Q3 2019 Earnings Call
Good day and welcome to the really believe 2019 third quarter earnings Conference call. Today's conference is being recorded.
This time I would like to turn the conference to Juliet Yang Senior director of Investor Relations. Please go ahead.
Thank you operator. Please note that discussion today will contain certain forward looking statements relating to the Companys feature performances and our tended to qualify the safe harbor from liability as established by the U.S. Private Security Litigation Reform Act.
Such statements are not guarantees of future performances and are subject to certain risks uncertainties assumptions and other factors. Some of this this risks are beyond the company's control and could cause actual results to differ materially from those mentioning today's press release and this discussion.
A general discussion of the risk factors that could affect Bailey believes business and financial results is included in certain filings. The company, we exchanged securities and Exchange Commission. The company does not undertake any obligation to update this forward looking information except as required by law.
During today's call management will discuss certain non-GAAP financial measures for comparison purposes, only four definition as non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. Please see the 2019 third quarter financial results news release issued earlier today.
As a reminder, this conference is being recorded in addition, and Investor presentation and a webcast replay of this conference call well be available on the visibility Investor Relations website at <unk> Dot com.
Joining us today on the call from believe at least in your management our Mr rate Chen Chairman of the Board and Chief Executive Officer, Ms. Collie, Lee Vice chairwoman up the board and Chief operating Officer, and Mr., Sam San Chief Financial Officer.
And I will now turn the call over to Mr. fan, who will lead to prepare remarks on behalf of Mr. Chen.
Okay.
Thank you everyone for students do funny.
I'm pleased to deliver today's opening remarks on behalf of Mr. Chat.
Oh, so quarter with another phone call adult growth.
Our active you would acquisition strategy and an increase commercialization efforts are paying all.
We secured another cotto to record high maybe you didn't pay you there.
Why meaningfully improving our topline and gross margin.
In the fourth quarter, we added 17.5 Smith.
12 platform sequentially.
This is our highest quarterly <unk> ever.
Great.
Great and 27.9 really upsell to 8% from this MPL read about [noise].
The growth rate <unk>, even more accelerated.
Reach 114.2 really into so quarter.
43% young yet.
While growing our user base, we are also keeping our community engagement or the high level.
So do you want 40% so quarter.
Reaching 70.
Let's go to 7.6 milling and all average they said if you see minutes per day our platform.
Our user stickiness Android to quit loved to Ritchie and the when it is to pay for premium content and services.
In the third quarter, our aggregate, mostly paying users once again more than doubled.
Compared to the same period into without a t.
Did you say 1.9 Billy.
Revenues for EMEA, you, what I'd be 14.5.
I'll do 5% increase from the same chira in 2018.
Yes, that's off numbers demonstrate improved monetization of our going topic.
For the six consecutive quarter things I'll IPO, we exceeded our revenue guidance.
Between the high end of our expectation by nearly I'd be 100 Emily.
Total revenues coming that's RMB 1.86 billing fourth quarter up 72% yeah yeah.
We think this means we are doing something there right.
<unk> expense, we are realizing more leverage and they'll gross margin has include the meaningfully each quarter. This year.
So 2.8% in Q1 218 question I've said in Q3.
To give a bit more insights into our strategy I love to walk you through our so called to perform as and provides an update our what we consider the backbone trajectory of our business.
Ted humidity commercialization.
Our full spectrum entertainment ecosystem is strong as a growing we continue to improve our tools and services to better support and things fall what can they equate to the mobile oculto submission to has been widely adopted biocon equator, which I referred 50% of content now being upload yes.
Mobile devices.
We believe the Fiveg that walk adoption well have a whether to doing pad on video creation as a call assumption beyond our imagination.
During the fourth quarter, we had an average of 1.1 million active calling equator.
Our two or 3%.
The older years overloading Threepo women live videos monthly up 83% all.
Over year basis.
The top five pet coke and tied to grade so call it a war lifestyle and the payment.
And animation and the technology.
For lifestyle, a wall broad camping, what's up with success. This summer by the end of Q3 rock has more than 11 billing committee to view.
Going to active you'll be trust continues to be a great Ali while a content creators to stretch daily imaginations virus verticals, attracting a viewership of more than 300 milling in just four months it.
October we launched a new joint integration program that encourage all clinical data we may tree talent.
The work together to draw until they Copel deals titled This initiative had being well received by will community, particularly in the verticals I wrote more professional skills such that view that does animation.
Looking ahead, we we and to further expand our cone that offerings, the entertainment fashion and the technology with more effective operators, which would believe well help I truck math audio.
Notably I lost mott's content distribution energy and operational capabilities improve.
We are excited to see our content and Cogs and quite a contractual softer than ever in the third quarter. The number off new video that she wasn't really viewed more than PAALGROUP hurt compared to the fem care, but last year.
Ability to showcase as Helen and again real time Fas.
But if populated community is making BDP the ideal platform.
Yeah addition, we continue to expand our Hajime LIBOR rate to supplement our ever growing PUGC offerings.
We remain the dominant leader in the and the major field with one off the Tyler largest enemy libraries. We recently released updates on dozens of Chinese and then may projects, including the three bought a Paul but.
And the over 20, new titles, including haven't officials briefing, Tim flexible and the legend of mortality assumption fires you'll have dropped.
In the documentary and the variety show Department.
Our signature for documentary series, the Dalai I'll start feeling too.
Our self produced any mole reality show animal hospital has been a hot topics all summer long.
At the same Todd we continue to what we the leading Oh, let's see producers to bring our audio top level titles.
Yes.
Include the Chinese version of discoveries, although survival reality show first met out.
I just offer and he doesn't kick that off China up and nothing though documentary that we co produced with National No drop Rafi.
This mass appeal titles have not all they felt attracting broader audience, but also yelled at decent but Tom month, and the premium membership revenue.
Looking at our community, we are seeing accelerated user expansion, where expressing Pos growth numbers as well.
So you can get them level.
In the third quarter, we have several hundred and 25 million daily video views of 60% yelling here. This larger base is deeply in growth you all possible connecting with each other and our content.
In Q3 hour user generated 2.5 billing, mostly interactions to Todd Ahmed bikes and the PDP. The momentum. So this is up 100.
Compared to the simpler last year.
Official membership program is also on the right. After the end of third quarter. We have 62 milling official members will pass it I'll answer. Your question is that a 46% year over year I'll talk much about potential rate remains high as well that's about 80% does an excellent indicator of the high quality.
I'll follow user growth.
Turning to commercialization. According to the latest I Research report issued in November this year by 22 to three time, though it's all a detailed my market will achieve mcus size of RMB 1.1, trailing as the driving force of this remarkable growth djezzy will contribute to nearly 66%.
Of the overall market.
And the more so than any other generation painful entertainment, there's a new norm in China during down a bit further they CGM market focus to hit RMB 62 billing by 23.
China's leading JV entertainment platform and the leader.
Field, we are well position to capitalize this market bomb and grow our position.
First let's pick a look at our Kevin Bennett Outgun business and now accounting for 50% of our revenues.
As we further diversify and to expand our game offerings, we continue to grow our market share in the high quality and getting the space for third quarter revenues from our mobile games were up 35% year over year.
At RMB 933 million the in doing faced when order all MTO continued to lead our growth.
With growing revenue contribution frolic jointed operated AC do seem to mobile gamma knife, which was released in Q2.
EFT yields better further growth in Q3.
After the release of major content update after your rents to number one our China, Iowa top grossing taught three time in September .
The gaps in doing lifecycle is an excellent showing of our ability to acquire appear more content and our strong them distribution power.
Our GAAP community continues to.
One of the largest in China.
We're excited to bring new titles to our massive audience.
We released a series of 82 titles, including an.
Exciting domestic RPG caused by Nokia and too high.
Great good depended female based RPG titled Untouchable, Tom.
I'll have been well received.
On the go until they operated Gan fraud, we launched a number of high quality of domestic titles, including tense and highly anticipated future mobile again swap spreads much maker and the paper again shiny Mickey.
Looking at our content updates and new gets applied.
To relieve a major come to update for MTO plants for new year's day 2020 .
With a total of 30 high quality.
Apply we have eight titles that have a cloud a pool, both scheduled to be relief in the coming benefit.
These include todays release of crude oil cut bacon to a highly anticipated domestic RPG does come by simulation and the shooting gameplay.
Although 1 million users have already approved rejected for the title on top of that the furious jamar down because you talked about that off guard shotgun sheet.
Yeah, Kashi children shell and a couple of other have also being a pool as a well be released come immersive.
Our platform is also later to bring audience jointly operates again, such as Latif immunology, the kotkin rig zero and more.
Yeah addition, we're excited to expand outcome distribution outside of mainland China with dozens of high the rented.
I told to be releasing Japan and Korea.
Well the great China region.
A few of the plan International relief at this time in crew titles, such as the fewest Jamar final gear Bill can become too and that ball.
Turning to our live broadcasting as that business.
Revenues increased by 170.
7% year over year richer RMB 453 mailing in the third quarter.
Also with improved the revenue contribution for our live broadcasting from their membership and the more than the comment business.
Continue to reach out give an entertainment operating live broadcasting and attracting new viewers with increasing demand in this area such as premium as spot content.
During the league of legends not final our peak concurrent user almost doubled compared with last year as a final.
Yeah addition.
Our feature the between over an audio related content remain our top verticals.
With access to additional and Ulta exclusive content members, a highly incentivized to join our premium membership pullback.
From a membership content to bringing new subscription and the by the end of September we had 6.1 milling valid per member.
400, and try to 9% year on year.
During the third quarter Wheaton issue initiated jointly member Pogo, we tend to music, which was has been great win win collaboration for both parties.
As far what tightening business, we are seeing encouraging OSI of stuttering mallicoat environment revenues for all of tidy increased by 80% year over year to RMB 247 milling, we continue to improve our performance AD efficiency, yielding positive results.
With better click rates the top three industry verticals for Brett as in the third quarter, where food at brokerage gap and E Commerce and the top three verticals for pro forma space that was.
The patient and e-commerce .
Our now briefly update you our partnership with Alibaba doing this DSW 11 that we launch and integrated marketing program with team Timo and top up.
The campaign with a number of e-commerce , why tightly initiative and the come by PDP, the vast content ecosystem with Alibaba the extensive e-commerce ecosystem to.
To be more specific the campaign allows ecommerce advertiser to complete one stop shop marketing our beauty. They can first raise awareness through virus display ads secondarily intraocular purchase at the additions through native ads and Sir.
Completed transactions for pro forma space as a link to the merchandise.
Initial results was very encouraging we look forward to walk locally with Alibaba and bring our partnership to the next level.
Finally, our lack to touch on our ecommerce business for third quarter, our e-commerce and other business grow by 703% to RMB 226 million.
Largely driven by increased number or paying users spending more our ecommerce platform.
We are pleased to announce that by the end of October our year to date ecommerce GSV has achieved an exciting milestones of RMB one building.
In summary, we are excited by the momentum that we are seeing across our business.
Our solid Q2 results.
Strong testimony of our ability to grow our user base.
While maintaining a healthy and engaged community.
The abundance traffic, we generated along the way.
Quickly translated into top line expansion at our monetization power improve.
More importantly revenue expense, we see growing leverage with our gross margin, which gave us more confidence to invest in our future growth.
Looking ahead, we plan to continue our active user growth strategy, while enhancing our commercialization power.
Actually the same time, we're committed to bring our community more exceptional content that help young users engage conduct and the and the test.
That concludes with trends remarks, our now provide a brief overview of our financial results for the so called out 2013, our total net revenues increased by 72% year over year to RMB 1.86 bidding exceeding the high end of our guidance by 5% our non-GAAP revenue made up nearly 50%.
Total revenues in a quarter across 31% in the same period of last year with almost half hour revenues coming from multiple sources, we're pleased with our commercialization progress and the enclosed case.
We also converting more and more all our traffic to paying users. The average of number of slipping do the increased by 124% year over year, which is 7.9 meeting in the third quarter.
Cost of revenues increased increased by 71% year over year to RMB 1.5 billing revenue shining caused a key component of course, a revenue will be 655 meeting a 49% increase from the same period in 2018.
Gross profit increased by 80% year over year, maybe 351 meeting we are also starting to see operating leverage from our diversified revenue streams.
With more revenue contribution for our higher margin business, including advertising and incorporated cabs as well as additional income from paying users our gross profit margin improved to 18.9% compared with 16.4% in the second quarter of 2013.
Total operating expenses increased to RMB 770.
For modeling up 71% from the same period in 2018, telemarketing expenses will be 364 million, representing 85% increase year over year, just increases were primarily from increased China and marketing expenses associated with our App and Brad during the summer holidays.
We also had additional promotion expenses for our mobile gifts and increasing headcount in sales and marketing personnel as well as the higher fulfillment costs by E Commerce Religare products.
General expenses were RMB 153 milling represented 48% increase year over year, this increase who apartment without from additional jernej personnel related expenses and increased amortization expenses related to the intangible asset acquired for business acquisitions and other increased.
During the item.
R&D expenses were RMB 247 milling represent 59% increase year over year. The inquiries were primarily due to increased headquarters in R&D personnel increased the share based compensation costs and other.
Net loss was RMB 400 zero.
Headwind in the six milling.
For the first caught out 2018 compared to RMB 246 million in the same period, how 2018, adjusted net loss, which had a non-GAAP measure that excludes share based compensation expenses and amortization expenses related to the intent set up through the business acquisition.
Was RMB 343 million compared to.
The 203 million in the same period, our 2018 basic and diluted net loss per share well RMB 1.26 to four.
Just to the basic and diluted net loss per share.
Well RMB 1.05.
As of September 2019, we have cash cash equivalents, Tom deposit and the short term investment or be a plus four Billy.
To further grow our business, we plan to improve our monetization by leveraging our comfortable and growing traffic. We're comfortable with a 50 50 split in revenues between GAAP and non-GAAP business, but the benefit in expanding our device.
Revenue stream and improving revenue contribution maybe even further.
Creating additional operating efficiency also further improve our gross profit margin.
Longer term, we believe our monetization effort higher paying user conversion rates and the skier well yield and improving the bottom line.
With that we might currently projecting that revenue for the fourth quarter of this year to be protein RMB 1.93, billing and RMB 1.8, Billy.
Thank you for your attention we will live now to open the call to your question operator. Please go ahead.
Thank you very much ladies and gentlemen, who will now begin the question and answer session. If you wish to ask a question today. Please press star one on your telephone and what's your name.
If you wish to answer your question. Please press the pound all hash Kay.
Participants are limited to one question at a time if you have further questions. Please press star one again to reenter the queue.
All participants on today's call. If you wish to ask your question to management in Chinese. Please immediately repeat your question in English.
First question today comes from the line of Jialong Shi from Nomura. Please go ahead.
Hi.
Good morning management jargon is huh.
Once again.
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Yes.
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Isn't that big EMEA with Mobileye system, and I'm not going much I can see shop during the winter Joshi Shalini sharp I'll Amanda <expletive> .
Alright. Thanks.
And figure out she is on the China children a tick.
Generally got engine go Judy you.
You want me or can you share so you'll see it your body's your concern I mentioned that you are right. So yes. It that you say that I'm going to national trend Guy you shared threeq.
Got you shifted settlement on their own downhaul adult file woman Joshi synergies you seemed a this year.
Yeah.
He shared ginger do not just on the higher hopefully.
Particularly in sheet to London, I should have begun to chart you put it all blended central Mccann Chinese.
So now I'm trying to tell you got sheer number which we define Asia.
First of all congratulations on a solid quarter and also congratulations.
Oh achieving.
The company is 120 to 130 men targeted ahead of schedule.
I just wonder if management can provide some color is on the profile of the new users are higher in the current quarter in the past Cortez and how are the new users compare to donate a compared to those oh users in trimming their profile and the engagements and seems the company has already achieved.
This year.
Hi, Good ahead of schedule. So, let's just wondering what is.
Your new Emil Takeda for end of this year end of this and the next year and my second question. It's about the outlook of competition landscape. We've heard some of the again like marketing platforms are trying to diversify their content offering by adding more in a more animated related content into the our library. So I just wonder what management.
Think of the potential for these new entrants. Thank you.
Hello, nickel whats RCM quid eyes.
When they go through hugoton job.
Your hoenig, how do you Cook with advertisers are going to see do you put on that the hits reducing huh.
Those are what the pizza and some people who don't Gandhi with future.
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Woman index was or is that since that you could slowdown we haven't seen quanta to retain that we're going to show the young for the girl, who don't do your whole for years to both core growth was bulk water salvation is how to put them on their privacy laws that will mean locally.
Yeah, you're quite a bit on utility to.
I can just here in San Diego Investor, Tom Doughty routines under you go single I saw Johnson's I realize you got to do more than the tons or single.
Okay. So mr. Chen will first first Cherokee.
These aircrafts and Kelly will share some colors on this quarter's user profile to Mr. Chen sales very optimistic about our future user growth stent. He feels that we can upkeep occurrence speed of Easter gross or even XL, a cheap accelerate at gross.
Without compromising the quality of our users that quality translates to the engagement at the time spend the retentions and we are quite confident to keep up a very high quality gross while achieving.
Relatively higher gross rate.
No we're seeing a slightly what your way through to the BBD the.
Now onto the Eagle sometime in two was homes will ensure that caution that well done the tools on the machines.
Well, let's see good targets should only go more consumable and particularly acute AI that figure because we didn't want to value that Brandon.
Not sure shoes on go hardworking hunting calendar content legal cost humble sweet hydrogel handoff to says that go to the Nick you down with Sidoti Man I mean, yes, just a woman named absolutely delighted to tune should the hot so will that total you buy land both onshore the city verticals.
Yeah, it related to what's the trigger dose of PTC enters a woman that could you comment to the can gather user tunes. You then it will solve it on a consolidated comp senior lender that should own woman, who set them up.
The cost is commencement then are more and more mature content creator ecosystem.
Over the past here, we have developed a very mature and self sustaining content ecosystem that attracts more and more content creators come through our platform, creating high quality content and the same time, our improved AI content recommendation as up pushing more high quality.
The content to meet with more mass audience best try are also at the same time. Our community also help help our client interest rat faster through word of mouth and that can be supported by over the past few quarters, we can see our content category than expense.
And it too much wider categories at the same time, the new client the new Bdcs that achieved 1 million video views become much much more.
You know where $3 is of course, you down lets you do your dog or designs on the transiting hypothetical Pago, yes. Those are short term liquidity and lumber. We don't go complete focuses on the only into the into cells will solidify those awards.
Putting on a go at least told me. This includes our descendants April two two Yoshida digital summed up more specifically related to divest or when do you negotiate the related to the sandy.
So in the past few quarters, we've seen reports from different third parties, suggesting that the benefit of growing population of China is diminishing.
More users.
They are less time spent less active users and the over our internet space.
On the contrary been they do is very unique content ecosystem and our unique user growth smartdose well definitely helps definitely attracts more and more attention in this field.
Oh, sorry margins chasing volume, which comes out that cues annually fashion houses I'd seen call volume I sounds from huh.
I will now give a quick update on the math there to be their acquisition and add new user profiles.
So again, a lot that Q, how that's around Jones out how should be Dow Jones.
So she easily be done and they all should be than we've seen a kobe does sound financial engines are high since our Manhattan.
Towards Inc. So first of all organic growth is still takes a big part user growth.
Sabatini peak, given our current content ecosystem aren't community environment. This is very beneficial for our word of mouth.
Used aircraft.
Oh, My God easy to don't watch.
Yeah bulk or that sounds huh.
So I can.
Send to that.
Oh, great should the team.
At the same time will also.
Be more proactive in acquiring topic that includes investments and on in different app stores and worked with larger topic platforms.
Oh that travels I know you know quake I'm glad to see on quota pushing it will trend higher hall, yet, we'll say Oh jeez I can tell you is also a t. though.
Sounds that came out there. We also want my way just dates of omni antisense issue the yours.
So for this part of gross and they acquired confident we will be very focus on the core user retention and time spend and engagement at the same time, our AI powered recommendations system will continue to improve that in that direction to help too.
Maintain a higher retention rate up to that new users.
How much of that fashion, you should be done might you that liana those tend to be how she told me again, Carla yell Bosnians senior queued up for say the media Waco yachts senior.
For sure.
Sure so.
For the which is all that much I think you got killed us young perfectly meeting in college this yes.
So youre, who was IP that essentially an agenda so you'd be done the timing. This was a he NTC where you'll get your competition.
So.
We've we've observed that the new users payout ratio has gradually improved the new users who are coming in 2017 paying ratio.
It's too.
To sum in 2018.
Paying ratio at significantly higher compared to 2017, and we've seen that new user who come in the third quarters paying ratio as also higher than previous previous quarters.
Oh decided on how they likely Josh how young coordinate these on the European cadences, Yeah way to ensure the 18.
Shows either five or so.
Ali I will not creek and order I talk to you all of which owns outlets how children are currently.
In addition, while also to invest in phasing the brand awareness and deliberately will upgrade our upper of branding campaign and this is Bob Pape here for 2020 used aircrafts.
Oh Youre trading you watch out that she was I hope I sound like Canada, while a woman mayorga leases on Wilmington, Yeah, Hi should do Union change and then.
Sure, Yes, yes also way too detailed sufficient holder sounds out thinking Fatah so in terms of new user profile, there's no significant difference between.
New users that we attract in the previous quarters.
Well maturity being young generations.
And first and second tier city with a further penetration in the lower tier city.
From an opinion RCD I will say.
So overall platforms average age are still.
21.5 years, though prominently on how you can get to quantify what Foundationcore, hi, or Tom I'll put on the appeals either Niamh I see you yet I get all the things you I, how the 20 years alcohol Suncor late Villalta, you'll join me on the Easyjet, Yes, just havent publishing finally.
Absolutely.
So in terms of their content preferences as still relatively the same with all users they are into lifestyle Chinese animation TGP and does it add. Thanks. This is beneficial reach you are increasing content supply.
In lifestyle, specifically in large and other high quality content verticals.
Okay.
Definitely to explain it said men.
And that's what kind of behind the trouble on trends.
So Matt.
Hi.
So turning of FY 17, bushel season can go total manner.
Our channel partners.
Certain godel multiply it was a job design.
Hey, Tony Indonesian has to go the other king hydro public unitholders.
Yes, so that each that talk too much on when the year <expletive> here. So first of all in terms that M&A content apply be Billability was never the first one to do and were not the only one.
Who is providing that type of content and as a matter of fact to their number of players including some of that.
Industry Giants, a supplying this type of content.
There is not going up different teams with the kind of what you want to.
So many meetings actually you got shoes that somehow the uses Darcy entitlement supercoms from ways to coordinate you'll do coordinator today.
So for them.
To manage through teams and leaving them.
But.
Our results.
Ourselves.
Especially in the past five years, we have proven to be the most influential platform and our partners.
Across the industry also agreed that it may be really is the most powerful and most influential animate platform in China. Okay candidates. These are the two among the also putting down here to say few who soil Juergen mentioned.
No matter, what those element looking huh.
If he can doctors, who will Anzac nail on those wells that IP the delay bulk wolenzac total delinquency rates on it for me it's evident.
So our advantage does not only include doubt, we basically have all the enemy fan gathering together on the liability, but also our pipeline our preparation in terms of content IP as well as creation content creation teams.
Has also been leading the industry pursue woman. So 10 of our highest single minimal shoes that are really and those are very good juggling scenario should also help me. It you are the $2 billion Hamzah Q juggling Sameer.
So I don't know, Italy will then go to clarify tell me pricing.
So are we aren't we have four confidence to continue to be the leader in the enemy field at the same time, while we see more and more.
The competitors coming into space, we think it that is a positive sign show in this industry has very promising growth future, where also delighted to see that.
Your next question comes from the line of Alex <unk> from Morgan Stanley .
Go ahead.
Got it somehow original.
And colleagues Juliet completely on how the Toby issue, so you'll see it.
I will eagle Twentys on what do you see oncology again.
Sure good year over year dumped steel accelerate all by could you, possibly sands and see too and so when you got in China ad load.
Congrats you should see coming up.
I mean.
You know meal on how you don't have already it's a high made fun Kwan Garden city suits are going to young ku the bulk ownership golf.
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Got it going see as Sean Dong seat answered units as a crisis autumn out.
So we mean, yes, you can actually that's in online. So you are going to need when youre doing all the way way too locally.
Josh release, Mogens Sucre, you showed circle.
So.
Sucre you tissue that accelerates helped by the Taposh.
Took a deeper into jago when do you see so when you show.
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Subsidy press release Mayo does close the door to shoot you could look are you sure. He's got seem that it should be russo answer that paying user ARPU Olympians Sheerness insight.
So recording more on them build silicon so going to direct way more than buybacks you got some do you see our child to go take on quite a revenue stream racial key value the gross margin since you.
Oh I translate myself.
First question is related to advertising and as we noted very strong year over year group acceleration to 80% in Q3.
Given you have a lot of injuries and can be shared with us. What's your plan of releasing more AD products in the coming quarters, especially any any is spot on the or platform that you have a lot of viewership, but have not monetize liggett's.
As some companies I've mentioned that the macro is bottoming out do you expect to release more products and also expect this year over year trend to continue to accelerate and my second question is related to live streaming and new share a little bit more about the trends from about paying users ARPU and.
In terms of monetization or economics of scale of revenue are you at a point that you can start negotiating down your revenue share ratio with.
And agencies. Thank you.
Well essentially going on they go through the piece on bottom he will have about how cali, occasionally who understands that the value from in the ginger.
Well GGR Holden I loaders, and there'll be a hot.
Our 2000 acre what should have relied upon we're going with it.
We like the eventually there will be removed standards, we order.
You go movie or has it she gold Eagle.
How he was.
Just the are a little harder so amir.
She walked you can do order to solve the Nielsen hygiene.
So how do you go faster.
Okay. So that outlet for our business. This quarter has remained at 5% this happened change and in many quarters and we do not intend to base that outlet.
In a short terms and my overview about where advertisement business.
Two first improve our.
Commercialization efficiency and discovery more advertising format that better combines our content ecosystem with our commercialization capabilities.
We really don't wish him the legal work all the time do you.
Okay.
As a woman and goes that Nicholas please on your good he and the single attached and should if you're going into China, how the salary arterial highway syncing woman that add a lot of European harvesting Honda will as I will ask will should have each in the going quite well call U. Nicholas will do that on them.
And we think our advertising advertisement team as our growing stronger and they have starting to find a way to improve our advertising efficiency without jeopardizing user experience and discovering more effective a commercialization math.
There and we believe without act.
Raising our outlet we can achieve a faster.
Overall advertisement growth me.
Okay.
Hi, tease out longer Gohar, yes.
Purchases that are the yell body out unions and alcohol, Yeah, Hi, Susana you said yeah.
Sure Yeah.
The buttons Bhatia, though the Jones, our kids at home.
Yes, we do see some at the macro.
Shifting shifts meant.
And last year and this year, however on Gary the unsettling environment. We are still there were still able to achieve 80% young your growth on our advertisement gross revenue.
Yeah, So deal Yang of our Mahesh your follow up here, Hi, Hi, Tom, but yes, I shall gun optimization shout seems Holly lunch at Lilly and don't handheld.
First of all we have a barrel <unk> improved and optimizing our of our brand advertisement improved our brand awareness and better merge our brand influence, whereas our content ecosystem.
Finally be done that junk and they all Shanghai gunshot Sheila you're shooting generally a young who they seem to equate to a chunk of peak highway lighting high co COO does they own the incidence is putting that.
So because that we have a further improved our community environment in brand advertisement that we can better help to Butte brand awareness among our community has to further improve our.
Our brand advertising efficiency.
I see a seasonally seasonally and how the alpha talking high quality NDP Antagonizes total up to nail Shanghai watch all content Johns Hopkins push it up higher can you talk more shallow walk out lunch Fonseca socially and all the time clock. So we've had.
We've come to I'm relatively new or Mastercard.
In integrated marketing campaign that includes rating brand awareness to display ads to ban dad and influence users purchasing decision to native ads with our content creators and last completed transaction through our various performance.
Yes.
Chose I'll go back out Tom Yes shown up our high said, it's all a sangha going out.
Towards that Youre.
He is sitting still machines that telephone call that that's inching Pat shouting she will be.
The other People's eyes, I won't mention shoes outside Shopify, Shopkeep Leticia, Bob I'll leave that T cell phone into yada yada.
Yes. So you could go toward that shoplifting contingent talk or you don't seem to be standards or the shell washing tied in cell phone call at the end salary TCT. So.
On the performance based ads, we've done the major improvement.
To improved efficiencies one as I in terms of performance AD formats, where creating new formats to better present.
That the advertisement and second is to improve our overall algorithms to resulting in better click through rate and third and to a better further expand our customer base to higher quality customers are higher quality advertisers to into.
Our overall efficiency.
Oh, Dolly Alianza young quarter the Gulf.
Hi, just how they are seeing thinking it would have thought that these aren't the longest searching tie the single fashion.
So looking ahead to 2020 were still very confident to achieve a higher gross rate.
Advertisement business and at the same time, we're going to explore a better ways to present, our advertisement that combines our overall content ecosystem, especially about shifting yen kill sander sometime so sometimes should.
And keep at least.
The current growth rate of.
Q3 s advertisement.
Sure.
The great trouble <expletive> , we'll need to know treaty mugard stability, we usually.
That's true put Sheila kind of how will the border you go you aegis boxes up at the device or it will that you can be summed up.
So are are like rock housing our app.
Leibrock passing business has upkeep has been up keeping 100% younger growth rate.
Hoenig going to boil down to about two to.
Give me your kids automaker and water sources into Oneq can go to Bush's how usually go digital highly eager to haul others, who will do go close in the LNG energy looking how that seems on the whole quit aegis. She's award. The go to proceed with the writing losing the Eagle you touched a wellness.
News on how to get Williamson touching the Nascency, maybe you so youre.
Negotiating the inquiry on of them down so it all into attempting to.
Good Eagle quota the whole border easier.
They are on the film some equitrans ancelotti, so we'll achieve weather negotiator war deal Jordan.
See you soon thank you looking at age it should what she said those are going to shipping and it comes on.
Hi, Good Judaism bullet.
In the past a lot of people house.
Yeah.
Mr. Chen that.
China Light broadcasting.
Industry, it's getting more and more competitive how work and as.
Well our position in this landscape I missed chickens response has always been were not.
The position to comp directly compete with other light broadcast platform on the contrary Billability Slide broadcasting is more of a natural extension of our current video platform as our user grow into bigger scale, our lifelock happen categories has actually.
Naturally expanded that includes the v., two where content categories that we talked about and also games and other.
Hi Entertainment.
Good luck passing category.
Flu he cannot go to be done season mail sort of the women's shoe wise here so without it.
Oh Wow titled It's imperative that should do that seems on comment does a woman the trouble here, we're going to guys. If we don't income to their father.
So in the past we have haven't spent a lot of money in poaching stake.
Uh-huh led by cutting harvest or spending too much marketing dollars to promote our like broadcasting business. However were still be able to achieve a relatively very sustainable by broadcasting.
Turning to those who quit who quit some glenda jager two quarters ago solutions assortment quoted you could do some downtime.
Hmm.
In terms of that yields related income in the past.
Indeed with that caught a portion that has staying relatively faster growth to you. It does not fit on Tim Conder you go you, who the eagle sometimes lead partially as a door.
For the only thing the lack of business I was wondering.
Sure because people are really has a very healthy user ecosystem. That's the major reason that Cox, one mark skills to come to our platform to work with US, let's say par the titled Apart I assume it should nickel to you. The good Tim colleague of other suite of how does the company will not recur Nichols.
And John you will note female you cash as we possibly can you thought you Golden Eagle will build sleeve, Ohio to successfully completing the pendulum is we've hedged at woman seemed to encounter.
So in terms of that revenue sharing with you know because in the very beginning the odds that reason.
The reason that we are introducing our welcoming guilds is to achieve sustainable growth not to fly our revenue.
To a spike in the short short our time, so and the first we set up our revenue split with.
As at a relatively healthy and sustainable level.
Yes.
Ladies and gentlemen, just a reminder finished we often participants limit their questions. Just one other time. If he has set of questions. Please press star one it again to reenter the queue. Once your question has been answered. Your next question comes from the bottom of Daniel Chan from JP Morgan. Please go ahead.
Those are quite a cautionary yet you hit on counting water needs a wouldn't use require you see bamian quite on them and go much I know, you're a woman's of what kinds of all the all in yen.
He did.
The good thing quite yet.
Sure so eager to on shale or the total she a bulk left you odds and though.
Well, we used cases.
How do you have us a woman scenario.
Good tableau sounds required that the pipelines about your dominant force voice or they are quite different not so much of those should be job.
To this over and you had I will be about a whole bulk will one day or shooters.
Yeah, Yeah, I would translate myself.
My question is on the game.
In business outlook for 2020 .
So firstly you can management elaborate on what.
What's our expectation for our key current games in 2020 , including such as the F. Geo Secondly, so whats.
Key games, we have been a pipeline what's the scheduled for launch in 2020 . Thank you.
Okay, Nick you anywhere jewel kids assortment negligible, she's a little difficulty so either positively or negatively affected our south African question FCO. The somehow what's earlier than go dosing with also that feel the telecom Ping harder, Okay kind of defense you do <expletive> just feel from the into the issue.
Sense about the only got them download the app store growth inbound deeming arch in the problem with just a few to Minnesota and Doug. So yes, that's about so you could be somewhat dealing with on that.
In terms of at cheap.
We are happy to share that apptio still at a very healthy state as we mentioned during the.
Earnings call that asked you in the third quarter has reached number one and China's I'll ask top grossing chart and where were delighted to see the over the full year 2019, Aptose grossing essence has maintained stayed relatively stable level compared to last year.
The whole Nick.
Well, you know ago woman, so to play with Google to Hello, Wheeler 11 year old Navy is auto where the tundra you guys, a little bundled with something that you it.
Additionally, switching Homer to the should have seen some de was 800 just to.
Founder and CEO , who potentially ship out should go to do our to do you see that will do just that the did the whole DRD two suniga tune depends on the Knickerbocker dollar cut to the bulk of the I raise we can probably neutral at tusa <expletive> . How are you starting out with any other so oxy and you'll see the news to talk with adult do the RC.
The whole ticklish <expletive> , Nicholas Chen with an acre.
Regarding each own yeah arbiters years, maybe that's me look we more to the Wheeler high with a quota you base architecture. So it's hard to whom he cannot less useful to show has some agreement. So we'll edison yet to be sufficient arguments on them.
So enter in terms of future performance, if our game business, we remain very.
Very confident that astute here number one the macro environment first of all they're still a lot of younger players.
And flying.
Ideal ideal titles that simple for their game play and their preferences and secondly, according to the latest I Research report.
That China's hcg gain market is forecast to be reached to be to reach 62 billion RMB by 2020 that is more than doubled compared to the market size. We have this year.
We have that gross at the market and grocers that demand that a number one reason.
Because it's a hit those are sleep disturbance, Bob as you move he was more than they were the agreement with area like hundreds with these I was hopeful you value should put you could you talk shows you are the two anyways.
Roland tissue quarter woman.
You would eagle patterns.
So when they see the habit.
I see that you should see could be over the you'll see that you will see you go philosophically how would you.
And according to our internal research about half of our existing user will actively search for games that they wanted to play and as we further expand our user base, we are very likely to get the barges audience.
Says gain lovers in China that is out very very ideal user base best position for future gain growth.
So do you only it was here with us or two that use a lot, but something other than go about you go well the combos <expletive> sometime you will see the goods to the unique in that book Thats, all those who are out in any country or see while the other Hodges capital.
Google because as you talk about Philadelphia pneumonia, you'll hear when you didn't it looks you, though you compete on price was summed up the with it.
There are two things were going to focus on one is to increase our eight content supply. Our teams have thought number two as quickly expand our user base as long as we are achieving that.
Two steps, where I'm very confident about our future growth.
Got any of your dollar to dollar <expletive> tooth Annuitized went with automobiles hardware centric wonder you will see the little bit the whole just how was that when it was either but you don't see or Bob.
Not all about hall, <expletive> treating or something.
Because it didn't help with essentially zero the other than just the woman that we like the.
Sounds in the bound velocity.
So as you may notice that we have over 30 exclusive exclusive license pipeline and among those 38 of those as already have a permit to release and that includes.
Girl Cafe gone too that will be released today and the furious gamma that will be released in the next two month. So definitely we should that Saddam negotiating who knows if it helps further solidify the July Babu, which will make it was easy that he goes into the thing that so both of the title has has has gained.
Very positive we view internally, we believe this two titles will become a milestone.
Our future came revenue growth.
How are you going to sequentially. Good you get the and I, just wonder woman surgical quarter culture down you'll see the second tourism, yeah, sorry, she and her will no longer. So that's just not gotten those needless war for talent he wishes for purchases.
Does it seems that will not cause have confidence in target.
Children that.
Heart as of yet how should that will.
But he or she not you could you wanted something which is that those the home.
And another thing to notice you called out is in terms of domestic game pipeline. We have got state improves our pipeline in that category relatively can't compare to 2017, where a majority of our pipeline.
Important games. This this is very positive for number one.
Gain approval perspective, and second as very beneficiary to for us to further expand our oversea market outside of men in China. We can promote this time.
More regions.
As to how does your idea about what really we like the.
Just a not parallel Daniel will leave it was he is he was under no duty you go live when the purchaser so or above that gives us very good confidence to further grow our.
Good.
Okay.
And next quick question answer session I would like to turn the conference back over to management for any additional for closing remarks.
Thank you once again for joining us today. If you have further questions. Please contact myself chilly out they literally scenario, our director or TPG Investor Relations our contact information for both I are in China and in the U.S. can be found in today's press release have a great.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.