2020-08-19 18:27Financial Data and Key Metrics Changes - Total revenue for Q2 2020 reached RMB1.535 billion, a 64.1% increase year-over-year [15] - Enterprise cloud service revenue grew by 259.3% year-over-year, reaching RMB246.1 million [15] - Adjusted gross margin improved from negative 1.8% in Q2 2019 to 5.5% in Q2 2020, an increase of 7.3 percentage points [16] - Normalized adjusted EBITDA margin improved from negative 12.6% in Q2 2019 to negative 1.7% in Q2 2020 [21] Business Line Data and Key Metrics Changes - Public cloud service revenue increased by 48.6% year-over-year to RMB1.287 billion [17] - Enterprise cloud service revenues accounted for 16% of total revenue in Q2 2020, up from 7.3% in the same period of 2019 [17] - Cost of revenue increased by 52.2% year-over-year to RMB1.454 billion, but as a percentage of total revenue decreased from 79.5% to 63.8% [17][18] Market Data and Key Metrics Changes - The size of China's public cloud market is expected to reach USD18.05 billion in 2020, up 45.5% year-over-year [7] - The company is focusing on sectors such as online education, e-commerce, and remote work, which are attracting new premium customers [33] Company Strategy and Development Direction - The company aims to solidify its leading position in the cloud service industry by leveraging growing demand and trends towards multi-cloud deployment [7] - Focus on vertical expansion in internet industries, public service, financial service, and healthcare [14] - Continued investment in infrastructure to meet growing demand for cloud services [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth faster than the general public cloud market in China despite macroeconomic uncertainties [16] - The company expects Q3 2020 net revenue to be between RMB1.67 billion and RMB1.74 billion, representing a year-over-year increase of 67% to 74% [22] Other Important Information - The company has cash equivalents and short-term investments of RMB5.76 billion as of June 30, 2020 [21] - Capital expenditures for the quarter were RMB432.2 million, with a line of credit of RMB750 million granted by banks [21] Q&A Session Summary Question: What is the key driver leading to the acceleration in top line growth for the second half? - Management indicated that revenue growth is mainly driven by cloud market development and a focus on premium customers and selective industries [25] Question: What is the development stage of cloud gaming in China? - Management stated that the cloud gaming market is in the second phase, with commercialization expected to take six to 18 months [26] Question: How should we think about the impact of Microsoft and TikTok's situation on the China business? - Management noted that TikTok does not directly impact their business as they have not cooperated with TikTok in the U.S. [28] Question: What is the G.P. margin level for the delivery business segment? - Management mentioned that the pricing of their CDN business is stable and they have solidified their position in the market [37] Question: Will geopolitical issues impact the CapEx plan for this year? - Management indicated that they have not seen significant impact from geopolitical issues on their supply chain but will monitor the situation [38]