Brian Gong: Thank you. That’s very helpful.
Operator: Our next question today will come from Kelly Wang [ph] of CICC. Please go ahead.
Caini Wang: Good evening, management. This is Caini Wang from CICC. Thank you for taking my questions. So in terms of the smart devices, things we have released the Youdao Dictionary Pen X6 Pro, and listening Pod Pro earlier this month. So would you mind provide an update on the user feedback for this new smart devices? And also, as we saw a slight decline in revenue in the smart devices sector this quarter, does management still maintain a confidence in the long-term prospects of this business which might give us more color on this? Thank you.
Feng Zhou: Yes, this is thank you. This is Feng Zhou, again. As you mentioned that we launched the Dictionary Pen X6 Pro and Youdao Listening Pod Pro earlier this month. So let me provide a quick update. For the X6 Pro Dictionary Pen, this is our flagship product. And the most popular features were the 100 day, ultra long standby time, English grammar instruction, video, human language coach and test and lab analysis from the popular five three series. So these are the four most popular features we got from user feedback. The users liked these features very much. So what’s exciting for us is that the AIGC language coach is actually among the most popular features. It’s the number three feature. So it’s the one of the most popular features.
So we’re happy to share that — for the first 30 days of August, driven by the popularity of X6 Pro and X6, our new Dictionary Pen activations were up by more than 20% year over year. So that’s for the new dictionary pen product. As for Youdao Listening Pod Pro the most popular features from user feedback is the AI player and AI dialogue, these two features are the most popular as some kind of new product sales activation, so we’ve observed that year-over-year increase in new activations of our listening pod line. So this year is higher in activation than the same period last year. That’s also for the first 20 days in August. And as I discussed in prepared remarks, we will have new devices to be released in Q4. So we are looking forward to bringing more new products to our customers in Q4 this year.
So that’s a quick update on new product. Now let’s discuss our thinking regarding the current market environment. Recently the consumer electronics industry exhibited over weakness due to the — mostly in the macro cycle. The demand for smart learning devices, although relatively resilient compared to other categories was also affected to some extent. We are continually monitoring the market conditions and optimizing our operations. Right now for Q2 and Q3, we are focusing on user satisfaction and profitability. Two things, user satisfaction and profitability. In Q2, we moved out of low return on investment sales channels and reduced our costs. So this contributed to the slightly lower year-over-year device revenues. We believe this is the right approach in this market, given our overall objectives of sustainable growth and moving towards companywide profitability.
We’re also actively adjusting the price points because, for example, the new X6 Dictionary Pen is priced at RMB499, a relatively low price one. The product has very good experience, and also very good profitability for us. So this is one example of kind of covering, adjusting our price points we cover. So the X6 is very popular right now, along with the very popular flagship X6 Pro. So that’s a quick summary of our current operating practice regarding smart devices. We’re focusing on user satisfaction with our best products, and also driving profitability of the business, not absolute scale growth. And we are doing all this by actively managing our R&D process and also, very importantly, sales and marketing costs with discipline. Now, looking ahead to the long-term, I believe learning devices do have a relatively low penetration rate, representing a significant opportunity for growth.
