36Kr Holdings, Inc. (NASDAQ:KRKR) Q4 2021 Earnings Conference Call March 29, 2022 8:00 AM ET
Company Participants
Dagang Feng – Co-Chairman and Chief Executive Officer
Lin Wei – Chief Financial Officer
Conference Call Participants
Peipei Qiu – Industrial Securities
Lingyi Zhao – SWS Research
Operator
Hello, ladies and gentlemen. Thank you for standing by for 36Kr Holdings, Inc. Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. [Operator Instructions] Today’s conference call is being recorded.
I will now turn the call over to your host, Tu-Cheng Wang [ph], IR Manager of the company. Please go ahead, Tu-Cheng.
Unidentified Company Representative
Thank you very much. Hello, everyone, and welcome to 36Kr Holdings fourth quarter and fiscal year 2021 earnings conference call. The company’s financial and operational results were released earlier today and have been made available online. You can also view the earnings press release by visiting the web section of our website at ir36kr.com.
Participants on today’s call will including our Co-Chairman and CEO, Mr. Dagang Feng; and our CFO, Ms. Lin Wei. Mr. Feng will start with call by providing an overview of companies and the performance highlights of the quarter in Chinese, followed by English interpretation. Ms. Wei will then provide details on the company’s financial results before open the call for your question.
Before we continue, please note that today’s discussion will contain forward-looking statements made under safe harbor provision of U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company’s results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties including in the company’s prospectus and other public filings as filed with U.S. SEC. The company does not assume any obligation to update any forward-looking statements except as required and applicable law.
Please note that 36Kr earnings press release and this conference call including a discussion of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. 36Kr’s earning press release contains a reconciliation of unaudited non-GAAP measures to the unaudited GAAP measures. Please note that all amount numbers are in RMB.
I will now turn the call over to our Co-Chairman and CEO, Mr. Dagang Feng. Feng, please go ahead.
Dagang Feng
[Foreign Language] Thank you. Hello, everyone, and thank you for join our fourth quarter and fiscal year 2021 earnings conference call.
[Foreign Language] 2021 has been an eventful year given the complex environment, a year we face both expansion opportunities and rising challenges. Despite the rapid global change, China’s new economy demonstrated a strong resilience and vitality, commitment to our mission of empower new economic participants to achieve more. We continue to witness as well as our company many new industries and verticals on their journey of development and expansion.
In the meantime, 36Kr delivered a solid top line growth in 2021, with our total revenue reaching RMB370 million for the full year. Notably, we also achieved the quarterly profitability in the fourth quarter of 2021 for the first time in the past eight quarters. This robust financial results were driven by the significant accomplishment and breakthrough in many aspect, including content strategy, product development, platform refinement, branding influence and the monetization capability.
[Foreign Language] In the fourth quarter, we delivered another record-setting performance in user traffic, with average monthly page views reached 850 million up to 35% year-over-year. This 15th consecutive quarter of the group demonstrated 36Kr unique leading position with new economy. The release of the blockbuster article such CTL crack in the trillion RMB battery in Kr. Corporate in TRG and intelligent hunters in internet giants and all use white paper stay up late is further evidence of the continued rise of our content influence. These articles attract widen attention and gain popularity with their premier quality.
[Foreign Language] During 2021, near 700 piece of articles published on via WeChat official account has amassed over 100,000 review each, with some of them attract more than 200,000 views. Even more impressively, some of the financial articles achieved a phenomenal level of readership, over 300,000 review and in some cases, over 600,000 reviews. Meanwhile, our content platform strategy remain intact as we delegated to further enhancing our content quality, deep and the diversify through both PGC and UGC. In additionally, our ongoing efforts bode fruits with results in product development, presentation formats, distribution channels, user experience and the expansion of other footprint.
[Foreign Language] With respect of the content column and product development, we continued to expand our high-quality content metrics. We target a wide range of industry, including new consumption, smart vehicle, high-end manufacturing sector, corporate digital transformation and the Beijing Stock Exchange, dual carbon economy. Meanwhile, we place more focus on new economy and capital market and continue to upgrade our product offering across both private and the secondary market. To this end, we launched a series of new products, such as digital 36Kr, Kr Finance, OUS, Super Review, 36Kr Research Institute, Kr Carbon, providing indeed professional analysis of latest business trend. In addition, we continue to optimize and innovate series of IP products, such as Wiscofort, 36 and the 36 suite waste classes and 36Kr Enterprises Service Review platform.
[Foreign Language] Regarding content formats, in addition to reinforcing our advantage in text and image, we have further strengthened our strategic efforts and investment in audio, in live stream, in particularly short-form videos. We have produced near 200 short-form videos, acquiring over 600 million reviews across our platform, with closely to 20 million likes. These videos are unique in terms of topic selection, visual presentation, appealing to a broad range of user demographics, and have currently attracted more than 6 million followers of our video across our platform. It is particularly not worth that the number of followers to our official corporate account on Bilibili now exceeds 1 billion. The testament that increasing popularity and raising influence of 36Kr short-form video content among young audience.
[Foreign Language] 36Kr audio content is another highlight of our content metrics. An example of the one of our exciting audience program is Kr Walkman, which provide users with the latest business highlights in short audio clips that takes just a few minutes to digest. We also collaborate with new radio to broadcast our business-centric product program on their new radio playlist, enabling 36Kr to deliver premier content to a wide audience across various setting. Furthermore, live streaming is a significant addition to our content advantage, leveraging its interactive first feature and 36Kr of the business gurus and industry experts, we have attracted many new users to our live stream content.
[Foreign Language] On the content distribution front, we continue to reinforce our omnichannel distribution strategy, establishing a more than comprehensive range of channels for distribution. In addition to our proprietary platform, 36Kr website and 36Kr app, we also distribute our content through external channels, such as our official WeChat account, Weibo, Juhu, Bilibili, and several other white portal and app. We have expanded our reach to almost all the mainstream platform and our followers exceed 22 million, providing us unprecedented influence.
[Foreign Language] In terms of user experience, we continue to optimize and upgrade our product offering. For example, the iOS desktop top wedges and the brand-new UI/UE upgrade have made it easy for user to discover and browse our content more conveniently and smoothly. Moreover, the new user achieved system and localized community operation strategy have gradually promote use active and enhanced user stickiness in our platform. Compared with prior year on a year-over-year basis, in 2021, the number of users post income is increasing by 47%, the number of comments rose by 204%. And our third-day retention rate rose by 97% across to 36 websites and 36Kr app.
[Foreign Language] Moving to expansion of 36Kr footprint. We extend our presence across a broad range of domestic market, lower-tier cities and international markets. In August of 2021, the official launch is that our dual headquarters in Shenzhen. And through a localized operations strategy, we have enthusiastically participated in the wave of a new economy development in South China Great Bay area. We have expanded our regional office to 12 key province and cities, including Hangzhou, Chengdu, Zhengzhou and Chongqing, to explore the potential of the low-tier market and the industry upgrades. On Internet front, 36Kr Global further expanding its presence from South Asia to Australia, New Zealand and Europe. Furthermore, 36kr premier content also adopted by the Bloomberg, Dow Jones and Nikkei, which substantially bolster our global influence.
[Foreign Language] Driven by the initiatives above, our customer bases grow rapidly in 2021. Each of our six major customer communities continue to expand, including start-ups, TMT James investment institution, local governments, traditional enterprise and individual clients. At the same time, we have built a close-loop product and server offering that empower the entire enterprise life cycle. Spanning from start-up and development to the expansion stage, we are also continuously boost our new commercialization efficiency. Next, let us look our achievement in terms of commercialization.
[Foreign Language] We expect that the recurring COVID-19 outbreaks and complex microeconomic environment, we achieved a solid top line growth on a comparable basis in fiscal year 2021. Our full year advertising revenue reached RMB250 million, representing a year-after-year increase of 25% – 24%, which was above the industry average. In addition, the number of advertiser exceed 500 and average revenue per advertising customer were above RMB400,000, both achieving solid year-over-year growth.
Unlike other traffic platform, 36Kr advertisement were building brand reputation and visibility has benefit from the platform’s significant leverage capability as well as limited impact of the recent macroeconomic cycles. Enabling us to exert the powerful revenue potential, the advertisers choose to collaborate with 36Kr because of our deep set industry expertise and a strong influence on the new economy. On other hand, we are also near to harness 36Kr omnichannel distribution, which accurately target distinct audience within our high-quality customer bases, a testament to our powerful platform asset.
[Foreign Language] Notably, our short form video business and the launch of content columns targeting customer end users has demonstrated 36Kr advertising advantages in achieving both in brand awareness and the performance, delivering to the rich media characters of the short-form videos, such as visual effect, strong engagement, diverse content and well distribution capabilities, we provide brand promotion and the content marketing solution to help customer enhance their brand image and influence. Our customer bases has expanded from corporate clients to brands targeting customer audience, including Samsung, Nike, PNG, GE, Juhu, GenkiForest and many other international and well-known local companies. At the same time, our average revenue per customer has been rising steadily.
[Foreign Language] Turning to the latest update regarding our value-added enterprise service. In 2021, we have strategically reduced low-margin intercity market business, while increasing our investments in offline events consulting service. Well, we proactively incubated the platforms and enterprise service product, such as enterprise service review platform with purpose of the driving our same growth curve and as its results made positive growth progress. Our full year revenue from enterprise value-added service reached RMB74 million. Among those service, offline events and consulting service record a remarkable growth of 19% and 13% compare with 2020, respectively.
[Foreign Language] Besides usual off-line events, we adopt a more flexible approach to serving customers by regularly leveraging the video and live stream formats for offline events. In the fourth quarter, we hold our annual WISE conference with Year of Parkour in this space. In addition to holding high-quality off-line summit, we also partnered with the [indiscernible] an online live streaming program and the same time to promote our WISE conference. We successfully create a long-tier effect from event promotion to live stream, and finally, the content recreation and the distribution, and turned to be event into a major industry influencer. Not only did the revenue from 2021 WISE conference remained a high level, but the user exposure also exceeds a total of 1.3 billion across our platform, effectively assessing this partnership as a benchmark for women collaborations between financial media and the OE.
[Foreign Language] In 2021, we hold various offline events. Furthermore, the number of our events and the revenue per event has both increased compared with last year. Our event covered are the diverse range of topics, including industry trend, investment opportunity, the outlook for the metrics, overseas commercial expansion, local investment promotion and industry operates.
[Foreign Language] In 2021, we also continued to make positive progress in our consulting service, an important component of our enterprise value-added solution. On the corporate side, we helped leading high-tech companies, such as ByteDance, Andy Group, [indiscernible] Biomind issue customized industry research report. On the government side, we produced research report on the investment, promotion and the construction planning for new developed zone for local governments in Shenzhen, Hangzhou, Xi An, among others, generating substantial more monetization opportunity. In November 2021, 36Kr Research Institute joined after metric research, a testimony to our professional capabilities, which recognization from professional authorities.
Next, I would like to share in details upgrades regarding our PK incubation project, the 36Kr Enterprise Service Review platform. The digital and smart technology trend has asked the south industry into a year of the faster growth. According to the iResearch, the size of the China enterprise SaaS market expected to grow from RMB53.8 billion in 2020 to RMB130 billion by 2023, with a compounded annual growth rate of 34%. As a result, we launched 36Kr Enterprise Service Review platform to fuel for this huge product demand and the market potential driven by corporate undergoing digital transformation, after more than a year of optimization and the fine-tuning, our Enterprise Service Review platform has became China largest most authoritative and the most convenient enterprise service software selection platform.
Targeting the pinpoint of information as metric between demand side and the sell side service providers, 36Kr Enterprise Service Review platform team has built its platform within three note-worth features to empower every enterprise service seeking the best solution for their corporate digitalization transformation. First, elaborate important information covering the key industry in China enterprise service market and as major of leading players in each industry, allowing the demand side to compare similar software product in terms of the functionality, price rating.
Secondly, after analyzing user reviews from real users of the software product willing to share their experience. Third, a structured enology system is created by the integrating various distinct items of knowledge from cross-enterprise service industry to help users accurate aggregate knowledge of the – and the information.
As of the fourth quarter of 2021, we have grown our enterprise service review platform to excluding close to 6,000 software applications, up 13 substantially and the 21 year-over-year. The platform market active user reached almost 600,000, sequentially an increase of 72% from third quarter and the growth of nearly 600 times year-over-year. The cumulative comments amount to nearly 20,000, increasing order 400 times quarter-after-quarter and 1,000 times year-after-year. These outstanding operation metrics further proven that our product review portal has became appealing to an even broader but still growing user base.
In 2022, we are accelerating the development of 36Kr’s competitive advantages and overall influence in the enterprise service review market. Firstly, we will set the evaluation standards for China enterprise service industry and leverage our first-mover advantages to educate the market. Second, through improvements in the product library, user reviews, knowledge likes and key influence library, we will further reinforce our enterprise service review platform and reinforce the product competitive advantages.
And additionally, as an independent third-party, 36Kr Enterprise Service Review platform will collect real comments from a wide user demographic as well as encourage users to voice their opinion to ensure the objective and the fairness of our platform. Furthermore, we will gradually begin testing enterprise service review platforms commercialization potential. Looking to achieve full monetization by generating sales leads providing consulting service and brand marketing solution, plus other effective measures to realize the monetization of our platform.
Building on our own advantages, we will collaborate with leading domestic SaaS and other service provider as well as industrial with digitalization demand, such as finance, new energy and healthcare to establish enterprise service review benchmark and create a flagship platform. So today, we have grown the platform to cover over 16% of enterprise service products in the market. We believe that we deepen enterprise service review portals market penetration, advantage of our platform produced and service will position us to capitalize on the best opportunity of this RMB100 billion market and enable us to achieve impressively further returns.
Last but not least. Let’s turn to our subscription service. Our full year revenue from subscriptions totaled RMB28 billion, up to RMB35 billion year-over-year. In 2021, we achieved solid growth in number of institutional and enterprise customers, which increased by 40% year-over-year with average revenue per customer growth by 19% year-over-year.
Looking ahead to 2022, a prominently brand pioneering platform delegate to survey the new economy. We will continue to build and develop our content products and the ecosystem to provide the entire life cycle of the service for our customers. We will continuously optimize the three major business segments to grow our customer base, including enhancing new formats, such as short-form video, programs targeting individual subscribers. We will also increase our ARPU and explore new business opportunities from low-tier market and industry upgrades.
And additionally, regarding our emerging business, we will continue to maintain an un-waving commitment to bolstering the research and the develop operations and commercialization of 36Kr enterprise service review platform. We believe this enterprise service review platform will became our second growth curve.
For quite some time, we have faced a challenge of COVID-19 and a complex macroeconomic environment. Despite those difficulties, we have showing by exceptional performance of our core business, which achieved solid year-over-year growth. Riding the wave of industry upgrades and digital transformation aimed at the rise of new consumption, advanced technology and dual carbon industry, plus, the growth of specialized, refined differentiate and the innovate enterprises, we will seize the historical opportunity to build a system of optimized product and service, achieving faster and high-quality business growth.
We expect 36Kr will continue to deliver strong revenue growth and achieve profitability in full year basis in 2022. Under the circumstances, that COVID-19 pandemic is progressively contained and the macroeconomy is stabilized. They will result in a comprehensive reshuffling out of 36Kr business fundamentals, promoting the market to hash 36Kr valuation and hash in the inflection point of company’s venue. We are confident that our robust long-term fundamental will empower us to forge ahead to deliver long-term sustainable value to society and our shareholders.
With that, I will now turn the call over to our CFO, Ms. Lin Wei, who will discuss our key financial results. Please go ahead, Lin.
Lin Wei
Thank you, Feng, and hello, everyone. We are very pleased to report another set of solid financial results for the fourth quarter and fiscal year 2021, despite the intermittent resurgence of COVID-19 and the complex macroeconomic environment.
We achieved strong growth across all three business segments on a comparable basis in fiscal year 2021, being worth with consensus on both the top line and bottom line. I want to highlight that our online advertising business grew 24% year-over-year, outperforming most of our peers in the industry. Most importantly, as we continuously improve our operating efficiency, we booked record high gross profit margin of 65% and a net income of RMB15.4 million for the fourth quarter of 2021, the first time of profitability in the past eight quarters. In addition, we ended the year of 2021 with a very strong cash position of RMB216.1 million as we generated a positive operating cash flow in both the fourth quarter and full year of 2021.
When we venture further into 2022, we will continue to solidify our core strengths in content production and service offerings while expanding our monetization channels. We believe that we are well positioned to capture the vast opportunities in China’s new economy space and create greater value for our users, customers and shareholders. Now I’d like to walk you through more details of our fourth quarter and fiscal year 2021 financial results.
Online advertising services revenue increased 10% year-over-year to RMB76.4 million in the fourth quarter and grew 24% year-over-year to RMB214.7 million for the full year of 2021. The increase was primarily attributable to more innovative marketing solutions we provided to our customers. The number of advertising customers and the average revenue per advertising customer both achieved growth in fourth quarter and full year 2021. Enterprise value-added services revenue were RMB30.3 million in the fourth quarter of 2021 and RMB74 million for the full year of 2021.
As was stated in our earnings release, starting from the first quarter of 2021, we ceased to act as a principal assuming low gross margin businesses and acted fully as an agent. Hence, revenues of such businesses were recognized on that basis from the first quarter onward. To increase comparability of operating results and help investors better understand our business performance and operating trend, we introduced gross transaction value as a supplemental metric to describe our business.
Gross transaction value of enterprise value-added services increased 46% year-over-year to RMB60.5 million in the fourth quarter of 2021 and increased 12% year-over-year to RMB217.2 million for the full year of 2021. In particular, our consulting services revenue and off-line enhanced revenue increased by 13% and 19% year-over-year, respectively, for the full year of 2021, reflecting the sustained growth despite the influence of the lingering pandemic.
Subscription services revenue decreased by 11% to RMB9.6 million in the fourth quarter of 2021, mainly because some of off-line training programs were canceled or delayed due to the resurgence of COVID-19. For full year 2021, our subscription revenues increased by 35% to RMB28 million, primarily attributable to our continued efforts in offering high-quality subscription products.
Total revenues were RMB116.3 million in the fourth quarter of 2021 and RMB316.8 million for the full year of 2021, respectively. Taking into consideration of the aforementioned changes in revenue recognition for enterprise value-added services, where there was a RMB30.2 million and RMB143.2 million relevance between net revenues and gross transaction value for the fourth quarter and full year, investors can figure out that our overall business trend is upwards and demonstrated solid year-over-year growth.
Cost of revenues decreased 42% year-over-year to RMB40.7 million in the fourth quarter and decreased 51% year-over-year to RMB128.8 million for the full year of 2021. The decrease was primarily due to our continuous shift and focus towards higher-margin businesses and recognition of certain revenues on a net basis. Gross profit increased 49% year-over-year to RMB75.6 million in the fourth quarter of 2021 and increased 50% year-over-year to RMB187.9 million for the full year of 2021.
Gross profit margin reached a record high of 55% in the fourth quarter of 2021 compared to 42% in the same period of last year. For full year 2021, gross margin was 39% compared to 32% last year. The increase was primarily due to our continuous shift and focus towards higher gross margin businesses and recognition of certain revenues on a net basis as well as our improved operating efficiency in fiscal year 2021.
Operating expenses decreased 32% year-over-year to RMB61.6 million in the fourth quarter of 2021 and decreased 28% year-over-year to RMB282 million for the full year of 2021. Sales and marketing expenses were RMB39.3 million in the fourth quarter of 2021. The increase was primarily attributable to an increase in payroll-related expenses and marketing expenses, partially offset by decreased share-based compensation expenses.
For full year 2021, the sales and marketing expenses were RMB143.9 million. The increase was primarily attributable to an increase in payroll-related expenses, partially offset by the decrease in share-based compensation expenses and marketing expenses. G&A expenses were RMB9.6 million in the fourth quarter and RMB90.6 million in full year 2021, representing an 88% and 57% reduction compared to the corresponding period of last year.
The decrease was primarily attributable to a release of the allowance for credit losses and the decrease in share-based compensation expenses, partially offset by the increase in payroll-related expenses, the release of allowance for credit losses was mainly due to improved collection of accounts receivables, as well as continuously increase our efforts in accounting receivable collection.
Research and development expenses were RMB12.6 million in the fourth quarter of 2021 and RMB47.5 million for the full year of 2021. The year-over-year increase was primarily attributable to the increase in payroll-related expenses as we bolstered our research and development capabilities. Share-based compensation expenses recognized in cost of revenues, sales and marketing expenses, research and development expenses as well as G&A expenses totaled RMB4.1 million in the fourth quarter of 2021 compared to RMB9.1 million in the same period last year.
For full year 2021, the total amount of share-based compensation expenses were RMB15 million compared to RMB39.3 million in 2020. Other income was RMB1.5 million in the fourth quarter of 2021 and RMB3.6 million for full year 2021, respectively, compared to other expenses of RMB10 million and RMB8.3 million in the corresponding period of last year. The fluctuation was primarily attributable to net losses recognized from equity method investments in fiscal year 2021.
Net income was RMB13.4 million in the fourth quarter of 2021 compared to RMB90.1 million net loss in the same period of last year. This is the first quarter we achieved quarterly profitability in the past eight quarter. For the full year of 2021, net loss was RMB90.6 million compared to RMB279.3 million in 2020, a significant reduction of full year net loss. Non-GAAP adjusted net income was RMB19.6 million in the fourth quarter of 2021 compared to RMB81.1 million net loss in 2020. For full year 2021, the adjusted net loss was RMB75.6 million compared to RMB240.1 million last year.
Net income attributable to 36Kr Holdings ordinary shareholders was RMB14.6 million in the fourth quarter of 2021 compared to RMB91.4 million net loss in the same period of last year. For full year 2021, net loss attributable to other shareholders were RMB89.6 million compared to RMB280.2 million in last year. Basic and diluted net income per share were both RMB0.014 in fourth quarter of 2021 compared to net loss per share of RMB0.09 in the same period of last year. For full year 2021, the basic and diluted net loss per share were both RMB0.087 compared to RMB0.275 in 2020.
As of December 31, 2021, the company has cash, cash equivalent and short-term investments of RMB 216.1 million, the highest cash level in the past two years. This was mainly because we generated positive operating cash flow in both the fourth quarter and full year 2021.
Lastly, let me provide some updates on our share repurchase program. On May 6, 2020, the company announced that its Board of Directors authorized a share repurchase program under which, the company may repurchase up to a total of 1 million of its American Depository Shares, each representing 25 Class A ordinary share. As of December 31, 2021, the company had repurchased approximately 786,000 ADSs for approximately RMB 17.5 million under this program.
This concludes our prepared remarks. We will now open the questions.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] The first question comes from the line of Jing Tang [ph] from CICC. Please ask your question.
Unidentified Analyst
[Foreign Language]
Dagang Feng
[Foreign Language]
Unidentified Analyst
[Foreign Language] I have two questions. The first is under the current macroenvironment, how do you view the advertising business in 2022? And my second question is, how did COVID-19 in March affect the company’s offline business in the first quarter? Thank you.
Dagang Feng
[Foreign Language] Thanks for your question. For your first question, I would like to say in 2021, advertising revenue grew 24% year-over-year, a relatively high growth rate compared to our peers. As the pandemic comes under control, I believe the economy will – as the pandemic come under control and the economy will gradually recover. And we believe the advertising industry will trend upward as well. From our perspective, our advertising growth mainly comes from two sources, the increasing number of advertisers and the steady growth of ARPU.
36Kr distribution channels became more diversified and target more niche markets and the new forms like short-form videos, we’re expecting both number of advertisers and ARPU will grows. We subsidized the branding advertising, which is currently by stronger leverage and less susceptibility to economy cycles. Therefore, our advertising business were least affected by the inflections in the economy. From the industry side, and it’s more depend on the pandemic situation. I guess I believe the new media will be better than the traditional media. That’s my opinion about the industry.
[Foreign Language]
About your second question, the pandemic will indeed impact our off-line events. However, we are planning to communicate with customers about the moving certain events online. We’re aiding the live streaming component, which will help alleviate the pandemic impact. From historical perspective, Q1 is not the peak season for offline events in any cases. So the pandemic should not have too great on impact on revenue. And we also may communicate with our customer about postponing their events. So that even if our Q1 revenue is affected by postponements, full year revenue will remain intact.
Unidentified Analyst
Thank you.
Operator
Thank you. The next question comes from the line of Peipei Qiu from Industrial Securities. Please ask your question.
Peipei Qiu
[Foreign Language] I will translate my question. We know that companies start with new economy content, recently making a lot of assets to expand the content boundaries. Could you give us more color of what you’ve achieved? How would you maintain your competitive advantage in content might be? Thank you.
Lin Wei
Thank you for the question, Peipei. Yes, you asked a very good question. Yes, in terms of content innovation and the production, we have been doing a lot of initiatives. First of all, we have been expanding our presentation format. For example, we previously only have tax flash information/news and pictures. Now we are expanding to more rich format, including short videos, audio formats as well as live streaming formats. That’s number one on the presentation formats.
And number two, on our columns and content productions, we have mentioned in our prepared remarks that we now have many, many WeChat account metrics, including our 36Kr official account and 36Kr Pro and 36 Finance and the 36 – the secondary market WeChat accounts and 36 Research Institute, 36 Carbon and the Wave which target at the institution as well as all use, we’re targeting at the younger generation lifestyle content as well as super review.
For example, we provide reviews for the 3C products as well as new consumption products. So overall, our presentation format as well as the coverage of the channels and the verticals are both expanding. That turns out into our commercialization. First of all, our short-form video contributed a lot to our commercialization. We are more – have more C end customers before than we – before, we only have a lot of B end customers, for example, Intel.
Now we are expanding into [indiscernible] Nike, P&G, a lot of – and the beverage brands. That’s our expanding the category of customers. So that helped us to increase our advertising customers as well as our ARPU. That’s why we are very confident. As Mr. Feng just mentioned, that we expect in 2022, both our advertising revenue as well as our enterprise value-added services revenue will both grow. And we expect we will achieve a full year profitability in 2022. I hope that answers your question, Peipei.
Peipei Qiu
Very clear. Thank you.
Operator
Thank you. The next question comes from the line of Don Tang [ph] from T.H. Capital. Please ask your question.
Unidentified Analyst
[Foreign Language] Hi, management. Thanks for taking my question. I have a small question regarding margin. So the overall gross margin was a record high at 65%, up about 33 [ph] percentage points on year-over-year and nine percentage points quarter-over-quarter. So I wonder what’s the reason for this trends and how should we look at margin outlook in 2022? Thanks.
Lin Wei
Thank you for your question, Don. That’s a very good question. Yes, our – for fourth quarter, gross margin of 65% is a record high actually in our history. That’s a very amazing gross margin level. The – actually, the year-over-year increase of gross margin, mainly because we recognize certain revenues on that basis. That gives us almost a 20% raise for gross margin. If you compare every quarter compared to the first three quarters of last year, we basically increased gross margin by almost 20%. That’s the main reason for year on – year-over-year improvement on gross margin.
The quarter-over-quarter gross margin improvement mainly comes on the economy of scale, which, in other words, if you look at our revenue for the fourth quarter, due to seasonality, the fourth quarter is the strongest quarter for the entire year. So we achieved almost RMB120 million revenue, that’s a very high level. And our cost remain on a relatively stable level. That’s why you will have a leverage here, which we call it the economy of scale.
That’s why, sequentially, our Q4 gross margin also increased a lot. And to a smaller extent, because some of our revenues, we recognize revenue on a cash basis out of prudential accounting policy. And due to our efforts in collecting account receivables, we have improved a lot in the fourth quarter. So before year-end, we collected some revenues on a cash basis that also were recognized in Q4, which we couldn’t recognize in the previous quarter. That also resulted in a higher gross margin in the fourth quarter. I hope that answers your question, Don.
Unidentified Analyst
Very clear. Thank you.
Lin Wei
Thank you.
Operator
Thank you. The next question comes from the line of Lingyi Zhao from SWS Research. Please ask your question.
Lingyi Zhao
[Foreign Language] Thank you for taking my questions. I have two questions. One is Mr. Feng said that never to be a company that lives by advertisement. Currently, the ad business is still the core business of our company. How we see the potential of advertising business and other new business in the future? [Foreign Language]
Dagang Feng
[Foreign Language]
Lingyi Zhao
[Foreign Language]
Dagang Feng
[Foreign Language]
Thanks for following my interview. I would like to say, I’m not the very big fan of the advertising business because no matter from the revenue scale and – or the gross margin, they have the limitation there. Of course, from our advertising business perspective, we are confident that in the future, we have at least 30% or 40% growth in the future.
But I would like to say this, we would like to put more attention on our new business, like enterprise service review platform. Actually, in 2021, our advertising business and the value-add enterprise service accounted for 60 – 46.6% and 47.2% comparable of the GTV, respectively, which indicating a very healthy revenue mix. In the future, we’ll continue to build our second growth curve enterprise service – enterprise in the short – hope this revenue will be the important part of future revenue. And I – and we believe that, driven by the enterprise service review platform, 36Kr growth will continue upwards along the new curve. Thanks.
Lingyi Zhao
[Foreign Language] As a true provider in the enterprise service industry, what is the advantages of Kr [ph] enterprise service platform? Thank you.
Dagang Feng
[Foreign Language]
Thanks for your second question. 36 to provide enterprise service review platform with three advantages. First, I would like to say is the – it’s the fairness and the objective our enterprise service review platform. And as independent platform, we especially valued authoritative user reviews, which not be [indiscernible]. Compare with other large Internet companies with their own SaaS and cloud products, our enterprise service review platform can display user feedback on software application sale and impartially, enhancing decision make efficient for both the sales and the buyers.
The second one is about ability and the awareness to serve customers. Then the third one, the last advantage is our completed product system. We originally saw the pinpoint for both seller and buyer in enterprise service market and start to build our presence earlier. Contents such as a software product library, user review library, key person database and knowledge maps contain the magical quadrants in our enterprise service software selection platform. I hope my answer is enough for you. Thanks.
Unidentified Company Representative
Thank you. We do have any further questions?
[Foreign Language]
Operator
As there are no further questions now, I would like to turn the call back over to the company for closing remarks.
Unidentified Company Representative
Thank you, operator. Thank you again for joining us today. If you have any further questions, please feel free to contact 36 Investor Relations through the contact information provided on our website or TPG Investor Relations.
Lin Wei
Thank you.
Operator
That does conclude our conference for today. Thank you for participating. You may all disconnect. Have a nice day.
Be the first to comment