Unidentified Analyst : Thanks management for taking my questions. I also have three questions. The first one is the demand outlook. Could management see more color on the non-outlook competition landscape and price trend in both overseas and domestic market? And the second question is, what does [indiscernible 0:28:40] with potential impact on business from the over AI’s video generator and so on. And the third question is on the potential market share gain. I mentioned — I said that after Twilio exit in the market, the company could potentially contribute share and how will Agora since this opportunity? And what is the current acceptance from the customers transitioning from Twilio service to our service? Thank you.
Tony Zhao: All right. I’ll take those questions. First of all, in terms of the market and competitive landscape we see in U.S. and international markets, we do see strong growth momentum in media and entertainment sector and telehealth verticals. Live shopping, IoT particularly in developed market, those are the areas that we see a strong growth momentum. Price-wise, we see more pressure in emerging markets, where it’s impacted by macro environment, including the currency exchange rate, et cetera. Price has been healthy and stable in developed markets, U.S. and European market. Twilio. About Twilio’s exit, our — what we’re seeing in terms of competition, Twilio’s assets is only a sign of competitors leaving the market. It’s not just Twilio.
There are other start-up competitors who are struggling and downsizing of their operations. We expect we will be gaining market share with those changes. In China market, we see growth potentials in going overseas all the — especially Internet companies based in China now looking heavily in going overseas by expansion. And although — also digital transformation is still having a clear trend to grow. And also, IoT side of the customer base are seeing more actively growth. Overall usage in both markets, we’re actually seeing still growing despite all the regulatory and macro changes, which is the foundation of overall customer value growth and revenue growth. Price-wise, in China market generally drops about 10% over the last few years and often happen in the beginning of the year.
This put some pressure to our Q1 results. Together with a seasonality issue, like Chinese New Year activity and change of consumer behavior change, our gross margin — but our gross margin remains quite healthy. In terms of competitive landscape, it’s largely unchanged in China market during the past quarter. Well, there are — we continue to see there are more competitors kind of backing off, which in last quarter, we see another large Internet company reduced their team in this area in Q4. I expect market to continue to consolidate. And the next question is about the latest OpenAI offering video generation. I think this is only the very early stage of video format generating model, but we can see the huge potential and possibility lies ahead.
Currently, the model is able to generate a short-video clips based on text, image or video prompting and can already be used in some of customers’ use cases to enhance user experience. For example, the virtual background of video chat room or live streaming session can be a short video clip generated by AI model as an overall background. It could be either realistic or imaginary to perfectly match the context or topics of the channel. This will create more engaging and immersive experience for audience. In the future, we believe human user will be able to directly interact with AI models in voice and video format, as we mentioned before. This will make us a crucial — the critical infrastructure as a massive amount of data will flow between users and AI models in real time.
Maybe to add a little to Twilio’s assets, we think — like I said, it’s only merely a part of competitors leaving this market, backing off or focusing on their more administrative business. And as I mentioned, we see this happen in both global market and China market, including, let’s say, in U.S. market, it’s not just Twilio. There are some other smaller competitors are also downsizing or stopped working in this area. The competitive environment with that we see is clearly improving. Of course, Twilio has still a sizable customer base, which we already start to work on to convert them. So this is a clear room for us to go into.
Unidentified Analyst : Thank you very much. This is all clear. Thank you.
Operator: [Operator Instructions] And I show our next question comes from the line of Bing Duan from Nomura. Please go ahead.
Bing Duan: Hi. Thank you management for the opportunity to ask a question. Just one follow-up question from me about the Twilio’s exits in programmable video product segment. So can you share more color about the reason behind this? Is this more because of the competition, the fears or competition or because of the demand is not growing strongly in the U.S. market? And about we offer two-months free customers switch from Twilio, how do we think that would affect our user growth and top line growth in the next one or two quarters? Thank you.
