO

Thank you. Hello, everyone. Thank you for joining our first half 2025 earnings conference call. Over the past two years, we have consistently upgraded our organizational structure, optimized expenses, and improved operating efficiency. In the first half of 2025, our gross profit increased by 10% year-over-year. Operating expenses decreased by more than CNY 60 million from the same period last year, down 52% year-over-year. We narrowed our net loss by more than CNY 90 million, a remarkable 95% improvement year-over-year, while our cash results remained stable due to the company's solid business operations. These operational achievements were driven by our ongoing efforts in content innovation and technological commercialization, which together improved our organizational structure and workforce efficiency. Let me walk you through our business progress in those three areas. First, in content. We consistently strengthened our content ecosystem in 2025, leveraging our unique content creation capabilities to expand our influence steadily. We broadened our content dissemination network across diverse channels, covering major new media platforms such as Weibo, Xiaohongshu, Toutiao, Zhihu, Bilibili, Douyin, and Kuaishou among others. This broad channel exposure increased our overall dissemination and visibility for our premium content. Our regular production of high-quality content also appealed to a diverse range of user demographics, elevating engagement and retention. As of the first half of 2025, we had over 36.57 million followers, marking 17 consecutive quarters of growth. We explored a variety of content formats throughout the first half of 2025, including graphics, short- and long-form video, audio, and live streaming, enriching our content offering with diverse styles. For text and graphics, we continued to produce high-quality content on various fronts while maintaining our existing metrics. By leading our flagship channels, including 36Kr and 36Kr Pro, we expanded our reach in key verticals and actively developed high-quality content specific accounts such as Intelligence, 36Kr Auto, Future Consumption, 36Kr Games, Waves, and 36Kr Finance. These accounts enhanced our metrics with both broad content coverage and deep expertise in specialized areas, providing users with valuable insights into industry trends and evolving business dynamics. Additionally, we tailored content experiences for younger generations through our Youth and TIDE subvertical media channels, successfully engaging younger audiences. At the beginning of 2025, we launched the 36Kr Industry Future channel, focusing on urban innovation and cutting-edge technologies to build our influence in emerging industries. Within six months, we released more than 60 articles, including a notable feature on the innovative pharmaceutical sector, which attracted over 70,000 page views on our official WeChat accounts and more than 100,000 total exposures. Currently, our accounts cover topics such as artificial intelligence, global expansion, advanced manufacturing, digitalization, dual carbon and ESG initiatives, hardcore technology, and consumer life science, making up a thriving content ecosystem. In the first half of 2025, under 36Kr of Visual Accounts alone, 339 of our articles achieved over 100,000 page views. Meanwhile, WAVES followers grew by 44% year-over-year. In terms of short videos, our robust content creation abilities granted us significant visibility in the market. By the end of the first half of 2025, our video followers surpassed 9.52 million. Our retail channel followers surged by 69% year-over-year. Following the debut of 36Kr tech on Douyin in 2025, we released successful videos such as AI Confident and AI Creator. Furthermore, our video featuring multiple hosts garnered over 10 million views across Xiaohongshu, Douyin, and WeChat channels. For live streaming, this year, we optimized our resources with a streamlined team, fully leveraging WeChat channels to foster content-specific accounts like Big Deal Global Expansion, Golden Shovel, and 36Kr CEO Tips. We also launched AI Insider, targeting AI entrepreneurs and independent developers. During this year's World Artificial Intelligence Conference in July, 36Kr acted as a special supporting media partner, providing extensive content coverage and multidimensional reporting. Our super live streaming channel, jointly initiated by the WAIC Organizing Committee and 36Kr, offered professional, cutting-edge live streaming content that brought together leaders in AI, focusing on scenario and application-driven insights. The live stream included comprehensive conference reporting, expert panels, cutting-edge technology insights, future trend forecasts, and tech product groups, garnering 50.2 million total views while engaging 1.17 million viewers across our live stream metrics. Additionally, at the Appliance and Electronics World Expo 2025, we launched our first robust themed exhibition, Future Plus, in partnership with five robotics companies, showcasing the vast potential of AI in home appliances. This exhibition led to 36Kr retail channels achieving 175,000 live views and 151,000 likes in a single session, while our Omni Channel live streaming totaled over 1.04 million views across multiple platforms. Regarding event IP, we successfully hosted WAVES in the first half of 2025, co-hosted by HI Camp and the Hangzhou Liangzhu New Town Management Committee. This year's WAVES centered on the new era for venture capital. At both investor and entrepreneur sessions, founders of emerging companies, innovative young scientists, and creators engaged with top-tier investors to discuss cutting-edge topics, including AI breakthroughs, globalization, and value reassessment, sharing insights about their business aspirations and future perspectives. This year's WAVES event accumulated over 150 million views. Moreover, on April 18, 2025, 36Kr hosted the 2025 AI Partner Summit at Modu Space Shanghai. Under the theme "Here Comes the Super App," the event emphasized the disruptive impact of AI applications across various industries, examining how AI innovations are transforming business logic and reshaping industry landscapes. We invited executives from several leading companies to explore trending topics such as AI adoption, computational power, search capabilities, imaging, and breakthroughs in AI education. Our 2024 AI Partner Summit garnered over 130 million views. Next, in commercialization, the first half of 2025 witnessed our deep expertise in content and IP driving continuous commercialization breakthroughs, including client structure optimization, stronger commercialization of subvertical media channels targeting younger audiences, new developments in live streaming and video revenue, and significant progress in industrial service commercialization. In terms of client structure optimization, our enriched content ecosystem and diverse distribution channels empowered us to expand our portfolio of services and products, significantly enhancing our commercialization capabilities. Within our Internet client portfolio, the AI and large language model segments continued to gain momentum, increasing their revenue share. Revenue from Internet clients rose by 52% year-over-year, while revenue from the FMCG segment grew by 27% due to multiple brand clients acquired last year repurchasing our offerings in the first half of 2025. Regarding the commercialization of subvertical media channels targeting younger audiences, revenue from these channels increased by 30% year-over-year, with brand client spending doubling year-over-year, reflecting sustained brand recognition of our consumer content. As for live streaming and video commercialization, we advanced our live streaming offerings for event coverage, notably during major industry exhibitions like AWE and WAIC in 2025. By launching a low ARPU product line, we complemented our existing high ARPU premium offerings, broadening the appeal of our video and live streaming services to new clients, particularly early-stage startups. Furthermore, our efforts in the global expansion segment led to a breakthrough with Canton Fair clients, establishing significant commercial partnerships and earning high recognition from event organizers. Moving forward, we will continue to explore new live stream formats and scenarios to provide users and clients with richer, diverse content experiences. Industrial service commercialization continues to be a core priority, particularly global expansion. At the start of 2025, 36Kr signed a strategic partnership agreement with Hangzhou Tiantang New Era Construction and the Investment Group Company for operations related to the Chinese Enterprise International Service Center project. This collaboration leverages our expertise in organizational operations and online content distribution alongside our extensive global expansion resources to support Tiantang in creating a unique service ecosystem and operational framework for corporate international outreach, aiming to establish a strong brand and amplify Tiantang's global influence. In the first half of 2025, we hosted a total of 11 events on global expansion to support clients' international ambitions. Additionally, we focused on key sectors critical for urban industrial transformation and future development, such as the low-altitude economy, commercial aerospace, advanced manufacturing, and new energy and materials. This initiative attracted over 200 upstream and downstream industry projects from government entities, fostering robust commercial partnerships. Beyond these advancements in content and commercialization, we continue to innovate in 2025, consistently driving cutting-edge EDI applications to optimize content production and commercialization efficiency. On the content side, we provided comprehensive coverage of China's AI ecosystem in 2025. At the start of the year, 36Kr made headlines both domestically and internationally as the only tech media outlet in the world to have interviewed DeepSeek's founder exclusively twice. This prompted the launch of our Disruptors program in the first quarter, leveraging our venture-focused media expertise to craft a communication roadmap for Chinese tech companies pursuing brand globalization. In addition to our text and graphic accounts, we launched video channels such as AI Map and 36Kr Tech, delighting users with multiple successful videos. Alongside the introduction of our new live streaming series, AI Insider, we hosted several sessions during major events like WAIC, receiving strong engagement and recognition from within the industry and beyond. We have actively integrated AI technology into our content ecosystem to enhance efficiency company-wide. Our AI Meeting corporate product, launched in the second half of 2024, employs huge AI model technologies to produce AI-powered interviews and generate content, incorporating partnerships with multiple large AI model developers. We also integrated DeepSeek in March 2025. To date, AI Meeting coverage has reached 993 companies, showcasing their latest initiatives in fundraising. This initiative has significantly improved our content team's efficiency, alleviating past manpower limitations and enhancing our startup coverage. Moreover, we launched the 36Kr Corporate Omni Intelligence in October 2024, targeting secondary market investors by providing AI-powered daily sentiment analysis reports on public companies. Currently, this service covers over 7,800 public companies listed in Mainland China and Hong Kong, allowing users to search, filter, and subscribe to reports on preferred companies, receiving daily analyses in a personalized format. The sentiment data stems from a collaboration between 36Kr and Soften, a wholly-owned subsidiary of Beyondsoft. Our core community has grown to several hundred users, with a cumulative user base of 25,000, including 4,220 subscribers. In the first half of 2025, as Doubao's exclusive technology and finance media partner, we launched the Doubao AI agent, achieving a steady 10% weekly increase in user interactions since its launch. Furthermore, we plan to introduce a user review and discovery platform for AI tools in the second half of the year, integrating AI product guidance, real user reviews, and community engagement to assist both individuals and businesses in identifying the ideal AI tools while facilitating experience sharing. Our development of AI products and tools reaffirms 36Kr's foresight and execution capabilities in AI. By maximizing AIGC technology utilization within our content production activities, we have expanded applications such as information identification, text processing, and image generation. We are actively promoting AI implementations across diverse business scenarios, matching our new AI products with a wider array of enterprises and organizations that were previously unreachable due to bandwidth and manpower constraints, converting them into clients. In summary, 36Kr has significantly enhanced its operating efficiency throughout 2025, driven by our exceptional content creation capabilities, strong IP assets, highly engaged user base, and commercialization successes. Looking ahead to the second half of 2025, we will continue refining our competitive edge in content creation, broadening our product and service offerings, and further leveraging AI technology to empower high-quality development among new economy stakeholders. With that, I will now turn the call over to our CFO, who will discuss our key financial results.

Xiang Li, CFO

Thank you. Thank you for joining today's presentation. We will now review the first half of 2025 financial performance. Please note that all amounts are in RMB unless otherwise stated. Total revenue was CNY 93.2 million in the first half of 2025 compared to CNY 102.4 million in the same period last year. Online advertising services revenue was CNY 74.5 million in the first half of 2025 compared to CNY 80.4 million in the same period last year. The decrease was primarily due to advertisers adjusting their advertising and promotion strategies in response to macro pressures and to a lesser extent for ongoing optimization of our customer structure to control credit risk, which led to decreased revenue. Enterprise value-added services revenue was CNY 12.2 million in the first half of 2025 compared to CNY 13.4 million in the same period last year. The decrease was primarily due to our proactive and ongoing refinement of service offerings to strategically focus on margin improvement. Subscription services revenue was CNY 6.4 million in the first half of 2025 compared to CNY 8.6 million in the same period last year. The decrease was primarily due to the change in our training services business model. Cost of revenue decreased by 25% to CNY 42.5 million from CNY 56.9 million in the same period of 2024 as a result of the company's strict cost control measures. Gross margin increased by 11% to CNY 50.7 million from CNY 45.5 million in the same period of 2024. Gross profit margin was 54.4% in the first half of 2025, representing an increase of 10% from 44.4% in the same period of 2024. The increase in gross margin was primarily driven by savings in payroll-related costs following the strategic workforce optimization. Operating expenses decreased by 52.3% to CNY 55.9 million from CNY 117 million in the same period of 2024. The decrease was primarily attributable to strategic cost management actions, including targeted workforce reductions and streamlined non-core spending. Sales and marketing expenses were CNY 29.4 million in the first half of 2025, a decrease of 35.1% from CNY 45.4 million in the same period last year. The decrease was primarily attributable to the decrease in payroll-related expenses, rental expenses, marketing and promotion expenses, and travel and entertainment expenses. General and admin expenses were CNY 20 million in the first half of 2025, a decrease of 68.2% from CNY 52.8 million in the same period last year. The decrease was primarily attributable to the decrease in the allowance for doubtful accounts payroll-related expenses. Research and development expenses were CNY 6.4 million in the first half of 2025, a decrease of 27.1% from CNY 8.8 million in the same period last year. The decrease was primarily due to the decrease in the average compensation level for our research and development personnel as we restructured our R&D team. Share-based compensation expenses recognized in cost of revenue, sales and marketing expenses, research and development expenses, as well as general and admin expenses totaled CNY 90,000 in the first half of 2025 compared to CNY 50,000 in the same period last year. Other income was CNY 0.4 million in the first half of 2025 compared to CNY 24.3 million of other expenses in the same period last year. The change was mainly due to the decrease in long-term investment loss. Income tax credit was CNY 4,000 in the first half of 2025 compared to CNY 70,000 of income tax expenses in the same period last year. Net loss was CNY 4.8 million in the first half of 2025 compared to a net loss of CNY 95.9 million in the same period last year. Non-GAAP adjusted net loss was CNY 4.7 million in the first half of 2025 compared to a non-GAAP adjusted net loss of CNY 95.9 million in the same period last year. Net loss attributable to 36Kr Holdings Inc.'s ordinary shareholders was CNY 5 million in the first half of 2025 compared to a net loss attributable to 36Kr Holdings Inc.'s ordinary shareholders of CNY 94.4 million in the same period last year. Basic and diluted net loss per ADS were both CNY 2.307 in the first half of 2025 compared to CNY 44.859 in the same period last year. As of June 30, 2025, the company had cash, cash equivalents, and short-term investments of CNY 75.1 million. Well, this concludes all our prepared remarks today. We will now open the call to questions. Operator, please go ahead.

Operator, Operator

Your first question comes from Yong Zhang from SWS Research.

Lingyi Zhao, Analyst

I will translate the question in English. We noted that the company's financial performance has achieved a significant improvement in the first half of 2025. I would like to ask, firstly, how did the company achieve this financial turnaround? And secondly, what is the company's full year financial outlook for 2025?

Dagang Feng, Chairman & CEO

First of all, through sustained operational efforts over the past two years, we have implemented a series of cost reduction and efficiency boosting measures. This includes relocating to an office building with lower rent, streamlining our tech and R&D teams, adjusting unprofitable businesses, improving workforce efficiency in core operations, and upgrading our organizational structure. As a result, operating expenses decreased by more than CNY 60 million year-over-year, and net loss was narrowed by more than CNY 90 million. While second, our gross profit margin rebounded to over 50% in the first half of this year. This was primarily driven by adjustments to our customers and businesses, coupled with stricter cost controls. Over the past six months, we optimized our product portfolio and client structure. Additionally, we implemented more rigorous project approval standards internally to enhance cost management. For the first half of this year, the company will continue to improve its content creation capabilities and optimize our product metrics, focusing on achieving profitability, and we predict that we will have profits at the end of 2025. That all answers your question.

Operator, Operator

Your next question comes from Rui Yin from Sealand Securities.

Rui Yin, Analyst

Thank you for your question, and I will interpret it for you. There are two questions. The first is whether management could share the future plan for the new initiative in the industrial service business.

Dagang Feng, Chairman & CEO

Well, first off, we have already hosted and will continue to host many of our IP events in 2025. We have a series of events scheduled for the second half of the year, including the AI Partner Conference for all industries, the industrial future conference, and more. Beyond this IP summit in 2025, we also restructured our content layout business strategy and organizational structure for the industrial service business. While these adjustments are beginning to yield positive outcomes, our all-new content channels spotlighting urban innovation and our state-of-the-art technologies have published over 60 articles within the past six months. Many of these articles garnered unmatched page views on our official WeChat accounts. By leveraging our content influence, we have connected with over 200 upstream and downstream companies in the local government. Moreover, we will continue to expand our overseas ventures, sustaining our strong globalization momentum from 2024. In addition to Southeast Asia, Japan, the Middle East, and Europe, we will strengthen our global network and collaborate with the China Council for the Promotion of International Trade Beijing Subcouncil to tap into additional resources from Beijing-based service providers specializing in global expansion-related solutions and identify enterprises seeking global expansion. At the beginning of this year, we made our first foray into operating a local government's global expansion service center in our capacity as a media entity, partnering with a construction and investment group on the Chinese Enterprise International Service Center Operations project. In the first half of 2025, we hosted a total of 11 events on global expansion. As our business adjustments are implemented in the second half of the year, our industrial services will have four new commercial opportunities with optimized offerings that are more sustained and profitable. The second question from Sealand is, how does the company position itself in generative AI across content and product offerings? Before DeepSeek gained widespread attention, we were the only tech media outlet worldwide to have exclusively interviewed DeepSeek founder Liang Wenfeng twice. Building our existing influence in the AI field in 2025, we launched 36Kr tech on Douyin and our new live streaming series, AI Insider to supplement our graphic and text content. This initiative delivered multiple blockbuster videos shortly after the debut. In the second half of 2025, we will also launch the future human laboratory graphic account to document ordinary people's real-world interactions with AI, exploring their experiences and challenges using AI tools. As I just mentioned, we've made good progress this year on several AI products. To date, AI meeting coverage has covered nearly 1,000 companies, highlighting their latest initiatives in fundraising ventures. 36Kr corporate Omni Intelligence currently covers over 7,800 public companies listed in Mainland China and Hong Kong with a cumulative user base of 25,000, including 4,220 subscribers. In the first half of 2025, as Doubao's exclusive technology and finance media partner, we launched our Doubao AI agent, achieving a consistent 10% weekly increase in user interaction following this launch. Furthermore, we plan to roll out a user review and discovery platform for AI tools in the second half of this year, integrating AI product guidance, real user reviews, and community engagement. This platform will assist both individuals and businesses in identifying the ideal AI tools for their needs. In 2025, we will continue to develop our AI content ecosystem, maintaining our edge in covering the latest AI trends and consistently delighting users with premium content associated with AIGC technology. We will also further integrate AIGC technology with content production to unlock new avenues for success. That's all the answers for your two questions. Thank you for your question.

Operator, Operator

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

Xin Wang, IR Manager

Yes, please say the closing remarks.

Operator, Operator

This concludes the conference call. You may now disconnect your lines. Thank you.