So going forward, hopefully, we can keep above 20% our gross margin of enterprise cloud as well as we are hoping after the AI eventually unfolded, our enterprise, our margin even higher hopefully can — above the three handles in the mid-term. So I think that give you — hopefully give you some color. Thank you, Tim. And the second question, I will pass over to Zou
Tao Zou: [Foreign Language] So before I answer the details of your question, I would like to give you an overview of how we think about the enterprise cloud business. The real thinking is that we have been becoming more focused on high-quality products — high-quality projects in terms of selecting high-quality projects and also for the projects that are more sustainable for us. So in terms of project quality, in terms of reputation, in terms of deployment capabilities and services we offer to customers, we have been working very hard on those fronts and that is why you have been seeing in the consecutive quarters we have been experiencing improving profitability levels. I now ask your question of why the slight decrease for the revenue of enterprise cloud from the second quarter versus the first quarter.
The answer is really just the seasonality because the revenue recognition for enterprise cloud projects, they generally delay from the time of the signing of those projects to the revenue recognition for some — for several quarters to one year, some — and in some other cases can be as long as two years. And therefore the financial results you see in one single quarter is the — added is the combined results of different projects signing a different time points and the different delays in the overall revenue recognition cycle and therefore, I wouldn’t say that a slight decrease for the financial of the revenue for enterprise cloud for the second quarter versus the first quarter is a reflection of the — of our business performance for the enterprise cloud, on the contrary, we feel that the fundamentals of the enterprise cloud business have been going quite well and in some future quarters.
For example, in the Fourth quarter, you might be also seeing a sudden surge of our enterprise cloud revenue. However, that’s — not necessarily reflect equivalent search of the business fundamentals. So that’s the general idea I would like to give you. In fact, we have also been in communication with the auditors, hoping to find a metrics that would provide real-time reflections of our fundamental business situation and the alignment with that of the financial performance, we’re still exploring that, we hope to find that metrics soon. thank you.
Tao Zou: Thank you. That’s helpful.
Nicole Shan: Operator, next question please.
Operator: Thank you. We’ll now move on to our next question. our next question comes from the line of Allen Li from JPMorgan. Please go ahead.
Allen Li: [Foreign Language] Thank you management for taking my question. I have a follow-up question on gross margin. So for public cloud services, if we exclude CDN business, what’s the gross margin trend for core computing and storage in past few quarters? And how do we think the trend into the second half? And also Henry, you just mentioned you have increasing revenue contribution from higher margin SaaS and PaaS services and could management share some color on how should we think about the long-term revenue contribution from these two business? Thank you.
Henry He: Thank you, Allen. This is Henry. Happy to share some color. So first of all, again, while we’re talking about the structure challenge of the client and revenue mix, CDN versus non-CDN. But I want to point out that the CDN business itself is not really problematic business. The point is a concentration risk together with the CDN products to certain clients is really a high-risk flat for us. So that’s why we did some changes in the past few quarters but putting that aside, as you mentioned, there are two things we can share why we haven’t disclosed in detail on that numbers. First of all, the marketing of the CDN business does have certain fluctuations, depends on the season, depends on time mix. And while we’re cutting down certain client penetration and the client concentration, we do need to switch and reallocate certain resources, especially on the DNA and the bandwidth, we need to change and cancel and renew, those actions will take out some fluctuations.
