Q4 2019 Earnings Call
Ladies and gentlemen, good day and welcome to the ability to leave 2019 at fourth quarter and full year earnings Conference call. Today's conference is being recorded.
At this time I would like to turn the conference I bought to Juliet Yang Senior director of Investor Relations. Please go ahead.
Thank you operator. Please note that discussion today will contain forward looking statements relating to the company's future performance and our attended to qualify for the safe Harbor from liability as established by the U.S. Private Security Litigation Reform Act.
These statements are not guarantees of future performance and are subject to certain risks and uncertainties assumptions and other factors. Some of this risks RP onto companies control and could cause actual results to differ materially on those nation in today's press release and is this discussion.
Hi, General discussion of the risk factors that could affect believe at least business and financial results.
Included in certain filings the company with the security and Exchange Commission. The company does not undertake any obligation to update forward looking information, except as required by law.
During today's call management will discuss certain non-GAAP financial measures for comparison purposes only.
Our definition of non-GAAP financial measures in a reconciliation of GAAP to non-GAAP financial results. Please see the 2019 fourth quarter and for your financial results News release, he sure earlier today.
As a reminder, this conference is being recorded.
In addition, I missed her presentation and a webcast replay of this conference call will be available deliberately investor relations website, and I are debility dot com.
Joining us today on the call from Philly releasing their management our Mr rate Chen Chairman of the Board and Chief Executive Officer, Ms. Colliery Leach are women of the board and Chief operating Officer.
Mr Samson Chief Financial Officer.
I will now turn the call over to Mr. fan, who will read prepared remarks on behalf of Michigan.
Thank you.
Thank you everyone for participating old fourth and full year 2019 earnings conference call I'm pleased to deliver todays opening remarks, I'll get off all the time to.
It was held in order to what I couldn't for model year will be the beauty with remarkable and I. Both girls 12 content user base, we significantly he has a lot and the team has done an extended <unk> problems offerings.
<unk>.
While we remained a leader.
Im Unfortunately the users.
For me is also beginning to be recognized as a mass market product offering that appeal to people across different in the region.
Meanwhile, we continue to post a friendly active sticky community with high engagement levels, because you're right.
Making BBB.
Extremely unique and the competitive player in China bus growing into too many industry.
During 2019, we affirmed do the growth at our key strategic focus and really so I mean your target for the next two years to 200.
I think I tried to trying to what.
I'm pleased to say we on the right.
This exciting go.
With growth of Yeah, Hi, note with all fourth quarter results Formula Solid Foundation bought to your growth.
[laughter].
I mean, this girl by 40% year over year, which I recall <unk> hundred 13 million users.
Had we not to screen bidding in the fourth quarter two saw the 80.
Well I may use grow at a faster pace of 46% year over year Richa Hendry into 16 million users by the end of Q4.
At the same time committed engagement that all time high.
Oh do you increased by 41% year over year to such a emailing higher though and we all girls.
And user spending and average of 77 minutes al Capone per day, excluding generally talk.
They start to see once again demonstrate the high quality growth would always having to deliver.
Paul talk real strategy and brand campaign, we roll out for our new Yes got all the most good for knocked off 2000 lighting the MACT December 31.
But that Kid.
For the tumor showcase celebrated the call me I try not jersey, well into India Twentys as 30.
Deeply frenzy our society.
And the Mezz cream ideal.
You bet well the images if it has quickly become the most talk about New York Carla you try to the play docs have been good view field over 90.
Million tonne generating units, we made and what are your trial as well as massive media coverage.
That's successful Scala not only except for part of understanding.
People's interest, but also in process older generation going into 17 and 18.
Opening beauty to a much wider audience group.
With your far reaching brand awareness of our company.
Thank you 20 at all.
To that good stuff, especially as we walk to grow up when a broader scale.
Without platforms, including friends is among multiple generations, a mass media, we take our social responsibility very seriously.
Especially during the recent according the virus outbreak.
Going to operate we took immediate action to support a depend again depends on mix, including donation off I'd be 10 merely and the medical supplies to hospital they pulled it.
We also believe dot disseminating timely and accurate information is crucial.
As such we partner with official media All day 50, TV news to provide 24 seven virus really didn't use and inflammation. Yeah addition, we partner with over 60 top universities and education groups, including Pigeon University, just like the diversity and to help.
Two lautenbach recall in the open causes to support continued at occasion for students who are unable to leave their home.
We also that decimated libel cutting triangle appointed by Shaw, Hi, Municipal Education Commission for K 12 dog students to continue with your school.
As big event progresses.
Well continue to evaluate ways because support our users doing as Todd.
Well the extension of the Chinese new year holiday hundreds of millions people have stayed at whole.
Spending more time on the Internet.
Billy Beale, we had to come many People's was twice on entertainment.
The same time, we are seeing and elevation in content supply as people now have more time to quaids content.
Based on the income increased Tom spend our platform have you the momentum we have seen so far pure one is shaping up to be one of the strongest first quarter, our corporate history.
We are also improving our ability to monetize outgrowing user traffic in the fourth quarter. The number all paying users doubled year over year Richard April Emily.
Our paying ratio increased to 6.8% compared with 1.6% for the second quarter two years ago.
Revenue per M, who award on be 15.4, and the non-GAAP revenue, probably I mean, you was RMB 8.7.
Marketing, 24% and 83% increase his father or it in 2018, respectively.
We continue to see considerable potential to cover more truck to paying user bringing them into the fraud, all active sticky community.
Total revenue for the fourth quarter was also strong.
Again, beating the top end of our guidance.
Total revenue for the fourth quarter, well up 74% young year Richa I'd be to billing.
Largely driven by our known gun business.
Through our increased the monetization and that's classified revenue streams, our gross profit margin.
I've also come a long way.
All 13.8% in Q1 to 19.8% in Q4.
We move through Twentytwenty, we expect to continue expanding our top line and the cost money.
With that overview of our improvement across our probably been this matrix I'd like to review some of our activities and upcoming initiative designed to further grow counter community at the commercialization capabilities.
It's going to be out.
First we will look at our content.
Would you be it the route and the foundation of all good. It's also the mosaic different have way to generate high quality content.
Lee low cost.
In the fourth quarter PUGC continue to be our probably assault foregoing content library accounted for 91% volatile told we do view, our increasing brand awareness friendly community involvement and improved platform services.
Continue to attract more cone inquiry to us to be debuted in the fourth quarter about 1 million active calling equator upload your 2.8 million videos, mostly.
But then 66% year over year, respectively.
With the development of mobile deluxe is an adoption Fiveg technology, we believe the video industry will be one of the biggest the beneficiaries across all sectors.
Really BD particular point to be benefit with fiveg potential to revolutionize the virus way, though how people produce and consume content.
2019, we felt very clear trend or more diversity, our wrong content and the comment Craig.
Helping us to I talk more mass audience with Verizon taste.
While we were amended a clear leader in gets an enemy related content, we continue to grow our lifestyle and entertainment offerings.
I will always Steve we had widget the many new stock content creators writing those verticals.
The law Fuji and the technology continue to get popularity in the fourth quarter.
We also proactively expanding into other pen entertainment verticals music is what not that we.
With this universal appeal music is welcomed by organizations of all different sidewalk.
Further expanding our content creators and enrich our music offerings, we have partners that Weve Tencent music and the most recently with Britain old record label Funny music to bring new experiences to our growing viewership of music lovers.
We're also looking into other universally attractive categories, such as celebrity fashion study and then commission.
To reach even broader audience.
Our smart content distribution continue to play a vital role.
Content ecosystem.
Greencrest Cobra high quality content and the talented equator speedy fashion.
As I'll Echo rhythm and operational capability to improve the number of video that achieved 10 million views grow nearly a full in 2019 compare with.
2018, the motivation to showcase their work and that attracts loyal fed BT BD ideal platform for content creators.
We continue to support and encourage alkone equator on the multiple levels in general are Twentytwenty, we hope that really beauty top 100 clinically to us out was seven day in Shanghai.
Well, we celebrate outstanding achievement of leading content creators virus categories.
Our cash incentive programs continue to motivate our middle layer content creators.
By the end of December to southern lighting over 220000 can equate to join our Pogo.
While hot high quality and original content creation I'd be rewarded with cash bonus based on the positive feedback from our users.
We also provide an increase the number of online and offline cluttering.
Specialists as well as access to attractive to help Newark on inquiry to grow at a four.
Turning to our of mutual aid generated video GB OTV strategy had to do broker.
To form IP assets and the second to convert visitors pacing.
In 2019, our EMEA for Titan enemy, so properties animate for the first time.
And they made the largest RGB logic goes on beauty.
With a growing viewership and that audience group hunger for new content, we're excited to bring new titles Osiris total community.
In November we host our annual made by BDP the event, highlighting our uptake and the new launch plan for 40 Chinese enemy titles throughout Twentytwenty and trying to 21.
This includes 13 project update I tried to award we know five by fewer the three body pulpit centene and the 27, new titles, including heavy officials briefing, Tim one simple legend or mortal Ascension furniture was interest and the daily life volume Auto Kings Hill on that you're comfortable. Yes addition, we see.
I'll hit the both in the depleting enemy and our commitment is many of the popular enemy titles also the top selling you both our comic platform.
In a documentary and a variety show department, but the larger to see our self produced an IPO into titles getting traction in the fourth quarter, we partner with Shanghai Media Group and Coproduce police already shall Hyde Guardian.
Documentary about local cleaving, Shanghai quickly getting popularity among young people.
The Hayden Kingdon of China, a phenomenal documentary that Weve Copa deals with National Geographic also released during the fourth quarter and the received a positive viewers.
As we welcome aboard diversified OTV titles community, we are accumulating a library of valuable IP I said Lyceum attendance late bring us.
Conversely, our growing traffic to paying users our premium membership, which offer additional exclusive and the best content to paid users continue to photos in the fourth quarter.
By the end of December we have 7.6 million valid put me members up 111% young yet.
While user growth as a tremendously high rate all committed to density has not being diluted as a matter of fat continue to through with high engagement high retention and type of.
In the fourth quarter, we have several hendry, a 10 million daily video views of 63% year on year in Q4, our user generated 2.4 billing, mostly infections reported chest combat life and the beauty BD moment, both up 141% down here.
Each user on average follow 30 full color inquiry to compare with 26 for the same period last year.
The Unparalled light at the level of engagement and the connection Amal users American beauty beauty, the most unique and the competitive.
We do community in China.
Oh, no official membership hold but it's also on the right.
At the end our fourth quarter, we have 68 million Valeo official members will pass our Hendrick catching up 50% year over year. This group of users 12 months Latino rate remains high as well.
That's about 80% this continue to be an excellent indicator of the quality of our user growth.
Turning 12 commercialization progress is less closer look at how again.
In the fourth quarter revenue, probably mobile games were up 22% year on year to RMB 871 million accounting for 43% of our total revenue.
We continue to expand our reaching gaps.
Covering different genre and again place I'll exclusively licensed games Fig order last year will continue its popularity doing fourth year of operating in China.
In November we also began operating the exclusive license title go configured to making a big slash in China mobile getting them.
Yes.
The newly launched almost at age again, the fewest Jamar was also a hit a mile enemy Fred following relief in January this year.
As part of getting behind your strategy. Our jointed operated can also made meaningful progress in 2019.
With increasing density.
I'll get lover.
Gathering our platform really busy have become a top channel to distribute it you see a high quality cabs.
During this year, we had multiple success with our joint to operate again project, including OCC Nice way Raven folks braids market maker.
An audio which is a cut to get.
Revenue generator. The bio jointly operated can now account for more than 25.
Our total given revenue.
25% sorry.
Looking at how again pipeline, we have over 30 exclusive license game light up for relief.
Which have already again regulatory approvals. This includes two exciting chip in Israel, playing games Princess co net income oriented and limited wanting to you and which we plan to roll out in the second quarter.
On the Jauntily operating cash fraud, we continue to work with leading camped over a person to bring our you the premium again.
Such as me high utilization you too.
Shanghai team.
Additionally, leveraging our expertise and understanding of the if you culture, we plan to expand our gas distribution outside element in China.
The growing our revenue streams and increasing our global reach.
Turning to our libel cutting vast business, we have excellent growth from the second month, and we believe that they are the deal or potential to broaden our offerings and attract new users.
Particularly you live broadcasting.
Natural cost overall without video business platform and our user base revenues for live broadcasting VAT increase by a head grade at 83% year over year richer RMB 571 million in the fourth quarter.
Our growth was driven by increased contribution for all libel cutting Permian members more and the covenant business, we continue to build our games and entertainment content for live broadcasting.
Well, we see considerable dormant for growth in Twentytwenty.
China, the worlds largest can market and E sports is getting more and more traction among young generation.
Demand for Premier Youth sports content and high and the we are poised to deliver.
Our three year exclusive license for live broadcasting rights for the ward with no.
Hi, Good work championship placed us in the center of the East Baltimore.
We have 10 can being held in our home base. So high we believe we can maximize the impact of the getting even further.
On the Pet entertainment from we had secured a contra with will have the China's top entertainment halt funky more who has quickly one over PDP list users.
Top level content and our new host additions we have now completed our new live broadcasting Powermate and they are working to grow the as part of our business.
As for our advertising business our community.
Considerable attractive audience for of a tighter.
Our brown when this is on the rice and we continue to be the go to platform for the go don't change the consumer cohort.
With the second this with a significant advantages we are confident that BBD will remain at our top choice as advertising partners look to allocate their budget for the year.
For the fourth quarter, we saw increased the sales in our tidy despite the challenging the Michael.
Environment.
Revenue for our tight increased by 81% year over year to RMB 219 milling.
[noise] governed by our Heaton throughout awareness and if it and offerings.
The top three industrial verticals for Brown, a tightening in the fourth quarter, what can you commerce at a food and beverages and the top three verticals for performance based advertising will again at occasion and E Commerce.
Here's our successful in equity markets to pull one with Cabo and see model for 2000 double 11 double 12 shopping events, we continue to deepen our partnership with Alibaba in the yen how about your lossless spot that really be familiar Carlyle you bet. The gala why success by exceed taobao as expected.
Good highlighting our deep understanding of our users an increasing awareness of beauty BD, Brad primary platform for all the Tyler.
We look forward to further collaborating with Bob and other industry leader that showcase the strength of our far reaching platform. In summary, we have reached an exciting fresh employed with have moved into the re or mass market appeal for Twentytwenty, our strategy relies on key especially initiative that border.
Our content offering grow our user base any pull our commercialization capabilities.
At the same time were dedicated to putting our community first by representing at varying our users at the kind of equator, where we're continue on this strategy with goals of creating successful growth and long term value for our community and our shareholder.
Thank you Ms. Chen Remoxy and I will now provide a brief overview of our financial results for the 2019 fourth quarter and full year. Our total net revenue increased by 74% year over year to RMB two billing excising the have exceeding the high end of our guide either.
Our non-GAAP revenue made up nearly 57% Alpha total revenue.
In the fourth quarter across 38% in the same period of 2080 with more than half of our revenues coming from multiple sources, we're pleased with our commercialization progress and the implications of this diversity.
We also converting more and more outlet traffic to paying users the aggregate number of monthly paying users increased by 100% year over year, reaching 8.8 billing in the fourth quarter.
Cost of revenue increased by 68% year over year to RMB 1.6 billing revenue sharing cost a key component of cost of revenues was RMB 705, many 63% increase from the same period in 2018 gross profit increased by 102% the over here, but.
390, Emily we are.
So starting to see operating leverage for our diversified revenue streams.
With more revenue contribution from our higher margin business, including advertising and coal operated gets the way our additional income from premium users. Our gross profit margin steady improves throughout 2019, reaching 19.8% in the fourth quarter.
Total operating expenses increased to RMB 818 milling up 68% from the same period in 2018, selling and marketing expenses.
The 413 million, representing 127% increase year over year. The inquiries were primarily attributable to the increase channel and marketing expenses associated with really BD App and brand equity promotional activities for offline event that Twentytwenty New years Eve Carla event for example.
As well as promotional expenses follow mobile games. The increase was also attribute to the increased headcount in sales and marketing personnel and the increasing fulfillment costs associated with our E Commerce program.
DNA expenses.
60, milling, representing 6% increase year over year.
R&D expenses were RMB 200, and fortify milling, representing 60 increase year over year to increase were permitted due to increase how call. The R&D personnel and increase the share based compensation costs.
Net loss of what I'd be 387 meeting, but first quarter 2019.
Was RMB 191 meeting in December 2018.
Adjusted net loss, which are non-GAAP measure that if crude share based compensation expenses and amortization expenses related to intensive asset that queso been this acquisition as well the RMB 337 million compared with RMB 152 milling. This impurity, though 2018.
Basic and diluted net loss per share why would be 1.17, adjusted basic or diluted net loss per share well on b 1.01 for the full year off 2019 total revenues increased by 64% to RMB 6.8 billing revenue from our guidance increase not 23%.
RMB 3.6 billion revenue for live broadcasting vast increase.
Hundred and 80% to RMB 1.6 billion revenues from advertising increased 76% to RMB 817 merely.
Revenue from E Commerce, and other increased 403% to RMB 722 Emily.
Gross profit increased 39% plan B 1.2 billing loss for 2019 was RMB 1.3 billing compared to RMB 565 million in 2018 adjusted loss for 2019 was RMB 1.1 billing compared to RMB 377 million.
In 2000 1980.
Basic and diluted net loss per share for 2019 with RMB 3.9, $9 deal plan Fiveseven compared to RMB 2.64 in 2018, adjusted basic or diluted net loss per share will be 3.30, our U.S. dollar bill planned for seven compared to RMB 1.8.
For 2018 as of December 31, 2019, where the cash cash equivalents time deposit as well as short term investments of RMB 8.1 billion compared to RMB 5.2 billing as off Decemberthirty one 2018.
To further grow our business, we plan to improve our monetization by leveraging our coffee the ball and growing traffic. We also see benefit in further expanding our diverse revenue streams and continue to include revenue contribution Perama you.
Longer term, we believe our monetization effort high paying user scale and the conversion rates will yield improved what's a lot.
With that he might we are currently projecting net revenues for the fourth quarter of certainty to be protein RMB 2.5, Billy and RMB 2.20 billing.
The above outlook is based on the cover the market conditions and reflects a company preliminary estimates, which are subject to change, particularly in light of the uncertainties related to how corona virus developments.
Thank you for your attention we were like now to open the call to your questions. Operator. Please go ahead.
Thank you, ladies and gentlemen, who will now begin the question and answer session. If you wish to ask a question. Please press star one on your telephone escalation entity.
If you wish to your question. Please press the pound or hash Kay.
For the benefit of all participants on today's call. If you wish to ask your question to management in Chinese plays immediately replete repeat your question in English.
Your first question today comes from the line of lay Jones from Bank of America. Please go ahead.
Hi, Ken just did this all of that you Oh, yes, yes, yes, do you guys.
Yes.
Element Gogo yesterday.
Okay. So you guys say youre, saying on the Ocean what would you see yeah. She's done one does this downtime that will not only to be done also do you cannot well that she says that the deal that you have paid out sometimes I will now there are lot tiny real well David.
Yes, you should they think Oh.
Oh, yes, well just energy level.
Wow.
Well the main Cheney and no doubt once anything.
I just know at the bank.
My first question yet right.
Virus outbreak wondering battery management grew share your thoughts on how the outbreak impacts our eight.
Our relate to that can you give atmel Tyler on the user can influence what they're actually after people back to merge and expand you, they're slowing down and how should we look at our full year.
Thank you.
Okay, no with identical equated to an extraordinary each in Uganda, and they're the ones here.
So called reach emerging Hong Zhao will lead you to either soon so they are he then we'd actually argue that mean beat.
Colombia, Colombia, nigger pressure, you'll get that comes out.
Women you meet woman year will surely be outdoor mastery, though hard to put on the year will show each in the yeah views on either didn't sound the year, we'll anyway. So would it would trade anyway, you could share that I will show to quit showed out meaning that especially appeal, Georgia.
She shell and the eurozone nigger should internationally and to create another Hugh.
Are you way.
Yes, actually yes, how many you can do it suite of Hydrotreater here with her she goes out.
So you talk a little harder for what my going away.
But she to Peter Jumpy income for that.
Okay.
Taking the virus situation under consideration we are currently projecting our Q1 total net revenue between 2.15.
The into 2.2 billion, and which has considerable growth quarter over quarter end year over years, and given that we have multiple business lines from different business lines E com as speakers.
Two.
Logistic delays they will be some impact related to how much we can.
Look.
E Commerce revenue in the first quarter, however, compared to other business, that's more related to our traffic growth such as.
Like broadcasting gained and.
We did.
Our positive.
Impacts.
Extended topic over all week.
In general we don't see much of the impact to our overall our business.
Paul Clegg, neither you'll wound up from where you make us I wish all Susan.
Reaching sound argues that I've got a taxable yet on the usability RK Eaton CJ divested Columbia instrument.
Please probably opened orders again to the Saturday it yourself.
Shipping down the nickel equity on the floor slide or do you want to hear delicate woman Nick that easy to the what does your who don't does make a full do hi, it's true that your order says how long how Korea to social media and told me which either.
So given that the extended holiday people are staying at home.
Sure.
A month.
The Billy has become many People's first choice for online Techtainment consumption and we've seen so far either it's a user traffic user engagement as well as time spend has.
Ben beyond our expectation so overall.
Tenda is quite positive.
The only run equipment were fully hole you immediately south deal what is the product candidate her woman clinician Nigger Sei Jin Yan yen the although it's only in the Jewish EWP was under the whole needless to say that encourage people to caught inserted a whole hunting and an acre.
Good on some sort of good on that push to negate taking hold off on me on the which should I say, here's what I see warmer did not eating and make a hashers neglected.
Retail partly.
She's yet.
Regarding the question about whether we see a declining users after people are narrow going back to work.
The answer is that easier gross.
Our primary business focus.
2020, and we don't rely on incidents or occasions site.
Fire outbreak, we do have a designated to thorough plans to out the years to help us to achieve that easier.
Food coordinator coding Nico just to you'll go down that we're going to come in place on the that's you know dollar Theres a couple of questions I'll pass it out order board.
After people going back to work for sharing that growth rate at high as when people are staying at home, but it won't be drastic ups and downs.
Okay.
Okay. Thank you.
In wet AMD.
And.
Thank you.
Your next question comes from the line of Wendy Chen from Goldman Sachs. Please go ahead.
I can tell how do you can truly I think okay.
Yes.
In the here.
Hello.
Okay.
Yes.
The other thing.
Yes.
Hello.
Check what comes out the kicker.
Right.
Now what that now you look at quarterback Mark woman do you go down.
Uh huh.
Thanks.
For taking my question. My question is about to use your growth outlook.
We have achieved that 130 media and your targets. This year I'm wondering what's managements updated feel our user growth target for the full year 2020, and as we are targeting with black market appeal. It. This year what is our outlook for our.
Gross addressable market.
Thanks very much.
Yeah.
We'll now or something.
Hi, Dakotan work to the woman shorting, the nigger Aarding Aarding Anthony Yes, we're going on.
Romer already Harding end.
We are sure you get by either I may you RDR, he and the move closer are they argue there may you.
You guys. All has a dollar neighborhood homeowners will pay about machine to machine Nigger went home trigger you put on them.
As we communicated with the market before that we have set up our.
Go for Twentytwenty to be a 180 million and 220 million for 2021, and we have done a lot. It would have conduct lot of efforts and add to help us to achieve this goal and so far it all looks like.
Progress is well on track.
The U.S. NATO sell woman socially cutaneous your bigger.
Correct.
Telephone girl module and the higher freight on closer you'll get out Slater Hodges you should that how color you could end up with deleveraging Hamzah will Missouri, outweigh pop woman, who did slowdown bulk or.
Sure shoot Autoliv toy woman traditionally our that you're going to make our two Italian conduct is a core geological team to film you'll go to Douglas will do before pressure woman does take the field Georgetown should have views on the with one views on the who don't nigger patterning capability to do it.
How does your volume and it was on things would go to me because there was nothing on sourcing in quarter $2, Hyundai Geomantic or should you thought you.
Father.
So while we are.
Quite optimistic about our user growth plans at the same time will also really values the quality of that route and the past historical data also suggests.
Even though that we are on a very fast track. Your gross we have maintained high quality easier for us as well as.
Hi community environment are you just time span retention rate aswell as the interaction levels has all been quite positive.
Hi.
Faster than our EMEA growth.
Indicating the quality of our histograms. So this is.
Rendered were hoping to continue to maintain throughout the year. They are to tell you England's without assortment issue really atones nager touches Pakistani economy, and Saudi build yourself you faded RVP was warmer so good color you go either.
The good you got summed up the whole some quality with you to that okay.
Future format to hear cellular trivial. So you will who pay the Saudi good firmed up you walk on the core competency in Saudi to conduct Patrick all your.
You are going to others.
So at the same time, we are also focusing on improving our commercialization capabilities.
There.
Several metrics that we see very positive Chen.
We are paying user conversion rate as well as our traffic related business such us.
Our advertisement revenue growth there all quite up very very positive higher paying user fro more than doubled our.
Advertisement revenue grow 81% here. So all of this nature are suggesting we're also making a very good progress.
Improving our commercialization capabilities.
So he or she is in that the at home and Uganda, Nicolas or the other thing.
Well then would you know so do you find ways Yorba Linda cellular you go Saudi really fit on private.
So.
In summary that we are quite confident that to a while maintaining a fast user growth trend will continue to maintain a high quality of dark roast maintain very friendly and tight embark community environment, while simultaneously improve our commercial.
Capability.
Your next question comes from the line of Alex do So China Renaissance, Let's go ahead.
Sure.
Sure.
Yes.
Well cannot.
So.
You too John.
Yes.
How do you don't usually shop.
Absolutely.
Yes.
Yes.
Okay.
Hi, hunting and golf.
Sure.
Okay.
I will jump.
Well, that's you're talking about.
My question is advertising business.
Note that fourth quarter advertising world, It's very robust and also the first quarter guidance is also very solid.
The management share some color on our advertising business performance in first quarter and also for full year 2020 could you share some update on advertising versus your initiative.
[noise] business.
Sometimes on the line cells they concentrate on top of the assisting said sure that's econ Dalglish Yoshi.
Or you can go though so jones outlets in coffee shop.
You would salvage I'm glad you much like you suddenly nobody out you know how close the year was yes, you should hashish agenda cultural initial job. She just diligently Joan Payson Siggi, you'll see that want all sounds okay.
Please I'm wondering how you.
He balancing class action suit absolute dollar Toby.
John.
So.
Historically.
He has been.
Very strong interest comforting customer.
Converting to be related business.
And we've seen a very strong conversion in terms of many.
Assumptions.
Putting our arcane slight broadcasting and advertisement business. So we do achieved very solid growth across all business lines in 2029, and we feel quite confident that well.
This business has great.
10 show and during the fourth quarter, even onto this challenging very challenging macro environment, we were still able to deliver 81% here advertisement.
Oh sure Asia Pizza.
I show, the helping patients out lesion tivo that he show.
I'm going to you Chantilly adventure Yahoo fashion.
That is she any kind of rolling out to you only eat into vocally kantar well go to be done alliances literally shipping passionately.
Yes.
These are yet again does seem to get some layla sinking five older people that being tied yes shipping hydro in yen Ching Tao, though John Allison.
So as our brand awareness continues to grow we have made quite big.
Impression.
On our advertisers.
Vertical content platform to amassed in fast must have.
Channels to reach young audiences. For example, this year, we've seen some very clear 10 stat that deliberately has become the first choice or a lot of new product launches PRASK online past conferences and all of that is.
We've we've seen that advertisement.
Advertisers budget is shifting with the movement of our users.
They tell me I'm curious how should I follow me at Lake Shore, well also their time teens actually how should I think yeah without missing something this I'll be glad illusory should outweigh tool should be that causing tied up late.
So starting from Q1, we will adjust and they continue to improve our advertisement overall strategy as well as pricing and efficiencies to achieve.
Sustainable growth.
Besides yet Latino you the tissues diesel TV show up on how should we really the casual solutions on a leader to show.
Should the U. backlog in Saudi that he show, how I should say I'll young.
Josh pollutant, you'll find yet.
Third and quite importantly is on the technology front, we'll continue to invest to improve and revolutionize our.
Operations efficiencies to improve our outperformance space advertisement.
Second is to improve our click to ratio they've got to your 2000 Ali. So he is our ollie's accuses Oklahoma Golly Linzess Shashi hashish assumption.
Bulk while our young Julien.
Yeah walkway shop dosing Lucky doesn't do that so I was a coupon transact central and Latin deal I wish I am showing its how tula Allied Hyundai the key surely will they say, they're not even though it's all shouting algebra shit.
That's helpful and merchandising either starting Arlington.
Way Syed Ali Baba shop, he shockwave kidney function to the hotel.
So your question regarding our collaboration with Alibaba say 29 team, we have established quite a lot of new projects and then and collaboration.
I mean double 11, double 12 shopping tunnels and Taobao Street asset austerity exclusively.
It really didn't listen easier Scala, which.
Overall effect has.
Ceded.
Exploitation.
So far weve.
We think that partnership between Alibaba has meet or exceed even exceeded our previous exceeded expectations and we really look forward to deepen our relationship with Alibaba us overall E commerce ecosystem Twentytwenty.
Early brotherhoods all missing Charlie you told me that shown how close are that's a heightened celgar dapa doesn't hold off out of our south and doubting, obviously young products and Python Cynthia So so Bob Walsh talking Taiwan golf within the comparisons.
Total obsolete and they also had we want us having atones huh it almost sounds roboguard sheeting, Salvato Sauceda, Utah.
So you how angelus I'd be done the Shanghai to answer that I thought he has already highly unpredictable type what's on the team I shot shoot challenge and being able to sell.
We actually have developed strategy and how we can better collaborate billability ecosystem with Alibaba ecosystem.
In terms of integrated marketing campaign that includes the brand campaign that increase the brand awareness and to influence users.
Purchasing decision to need at that and complete the transaction to performance based ads and this strategy, we can copy and paste and replicate that with many new.
Advertisers in Twentytwenty and we believe we.
We have a lot of potentials to further replicate the success stories between Alibaba and they literally too many others. Many other new advertisers data on the all in Nevada, Yahoo. Jones, Our government agency, though although as I told how they want us house.
So these are the orleanians I don't think also comes out so am I should have you will see things actually the kitchen yen.
I wish I don't know about so your cultural John.
Yes, as Pedro mentioned earlier that 2020 his primary focus of our business is too.
Our huge Sears and while we do sell.
They will.
Increased topic will also serves fields for our advertisement business. So we are quite confident that in Q1 and twentytwenty. Our overall advertisement business will have a very good growth trajectory.
Your next question comes from the line of Thomas Chong from Jefferies. Please go ahead.
Josh.
On each on January one if you went.
But when he Eagle Twentys shop in shop, and how do you do that.
All true strategy doable.
Those are the feature which will shop.
Hi, Bob will mean guide.
While we knew that trend.
No potash Ocean JD mall bonds.
Quick audit fees how much.
Let me start ocean bottom wager hold at the moment.
Managing shop and shop in shop.
Management for taking my questions.
Two questions.
Question is about the GP margin trend.
And a solid GP margin over the past three quarters.
And managements comments about how we should think about a GP margin outlook in training trendy.
And my second question is about to get an event that we host.
Thats full earlier this year.
Management comments about the positive impact.
Well our platform opt.
Thank you.
Okay, Thomas our city office question and the recent wells to comment on your second question, Yes, you're right our cost of American Holocaust study.
Incomers throughout.
2000.
No change from like 13.8% in Q1 two alike.
It's important for sending Q4 in the future, we'll still see some goal to further.
Leveraging on our between our high paying ratio and to increase around your proud that maybe you to further you'll know improved across profit margin.
That does lever to welcome from the cost component like bandwidth costs as well as the rubbish oncology.
So we will work on that new us he does in the coming quarters.
How latchways upon yen.
Well I place he should be that you see all Jones on how should the top.
So a kalydeco quad hopping receive high 90 to one way to be done this how long how can go to see.
Yes, I'll just yet you got some he should be is on the said shooter not only are seemingly Taiwan typically don't follow up with that so you've got I, usually okoniewski that again the got now.
So.
The success of the Carla.
The color itself, it's part of our user growth can.
Growth plan as well as part of our brand campaign.
And we don't think this is isolated event that deliberately.
Ability linear scala.
Success. It is actually it's a testimony.
Okay, how billability understand young People's interest and.
As we accumulate a our understanding for the past 10 years.
Has.
But has made material impact in a mainstream ideals.
So no, which as you see ample Tony energy will be to the Yahoo. So study shows either way to should.
Well that has a lot.
Welcome to whole, how should have selling lunch, which initially.
So the Bill Bill This is David Galison landmark event.
Spin Billy move into the realms of mass market appeal and the success of that Carla actually a crack.
The content the call actually attract many users from different background and different generations and may.
Make them get you know Billy Bailey from their perspective from what they have.
Perspective, our content.
Vertical that they're familiar with and this is up quite well. We think this is up quite eventful.
Campaign that made the Billability Brent.
Successful much accessible to wider generations and audiences.
So you have played a part I think on Sunday.
Joe Shan one that was also show on about Wong Togo.
Yeah, well see the to US later on I should say Ali.
Drilling out.
So so far the playback of the event has.
Been viewed over 90 million times, and we have accumulated 5 billion media exposures and nap.
We think we have four major point that I will impact our business.
They don't do you guys should they already know who chose our installed.
That's all Youre just at the organization. So all of these assumptions include isn't actually already Holly.
I don't see that highlight the town.
Yes.
I was sitting natural he Congo. That's also has a C dollar buildouts easy that's all your Yahoo kitchen Apart you Cook will consist of either.
That sounds account it out of how about you Passante Hi judiciously.
Well, I mean, I sure cultural fit either way.
Yes. He said you know why not just such a walkway has its own elements. Yes, it's looking how to allow me, saying he will actually go go notion that youre seeing canopy, Canada.
So first of all is definitely laid a very solid foundation for our 2020 overall user growth plans and second.
Further increased our brand awareness among users and make them too.
Per perceive a little bit more clear about what they really is and what they really has to offer and thirdly, we mentioned earlier.
On the average Heistand front definitely also has a very positive impact.
We sat Johansson sponsorship overall effect has exceeded.
Their expectations and also made very good example of how do they believe.
Events and campaign I can influence to reach and reach much.
White audiences groups.
And last but not least is once again.
There's a strong testimony of how did they barely has the determination and ability to produce high quality content and will continue well and well committed to continue to produce more high quality content.
The next question comes from the line of Jialong Shi from Nomura. Please go ahead.
Hi, good morning trends on them as Jim Thanks for taking my question.
Today you go once you do so going into gotten done.
To go find you know when he went on Mt.
Yes.
Taking a deduction the demo mechanical consolidation on how many have begun to saw it wasn't that Johnson should continue.
Todd.
As you got all mountains since I think Apptio TV.
The only Binyamin at hotel tower mentioned at the lowest sort some agoda.
June for.
Core how does your song.
Turning to compute you mean passengers from insignia Susana, who natures Sunshine State Honda anyway, Bamian Ottoman border.
C to digest seemed to tick.
Yeah, I'll go to not only charging a higher that didn't show up though to go once you do the junction does Albani's home. So thats, how you go through that.
I saw you mentioned that you need a tiny.
Them out woman scientific.
Although ouch.
10000 lives in the upstream region or mitigate Gokul think no quoting a bomb yes.
Hopefully your thoughts on yeah.
The becomes your thoughts on so Authentiguard apartments, we got up to Colombia or might go milken annuities and John Ciulla, So multinational communicated to the put options open Gordon.
She consumed in the TV.
And then go down on the George if you.
On the Signups in those Alberta thinking than this alonzo authentic.
Uhhuh.
And on to comment on lump anything here sitting on that because what's been done in more detail.
Since in the not Wisconsin, Dells headroom slowing what's in the mobile it wasn't a team, though we've been that incident at Ohio milk No elements I think there's no doubt, we won't comment or something or does it.
So you won't be Permian tickets is hopefully you analyze each of alcohol.
I don't want to put more than doubled what's in your signs up my question.
Our management is about the competition landscape, we sort them out.
In his peers Chinas internet peers ours.
Talking about ramping up investments this year, either animal or Puget sound homes, we understand.
Peers.
Dispute this move bye bye bye abide by peers May show.
<unk> potential in this market, but the entry of this new Commerce may also have fewer the competition in this settlement. So my questions are too first of all I, just wonder how management things up potential impacts.
In may have on on.
On the company's assets to retain talent to the content creators and that the.
And the audience.
Our ability to at certain point before it's too and more.
Yes, im more to some of the top content creators in order to two to retain them.
I think on or what are the companies and strategy is to maintain.
Fast mutant grows in a more competitive environment. If there is there an event that.
Maybe the net.
I have to spend more in marketing dollars to to the user growth pocket.
How long ago.
The other.
Usually were shooting delicious.
Aegis that causes them to US you know, we moyes thinking dollars from detailed on the peninsula kind of how much can agree more Eugene dot alert steel either.
The leukemia Archie of our anyway. So I don't see who are you know survey tissue seasonally neighbor to negotiate with other well do it where does that enters its a good shipping the individual quick but also either Topeka.
So.
As regard.
Overall video industry actually as a fast and.
Very big market. According to third party research data that the current video user has already reached 715 million in China, and we think as the adoption of Fiveg technology and that revolution of hardware and infrastructure.
I'm protecting the overall bds users can grow to 800 million or 900 million in the next few years, so hard to whom clearly railway shipping and how should.
To go who they are usually the other eco nical, who the onto that you guys should help the whole neighbor.
You just don't visited Nigger shipping, which we had to go through the course you that you can go close with the who know what you. The can do the ashes huh fed put on the beyond that it's usually a bunch of three whatever it took another you should have a couple of working with the water heater teams also park central but should again.
So so as a matter.
Video.
Industry vertical on.
Internet space.
As actually went up the largest.
Verticals.
And for the past few years, you can you must have witnessed many new player. Many players in the video industry I.
By significant.
That has.
Very direct relation to the expansion of the market.
And we don't believe 102, New addition, no players entering this market will make a material impact or difference from this growth trajectory.
This is something that go into though to cater to fit on quite summed up 13, yet the whole urea woman to go into a whole nigger.
So in that sometimes who do.
Sure if it on quiet.
We should ultimately Ali good evening.
Are you hearing kind of resorts is a unique challenges, England I should be.
Pressure should PUGC readers English as Houston had a should this in the buildings here.
Well as cost about that.
Okay. So I'm a lot of people have asked that for two years how.
Pack, though as shape.
As a matter of fact, we are able to maintain a fast gross baldelli gain their market share. Many people wed probably will argue that.
The difference and.
There's a difference.
Then in terms of short medium and long long form video, but we believe we are actually the player who gets definition of PGP.
We have been his experience in terms of Pete will need to leave huge emotionally woman. The good news to me all the good.
Looking there you go more since you season, you subdued hobble when you initially gallon rahho nickel.
To sum it probably was again big old mature that'd be a who do the whole whatever 30 touching on is that fair mutant everything when and where your synergy goals.
Yeah, there's quite a lot of this is on geological if you do that you're sitting hard to come onto domain juggling, how should we go to sort of foreign policy.
So.
We are we have been putting PGC as our primary business model for at least five years and for the past five years really asking a lot has the experience and actually we kind of feel alone in this track and now we have more players starting to pay more attention on this business model.
We believe this is another test different perspective on another side of the story.
Me. This tack has great potential to grow the we'll Miss you know mizumoto routing.
We were alive nigger hold we should actually as a whole surgeries are the Holly.
There were going to talk a little harder the nickel.
Just wanted to.
What are the trigger.
I mean, no more should the whole Ptolemaic.
Entirely sitting in per kilo.
I sure I figure, which it was an accordion.
So you know hardly ago, what you're done eager to see Gillette or the hot Hot I show to the.
Because typically come a quiet.
Too soon to each other Nick attach easier from hobbies yawar.
And this business model.
Wires unique expertise I in terms of operation as well as running a platform I'm. So for the new Commerce, I think theres going to be a learning at least a learning curve for them and won't yield results and.
Short terms.
The whole Nico company wouldn't Donegal to contribute to lose bundles you go wouldn't nickel what you the hassle.
Visible in the U.S. nigger, what you the shipping juggling.
Fall short hair shoes, Montenegro quarter's magic ocular should that Cologne sued entered into how close to one single how much was yes that stands out as were taught us user.
Teams on the those team had its own quantum leap.
Isn't that big or some kind of ecopetrol.
Okay.
Tom voters assumptions and factors on Colombia, whether you got tons you should go either she is equal to go mobile sleeve upon legal to Georgia. The takeaways attendance on people thought that meager two months ago horses, and make the kildair from year to touch on the bigger bigger nickel has sort of tumor the between us.
The moves into the circuit, which if you're going to put up.
As for your question about the competitive cost related to more player joining in this very close we believe.
For this industry, we have long past assays that people have to foreign cash to fight for content or Kale Alice.
This is we have already interface that.
That we compete Whitney Chaucer's in terms of.
The overall industry laid out.
On the business operation.
As well as play their content creator are able to achieve their career goals going our platform to able to grow their topic.
So it won't have a significant impact in terms of single costs.
Whether its content or south of marketing.
And that concludes the question and answer session I would like to turn the conference back over to management for any additional or closing remarks.
Well. Thank you once again for joining us today.
You have any further questions. Please contact myself, Julie I really believe senior Eric actor or TPG Investor Relations, our contact information for IR in both China and U.S. can be found and today's press release, how about great day.
[music].