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Edited Transcript of WUBA earnings conference call or presentation 19-Nov-19 1:00pm GMT

Q3 2019 58.Com Inc Earnings Call

Beijing Nov 25, 2019 (Thomson StreetEvents) -- Edited Transcript of 58.com Inc earnings conference call or presentation Tuesday, November 19, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jinbo Yao

58.com Inc. - Chairman & CEO

* Wei Ye

58.com Inc. - CFO

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Conference Call Participants

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* Eddy Wang

Morgan Stanley, Research Division - Research Analyst

* Hillman Chan

Citigroup Inc, Research Division - Research Analyst

* Thomas Chong

Jefferies LLC, Research Division - Equity Analyst

* Tianxiao Hou

T.H. Capital, LLC - Founder, CEO & Senior Analyst

* Christian Arnell

Christensen & Associates - MD

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Presentation

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Operator [1]

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Good day, and welcome to the 58.com Third Quarter 2019 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Christian Arnell. Please go ahead.

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Christian Arnell, Christensen & Associates - MD [2]

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Thank you. Hello, everyone, and thank you for joining us this evening. Our earnings release was distributed earlier today and is available on the IR website at ir. 58.com as well as through PR Newswire services.

On the call today from 58 are Mr. Michael Yao, Chairman and Chief Executive Officer; and Mr. Wei Ye, Chief Financial Officer. Michael will review business operations and company highlights followed by Wei, who will discuss financials and guidance. They will both be available to answer your questions during the Q&A session that follows.

Before we begin, I would like to remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and current market regulatory and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict, and many of which are beyond the company's control which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties and factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

It is now my pleasure to introduce Michael. Please go ahead.

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Jinbo Yao, 58.com Inc. - Chairman & CEO [3]

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Thanks, Christian, and thanks for joining our call. The macro economy remains uncertain, and as such, uncertainty has created a challenging business environment. Despite the headwind, we are very pleased to report solid financial and operational results for the third quarter, revenue totaling RMB 4.26 billion, an all-time high and exceeded the high end of our previous guidance.

Among our core revenue segments, revenue for online marketing service grow solidly, increasing 20% when compared with the same quarter last year. E-commerce service and other services revenue combined generated outstanding growth momentum and increased 129% year-over-year. On a non-GAAP basis, our operating income grow by 21.3% year-over-year, but they can still show you the strength of our operational -- operation leverage. A key component of our business model that enable us to steadily anchor our strategic investment in new business, such as Zhuan Zhuan and 58 Town.

Our unique paying business users was 3.6 million this quarter, a 3% increase from the same quarter of 2018. Our traffic remains very healthy with mobile app users grow faster than revenue on a year-over-year basis, which reflects how we are able to provide a better return on investment for our customers.

Our total head count was about 22,000 during the quarter, 2% lower than a year ago. We continue to accelerate the pace of our structural shift towards supporting innovation and then improve internal efficiency, granting a 10% increase in product and the technology staff and a decrease of 4% in sales in the marketing business relative to the same period last year.

We have always strongly believe in our business model, residential classified marketplace, combined with a few vertical platforms, either acquired or internally in competitor. The residential marketplace office diversified content categories, products and the service, which are more resilient during the challenging economic period. Due to its scale, network effect and the risk profile, is opposite for the business model for vertically integrated players.

Vertical marketplace offer more in-depth industry-specific purchase in the service. At the beginning of this year, in anticipation of an uncertain macroeconomic environment, the effect is worse. Encouraged that we capitalize on any opportunity for solid top line or a leading market position in all our core categories despite a stronger headwind than originally expected. We are really pleased with the execution of our initial initiatives and the great progress we have made in enhancing our ecosystem. We also scaled back advertising expense in the second half in our operating, and the net margin remains healthy.

Within our housing category, transaction volume remains low. There is currently low [careers] in the government policy, they are loosened and the overall sentiment in the property market continue to be weak. This is expected to be the -- low for the foreseeable future. That said, our secondary and the rental housing business showed tremendous resilience and still lead the market by a wide margin. At the same time, our primary housing business situation is leading position by accelerating its market penetration and expanding its market share.

We continue to have the tightness on our technology advantage by further enhancing the user experience and by improving the effectiveness of our marketing. For example, our automated, we are stitching technology, and now significantly improves the process plan and the quality of VR production. In doing so, it has become an integral part of our agent customers to keep.

We also launched our one click innovation program at the end of September, applying a similar technology to allow users to simulate their own innovation design online and they try to either go there for it property distance. This marks only the start of our independent footprint in the valuation category, one of the most important adjacent housing category.

Within our job category, employers continue to be very cautious when it come to hire with more and more talking -- a wait-and-see approach. In response, we have increasingly offered more flexible products to allow our customers to tailor their leads. Unique paying business users in the job category continue to grow both year-over-year and sequentially. We solidified our leading market position while constantly innovating in imposed product and the solutions that best serve our customers. In the same way that we build our own property database, we are also operating our enterprise in the applicant database with an effort on user big data to better profile our current users and deploying AI for more presence and effective margin.

In August, we launched super job season, a co-branding campaign in partnership with McDonald's, JD.com, [Ling Ling] and Zhaopin that touch the job categories such as latest customer service, shopping assistance and logistics. This campaign was hugely successful and result in significant fortune for our partners.

This is the start of the ramp of our key counterstrategy which will transform us from being an information provider into a solutions provider. This will allow us to provide a different set human resource solutions for corporate trends. All have peak and lasting demand for blue collar or intra-level positions.

The yellow pages and the other local sales categories is probably least impacted by the ongoing macro challenges and continue to show steady growth since the launch of Dada Daojia for selected home service. We have been focused on partnering with high-quality service provider to standardize their service quality and integrate the protection plan, which is [pre-pricing] closed-loop transactions through our platform. This enhanced service will foster consumer integration and trust. We will continue to expand the coverage of selected home service to more categories.

We also studied to provide additional value-added enterprise solutions that include operational, promotional, campaign and trading, all of which greatly improved their operational efficiency. We are very pleased with Zhuan Zhuan's progress during the quarter. The U.S. core market still has huge potential. Zhuan Zhuan has been narrowing its loss this year while exploring various opportunities for monetization.

In September, Zhuan Zhuan secured USD 300 million in a Series B financing with a group of investor. Both Tencent and 58.com participated as existing investor, demonstrating our confidence in the business in the future. Zhuan Zhuan is the clear leader in online used cellphone transaction and the highest established sustainable model, which included quality inspection or certification and other value-added services. We will continue to replicate this model to other semi-standard and the high-value used goods categories.

Regarding our other co-investment, 58.com and [Tencent] will continue to be both facilitated and encouraged by the good, great potential and opportunity, lower TCT provides. While monetization is the low priority forecast this year for dot-com, we begun generating enormous amount of data in potentially hundreds of millions of users, and they expand our unique organizational capabilities. This year, we focused on expanding coverage, improving relationships with local partners and the guided traffic to our centralized new app. This has created synergies between 58.com and the main app, which have laid a solid foundation for monetization in the future.

In the meanwhile, 58.com, together with 58.com Inc. also played an increasingly great crucial role in extending our effort in the [terms] with respect to social responsibility.

Last but not least, I would like to reiterate, the classified market model continue to be a very relevant and a dependable business model globally. China alone form a massive market opportunity for this model. I can't emphasize this enough.

Despite the market uncertainty, we strongly believe in the longer-term fundamental trend that support our business, and we remain very, very optimistic about the future growth prospects. Our strategy remain unchanged. We will solidify and extend our leading market position through investment in innovation in both technology and organizational solutions and the footprint improvements in the usage experience of our platform. We are focusing on creating longer-term value for our customers, shareholders, and the employees.

Now let me turn it over to Wei. Wei, please?

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Wei Ye, 58.com Inc. - CFO [4]

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Thanks, Michael, and thank you, everyone, again for joining our call tonight. I will now walk you through our third quarter financials.

Total revenues were RMB 4.26 billion, a 17.4% increase from the same quarter of last year. Membership revenues were RMB 1.2 billion, up 1% year-over-year. Online marketing services revenues were RMB 2.8 billion, up 20.1% year-over-year.

In the third quarter of 2019, the total number of paying business users was approximately 3.6 million, a 3% increase from the same quarter of 2018. The uncertain macroeconomic environment impacts the membership growth, but we were able to partially offset that impact by offering more flexible and customized products and services that are tailored to suit the needs of our customers, generate better return on investment for them and attract more new paying business users.

Among the 3.6 million paying business users, approximately 1.3 million are in the housing category, representing the majority of market share. Approximately 1.6 million are in the job category, up slightly both year-over-year and sequentially. These paying user numbers in both the housing and jobs category are far larger than that of any other pure vertical players based on publicly available data.

Outside of revenue from membership and online marketing services, revenue from e-commerce services and other services together, resulted in a growth rate of 129% year-over-year, showing very strong momentum.

Gross margin was 88.2% compared with 89.5% in the same quarter of 2018 due to the above-mentioned minor changes in our product mix. Operating expenses were RMB 2.9 billion, an increase of 12.4% from the same quarter of 2018. Sales and marketing expenses in the third quarter of 2019 were RMB 2.2 billion, an increase of 13.4% year-over-year.

Within sales and marketing expenses, advertising expenses in the third quarter were approximately RMB 1 billion, which were generally stable compared with the same quarter of last year. Nonadvertising sales and marketing expenses in the third quarter of 2019 were approximately RMB 1.2 billion, up 26.4% year-over-year. Research and development expenses in the third quarter were approximately RMB 0.5 billion, up 11.1% year-over-year. General and administrative expenses in the third quarter were approximately RMB 197 million, up only 5.3% year over year.

We scaled back advertising expenses in the second half of this year, as we used the alternative marketing activities before new and more effective customer acquisition channels. Overall, all major operating expenses grew at a slower rate than that of total revenue, a clear reflection of our diligent execution and successful efforts around improving internal efficiency.

The total number of employees at the end of the third quarter was approximately 22,000, approximately 2% decrease from the same quarter last year. As Michael pointed out in his remarks, we continue our structural shift by converting sales and marketing staff into product development and technical staff. This strategic shift will continue to be among our top initiatives.

Non-GAAP income from operations was approximately RMB 1 billion in the third quarter, up 21.3% year-over-year. Non-GAAP operating margin was 24.4% compared with 23.6% in the same quarter of 2018.

Net other income in the third quarter of 2019 was approximately RMB 80 million, compared with that net other income of RMB 103.7 million in the same quarter of last year. Non-GAAP net income attributed to 58.com Inc. ordinary shareholders was approximately RMB 1 billion in the third quarter of 2019, up 20.7% year-over-year.

Non-GAAP net margin was 23.9% in the third quarter of 2019 compared with 23.3% in the same quarter of last year.

Now let's turn to guidance. Based on the company's current operations, total revenues for the fourth quarter of 2019 are expected to be between RMB 4.05 billion and RMB 4.15 billion. This represents a year-over-year increase of 12% to 15% in terms of RMB. These estimates reflect the company's current and preliminary view, which is subject to change.

On that note, we'd like now to begin the Q&A session. Andrea, please begin.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Thomas Chong of Jefferies.

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Thomas Chong, Jefferies LLC, Research Division - Equity Analyst [2]

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I have 2 questions. My first question is about the macro environment. Given the macro environment right now is not that certain, can management comment about how we can add value to our customers and also improve our monetization capabilities on this front? And my second question is about competition. Can management talk about the competition -- competitive landscape in property, jobs, used goods and others?

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Jinbo Yao, 58.com Inc. - Chairman & CEO [3]

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Thanks, Thomas. I will answer the first question. This is Michael Yao. (foreign language)

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Wei Ye, 58.com Inc. - CFO [4]

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[Interpreted] Sure. Given the current macro environment, it's difficult for everybody, okay? It's difficult for us, but actually, it's probably more difficult for our customers. So we will always stand together with our customers. And through continued improvement of our offerings in better added product and services, we not only help our customers to get a better return on investment, but also expand our influence and leading market position.

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Jinbo Yao, 58.com Inc. - Chairman & CEO [5]

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(foreign language)

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Wei Ye, 58.com Inc. - CFO [6]

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[Interpreted] Yes. So actually our traffic, specifically mobile traffic, has been growing faster than our revenue growth, okay? So in other way, our customer has been getting bad effects with the same amount of money and/or even less compared to the past, are literally a much better return on investment. So this will be our continued effort in strategy going through this difficult period.

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Jinbo Yao, 58.com Inc. - Chairman & CEO [7]

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(foreign language)

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Wei Ye, 58.com Inc. - CFO [8]

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[Interpreted] So we are also at a stage of transforming ourselves from pure traffic provider into a more service and solution provider to our customers. As you can see, there's strong momentum in the e-commerce and other services category where we actually provide more in-depth service to our customers. I think this kind of service not only help us to understand what exactly our customer needs, but also in the long term, we've opened up more opportunities for us to grow our platform.

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Jinbo Yao, 58.com Inc. - Chairman & CEO [9]

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(foreign language)

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Wei Ye, 58.com Inc. - CFO [10]

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[Interpreted] Yes. Okay. So yes, as I emphasized in my remarks, and again, I cannot emphasize this enough, China is a massive, massive market. It has 1.4 billion people, right? And that alone represents a huge opportunity and potential. So for us, we will continue to invest in innovation and user experience. This year, we had about 10% increase on research and development head count, and this trend will continue. We believe in the long run, right, as we point out the structural shift in our total head count, we're not just sacrificing today's short-term expenses, although we know the trade-off between R&D people and the -- those people but, we are actually investing for our long-term success.

Okay. I guess, I hope this answer, Thomas, the first question, right? Your second question is about the competition. Again, give it a think first. So in our major categories, if you look at housing, again, we don't see any clear sign of government policy loosening and the current weak market sentiment. We might have to accept that, that's the norm for foreseeable future, right? And if you look at the paying business users on our platform, there are 1.3 million in housing category that represents considerable major market share. And we have been holding that market share under pretty intensive competition since April last year, right? So we'll say we are not afraid of any competition. Actually, competition always makes us stronger, that Michael has internally talked about. Actually, sometimes a strong enemy actually will -- actually make you even stronger, okay? So I think housing's situation is that we do have a pressure on membership growth because pretty much, we are already having a fair, big market share there. But what we are, going forward, be focusing on is continue to provide more value-added and in-depth service like including SaaS and other technology like the VR, as Michael mentioned in his remarks, to adding more tools into our aging customers' toolbox and help them to improve their efficiency. So by the end of the day, they will be able to get a better return of investment from partnering with us.

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Jinbo Yao, 58.com Inc. - Chairman & CEO [11]

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(foreign language)

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Wei Ye, 58.com Inc. - CFO [12]

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[Interpreted] Okay. Yes. In the past couple of years, right, we do -- we did have a lot of challenges from different verticals not only in housing, but also things like used car and jobs, too. But a majority of those rising competitors, like us, they live on financing. They're private companies, and none of them are really showing profits as of today. So under a difficult market, those competitors that are living on financing will have a lot more difficulty to continue to find more funding. At the same time, we -- under our proven business model, we have very positive cash flow and a very robust business model to support a sustainable and profitable growth. So our expectation is in 2020, the competition situation might favor us more.

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Jinbo Yao, 58.com Inc. - Chairman & CEO [13]

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(foreign language)

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Wei Ye, 58.com Inc. - CFO [14]

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[Interpreted] Yes. So basically, if you look at the -- look past this year, we didn't really make a lot of change from our original plan. We held out our own pace, but we look forward to next year. We will see if the favorable competitive situation, we might in specific market, become more aggressive just to, as we said, solidify and enhancing our leading market position.

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Operator [15]

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Our next question comes from Tian Hou of T.H. Capital.

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Tianxiao Hou, T.H. Capital, LLC - Founder, CEO & Senior Analyst [16]

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Congratulations on a good quarter in such difficult environment. The question is related to the revenue mixture. I do see the increase in the e-commerce and the other business. And so going forward, Michael and Mr. Ye, how much do you expect this part of revenue as a percentage of total revenue, let's say, end of 2020? That is the first question. Second question is related to sales, marketing and other operating expenses. So I don't see a lot of increase, and I guess, that is really related to the company's internal control. And going forward into next year, how do you plan to manage your operating expenses?

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Jinbo Yao, 58.com Inc. - Chairman & CEO [17]

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(foreign language)

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Wei Ye, 58.com Inc. - CFO [18]

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[Interpreted] Yes. Actually, internally, even at the beginning of the year, we have a initiative called from sales to service. Because internally, our sales belong to the S grade, but at the same time, sensible service too, right? So we want more and more of our sales personnel to become service providers to our customers. They tried to have a deep understanding of our customers' needs and become more like consultant type of role to our customers and provide solutions. I think across all our core categories, this is a great -- good opportunity to increase such type of service revenues. We'll have a concrete plan to say how exactly the ratio will be. But I do expect in a couple of years, the revenues from those type of services, they become a significant part of our total revenue, let's say, maybe even half. So that's Michael's comments. On a side note, my take is also -- again, it was -- if that kind of change materializes, we will definitely consider how to report our revenue mix in a more meaningful way to help investors to understand our business.

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Jinbo Yao, 58.com Inc. - Chairman & CEO [19]

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(foreign language)

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Wei Ye, 58.com Inc. - CFO [20]

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[Interpreted] In the past, our revenue growth was mainly reliant on the total membership growth and also the online marketing or advertising type of revenues growth. What was the current market environment with them, you see the pressure on membership growth. And we are definitely revamping our key account strategies, where we'll be working with -- as Michael mentioned in his previous remarks, something like, he used the example in the jobs category, right? We had this super job season co-branding campaign that we partnered with big corporate clients like McDonald's, JD.com, [Ling Ling] and Zhaopin. That's a great start that we're trying to provide total solutions for our corporate clients. And we guarantee we'll try to develop more and more corporate clients in different categories, and we'll see the percentage of such type of revenue grow in the future.

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Tianxiao Hou, T.H. Capital, LLC - Founder, CEO & Senior Analyst [21]

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Okay. The second question?

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Wei Ye, 58.com Inc. - CFO [22]

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Okay. I'll take the second question on operating expenses, right? So I think -- so if you look at the big buckets of our operating expenses, we're wary on the -- very conscious, our way of scaling back advertising. And if you look at the conventional online traffic acquisition channels, and probably everyone realized nowadays the marginal return on additional traffic, our new user are definitely declining, right? So we are exploring different kind of marketing activities or even offline type of activities as more effective channels to acquire new customers, 58 Town being one of the example. And also, we replicate their model into county and city suburban areas, we call it the city partner programs, and also showing very nice momentum this year. So overall, for the sales marketing part, we will have a very cautious view on what we're going to spend on advertising and other marketing expenses. We'll view them as integral part in looking for the best marginal return. And on the sales and marketing personnel parts, as we just mentioned, we're converting them into service lines. At the same time, we're also steadily reducing the pure number of pure sales person and adding those head count back into our research and development staff. In terms of general and administrative expenses, I think we already show a very clear record that we have very good control and leverage over that G&A line. So I think, overall, that's for our core businesses. And those leverages on the core businesses will enable us to self-fund our other new initiatives like Zhuan Zhuan and 58 Town.

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Operator [23]

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Our next question comes from Hillman Chan of Citigroup.

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Hillman Chan, Citigroup Inc, Research Division - Research Analyst [24]

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I have 2 questions. Firstly, it's possible to follow-up on the competition on recruitment. As Meituan has made a high-profile expansion into recruitment, leveraging on the user traffic and the [significant] amount of merchants from restaurants and local services. And with that perspective, how do we see the competition from Meituan, please? And my second question is on 58 Town. Could you provide a bit more on the latest operating metrics for 58 Town initiative? How do we think about the level of investment and the pace of monetization in 2020, please?

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Jinbo Yao, 58.com Inc. - Chairman & CEO [25]

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(foreign language)

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Wei Ye, 58.com Inc. - CFO [26]

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[Interpreted] All right. Regarding the jobs, the initiatives that generates relatively huge PR a couple of months ago from Meituan, we really didn't see any concrete actions from their side. Actually during that period, they even came to us to discuss potential cooperation, because they do through their agencies, actually recruit a fair amount of the delivery crews on our platform. So I think we continue to focus on our own user experience improvement and scaling our platform.

I think the other question Hillman mentioned like there's other local services categories that also seems to be overlapping between Meituan and us. I would like to make a comment on that, too. Michael, you can add more comments. I think although Meituan also call themselves a life services platform, if you look at the life services, both platforms, you realize, there's actually a very different type of life services, right? If you look at what's on Meituan, I think their core is around food and also other entertaining type of activities. So -- and typically, it's more high frequent need, okay, and nice-to-have stuff in life. And the life services on our platform, the [catching up] is typically is low frequency, but really a sort of must-have type of services when you need them, okay? So I would say, like the local services category or the yellow pages category on our platform, less sensitive to the overall macro environment. And really probably besides very few like between the high-frequency and low-frequency categories, there's really not much overlap between Meituan and us, right? Does that answer your first question? Hillman, would you mind to repeat your second question?

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Hillman Chan, Citigroup Inc, Research Division - Research Analyst [27]

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Yes. My second question is on 58 Town. Could you please provide more of the latest operating metrics on 58 Town? And how do we think about the level of investment and the pace of monetization in 2020, please?

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Wei Ye, 58.com Inc. - CFO [28]

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Okay. Well, I'll take on that one, okay? Yes, we continue to expand the coverage of 58 Town this year. And at the same time, we also had a lot of programs to improve the quality of our local town partners. The priority this year for 58 Town is to prepare for monetization in near future. So monetization itself is not a top priority, but we're laying the foundation for it. And so we were ready to pick up the monetization next year. And the key actions we're taking in that category is, one, we wanted to have to improve the -- enhance the quality of the traffic we're generating. Last year, at the beginning, you would focus more on the quality. And once you reach certain level of traffic, now you want to really think hard about the quality of the traffic and the potential conversion rate you can get from those type of traffic, right? And second thing is that we want to guide those traffic that's generated from the WeChat ecosystem back into our centralized app. We did have a specific app for 58 Town, which we call it 58 local version, that's specifically designed for that purpose. But only when you guide those traffic back to the app that you have a better chance to monetize the traffic. So those are the several key actions we are taking this year to get ourselves ready. And I think next year, the monetization for 58 Town coming from 2 different places. First, as we see those additional traffic and actually additional users from the -- to 58 Town ecosystem, they're going to be able to contribute additional revenue for our existing core businesses. But if you look at the 58 Town content categories, we realize that it's pretty much identical with the properties and jobs and used goods, used cars and life services as the major leading traffic sources, right? And on the other side, 58 Town does have its own unique organizational capability. Now we have all these local town partners on the field that they can actually do a lot of different things. For example, we can actually provide a sort of like local exhibition for a specifically targeted OEM client. So those -- there will be more room for imagination, and we will continue to be fascinated by the potential we have from 58 Town. And then as said, we definitely expect to see some monetization to pick up next year. Does that answer your question?

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Hillman Chan, Citigroup Inc, Research Division - Research Analyst [29]

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Yes.

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Operator [30]

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Our next question comes from Eddy Wang of Morgan Stanley.

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Eddy Wang, Morgan Stanley, Research Division - Research Analyst [31]

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Morgan Stanley, Eddy. So I also have 2 questions. The first question is about Zhuan Zhuan. So given its recent -- the equity finance, do you think there will be acceleration of modernization of Zhuan Zhuan in 2020 versus this year? This is my first question. And my second question is related to the primary housing sector. So as mentioned that the macro and market condition is still relatively weak for the secondary housing sector. Were we more focused on the primary housing strategy in the next year? And will it be a benefit to your -- to the steps, the strategy you just mentioned about the KA? So better, more focus on the primary housing in the next year. So yes, that's the second question.

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Jinbo Yao, 58.com Inc. - Chairman & CEO [32]

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(foreign language)

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Wei Ye, 58.com Inc. - CFO [33]

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[Interpreted] Okay. I'll tackle the Zhuan Zhuan part first. So yes, I think the latest financing for Zhuan Zhuan, I think it's enough to support them for the next 2, 3 years. And it really doesn't have a real impact on 58's cash flow because majority of the financing from third-party investors. So Zhuan Zhuan had very nice development this year. They're still exploring the monetization channels to establish a differentiated business model. They're very successful in the used cellphones category, definitely a proven and sustainable business model with their value-added service. So they're going to replicate their business model into other similar type of categories such as iPad, laptop or other [3C] categories or other categories that share the same characters that: one, has the relatively high unit value; two, is there's a way that you can transform the nonstandards product into a semi-standard way that's recognized by the consumer; and three, the consumers willing to pay for the value-added service such as quality inspection, authentication and other type of services. So the net will continue to expand the coverage into new categories, and we expect its momentum of revenue growth will continue next year.

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Jinbo Yao, 58.com Inc. - Chairman & CEO [34]

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(foreign language)

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Wei Ye, 58.com Inc. - CFO [35]

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[Interpreted] All right. So on primary housing, as you all know, it remains to be a tough market for the property developers, and most of them are under tremendous cash flow pressure. So they want to sell the inventory as soon as possible. And actually, that gives the primary housing market advertising a very good opportunity in recent years. Our primary housing did gain a lot of market share and showed a very nice growth, and we are cautiously optimistic that trend may continue in 2020. And on a side note, we also had formed a joint venture with a work union and [Tencent] back in August. And in this joint venture, we're aiming to actually get deeply involved in the transaction -- transactional service with the developers. 58's role, although it was only a minority position in the joint venture, we'll be building a platform and mobilizing our -- all the agents on our platform. And our partners, work union and Tencent will have their field forces to work with the developers and with the agent-based platform to help the developer to sell those primary housing. We believe such model will make us a major player in the future, and that will definitely help us to accumulate also more transactional data for our future growth. I hope this answers the question.

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Eddy Wang, Morgan Stanley, Research Division - Research Analyst [36]

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Yes.

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Operator [37]

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This concludes our question-and-answer session. I would like to turn the conference back over to Christian Arnell for any closing remarks.

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Christian Arnell, Christensen & Associates - MD [38]

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That concludes the conference call for tonight. Thank you very much for joining. If you have any questions or comments, please don't hesitate to reach out to the Investor Relations team. Good night.

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Operator [39]

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The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]