Sogou Inc.
Q4 2018 Earnings Call Transcript

Published: 2 Feb 2019

[Operator:]

Ladies and gentlemen thank you for standing by, and welcome to Sogou's Fourth Quarter and Fiscal Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. After managements' prepared remarks, there will be a Q&A session. Today's conference call is being recorded and if you have any objections, you may disconnect at this time. I would now like to turn the call over to your host today, Jessie Zheng, Investor Relations, Director of Sogou. Please go ahead.

[Jessie Zheng:]

Hello, everyone, and thank you for joining Sogou's fourth quarter and fiscal year 2018 conference call. On the call, our CEO, Xiaochuan Wang; and our CFO, Joe Zhou, will give an overview of operations and the financial results. In line with our previous sectors on the previous earnings conference call, Xiaochuan's prepared remarks will be made in Xiaochuan voice using personalized the speech synthesis and the style transfer learning technology, which is developed by the Sogou Voice Interaction Technology Center. Xiaochuan will join a Q&A portion of the call in person. Before management begins their prepared remarks, I would like to remind you of the Company's Safe Harbor statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed in this conference call are forward-looking statements. These statements are based on current plans, estimates and the projections, and therefore, you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the Company's filings with the Securities and Exchange Commission. With that, I will now turn the call over to our CEO, Xiaochuan Wang.

[Xiaochuan Wang:]

In 2018, we consistently executed our twin-engine strategy with Sogou Search and Sogou Mobile Keyboard and increasingly integrated in our technology into our product and services to upgrade our core businesses. This has continuously improved our overall competitiveness. In Search, we made dedicated efforts to improve the quality of search results, enriched our differentiated content and continued for upgrades service to Q&A base search. As China's second largest search engine, our core search revenue continues to grow faster than the industry average. With Mobile Keyboard, we continue to expand our user base and improve the synergies with Sogou Search to enhance the mobile keyboard content and service distribution capabilities. By the end of December 2018, Sogou Mobile Keyboard had 430 million DAUs, an increase 28% from the previous year. This really enforced its position as the third largest Chinese mobile app in terms of the DAU. According to iResearch, now I'll provide an update on these all core businesses starting with Search. Over the past year, we have focused on delivering better natural search results to our users. We've returned highly relevant development results that are more accurately respond to user query and significantly improve the quality of our search results on long-tail queries. We also enhanced our health care search services by adding and integrating content from authoritative health care institutions and experts both at home and abroad. We've established the health care content ecosystem that has become the industry benchmark, and with the ongoing integration of the AI technology, Sogou Search continues to evolve into intelligent Q&A base search. In health care search, in the fourth quarter, we've significantly increased the Q&A content on our platforms from prominent health care experts and physicians. And we became the first search engine to exclusively offer authoritative medical deadlines endorsed by China's National Health and Family Planning Commission. Driven by these efforts, 65% of total health care search results feature content from authoritative sources in the quarter, up from 50% a year ago. This figure is significantly higher than debt of other industry players. As a result, the number of health care queries in mobile search has definitely risen with click through rate continuing to climb as well. At the same time, we continue to upgrade our search services by optimizing our independently developed Q&A technology. During the fourth quarter, we've reviewed 42% of search queries with the top direct answer results and achieved the 94% accuracy rate. We also introduced an open Q&A platform that provides access to quality content related to a number of sectors. This enhanced the content quality and the accuracy of top direct answer result. The click through rate for top direct answer result increased to 35% from 32% in the previous quarter. Now, let me talk about our close collaboration with Tencent. Over the past year, on top of general search results, Sogou Search has provided additional search services for WeChat users including vertical search functions such as Sogou Zhihu and Sogou wenwen, our user-editable encyclopedia and interactive Q&A platform respectively. Sogou Search results are also increasingly displayed on the WeChat search platform and the click through rate has remained at a high level. Moving to Sogou Mobile Keyboard, our core AI technology including voice, translation and conversation, has enabled local mobile keyboard to facilitate more intellect users interaction and exploration. This has contributed to the rapid growth in our user base. By the end of December 2018 Sogou Mobile Keyboard received up to 540 million voice request a day. With a daily average voice requests up 69% from a year ago, this strengthened Sogou Mobile Keyboard's position at the largest voice app in China. With the multilingual translation function, Sogou Mobile Keyboard also enabled users to overcome communication barriers for both spoken and text based conversation. Daily translation requests increased by 60% from a year ago, Sogou's smart reply function which leverages our conversation technology can provide a diverse range of automated personalized reply options, also proved increasingly popular among users. The continuous evolution of our conversation technology enhances the facility of our mobile keyboard to predict user intent thereby improving the content recommendation function in users chat. This has gradually improved Sogou Mobile Keyboard's ability to distribute content and services that ever meets user needs on a real-time basis. Turning to our smart hardware business, we continue to upgrade this segment by shifting the focus of our R&D and sales to AI-enabled hardware. In 2018, we launched a number of new hardware product that better utilize our core AI competencies. Our smart translation devices such as the Sogou Travel Translator, Sogou Smart Translation Recorder, and Sogou Translator Pro were all well received by the market in line with our new strategies with accelerated to product upgrade, expanded used cases and established core competencies such as offline translation. This has led to a significant improvement in user awareness and recognition of our translation devices and other Sogou-branded hardware product. Moving on to our AI strategy. In 2018, we continue to implement our AI strategy of developing language-centric technology that advanced natural human-machine interaction as knowledge computing. Thanks to our achievement in both technology development and application. We are become a leader in several key areas including voice, computer region, machine translation and Q&A. On the technology front, through ongoing R&D investment, we continue to achieve technological breakthroughs and reinforce our competitive strength. In the fourth quarter, we introduced the innovative Sogou Vocational Avatar, which combines voice, image and other human-machine interaction technologies, enabling machine to better imitate human behavior in certain professional areas. Our advanced technology also continues to be recognized in global competition. At the recent International Workshop on Spoken Language Translation, a top tier international machine translation competition, Sogou ranked first in the baseline model path, ahead of both domestic and foreign peers including iFlytek, Alibaba, and U.S. National Air Force Research Laboratory. This serves as a strong testament to Sogou's industry-leading competency in machine translation. In January 2019, we not only came in first in the Conversational Question Answering Challenge, but we also set new record for all evaluation metrics, leading AI players including Microsoft, AI2 and Stanford University, all participated in the challenge. Our achievement further narrows the gap between human and the machine performance. This demonstrates the potential of Sogou's advanced algorithms to drive the applications of Q&A technology in search. We also continue to explore ways to apply our AI technology in most processor and in various commercial segments, laying a solid foundation for future growth. In November 2018, during the Fifth World Internet Conference in Wuzhen where we built the first world's first AI news anchor in partnership with Xinhua News Agency. By leveraging our Sogou Vocational Avatar technology, the virtual anchor creates a less like resemblance of a professional human anchor. The AI news anchor which is now in daily use generated widespread interest in media, education and other industries. In addition, our AI-powered simultaneous machine interpretation technology, which is the first to be used in commercial settings were successfully utilized at number of conferences and international sporting events including the China Open 2018, Longines Equestrian Beijing Masters and the FINA Swimming World Cup. With this amassed track record, we have set the benchmark for AI interpretation technology in the field of machine learning. We've also leveraged our intuitive Q&A capability to bring a new experience with health care and legal search users. Our smart diagnosis assistant imitates physician-patient conversation and provides free diagnosis and medical advice. Similarly, our Q&A robots embedded in Sogou Lawyer. Our legal search service can analyze user responses through a series of questions and then provides legal advice, a prediction of the case outcome and the references to similar cases. Now I'd like to share some thoughts on 2019. First, on the macro-environment in China, we've observed that softness in the Chinese economy has already started to impact the online advertising industry in general from the fourth quarter of 2018. This will probably linger into 2019 with advertiser segment turning even more cautious. We have also seen many players in this internet sector, especially in innovation areas starts to either scale back or simply become financially inviable. Sogou remains fundamentally focus with our high quality assets, a large and highly engaged user base and an annual revenue size over $1.1 billion. At the time of increasing uncertainties, we see greater opportunities to drive solid business execution, improve organizational efficiency. We are continuing to invest in the leading edge AI technology for future. More specifically, we will continue to develop our twin growth engine, search and mobile keyboard to enhance the overall competitiveness of our products and services. With search, we will integrate even more differentiated content into our Search ecosystem. We will also continue to optimize our Q&A technology to facilitate intelligent search. On mobile keyboard, we will continue to push the boundaries of product innovation to showcase the value of mobile keyboard as the content and service distribution platform. These initiatives will help increase the organic traffic generated from our large portfolio of products and services. We are committed to developing language-centric AI technologies, and we will continue to pursue technological breakthroughs and develop applications based on our core conferences including voice, computer vision, machine translation and Q&A. In the addition to empowering our core businesses across the board, we are also at the forefront of exploring new commercial use cases. Our advance AI success will help Sogou to tap into new gateways, expand at the patient scenarios and increase data capabilities. This will pave the way for Sogou’s continued development in the era of artificial intelligence. Now, I will turn the call to Joe, who will walk you through our financials.

[Joe Zhou:]

Thank you, Xiaochuan. Hello, everyone. I'm pleased that we continue to outpace industry growth in our core search business where search revenues growing by 17% in constant currency. We were pleased that to see increased contribution from organic traffic generated from our own portfolio of products and services. Hence, we deliver $27 million of non-GAAP net income. Now, I walk you through our financials in greater detail, starting with the fourth quarter. Please note that unless otherwise noted, all monetary amounts that I discussed are in U.S. dollars. Also note that, I will refer to some non-GAAP numbers which exclude share-based compensation expenses. You can find our reconciliation of non-GAAP to GAAP measures in our earnings release. Total revenues in the fourth quarter were $298 million on a constant currency basis. Total revenue in the fourth quarter would have been $311 million a 12% increase year-over-year. Search and the search-related revenues were $277 million. On a constant currency basis, search and the search-related revenues would have booked 17% increase year-over-year. The increase was primarily due to growth in auction based pay-for-click services. Auction-based pay-for-click services accounted for 85% of our search and search-related revenues compared to 84% in the corresponding period in 2017. The number of advertisers for our auction-based pay-for-click services was approximately 79,000. The average revenue per advertiser for auction-based pay-for-click services was $3,000. Other revenues were $21 million, a 32% decrease year-over-year. The decrease was primarily due to lower sales of smart hardware products, due to our continued assets to upgrade our smart hardware strategy. Cost of revenues was $186 million, a 39% increase year-over-year. Traffic acquisition cost, a primary driver of cost of revenues, was $130 million, a 69% increase year-over-year, representing 50% of total revenues compared to 32% in the corresponding period in 2017. The year-over-year increase was driven by price inflation as a result of increased competition. Both GAAP and the non-GAAP gross profits were $105 million, compare to $144 million in the corresponding period in 2017. Both GAAP and the non-GAAP gross margins were 38% compared with 52% a year ago. The decrease primarily resulted from traffic acquisition cost outgrowing revenues. Total operating expenses were $99 million, a 19% decrease year-over-year. Research and development expenses were $48 million, a 21% decrease year-over-year, representing 16% of total revenues compared to 22% in the corresponding period in 2017. The decrease was primarily due to a decrease in share-based compensation expenses. Sales and marketing expenses were $42 million, a 17% decrease year-over-year, representing 14% of total revenues, compared to 18% in the corresponding periods in 2017. The decrease was primarily attributable to a decrease in marketing and promotional spending on some of the Company's mobile products and share based compensation expenses. G&A expenses were $9 million, 19% decrease year-over-year, representing 3% of total revenues, compared to 4% in the corresponding period in 2017. The decrease was primarily due to a decrease in professional fees. Operating income was $12 million, compared to $20 million in the corresponding period in 2017. Now operating income was $30 million, compared to $43 million in the corresponding period in 2017. Other income net was $10 million, compared with $1 million in the corresponding period in 2017. The increase was primarily due to an increase in the gain from short-term investments. Income tax benefit was $4 million compared to income tax expense of $7 million in the corresponding quarter or 2017. The income tax benefit was primarily due to a decrease in taxable income and the larger tax benefit from the renewal of the Key National Software Enterprise status for one of the Company’s subsidiaries. Net income attributable to Sogou was $26 million, 71% increase year-over-year. Non-GAAP net income attributable to Sogou was 27 million, a 28% decrease year-over-year. Basic and diluted earnings per ADS were $0.07. Non-GAAP basic and diluted earnings per ADS were also $0.07. As of December 31, 2018, we had cash and cash equivalents and short-term investments of $1 billion. Net operating cash outflow for the fourth quarter of 2018 was $21 million. Capital expenditures for the quarter were $22 million. That was our fourth quarter results. Now I'll briefly work through the highlights of our full year results. Total revenues were $1.1 billion, a 24% increase from 2017. Search and search related revenues were $1 billion, a 28% increase from 2017. Auction based pay-per-click services are accounted for 84% of search and search related revenues compared to 83% in 2017. Other revenues were $101 million 5% decreased from 2017. Net income was $99 million, an increase of 20% from 2017. Non-GAAP net income was $130 million, an increase of 7% from 2017. Basic and diluted earnings per ADS were $0.25. Non-GAAP basic and diluted earnings per ADS were $0.29. Looking ahead to 2019, given the tougher environment, we will continue to enhance the overall competitiveness of our business, while prudently managing our cost and expenses. For cost search, we will continue to expand contribution of our organic traffic and become more selective in traffic execution. This strategy will impact the cost of revenue growth in the near term, but will benefit the sustainable growth of our search business over the long term. As we continuously increase organic traffic and the improved monetization and with greatest contribution from organic channels, we expect that impact to revenue ratio will gradually stabilize in 2019. With the smart hardware business, we will continue to execute on our upgrading strategy. With more AI-enabled hardware product in the pipeline, we expect our smart hardware will regain momentum in 2019. And finally turning to guidance. Looking ahead the first quarter of 2019, we expect the total revenues to be in the range of $231 million to $241 million. This translates into 1% to 5% increase year-over-year in R&D terms. The guidance takes into account firstly the slower growth in quarter's revenues, primarily due to the macro uncertainties, along with our decision to be more selective in traffic acquisition. And secondly, the decrease in other revenues gives the ongoing upgrade of our smart hardware business. Please note that for the first quarter 2019 guidance, we have similar exchange rate of RMS6.9 to the dollar as compared with the actual exchange rate of approximately RMB6.36 to the dollar for the first quarter of 2018 and RMB6.91 to the dollar for the first quarter of 2018. That concludes our prepared remarks.

[Jessie Zheng:]

Thank you, Joe. Operator, we now like to open the call for questions.

[Operator:]

Yes, thank you. We will now begin the question-and-answer session. [Operator instructions] And the first question comes from Thomas Chong with Credit Suisse.

[Thomas Chong:]

Hi, thanks management for taking my questions. Regarding the organic traffic strategy, can management provides us some more details about how we are going to have more organic traffic from different perspective like our synergies with our key board, Sogou Hao as well as the browsers? Can management go into more details about how achieve that? And my second question is about the external traffic that we’re going to rely less on them in future. Can management talk about the pricing for external traffic in 2019 versus 2018?

[Xiaochuan Wang:]

[Foreign language]

[Jessie Zheng:]

Okay, so our organic traffic strategy I think in 2018 with improving search quality, we have been able to grow the user base of our browser and app and then drive our organic traffic from these two products. We have seen nearly 40% to 50% growth in traffic from these organic channels. And our mobile keyboard, we have made solid progress in integrating, creating more synergies with search, and we are going to continue to execute on creating greater synergies from mobile keyboard to drive organic traffic for Sogou.

[Xiaochuan Wang:]

[Foreign language]

[Jessie Zheng:]

I’d like to add one point that in the past, we have been driving our organic traffic from mobile keyboard to search suggestion function, actually title of -- one of our major competitor have copied this function to use in their product. Obviously, that search suggestion is a very effective way to drive our organic traffic and this year we’ve made additional progress in more innovative ways to drive organic traffic, such as content and service recommendation as a solution to it.

[Joe Zhou:]

Okay, let me add one point on that regarding the increase of our organic traffic. So I'll give you some numbers. So in Q4 '18, organic traffic contributed 27% of our total traffic compared to a year ago, 22% contribution. So that's our substantial increase. And with our strategy to expand the contribution, we target to increase the contribution further to around 30% by the end of 2019. And for the second question regarding price inflation for 2019, so we're still in negotiation with those handset makers. According to current status, comparing to the price as of Q4 '18, the price in 2019 roughly where increase around 20%. That's substantially lower increase comparing to what happened in Q1 '18 comparing to the price of Q4 '17. So together with our strategies will extend the contribution from organic traffic and be more selective on traffic acquisition and the continuing improvement monetization we expect the type to run your ratio in 2019 we'll stabilized compare to that of 2018.

[Operator:]

Thank you. And the next question comes from Alex Yao with JP Morgan.

[Alex Yao:]

Hi. Good evening management and thank you for taking my question. I have one question for Xiaochuan. I'd be delighted to hear your thoughts on the recent trends that the general search engines in China start to diverting more traffic to its own content vehicle. I think there has been a lot of debate in the recent media reports about Baidu, diverting more and more traffic to Baixar Hao as opposed to sending traffic to third-party websites. I think that you guys are also building your own Sogou Hao, which essentially is a content vehicle that created by third-party content contributor but resize on your server. Why are you guys order general search engine industry moving away from the traditional distributing traffic to the third-party websites kind of the distribution model and adopt this Baixar Hao or Sogou Hao approach?

[Jessie Zheng:]

Okay. Just let me translate for Xiaochuan.

[Xiaochuan Wang:]

[Foreign language]

[Jessie Zheng:]

So to answer your question in a search engine start to direct to its own content ecosystem instead of the third-party websites because in this way, we can improve and ensure the content quality and the follow-up tasks like a better ranking system for the content and the better advertisement matching system. So in general, this is leverage to optimize the search results. And on the other hand using our own content ecosystem, it's beneficial for us to develop new suite businesses.

[Xiaochuan Wang:]

[Foreign Language]

[Jessie Zheng:]

So I have a follow-up question on the monetization from the traffic redistribution in chasm back to the search engine, the own content ecosystem. How should we think about the incremental revenue from this traffic distribution in chasm? Does it create additional inventory for keyword search that doesn't have commercial value. Thank you.

[Xiaochuan Wang:]

[Foreign Language]

[Jessie Zheng:]

In industry practice, actually we do want to see that with this traffic inflow, we can increase the opportunity for at the same as the things, so the highest do at a very early stage of development is very hard for us to share additional metrics.

[Operator:]

The next question comes from Bill Liu with Goldman Sachs.

[Bill Liu:]

I have two questions. First one just to clarify, when Joe said that the TAC may increase 20%, may I clarify that doesn't mean that in Q1 '19 we're looking at 180 at traffic acquisition cost which is 20% sequentially increased? Or are we looking at something like 134 which is 20% year on year increase from Q1? So that's the first question? And the second question is about our collaboration with WeChat Search. We know that recently in the event, WeChat Open Class, WeChat Search actually did a presentation about brand search product. So I wonder does that product have any collaboration with our offering or is this a independent theme from our company or is this a collaboration between WeChat Group and Sogou?

[Joe Zhou:]

Yes. Okay. I will take the first one. There are a couple of factors affect the absolute amount of tech. So number one, the pricing, as I mentioned increased 20% comparing to Q4, '18. And second volume. And third, if you calculate amount the RMD and U.S. dollar is quite difference because there are it will be roughly 8% exchange rate difference year-over-year for Q1 '19. So in short the answer is that, considering all of this, if you compare the RMB amount impact roughly it will increase 20% year-over-year. If you calculate the amount in U.S. dollar, so it's roughly 12% year-over-year growth for Q1. So it's mixed result from the price inflation and the volume change.

[Xiaochuan Wang:]

[Foreign Language]

[Jessie Zheng:]

On the WeChat question, the brand search I mentioned has nothing to do with Sogou. I think it's independently developed by the WeChat team. There is no change in our collaboration with WeChat. The WeChat team is still focusing optimizing search functionality. And then, there is no imminent monetization plan.

[Operator:]

Thank you. And the next question comes from Xueru Zhang by 86 Research.

[Xueru Zhang:]

So my first question is just wondering, what's your thought on China's search ad market growth going into 2019 on the search macro environment, actually the top one you mentioned in the prepared remarks. And how should we think about Sogou's growth profile? What's our major growth driver looking ahead? If you can comment more quantitatively, that would be helpful?

[Xiaochuan Wang:]

[Foreign Language]

[Jessie Zheng:]

For the search industry in general, we expect the top line for search are industry should be around 10% growth this year and a traffic should be lower at single digit growth, and Sogou continue -- will continue to outpace the industry growth in terms of both revenue and traffic.

[Xiaochuan Wang:]

[Foreign Language]

[Jessie Zheng:]

This year, as we mentioned earlier, we will continue focusing on increasing our sales generated traffic from our own portfolio of products services including browser, app and especially from mobile keyboard. And as I mentioned earlier, we have launched the newer functionalities for mobile keyboard to more effectively generate organic traffic.

[Operator:]

Thank you. [Operator instruction] And the next question from Alicia Yap with Citigroup.

[Alicia Yap:]

I have two quick questions. Number one is, how much of the slower guidance you provide for the first quarter is related to the macro weakness? And how much is related to the scale back of the traffic investment? So if we assume, you’re doing scale back on the user acquisition spend, what could be the growth rate purely from the macro impact? Then second is also related to the macro and amortizing sentiment. Could you elaborate more detail as we laid to Sogou which industry vertical is more impacted by the macro weakness? Isn’t that the search should be a better ROI and hence more resilient in this macro downturn, so any color would be helpful?

[Joe Zhou:]

Okay, so regarding the guidance. First, for total revenue, in RMB terms, it implies a 1% to 5% year-over-year growth. So among that for search related revenues, the gross rate is from mid to high single digit. And for other revenues, it implies a decrease year-over-year. So for search related revenue, -- if you want to split the slowdown between macro factors and our decision to be more selective on traffic acquisition, so roughly I can put it this way. So, previously, we accept the industry to have say 10% to 15% annual growth I mean for the search advertising revenue. And currently, we believe that growth rate will be slowdown to less than 10%. So, roughly 5% -- 5 percentage points impact from the macro environment. And then for the rise, that's roughly -- I mean for rise, the majority is from our decision to expand organic traffic and being more selective on traffic acquisition. So maybe you can take our Q4 '18 as a benchmark, say, as we mentioned during the call for search-related revenue, in RMB terms, the year-over-year growth rate was 17%. So from that you can physically see that 5% as the micro impact. And so after that, for the difference between that and the 5% to 10% growth rate for Q1 '19 circles around me on roughly is the impact from truck acquisition. And for those industries actually we, you can see any particular sectors to be material impact by the micro environment instead we see the macro environment impact all those industries. But of course each different industry have its own different growth rate.

[Operator:]

Thank you. [Operator Instructions] And the next question will come from Jialong Shi with Nomura.

[Jialong Shi:]

I have two questions here. My first question is always about the traffic acquisition cost or TAC. So I just wonder a site from your search engine competitors. Did you see any other competitors beating fiercely for external traffic or smartphone installations against you guys? And my second question is also a follow-up on the advertising trend in 1Q. I think Joe Zhou mentioned, macro had a negative impact on your market in 1Q. And so I just want to use the advertisers are beginning to become cautious or are beginning to cut back your advertising budget heading into 1Q. So I just want to in what stage are they now are they begin to, are they beginning to cut their ad budget across all the media including both brand as budget and the performance based after budget? Or they are still cutting the budget price selectively?

[Joe Zhou:]

Okay. So for the TAC question, based on our current negotiation with handset makers, the prize roughly the increased 20% comparing to the price in Q4 18, so I think that's our somehow not determining by ourselves. I think that's already a result from the competition from our competitors. So that means, all the competitors are not as crazy for the traffic acquisition as last year by offering very aggressive price. So I think everyone comes down a lot and tried to balanced growth in revenue growth with the bottom line. For Q1 add trend from the Q4, we already started to see the impacts from the macro environment. So if you're comparing to the first half, the revenue growth rate has slowed down a little bit. So in Q1 '19, we expect the impact will be deeper. So for the budget allocation, actually, we don't have such statistics how they allocate their ad budget, but roughly our feeling is that, they will first cut those, say, brand advertising. And after that, they will cut -- if they want to cut ad dollars, work hard so the pay-for-click kind of advertising. And the amount pay for performance advertising, I think search with relatively high ROI, it's a better choice. So maybe the last one, they will cut their budget.

[Operator:]

And there are no more questions at the present time. I would like to return the floor to management for any closing comments.

[Jessie Zheng:]

Thank you everyone for joining today's call and for your continued support for Sogou. We look forward to speaking to you again in the future.

[Operator:]

Thank you. The conference has now concluded. Thank you for attending today's presentation. We now disconnect your lines.