Q4 2019 Earnings Call
Thursday
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Dead dead dead good day and welcome to the kootek fourth quarter and fiscal year 2019 on audited Financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero after today's presentation. There will be an opportunity to ask questions to ask a question. You may press star then Thursday.
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On your touch tone phone to withdraw from the question queue, please press * then two, please note. This event is being recorded. I would now like to turn the conference over to tip Plumbing at Christensen could go ahead.
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Thank you operator. Hello, everyone and thank you for joining us today. Our earnings release distributed earlier today and is available on our website at home our news wire on the call today from Coosa XR Mister Carl. John chairman and Chief Architect and Miss Jean king Jong Chief Financial Officer Mister Johnny Cochrane review with operations in company highlights followed by Mister Chang who will discuss financials and guidance. They will both be available to answer questions during the Q&A session that follows month before we begin. I'd like to kind of remind you that this conference contains forward-looking statements within the meaning of section 21e of the Securities Exchange Act of 1934 as amended these forward-looking statements are made under the Safe Harbor provisions of the private Securities litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will expects anticipates wage.
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Sure intends plans believed estimates confident and similar statements to Tech may also make written or oral forward-looking statements in its reports filed with or furnished of the u s s e c and it's and report to shareholders in press releases and other written materials and oral statements made by made by its officers directors or employees to third parties any statements that are not historical facts including statements about to text beliefs and expectations are forward-looking statements that involve factors risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements such factors and risks include but are not limited to the following the technician and strategies future business development financial conditions and results of operations are expected growth of the mobile internet industry and the mobile advertising industry expected growth mobile advertising expectations regarding demand for and Market acceptance of the company's proxy server.
competition mobile application advertising industry and relevant government policies and regulations from
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Relating to the industry further information regarding these and other risks uncertainties and factors is included in the company's filings with the SEC all the information provided on this call is current as of the date of this call and contact is not undertake any obligation to update such information except as required under law. It is now my pleasure to introduce Mister Carl James Charles, please go ahead.
Thank you. Thank you everyone for joining our fourth quarter 2019 at least call our performance during the fourth quarter far exceeded our expectations as our business bounce back strongly to the Kenyans growth momentum total net revenue for the quarter was 69 million US Dollars billion dollar adjusted guidance 53 million by Thursday and ability to derive the physical user insights and the drive growth remains one of our peace core competencies. We also made a promise in progress team competitive content apps and building a distinctive content ecosystem.
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In House at that work could have a platform will rapidly during the quarter which field our monetization efficiency and the mitigating the risk of the party depending of this positive momentum made a optimistic on our long-term growth.
Based on the current state of our business we project our first quarter 2020 Revenue. Well exceed $85 US Dollars representing Chinese Chinese represent growth rates depend actually despite the industry seasonality and the impact of the global Corona virus outbreak.
Good day, and welcome to the fourth quarter and fiscal year 2019 on audited Financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0 months after today's presentation. There will be an opportunity to ask questions to ask a question. You may press * then 1 on your touchtone phone to withdraw from the question queue, please press * then two dead. Please note this event is being recorded. I would now like to turn the conference over to tip Plumbing at Christensen, please go ahead.
Our Focus remains on developing and growing our portfolio of content-rich apps to meet the evolving needs of users the average of our content, which photo app was twenty four point seven million in December up from twenty three point nine billion in September the increase to seventy four point six million in the bank up from 67.5 minutes in December.
I'll contact which portfolio apps contributed approximately 95% of our total revenues during the quarter. This is The Testament to our mission of empowering everyone to enjoy reading content seamlessly.
Thank you operator. Hello, everyone and thank you for joining us today or earnings release distributed earlier today and is available on our website at home our news wire on the call today from kusac are Mister Carl John chairman and Chief Architect name is Jean-Luc change on Chief Financial Officer Mister Johnny Cochrane review his operations and Company highlights followed by mr. Wang who will discuss financials and guidance. They will both be available to answer questions during the Q&A session that follows off before we begin. I'd like to kindly remind you that this conference contains forward-looking statements within the meaning of section 21e of the Securities Exchange Act of 1934 as amended these forward-looking statements are made under the Safe Harbor provisions of the private Securities litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will expects anticipates wage.
During the quarter we were in communication with Google to clarify the potential misunderstandings behind the removal of of our apps from Google Play in July. However, as of the day off those apps have not been reinstated yet. We cannot guarantee that we will prevail in our efforts or that any such removed applications will be made available regardless, we have already brought out effective operational measurement to release new content-rich apps diversify our use a good channels such as Abdul and to strengthen our internal compliance efforts with all these initiatives our business regained strong growth momentum, and we believe that impact of Google's actions in July is behind us.
sure intends plans believe
These estimates confident and similar statements to Tech may also make written or oral forward-looking statements in its reports filed with or furnished to the u s s e c ROM and it's and report to shareholders and press releases and other written materials and oral statements made by made by its officers directors or employees to third parties.
Well moving on.
And the book has the growing our new portfolio app.
Why the engagement rate of our portfolio apps was found 2% sequentially at 33.1% We're not overly concerned when reason for this job is that we cannot use Google push notification to reach and activate our users after our developer account was disabled before the ads. We fully expect them to job for those apps removed by Google's actions. Thanks to the strong. Growth of the new content-rich photo apps total theater. You regain growth momentum.
any statements that are not historical facts including statements about to text beliefs and expectations are forward-looking statements that involve factors risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements such factors and risks include but are not limited to the following the technician and strategies future business development financial conditions and results of operations team expected growth of the mobile internet industry and the mobile advertising industry expected growth mobile advertising expectations regarding demand for and Market acceptance of the company's products and services off competition mobile application the advertising industry and relevant government policies and regulations relating to the industry further information regarding these and other risks in a certain factors is included in the company's filings with the SEC all the information provided on this call is current as of the date of this call and protect does not undertake any obligation to update such an
While some of our new property apps have naturally lower than average engagement rate. They have much higher output and overall how I compared to the Shack app.
Satisfied with the growth momentum of this high output, but naturally with lower engagements act again. We are moving on and the focusing on growing our new portfolio s going forward and not to just focus on engagement, but also product lifetime value our I and the value that we bring to our users.
Information except as required under law. It is now my pleasure to introduce Mister Carl Jiang Carl, please go ahead.
Our mission is to empower everyone to enjoy reading in the content seamlessly. We believe that the global content app market is still is early stages and this gives us massive opportunities in both horizontal and vertical area at this stage. We have focused our content app strategy and three special categories.
Thank you. Thank you everyone for joining our fourth quarter 2019 at least call our performance during the fourth quarter size, exceeded our expectations as our business bounce back strongly to the Kenyans growth momentum total net revenue for the quarter was $69 billion dollars billion dollar adjusted guidance 53005000 cents ability to derive sophisticated user insights and the drive growth remains one of our peace core competencies. We also made a promising progress, competitive content apps and building a distinctive content ecosystem.
scenario-based the vertical content apps such as fitness health care apps
round reading content apps such as Global online novels and Casual games, which is typical entertainment content.
Would believe that this three markets are meted globally and that's we our sophisticated users inside driven roast platform will help us deliver a unique value proposition in the in this address.
In House at that work could have a platform grow rapidly during the quarter which field our monetization efficiency and the mitigating the risk of the party depending of this positive momentum made a optimistic on our long-term growth.
I want to emphasize that our first priority at this stage are to grow the user base of our contents Rich before the apps aggressively and to cultivate our content ecosystem.
We will continue to follow this strategy and make decisions with long-term growth in mind.
What's the current level and the business opportunities we are confident to invest aggressively to grow our user base and at the same time make great efforts to improve our home key metrics such as user retention rates continuously.
Based on the current the stage of our business we project our first quarter 2020 Revenue. Well, exceed $85 US Dollars representing Chinese Chinese strategic growth rates actually despite the industry seasonality and the impact of the global Corona virus outbreaks our Focus remains undeveloped and growing our portfolio of content which apps to meet the evolving needs of users the average of our content which photographs was twenty four point seven million in December up from 23.9 minutes in September the month in December.
In this quarter, we released some new casual games to the global market on both Android and iPhone such as Idle and King Tycoon crazy painting and bomb.
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Without casualty in business in its very early stage. We still have plenty of room to improve in terms of the game quality localization and the user retention and leveraging our use the Inside Edge growth platforms. This casual games delivered better-than-expected our guy and started to contribute meaningful Revenue. This gives us the confidence to invest money in this entertainment content segment.
Strategy strategic goal is to strengthen our advertising business by reducing external dependencies.
Photo apps contribute to that approximately 95% of our total revenue during the quarter. This is the temperament to our mission of empowering everyone to enjoy relevant content seemed during the quarter. We were in communication with Google to clarify the potential misunderstandings behind the removal of a power apps from Google Play in July. However, long as of the day those apps have not been reinstated yet. We cannot guarantee that we will prevail in our efforts or that any such removed application. I'll be made available again regardless, we have already ruled out effective operational measurements to release new content-rich apps off by our user group channels such as a store and strengthen our internal compliance efforts.
And the first quarter of of nineteen, we officially launched the attack advertising platform our in-house ad networks. This system allows advertisers took create and manage it ad campaigns manage a budget and the place ads in our appp reported directly in the past couple of quarters. We have working hard to improve our Network by leveraging AI Technologies optimize end-to-end add conversions and cultivate our Advertiser ecosystem.
With all these initiatives our business regain strong growth momentum, and we believe that the impact of Google's actions in July is behind us off moving on and focusing on growing our new portfolio app.
Add from boosted our monetization efficiency because the average ACT for the platform to pass all the third parties at exchanges. Is to contribute a significant percentage of our total advertising Revenue.
While the engagement rate of our apps was down 2% sequentially at 3.1% were not overly concerned when reason for this job. And that's we cannot use Google push notification to reach and activate our users after our developer account was disabled before the ads. We fully expect you to job for those apps removed by Google's actions. Thanks to the strong. Growth of the new content-rich photo app. Total will regain growth momentum.
During match 2020 we're generating approximately 60% of our revenue from the from our Network. We will continue to strongly invest in both advertising technology package and our ecosystem with that. I will hand the call to our CFO Jean to walk you through our financial results for the quarter. Thank you. Thank you everyone for joining us on the call today. I'm going to walk you through our first-quarter financial results and a few key results from four year. 2019. All comparisons are on year-over-year basis, but otherwise noted let's start with users mostly active users for our portfolio products reach 74.6 million in December at 68% a year ago average daily active users our portfolio products in December reached about twenty four point seven million up 46% compared with
While some of our new apps have naturally lower than average engagement rate. They have much higher output and overall how I compared to the Shack app.
Residents find a way the growth momentum of this High Apple, but naturally with lower engagements apps again. We are moving on and the focusing on growing our new portfolio s going forward. I cannot to just the focus on engagement, but also product lifetime value our eye and the value that we bring to our users.
Our mission is to empower everyone to enjoy reading in the content seamlessly would believe that the global content. The app market is still is early stages and this gives us massive opportunities in both home and multiple areas at this stage. We have focused our content app strategy and three special categories.
Last year average daily active users untouched post marked input in December or about 130 7.6 million down 2% from last year's. I may use 182.8 million down 4% from last year Revenue worth 69047000 Grand. Tia mobile advertising Revenue were sixty eight point five million up about 47% from a year ago. We still do advertising revenue for fiscal quarter of 2019 portfolio product contributed about ninety-five percent exposed not include contributed about 1% and the touch program both contributed about
scenario-based vertical content apps such as fitness health collapse
round reading content apps such as Global online novels and Casual games, which is typical entertainment content would believe that these three markets armor globally and that's we our Sophisticated You the inside driven Bros platform will help us deliver a unique value proposition in the in these categories.
Yeah.
I want to emphasize that our first priority is at this stage are to grow the user base of our content Rich before the apps aggressively and to cultivate our content ecosystem.
We will continue to follow this strategy and make decisions with long-term growth in mind.
Sending out expenses gas costs and expenses or about 75.2 million and increase of 58% sequentially and up 74% 5:10. Last year now get calls and expensive or 74% 74.8 million and increase of 60% sequentially and an increase to 6% year-over-year as a percentage of Revenue non-gaap costs and expenses account for a hundred and 8% down from 150% in previous quarter of the increasing operational expenditure will mainly driven by sales and marketing expenses.
Which the character our level and the business opportunities we are confident to invest aggressively to grow our user base and at the same time make great efforts to improve our home key metrics such as users retention rates continuously.
sales and marketing
In this quarter, we released some new casual games to the global market on both Android and iPhone such as Idle and King Tycoon crazy painting and bomb.
So our mission is to empower everyone to enjoy reading content seamlessly. So as I mentioned at this stage, we have focused our content app strategy and three special Campground and and Global and although is actually one of them so crazy reading novels, which is not releasing China is in the initiative for the long reading content job market. So we do not disclose details number of any specific app at this moment. But yes, the growth of the crease reading novel is promising here. I want to emphasize that off Target for the long reading content app market our Global. So actually we have already released online mobile apps to talk to Target oversea markets as well. So we believe that we have that opportunity to disrupt the global online novel Market.
Without casualty in business in very early stage. We still have plenty of room to improve in terms of the game quality localization and the user retention and leveraging our use the inside wage growth platforms. This casual games delivered better-than-expected our eye and started to contribute meaningful Revenue. This gives us the confidence to invest more in this entertainment content segment.
Expenses increased by 99% from straight from the same period last year in the 90% the potentially the largest component of this extensive is usually a position, which grew in libraries overall expansion of our business and cows mentioned at this stage of our first priority continue to be as to be actively growing user base of Allah content-rich portfolio applications and to cultivate our content ecosystem which our current level of our and the business opportunity that we are confident such as we continue to invest aggressively to grow our user day. We should be able to maintain our fastest Revenue growth in the coming. And Achieve future Club.
One of our strategy strategic goal is to strengthen our advertising business by reducing external dependencies.
And we're making an effort to cultivate our content ecosystem for our online mobile apps. So we worked with copyrights Partners to license books in China and overseas markets off at the same time. We have already established in house online literature Marketplace to directly work with writers help them submitting novels and making money going off. We expected business continued to grow and we believe that the overseas Market is a great opportunity for us.
And the first quarter of of nineteen, we officially launched the attack advertising platform are in House at Network this system allows advertisers wage rate and manage an ad campaigns manage a budget and the place ads in our app per photo directly in the past couple of quarters. We have working hard to improve our Network by leveraging AI Technologies optimize end-to-end add conversions and cultivate our Advertiser ecosystem.
I am the expenses decreased by 17% sequentially and by 2% year-over-year primarily due to a decline average compensation rates with technology and stuff off and the ship basic common-sense extensive. We ended the quarter with $553 employees up 11% from last year and up 8% off the quota on the employees represent about 63% of total employees the same as last quarter and compared with 62% last year with the crease by 19% of gradually and by 24% year-over-year the sequential and year-over-year decrease will mainly due to reversal that that provision of pointy 6 a.m. During the fourth quarter of 2019. Rock margin was 94.4% at the from 92.6% during the same period last year off.
Platform boosted our monetization efficiency because the average is etm for the platform to pass all the third parties at exchanges.
In comes off the the new game business category. We are focusing on casual games at this moment because they are more suitable for our advertising business model as of the same. We have developed a much gain such as Idle Landings at home simulation games such as farm hero and the puzzle games such as crazy painting in which Thursday at 2 with our casual game business in a very early stage. We still have plenty of room to improve in terms of game quality localization. The user retention rate something and leverage you the inside driven growth platform. This casual games delivered better-than-expected our eye and the study to contribute meaningful Revenue. So the new casual can businesses contribute to the project at least so 10% of our total revenue in fourth quarter of 2019. Our game business is targeting both China and the overseas markets.
And it started to contribute a significant percentage of our total advertising Revenue.
Thank you.
This concludes our question-and-answer session. I would like to turn the conference back over to tip Plumbing for closing remarks.
During a match 2020 we're generating approximately sixty percent of our revenue from the from our Network. We will continue to strongly invest in both advertising technology package and our ecosystem with that. I will hand the call to our CFO Gene to walk you through our financial results for the quarter. Thank you. Thank you everyone for joining us on the call today. I'm going to walk you through our first-quarter financial results and a few key results from four year. 2019. All comparisons are on year-over-year basis, but otherwise noted let's start with users monthly active users for our portfolio products which 74.6 million in December at 16% a year ago average daily active users for our portfolio products in December, which is about 24.7 million up 46% compared with
And an increase from 87.5% last quarter, the Improvement of what Marty was primarily due to our effort to optimize efficiency related to infrastructure utilization month. We had a gaap net loss of 6.6 million which represents a net loss margin of 9.6% If excluding the effects of stock compensation. Oh, I guess in that lawsuit was approximately 6.2 million representing a non-gaap net loss. Margin of 9% our Now quickly run through a few key for year 2019 Financial results for the details can be found in the early release not to revenue was $178 Million an increase of 33% from 124 million in 2018. Mobile advertising Revenue was 175 million an increase of 33% from 131 million month.
Thank you operator. This concludes our call for today and thank you everyone for joining the call tonight. If you have any questions or comments, please don't hesitate to reach out to us directly off by by the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
last year
Eighteenth what folio products can contribute approximately 85% Tax Plus marked input contributed about 6% and texts for phone book contract about the 9%
Average daily active users untouched post marked input in December or about 130 7.6 million down 2% from last year and may use foul 182 point eight million down 4% from last year total net revenue 469 million forty seven percent from last year with mobile advertising revenue or sixty eight point five million up about 47% from a year ago with total advertising revenue for fourth quarter of 2019 a portfolio product contributed about 95% vegetables not include contributed about 1% and the touch programmable contributed about 4%
cost an operating expenses for 215 million an increase of 73% ground 124 million in 2018 sales in the market extension for 187 million of 95% year-over-year as a percentage of total revenue sales and marketing expenses are accounted for eight eighty eight dollars an increase from 60% in 2018 primarily due to increased investment in use Acquisitions. I only expenses or twenty-seven million an increase of 39% from 19 million in 2018 many due to the increase increase the costs associated with technology and people as a percentage of total revenue R&D expenses are accounted for 15%, from 14% in 2018.
Sending out expenses get costs and expenses to about 75.2 million and increase of 58% sequentially and up 74% off. Last year now get calls and expensive or 74% 74.8 million and increase of 60% sequentially and an increase to 6% year-over-year enter percentage of Revenue non-gaap costs and expenses account four hundred and 8% down from 115% in previous quarter of the increasing operational expenditure were mainly driven by sales and marketing expenses.
Fifteen million an increase of 52% from 10.7 million in 2018 primarily due to an increase of four point 1 million impact Birth s n as a percentage of extensions account for 9% and increase from 8% in 2018. Gross margin was 91.54% compared with 88.9% in 2018. Net loss was thirty-seven Million compared with net income of 6 million in 2018 adjusted net income.
Sales and marketing expenses increased by 99% from from the same period last year and the 90% sequentially the largest component of this extensive use the acquisition costs which grew in live with overall extension of our business is called mentioned at this stage of our first priority continue to be at 2 a.m. Aggressively growing user base of our content to reach portfolio applications and to cultivate our content ecosystem with our current level of our home business opportunity. We are confident that as we continue to invest aggressively to grow our user day we should be able to maintain our fastest Revenue growth in the coming. And a future profitability.
Was thirty-three million dollar compared with adjusted net income of 12.5 million in 2018 Chevy end of the year 2019. We had cash cash equivalents and the restricted cash of about sixty million u.s. Dollars compared with the $85 million u.s. Dollars at the end of the end of year 2018 on November 26th, 2018. We announced a share repurchase program. This program was terminated during the fourth quarter of 28th. 2019 will be purchased in aggregate of one point seven million 80s for a total consideration of Thirteen point seven million, you have dollars during this time, you're in the process. We net the cancellation of Treasury stock with additional paid-in Capital. Yep.
I am the expenses decreased by 17% sequentially and by 2% year-over-year primarily due to a decline average compensation rates with technology and stuff home and the ship basic common-sense extensive. We ended the quarter with $553 employees up 11% from last year and up 8% off last quarter and the employees represent about 63% of total employees the same as last quarter and compared with 62% last year. Jeff. Jeff is decreased by 19% of gradually and by 24% year-over-year the sequential and year-over-year decrease will mainly due to reversal that that provision of point to 6 a.m. During the fourth quarter of 2019 or gross margin was 94.4% at the from 92.6% during the same period last year off.
and an increase
November 20th, July 19th, we launched a new share repurchase program where we are also allowed to purchase up to three six million dollars of our office building 6 months. Starting on November 27th, nineteen as of the end of the year 2019 we had used an aggregate off of US dollars is 1.1 million to a purchase to 80s can turn in our to the revenue Outlook. We expect to revenue in the first quarter of 2020 to be above eighty-five million u.s. Dollar represent an increase over 112% year-over-year these afterbirth respect our current and the preliminary views, which is subject to change operator. We are now ready to take questions.
7.5% last quarter. The Improvement of rock Marty was primarily due to our effort to optimize efficiency related to infrastructure utilization. We had a gap of 6.6 million which represents a net loss margin of 9.6% excluding the effects of. Compensation or adjusted net loss. Approximately 6.2 million representing a non-gaap net loss. Margin of 9% Our Now quickly run through a few key for years 2019 Platinum package for the details can be found in the early release not to revenue with 178 million an increase of 33% from $124 million in a Sunday 18th. Mobile advertising Revenue was 175 million an increase of 33% from 131 million in 2018. Yep.
We will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the key to withdraw from the question. Queue, please press * then two.
What products can contribute approximately $0.85 text box marked input contributed about 6% and texts for phone book contributed about the night.
The first question comes from Hans Chung of keybanc capital markets, please. Go ahead. This is Zoe on behalf of hence. Can you check on the strong result? And thank you for taking my questions. I have two questions. The first one is could you talk a little about the potential impact of the Corona virus outbreak wage, especially in the overseas Market the second one is what do you think is the upside of the in-house ad as a as a percentage of the total revenue and may contribute to the Improvement of our po. Thank you.
Paulson operating expenses for 215 million an increase of 73% wrong 124 million in 2018 sales in the market extension. Well, 187 million up 95% year-over-year as a percentage of total revenue sales and marketing expenses are accounted for $88 an increase from 60% in 2018 primarily due to increased investment in use a position and the expenses were twenty-seven million and increase of 39% from 19 million in 2018. Mainly due to the increase increase the cost associated with technology and the people as a percentage of total revenue R&D expenses are accounted for 15% up from 14% in 2018.
Thank you. Let me answer this question. So the pandemic actually has mixed impact on our business. So travel been tripped our users at home which resulted in wage higher than expected usage of our content apps the inventory increase accordingly with the increased time spent actually. So on the other side coronavirus out that impact the advertisements industry. So in China, usually we expect a strong at budget recovery after the Spring Festival holidays, but this year we noticed that some of the major advertisers were cutting budgets. So this cost less building competition increasing at inventory, which is a result lower the
Damn expensive for a 16 million an increase of 52% from 10.7 million in 2018 primarily due to an increase of 1 million impact that provision s n as a percentage of total revenue and expenses account for 9% and increased from 8% in 2018. Gross. Margin. Well, it's 91.4% compared with 88.9% in 2018. That place was thirty-seven million jobs with net income of 10 million in 2018 adjusted net income.
133 million dollar compared with adjusted net income of 12.5 million in 2018 Dodge end of the year 2019 we had cash cash equivalents and the restricted cash of about sixty million u.s. Dollars compared with the $85 million u.s. Dollars at the end of the end of year 2018 on November 26th, 2018. We announced a share repurchase program. This program was terminated during the fourth quarter of 28 2019. We purchased in aggregate of 1.7 million eighty ads for a total consideration of Thirteen point seven million, you have dollars during this time, you're in the process. We need to the cancellation of Treasury stock with additional paid-in Capital. Yep.
November 20th
Nineteen, we launched a new share repurchase program where we are also allowed to purchase up to three six million dollars of our ATS during the six-month starting on November 28th, 2019, as of the end of the year 2019 we had used an aggregate of US dollars is 1.1. Can we purchase point two minute abs can turning out to the revenue Outlook we expect to revenue in the first quarter of 2020 to be above eighty-five million u.s. Dollar represent an increase over 112% year-over-year these estimates reflect our current and Life View, which is subject to change operator. We are now ready to take questions.
We will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the key to withdraw from the question. Queue, please press * then two.
The first question comes from Hans Chung of keybanc capital markets, please. Go ahead.
Hi Colin, James. This is Zoe on behalf of hence. Congratulations on the strong result and thank you for taking the questions. I have two questions. The first one is could you talk about the potential impact of the Corona virus outbreak, especially in the overseas Market? The second one is what do you think is the upside of the in-house a dead as a as a percentage of the total revenue and its contribution to the Improvement of our po. Thank you.
Thank you. Let me answer this question. So the and that makes actually has mixed impact on our business. So travel been tripped our users at home which resulted in higher than expected usage of our content apps the inventory increase accordingly with the increased time spent actually. So on the other side coronavirus off that impact the advertisements industry. So in China, usually we expect a strong as budget recovery after the spring festivals holidays, but this month we noticed that some of the major advertisers were cutting budgets. So this cost less building competition increasing at inventory which as a result of both the fuel rates and the EC p.m. So this was happening throughout all of the February and the way estimate it had processing approximate wage.
Tend to 15% negative impact on Apple the map is it started to recover recently but not strong enough. We anticipated that the recovery were happening in the second quarter actually, so as for the overseas Market, especially the US market, we didn't notice any significant impact yet, but we are not quite sure about the future impacts as the virus continue to spread we will see but anyway, our guidance has already built in conservative considerations and the the current our lack of apps is relatively safe even taking the pandemic impact into account. So in terms of the cook in terms of the the could have had platforms Duramax, we are generating approximately 60% of our revenue from our Network. So it boosted approximately 20 to 30 per month.
Thanks of our Apple.
So we are confident that the Apple will continue to improve on going. Thank you.
The next question is from Nelson chuang of City, please go ahead. Thank you for taking my questions and congratulations on the birth questions here. My first question is could you elaborate more details of drivers for a strong performance in fourth quarter 2019, and the