Wei Zhang

Wei Zhang asked for an elaboration on the company's cost structure, specifically the significant increase in sales and marketing expenses and whether this trend would continue. She also questioned the key drivers of revenue growth from Mainland China and the expected evolution of this market.

Answer

CFO Yimeng Shi explained that the 2024 increase in sales and marketing spend was a strategic investment to launch new businesses, and this investment would continue in 2025 to drive long-term user growth. CEO Chaohui Chen added this supports the company's shift to a 2C focus. Regarding China, Mr. Shi attributed the nearly 100% growth in 2024 to outbound travel recovery and noted a recent regulatory approval will unlock domestic market potential. Mr. Chen emphasized their growing market share due to superior 5G service quality.

Wei Zhang from Diamond Equity Research asked about the company's collaboration model with third-party game studios to ensure the delivery of successful games and questioned how tightening Chinese government policies affect the company's industry outlook.

Answer

Executive Kan Zhang stated that CooTek enables partner studios by providing access to its proprietary data-driven SaaS platform, which includes metrics and algorithms for content production, user growth, and monetization. Regarding regulations, he explained that the company is mitigating risks from the weak Chinese domestic market by optimizing resources and concentrating on its overseas business, particularly mobile games and the online literature app Readict, which is expected to turn profitable in April 2022.

Wei Zhang from Diamond Equity Research inquired about the business model and monetization strategy for the company's newly announced metaverse plan.

Answer

Executive Kan Zhang explained that the metaverse plan is an extension of the existing two-wheel strategy focusing on online literature and mobile games. He described how novels create virtual worlds that can be visualized through games, citing the 'Love Fantasy' game as an example derived from an online novel. Zhang detailed the monetization strategy, which involves using NFTs to tokenize digital books and virtual items like props and weapons, allowing users to collect, trade, and use these assets within and outside the company's apps, benefiting from their potential appreciation in value.

Wei Zhang from Diamond Equity Research inquired about the monetization strategy for the Fengdu Novel platform, specifically through social media channels and copyright operations. She also asked about the potential impact of new Chinese government regulations limiting gaming time for minors on the company's mobile game business.

Answer

Executive Kan Zhang explained that the company uses a pay-to-read model on social media to reach new user segments and is actively developing its IP operations by turning novels into audiobooks and films, with two projects expected to complete filming this year. CFO Robert Yi Cui addressed the gaming regulations, noting their ad-based monetization model is less impacted than in-app purchase models and that the company is mitigating risk by expanding its global presence.

Wei Zhang from Diamond Equity Research inquired about the development and competitive positioning of the Fengdu IP-based short-form video project. She also asked about the company's strategy for creating mobile apps and the trade-off between in-house R&D versus acquiring other development firms.

Answer

Executive Kan Zhang addressed both questions. Regarding short-form video, he stated the company is diversifying its IP from the Fengdu Literature platform into audiobooks and short video series, which are distributed on major platforms like Douyin and Kuaishou. The company positions itself as a content producer, not a platform competitor. On mobile app strategy, he said Catwalk Beauty's success validates their incubation and growth platform. The key is consistently publishing high-quality games, whether developed in-house or through open cooperation with third-party producers, and the company remains open to acquiring studios.