Ashley Jing: Operator. Just in the interest of time, let’s just take one last person for today’s call.
Operator: Thank you. The final question is from Raphael Chen from BOCI Research. Please go ahead.
Raphael Chen: I will translate myself. I have two questions. First one is regarding Tantan. Could management share the latest user trend, marketing and monetization strategies in 2024? And any guidance on its revenue and profit this year? Secondly, could management mention — I see management mentioned new products related to Apple Vision Pro in the prepared remarks. Could you have — could we have more insights on the product details? Also considering company plans to ramp up exploring new business opportunities. How do we evaluate the margin trend in 2024? Thank you.
Yan Tang: At the beginning of this year, our user base continued to be under pressure from factors such as the COVID wave further reduction in channel investment, and the Chinese New Year holiday. After the holiday, as the external negative factors subsided, Tantan’s new user engagement and new user paying ratio started to bottom out and stabilize. Our goal for Tantan this year is to improve the core dating experience. And on top of that, build an effective — an efficient business model that drives some profitable growth. In order to improve the core dating experience, we need to constantly innovate use cases and explore dating scenarios around the core dating theme, provide more tailor-made services for users in different markets, and maintain a healthy, stable ecosystem.
Achieving profitable growth depends on business model innovation and channel OI improvement. Last year, we achieved good results in reducing unit acquisition costs. And this year, we’ll continue to improve our monetization capability based on the core dating experience. For example, around the Chinese New Year holiday, we launched a pilot campaign for our membership product that is higher than the Black Gold membership. I received a very positive feedback from the first batch of high-paying users. Through this new premium membership, we hope to, first, unleash the spending power of the existing high-end members. And second, capture the dating needs of the top cohort paying users from live streaming. Meanwhile, we will also leverage our algorithm to improve the basic member experience and drive paying ratio growth.
If through these efforts, ARPU can continue to improve without compromising user experience and retention, we will truly realize a positive business cycle and achieve profitable growth by increasing marketing investment. For other financial-related questions, Cathy will answer them.
Hui Peng: Sure. So as Sic and Tang Yan mentioned, the focus of Tantan this year can be really broken down into two priorities. One is to continue to improve the core dating experience. In the past couple of years, we try to diversify into live streaming and the more community-driven entertainment experience, such as chatroom experience. Now we can conclude that although these efforts did contribute meaningfully to ARPU, they are not very compatible to saving experience at this point. And therefore, we will increasingly pivot away from these more entertainment-oriented experiences. And the other focus for Tantan this year is, of course, to continue to improve paying user experience so we can drive a higher ARPU. If ARPU and user retention continue to improve to the point where ROI turns positive, we will definitely ramp up marketing to drive user and top line growth.
That’s when we are going to see what we call a profitable growth cycle. However, before we hit that tipping point, it’s possible that we will continue to see top line trending either flat or slightly under a bit of pressure as we continue to scale back from live streaming and the chat room experience. However, if we are successful in reaching that tipping point and enter into a positive business cycle, as we described, we can see growth in both top line and bottom line. At this point, I would say investors probably still need to have more patience as we work our way to get there.
Yan Tang: With the continuous iteration of XR hardware, more and more new users are joining the XR virtual space. The development of hardware has broken through the limitations of social models in the mobile Internet era and has also brought new opportunity to us who are dedicated to the social space for the past decade. inspace users can create their own avatars and personalized space and invite Apple Vision Pro users around the world to have parties, play, chat and have fun together. And inspace built in real-time translation function allows users of 12 major languages to communicate without barriers. Checking over social or dinner-party games makes getting together more fun for acquaintances who are thousands of miles apart.
And it also helps break the eyes for strangers in the open social space. We plan to roll out more use cases and gamified features based on localized users preference in different regions, and to make better use of technological innovation to break through the traditional social experience. For the investment budget for new endeavors and our overall margin trend, I will leave them to Cathy. Cathy, please.
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.
