Hui Peng: Investment budget for new endeavors. Internally, we do have a budget for new endeavors. But at this point, we hesitate we will probably defer until later to answer that question with a more definite number because we want to keep the budget flexible at this point in time. If we see really good opportunities, we will invest a little bit more. If the RI doesn’t trend good, we will probably invest a little bit less. So it’s really a quite flexible number that we’re trying to put in there at the beginning of the year. On the margin question, I guess, this is a question about — at the whole group level, I think for gross margin, it has remained relatively stable throughout 2023, with the largest cost driver which is the payout ratio being stable, I’m currently not seeing any factor that could potentially change that trend one way or another in a very meaningful way.
But there is this one thing that I would like to call out here, which might cause the margin to fluctuate a little bit. And that is that as revenue decreases, there could be some negative leverage on the infrastructure cost and also the personnel cost charging to the cost of sales line, which is going to pressure the gross margin a little bit, but we do not expect that to be very significant. So that’s what we’re seeing on the gross margin line. Operating expenses wise, although we plan to substantially increase our investment in the new business, part of the increase will come at the expense of the old business which won’t be consuming as much resources. Now if we try to think about the operating margin on an ex-compound basis, last year, I believe we delivered close to 23% adjusted operating margin.
In Q1, the ex-Tantan part is going to see a 9% to 10% year-over-year decrease at top line. And that level of top line decrease is obviously going to pressure the operating margin a little bit. But I would say from 19% to 20% is still a quite achievable range of adjusted operating margin for the ex-Tantan part of the business. I do not really have a margin number for the whole year because of that flexibility that we talk about that we would like to maintain, especially for the new business. But in terms of how the operating margin is going to trend from Q1 onwards, I would say there are several factors to consider here. One is the overall top line improvement from Q1 onwards. Of course, that is heavily dependent on the overall macro and regulatory environment.
And the second factor is how aggressive we are to cut down on cost. At this point, I do see some headroom to continue to cut on the old business part but we do want to, like I said, maintain the flexibility to move the spending to new business if we see good ROI. So basically, that’s my current thought on how the margin may play out for the whole year. I think with that — I’ll hand it back to Ashley for closing.
Ashley Jing: Yes. I think that’s it for today. Operator, we’re ready to close.
Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
