Q4 2019 Earnings Call
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Hello, Ladies and gentlemen, thank you for studies.
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Company Investor Relations. Please go ahead.
Hello, everyone and welcome to last fourth quarter 2019 earnings Conference The conference financial and operational results were issued earlier today and I posted online you can also be able the earnings press release by visiting the IR website at <unk> I honestly I don't come a replay of so called will be available.
The IR website in the view hours.
Participants on today's call will be measured on <unk>, Chief Executive officer of Yeah, and Miscalculated Lu Chief Financial Officer management will be game was prepared remarks ended the call will conclude with acute any section.
Before we continue please note that predict discussion will contain forward looking statements made under the safe Harbor provisions of the U.S. Private Securities Litigation Reform Act isn't 1995 forward looking statements in Bobby she around risks and uncertainties as such the communist wears off maybe materially different from the wheels expressed today.
Further information regarding these and other risks and uncertainties is included in the company's perspectives and other probably fall is as follows the U.S. FCC accommodate does not assume any obligation to update any forward looking statements except as required under applicable law. Please also note that we have earnings press release.
This conference call include discussions as <unk> GAAP financial information as rise on all day to non-GAAP financial measures. We asked rationally is contains a reconciliation of the I'll now they didn't non-GAAP measures to the on how they'd be most directly comparable GAAP measures I will now has a call over to now I see all Mr was you don't see school.
Go ahead.
Hello, everyone. Thank you for joining our call today, we are happy to speak with you today. Both following the completion Oh, great. Yeah, Wizards Joanne pools, and a 90 was a year well weve for the Jenson, our leadership position and any inquiries.
Mark this year in China is booming game live streaming industry by leveraging and those Janssen me Oh, a comprehensive and the sales <unk> Dream pools before you go sit Tim.
During this year, we continue to English and diversifying our content offering.
Hi, Bro, whereas they re investing in high quality for all the cost of expanding our youth sports pulling them and government coverage and the great Quaking Neal's self generated content.
As a result argues that come in if they continue to it spending how off where we are alive and meals increased by 10. They havent been paid since year over year to 151 to 2 million equaled pool in line with all I'll do that target.
Among all off we online.
I use that mobile amyloidosis group contained wasn't part of the 5% year over year too soon to pay 1.6 million driven by all our effective mobile strategy.
Various even though what led to let's say for our users isn't more mobile users come to our platform during the summer of occasioning quota city and there's a winter of occasion in quote to what.
And the more TCOS has come to all our platform buildings at quarter was it because he supports tournament in quarter, one 2010 thing on mobile and males.
Hi expected to luge historical high all the same pay million due to the winter occasion season season.
And.
The New center locked on policy is still rings, a current a virus outbreak.
No bio and males inquiries to so 34% to 5% year over year, mainly due to the pick a esports tournament in the quota so in game pop out a streaming windows and promoted by our game. They went up a continent and there's a cooperation.
He was offline internet cafes during the quarter.
Monetization capabilities also continued to improve their though thinking that the cooperation with Arab World Cup tests, and the talent aging say pop in.
Our revenue grew by 54 point.
Per center, Yeah, well year to what pro cut cemetery, RMB 2.5 billion during the fourth quarter, which he is a seventh consecutive consecutive quarter set we exceeded our management guidance since our IPO.
2019 for Yeah revenue was new to the I'm V eights upon certain cities seven Gram a inquiries Oh thing paid nine pound that 6% yeah. We.
Our revenue growth also come along with gross margin and the operating margin improvement.
Once again.
Demonstrating our spending it because their code sharing capabilities.
These are compressed she men in 2019 positioning us for I'll jump start as we head into the new Yeah, Oh 2000.
Pentane I'm very pleased to with a two month or business in front, so far in 2010 thing.
Our primary objectives for the year to strengthen our leadership position in China and overseas, but that domestic market. We will continue to bring more high quality content to our users and access to play to our new product and service.
They were up a month ever.
Some of the neo product well be in bad business within our core who we are alive and well some well become send our own AFA separate today. We will also continue to increase or influence in overseas markets.
Strategic initiatives designed to capture the tremendous growth potential.
We believe our platform cannot too.
As we continue to.
As we continue to improve and diversify our content, we expect us to further grow a huge user base enpro and monetize aging and increase the so when do we bring to all our.
Come soon.
Yes, Jim.
Our company, our users are putting us and our investors in addition to that business that humans.
We made during the quarter.
Hi, there like to take a moment to talk about to the ongoing Novo Carla virus outbreak drillings outbreak we price.
All that ties to the house or employees by taking your censoring for of course you.
Measures and the operating flexibility to work from home so far no all our employees was in fact here.
In addition, we have always been committed to maintaining high standards, our corporate social responsibility, we provided pro Bono services for the public or then including online tilt towards real streaming for corn.
On a virus prevention Jared charity music.
Goes and the streaming services for education things to do things and you know addition to that donations made up by a company and a broad contests and the talent aging say pattern us.
Limited.
Tendering sent C. O V. I'd be 919 has increased our users mobile usage and that as a result, our mobile Emily's new Cheetah medco the high in quarter one.
So did a similar values us time spent but we will continue to close blame money monitor so involving situation and assess its impacter how called Accordingly, we believe the current virus outbreak will be overcome event Charlie.
And our path toward the future growth prospects will remain intact.
With that I went a long term so cool over a two hour.
Neil CFO.
Concerning Neil who has been with US for several men says now instead of time her swift and active engagement.
Hasn't been pretty impressive and that we deeply deeply value first strategic insights and extensive experience in the Chinese TMT sector. She will now provide the you was operating metric has in more details and our assessment.
Oh it was our financials. So cancering. Please go ahead.
[noise]. Thank you Mr. Dong I appreciate that well warm welcome and he has seen a pleasure to jointly asked management team.
Now following Mr. Dong Tomorrow.
Specifically onto our content, Richmond, and diversification effort and important growth pillar that has supported our ability to meet the evoking preferences.
There's.
In the fourth quarter 2019, outboard captures nice between 45.6 million hours, both <unk> and other into team in constant platform, representing an increase of 37% from the same period last year.
We will continue to partner with talent agency and recruit more broadcasters to ensure we are providing high quality content.
Remains relevant an interesting to our users.
There's another important content source E sports tooling remain vibrant and prosperity on our platform.
During the fourth quarter Broadcasted, 117, third party east to them and including words to sound 19, P.D.C.P.L. <unk>, Okay winter and keep <unk> fall in Q4, Oh E sports viewership exceeded 530 million reps.
Doesn't seem more than 830% year over year increase well the full year 2019, we broadcasted over 403rd Party tournament.
Viewership.
Over 2 billion, representing a 25% year over year increase.
Yeah, we have some exciting updates about El al tournaments Broadcasting rights for 2020, following the strategic partnership that we signed with writing and its three year exclusive Chinese broadcasting rights of LDK between 2020, and 2021 22.
We also loved it down exclusive broadcasting rights.
Yes, and you see what 2020 Exclusivities well make we are the only live streaming platform for all four major L. L regional be in China. As we also have broadcasting rights.
Yeah.
We are also continues to proactively produce our self organized esports tournament that further complement the viewing experiences of game enthusiastic.
During the fourth quarter, we successfully produced a 30 branded tournaments generating total viewership of over 70 million, representing an increase of more than 20% year over year.
In November 2019.
We are line and Nimo TV co hosted Asia, Influencer Sports Festival with Africa.
In Korea.
Lighting gaming broadcasters from these three platform to compete in publishing and top T. Mobile. This is the first time that the company has organized a multinational event abroad with an overseas hardener, demonstrating how steep immersion in the east sports analogy Chen and growing recognition on the.
Global stage well before you have to some 19 will produce 120, we aren't branded tournament generating total viewership over 280 million, representing a 79% year over year increase.
Constant diversification is a long term strategy for yeah.
In addition to bringing more games and east tournaments.
Growing user base.
Also cultivate non gaming content, such as enemy and comics outdoor and traditional sports food My theater and education.
In the fourth quarter over 55% of our users what's the non gaming constant.
Platform.
Non gaming content generated around 45% of our stream gross revenues.
It's a series of initiatives to further enrich our knocking constant as being made to capture the growth opportunities.
Let me share with some with you. Some recent examples such as we got electronic nine an easy to event featured performances.
I'm virtual broadcasters together with actual broadcasters and their digital fingers.
Making a meaningful step toward our HCT expirations.
Outdoor and traditional sports content from the organized we are comfortable kind of all a mixed martial arts competition that you might have we are celebrating outdoor broadcasters to join the stage and compete with professional fighters.
The lobby then generated even more viewership and average daily viewership of El Al All stars.
Oh that being said, we continue to see tremendous opportunity to serve the gaming population with comprehensive coverage of different content categories and we are on the right track to see the writing a potential.
Looking at the advertising side of who asked business 2019 was a landmark here, both advertising and other business with full year revenue growing at approximately 80.6%.
Despite the macro headwinds in advertising sector.
In 2019, we put happen more experience the team extended our advertiser portfolio diversified our AD product offerings and launched an AD distribution platform.
Reflecting on the work we have done we have made great strides in gaining more recognition across advertisers, both gaming and non gaming Brian.
Internationally, we have gained a significant overseas cousins in less than two years without overseas and they use reaching approximately 20 million in the fourth quarter.
Optimizing on the growth opportunities in the emerging markets.
Overseas cousins, well continue to serve as a core differentiator for us.
In the game Lightstream landscape, and we will persist you know global expansion effort as the year progresses.
In addition investments in our technology capabilities with immediately evident and the positively received I was really user base. It improve the video quality of life streaming content enhance the interaction between our users and broadcasters and increase the efficiency.
Ben was usage, we believe our high definition streaming capabilities on mobile devices.
And our cutting edge AI technology are among the best in the industry in the fourth quarter, we signed a strategic partnership and established a joint innovative central with folly to explore more opportunities in fiveg.
Now services and game live streaming.
We still believe Fiveg will serve as inspiring catalyst for a thriving error of cloud gaming.
This could you, especially be the case, we're driving like streaming to be more relevance in the game industries upstream market and we are continuously updating supporting technology to best to prepare ourselves and leverage this exciting movement.
Now, let me walk you through our financial highlights.
Fourth quarter financial results reflect we I focus on.
On both the driving user and revenue growth.
And improving operational efficiency and margin.
In the fourth quarter, our total net revenues grew by 64% year over year to RMB 2.47 billion.
Our non-GAAP gross margin improved it to 19.5% compared with 18.3% in Q3, 2019, and 60 and 16.1% in Q4 2018.
In our non-GAAP operating margin improved to 7.4% compared with 6.5% in Q3, 2019 and 5.5% in Q4 2018.
Oh, a live streaming revenues increased by 62.7% to RMB 2.3 billion in the fourth quarter of 2019. The increase was primarily due to the increase in average spending per paying user I ARPU as well as a larger number of paying users or we allow.
Hi.
All lines streaming ARPU increased about 53% year over year, and 13% quarter over quarter due to our year end promotional activities as well as our enhanced the constant and user experience.
Thank you and promotional activities, we're focused more on improving existing paying users ARPU.
Acquiring new paying users correspondingly the total number of paying users was 5.1 million representing year over year growth of 5.9% lose some sequential fluctuation.
I would like to us that would typically look at this two metrics together, both the number of paying users and the ARPU to determine the engagement level of our users does the business team with the takes a strategic priority between the two.
Measures, depending on a quarterly line up of activities. They organize and then the seasonal circumstances they have.
In the first quarter of 2020, driven by the strong mobile and me you growth resulted from school holidays, and the reason lockup loved on policies. We expect the total paid users will reach a historical high.
Over 5.5 million.
Advertising and other revenues increased to 92.1% to RMB 121.3 million in the fourth quarter of 2000 2019.
Primarily due to higher demand for more advertisers more diversity, our new advertising distribution platform that we launched in Q3 and these trends and its recognition friendly.
We continue our innovative product development to offer more diverse forms of advertisements on our platform, we can create more value for our advertisers.
Cost of revenues increased by 58% to RMB 2.0 billion.
In the fourth quarter. The increase was primarily attributable to the increase in revenue sharing fees and the continent cost.
Bandwidth costs and personnel related costs revenue sharing fees and content costs increased by 51% to RMB 1.6 billion in the fourth quarter. The increase was primarily due to the increase in virtual item revenue sharing fees you relation to higher live streaming.
Revenues continued spending in content creators and E sports content in both domestic and overseas markets.
And was partially offset by benefits from economies of scale.
Then was cost increased by 39.6% to RMB 225.6 million in the fourth quarter increase was primarily due to an increase in bandwidth usage as a result of our larger user base and enhance the live streaming video quality.
Partially offset by improved efficiency in bandwidth utilization through continued technology enhancements that [noise].
Gross profit increased the by 95.5% to RMB 46, 466.6 million in the fourth quarter gross margin increased the to 18 went to 9% in the fourth quarter wrong, 15.9% in the same period of.
To sum 18.
Non-GAAP gross profit, which excludes share based compensation expenses increased by 98.7% to RMB 481.4 million in the fourth quarter.
And non-GAAP gross margin increased to 19.5% in the fourth quarter from 16.1% in the same period of 2018.
Gross margin improvement was primarily due to economy of scale and improve efficiencies.
R&D expenses increased by 125.4% to RMB 178, when 3 million for the fourth quarter, many attributable to increased personnel related expenses.
Sales and marketing expenses increased by 97.6% to RMB 118.3 million for the fourth quarter. The increase was primarily attributable to the increased the marketing expenses associated with the promotions we asked product.
Brent name in both domestic and overseas markets as well as increased the personnel related expenses.
General and administrative expenses increased by 4.5% to RMB 96.4 million for the fourth quarter. Many due to increase the personnel related expenses.
Operating income increased by 448.7%.
RMB 100, or one point sixmillion well the fourth quarter of 19.
Operating margin increased to 4.1% in the fourth quarter from 1.2% in the same period of 2018.
Non-GAAP operating income, which excludes share based compensation expenses increased by 122.8 present, why RMB 183.8 million for the fourth quarter and non-GAAP operating margin increased it to 7.4% in the fourth quarter from five.
25% in the same period of choose HM.
Operating margin improvement was primarily due to the improvements in gross margin.
Income tax expenses.
Were RMB 27.6 million for the fourth quarter compared with an income tax benefits of RMB 31.8 million in the same period of 18.
Net income attributable to yeah in the fourth quarter increased by 60.3% to RMB 159.7 million.
From RMB 99 point Sixmillion in the same period of 2018.
Non-GAAP net income attributable to in the fourth quarter, which excludes share based compensation expenses increased by 44.9% for RMB 241.9 million [noise].
[noise] net income increase was primarily due to the increase in revenues the improvement in gross margin and partially offset by income tax expenses.
Diluted net income per ATM was RMB.
Bureau, 0.68 for the fourth quarter compared with RMB Zero point 45, well the same period of 2018.
Non-GAAP diluted net income per ATM was RMB 1.0 to where the fourth quarter compared with RMB zero point 76, well the same period of 2018.
Now turning to the full year of 2019.
Our total net revenues grew by 79.6% to RMB 8.38 points 37 billion. Our lives extremely revenues increased by 79.5% to RMB 8 billion due to both the increasing ARPU and then the number of paying users.
Advertising and other revenues increased by 18.6% to RMB 398.3 million, primarily driven by rising demand for.
From a increasing number of advertisers more diversity advertising clients, the new advertising distribution platform and the further recognition of we are running in Chinas online advertising market.
And for the full year of 2019, our gross profit increased by 100 or 3.1 person to RMB, one point 48 billion.
And gross margin increased to 17.7% in 2019 from 15.6% into some 18 or non-GAAP gross profit, which excludes share based compensation expenses increased by 100 or 4.5% to RMB 1.51 billion.
2019.
And to non-GAAP gross margin increased to 18.1% in 2019 from 15.9% in 2018.
Gross margin improvement was primarily driven to economy of scale and improve efficiencies.
In 2019 of operating income increased by 880.3% to RMB 261.4 million.
Operating margin increased the two or 3.1%.
In 2019 from 0.6% into some 18.
And the non-GAAP operating income, which excludes share based compensation expenses increased by 100.
14.4% to RMB 543.1 million in 2019 and non-GAAP.
Operating margin increased to 6.5% in 19 from 5.4% <unk> 18.
Oh pretty much improvement was primarily due to the improvements in gross margin.
And operation efficiencies.
Net income attributable to if we I think 19 was RMB 468.2 million compared with a net loss of RMB.
1.9 billion.
In 2018.
Non-GAAP net income attributable to yeah into some 19.
Which exclude share based compensation expenses fair value losses on derivative liabilities and gain on fair value a change of investments an equity investees investments increased by 62.7% to RMB.
I'm 149.9 million.
Finally diluted net income per ATM was RMB 2.0 true in 2009 cheap compared with diluted net loss for eight years of RMB 15.02 in 2000 teaching [noise].
Non-GAAP diluted net income per ATM was RMB 3.23 in 2019 compared with RMB 2.06 in 2018.
As of December 31st the 2019 the company.
Cash and cash equivalents short term deposits and short term investments.
Total RMB 10.1 billion compared with RMB six cylinder.
As of December 31st to choose on 18, and net cash provided by operating activities was RMB 571.6 million for the fourth quarter compared with net cash provided by operating activities of RMB 191 million in the.
Same period of 2018.
Well the full year of 2019 net cash provided by operating activities was RMB 1.9 billion compared with net cash provided by operating activities of RMB. Some 101 7.5 million.
In 2018.
To be mindful of the Len about earnings call for the full for the other full year 2019 financial results I'll encourage listeners to refer to our earnings release will further details.
Turning to our guidance for the first quarter of 2020, we currently expect total net revenues to be in the range of RMB.
200.
2000, 360 million to RMB, 2000, 400 million, representing a year over year growth of between 44.7% and 47.1 person. This forecast considers the potential impact of see over 99.
19 outbreak and <unk> reflect our concurrent stuff, our current and preliminary views on the market and operational conditions, which are subject to change particular, a true the potential impact of the Corona virus on the economy in China and elsewhere.
With that I would now.
Turned a open the call for questions.
Ladies and gentleman, who will now begin the question answer session. If you wish to up for questions. Please press star one of your telephone athletes who needs to be amount. If you wish to cancel your question. Please press <unk> founder hatched <unk> for the interest of climate is called links on the ash two questions.
And for the benefit of all participants on today's call. If you wish to watch your question the might you might be Chinese sleep immediately repeat your question English.
Your first question comes from the line ups Thomas Chong from Jefferies. Please ask your question.
[noise], Josh how especially I bought each home jet showed it to you and Oh, there wouldn't be sure why we at home and tons sheet agenda.
He jumped to about each of our associates woman's diagnoses <unk>, Ohio Joshi fail Siggi bore you with Apollo woman relied upon that woman that bunch I wish it yeah.
Father, social woman highlights that time that Oh, what each okay, a bunch I wish I love Woman's I a high why the told you bar a French management for taking my questions and my question is about the long term strategies.
Well, we are a first oh can management comment about our strategies in call gaming distribution and opportunities that we are embracing and secondly is about the hauling game broadcasting apps our strategies and then my second question is.
About our investment and a in overseas expansion, our can management talk about our.
Our investment focus O.J.P.I. as we go into overseas market. Thank you.
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Oh I fresh classroom regarding the had clocking in hand, I'm actually they have being closely paying attention to victory I mean, lira, such financing and Oh here. This year. We started to reveal are there specific sector and we have noticed that the.
Revenue per user and as a cost to for users the gap between the revenue for you there and as a copy of there is actually lap narrowing down and we think a the economy of o'clock. They mean currently within kids, so probably a rack ready and a a window take this time for us to entry this specific sector and.
And Hmm efforts at all we are a and premiers cost will look close way paying attention to there's a coffee me, but let's just that means that it's still early stage for those before this whole industry to grow and so for the users well informed we wouldn't see.
Thanks, Alan So for this year, we wouldn't think clogging is going to a impact a large on the you Liberals lashway a question for the clock any before you are a question regarding the non gaming <unk> non game a live streaming I'm actually just close the previously non gaming.
Live streaming users is actually picking up she'll half a half of the users of the platform. It's actually what she is a non gaming live streaming and wasting into your of about 29 team the growth rate often non gaming a ics streaming users is actually.
It faster than the browse raise the after gaining users we see the rising on content categories, such as AC T. outdoor 40, and traditional sports and it is ours or fastest growing kind of categories Ashley will kept power.
And Jairam, specifically focused on the east sports as we always do we will towards non game streaming as a strategic priority and that's for two hours. He does not only include a live streaming but also to a and quotes <unk> to include to me.
Deals.
So for the non gaming or whether we're just to try and a elected to explore more opportunities whether in the form I felt like Cheney and videos for you a large cost parents already in there or is this business within for the performance I will oh, its its business is actually being with.
In management expectation actually sat Eau Claire unless I chief does it 20 my way I mean, you in the fourth quarter of for 19, and I always think we'll capture that well they'll keep that whilst momenta and they are for 2020. It made me to 50% CEO are way up rose four hour or says that made you.
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And the along all corner ballots outrage, especially they want mentioned that there were rich a historical all you there all historical high in the fourth quarter, but well see all Nate low down ops are all people come back to work had an effect when the wants to follow up on Oversleep, just what is our target.
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Oh for your first question regarding on the user growth there are several dimensions to it I finish best friend. The firstly a is that we will keep com our across Africa seems like him why streaming sector.
Especially expectation for the new blockbuster things coming into your after 2020 for example, like Downs and some fighters mobile version in the first half and a league of Legends Mobile version, probably later this year and we think wall Badger is actually will help.
We added user growth and the second growth driver could be the esports tournament and they actually have seen and have you ever for 19 game developers happen has been interact analog to deploy you'd be or esports tournament Santa wasted.
Thanks, I will further help us to maintain our browse momentum in the users and a the third one as all the product the diversification.
What are your outside 2020, we have some products up Pat flights are lining up a like for example, the first one is the EA sports community and then secondly is a co plays down alone App.
And Oh for apart from apart from the live streaming business that we have always been doing well also.
Spend some efforts in the and I really love Ah Ah video services, especially in the entertainment sector and also clocks gaming product that will be a another I'm proud that could diversification effort for this year and we'll closely monitor the.
Industry Hoffman.
And for the fourth was right where for the users is that a way have Oh, we're always things here. So a.
Great growth potential for their non gaming sector, whether in the form of a live streaming or in the form of for video services is a greater market here and it's going to be a strategic priority for us into Europe.
If I 2020, so that's the other for your first first question regarding the use of wells.
Secondly, I'm, whether people are getting back to work will impact our Ross after the loved on policy and they extend these holidays of people because that's a call that 19 on wasting the impact so it's not so big.
Based on the did statistics that way Sol and.
Mmm, because there's a little tougher you. This is especially the students there still oh, there's deal I'm getting classes or at home and we can consider this specific time off like your as a similar to a winter holidays, where summer holidays Wow historically this.
To this school this two kinds of for school holidays are a the time that way experience a you'll there was a lot and for your [noise].
Your question regarding our hours this strategy, a and whether we will only do the emerging markets. We think afford that they lost some market, Japan and Korea as going to be our next that's harking, it's actually see there's a lot Ross potential here and.
And Ah for the European countries Honda United States, We don't really things is chew reason is won't be it will be the oh focus because it's gonna be a long shot. So now for now for European countries in the United States and monetization I'm going to be a focus for the.
Company in the always this market because only if we have a I'm not sure mechanical enough on monetization data, we will keep our Tonsan acquisition 10 vibrant.
So that's out that's Oh before the next question.
Your next question comes from a line of Daniel Chan from JP Morgan. Please ask your question.
It's all quite what do you go was on three ways other than your core they've been a once youre just not was a 100 and your rail so that somebody that these yes. So so here's how I see a merger. We're told her that lets go to you know letting their contracts are herpes job or total because it there.
We'll go and teachers are sound ones have been shipped there quite a woman who joined here don't depend sensor with them, though for the home. So once the all India a woman go so much colder temperatures you choose to go there.
Some of your she'd been classifying it up on quite a bit Sheila they pick what I would try to play myself or my first question just a follow up on the use of world. So commencement maybe.
A little bit on your usage growth strategy, especially lower tier city and the second wise or the modernization front. So we have a very good run in revenue grows in Turkey, nitin. So what's the key strategies those trends on a monetization.
Both screaming at a non gaming segment in our dependency. Thank you.
Footballer Ziggo, you sentence says its own within sensor, which isn't residents Oh man I'm kind of a this.
But anyway, where cargo jardiance visible, whom kind a woman too soon.
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The answer is under this isn't a minimum who does take a tick up you don't agenda. The woman's leasing is on its own conveniently. They say that said I mean, who are cool.
Someone has answered the took a young who take months I mean towards closer to the downtown.
Oh for your first question regarding our deployment strategy in terms as the tier three and here for users. We think actually observation that seems quite sure have from a cash on hand, and she'll be analyzed streaming.
Factor and Ah with their special I'm penetration into that here, it's really and here for a Cds, we have observed that there's a positive impact on the you'll deferrals on Miranda. So in other words, because says that patients entrance with.
See that's where penetrating deeper into that history and a tier four cities and also another observation from the common as I as I always think the students the type of the students users are taking a a larger proportion of the overall user base.
And it is our so penetration ancient history and here for cities and she palm to serve these are rising a user growth of five students are will be as a tool or strategic focus for us in the off a 2020.
And if we were second question of money has Asia, a we think that Ah first so we will still are trying to attract a more new users and then I'll keep converting a new users and they see users true or paying users and then second to increase our a pool of we will continue to.
One is to improve our current product offerings, such as a enrich and diversifying content and Ah also we were trying to developed somebody innovative new products to offer to our users to help monetized.
Thank you for question and then a piece moved to the next.
Your next question comes from the line of Alexandre you from China.
That's your question.
Hey, hospice, everyone called thinker, well kind of Im sure you got hurt yourself with us in Turkey, and you're going to your woman.
Well I think it hasn't yet fully dr., Dan I'm not sure as huh.
Good how concerned are the.
So youre the metrics.
Yeah, I hope you shouldn't assume that your hotel so it sounds as if it you somewhere to triple person to lead a triple.
The woman quiktrip or get older children.
Yeah sure.
Sure sure holds why itself.
Maybe I guess I'll, let you go through and so that you got filed but even that kind of course yourself El Dorado children's hospitals on the future.
Juices anyway schools they choose all these actions in the park.
We also lets you want.
Is that something.
So I Trust me myself, so on a new products side, Oh, what sports.
Well the matter, which are more color on the on the on your part up for example, okay. One place together and end up and that's the potential expansion into new verticals horsepower, let's such as these new initiatives over existing platforms and the second question is on a cash allocation the usage hold us imagine I think about occurrence.
Net cash balance.
For first a question for our new product. He was a is one of the categories that were growing pretty fast and Ah and as it should be pretty a significant scale in terms of the girls billings.
So currently we we plan to to have a standalone product Oh, that's probably won't be long.
[noise] nothing more than one I'm interested to share with.
Such analysts and investors.
You mean in probably the second quarter.
And Ah in terms of your second question of net cash 'em. We will we are still actively looking up the opportunities of potentially investment and acquisition targets and ER.
The cashmore, mainly reserved for for the potential investments and acquisitions, we will update a investors the Ah the investments and.
Or decisions that we do a when this happens.
Thank you for a question of sector <unk>.
I think it's about time.
Our debt coming along for the next question. Please.
Okay last question comes from the line of Binnie Wong from teach SBC. Please ask your question.
[noise] Shibani time somehow Asian today that isn't salt woman and that's how about you don't come out and get I guess, you never know woman the deal bushel Yep.
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HM East back on cost won't cause you. So do you assume on smartphones.
So it's impossible among the someone told us how quickly translate myself. So the question here is on the recognition season kononenko given that all competitors entering the market and they have also been emphasizing that 2028 will be knowing their revolution.
The revenue sharing to make it more a trip to to incentivize the streamers to go to on that platform. So in between these when he wants to sell expectations on our revenue sharing in terms of Directionally.
And then also aware that there will be only can you just in terms on competitive strategies to hopefully to keep finishes concept.
Although some of them either wasn't done anyways. It up we only see nine woman the answers on time, whom quicker to look at Townhomes Lee woman Nothing's Gonna be Eases Foundation.
They too good to get a smidgen did I wouldn't be the novel immune jeez I think it just doesn't should anyone listening MPT triggered by the functions, where you've chosen been doing that's when we got about the.
To give some Yahoo, the secret to Florida Boot here say, we'll Miss you on women's <unk> took a pretty back end loaded teasing you switched to a minutes and go to was entirely viewpoints that allows you won't you can do the ticket to woman go like we are doing cable.
Oh, historically, we have things happen any try part is trapped her and food and the platform, which is we are alphaville the talent agencies and other broadcasters we have been catch her catches Astro turf along so the revenue sharing between among those three parties half saying.
Stay at all or the past few years and when you're thinking along the main direction for their revenue sharing renewables will be stable as well, but since we have thing on keeping Amy nm broadcasters strategy and we will thing we have a and we will be.
Writing subsidies to those medium op income in broadcasters. So I'm after conclusion on when will.
And last somewhere in the keeping up the a broadcaster upon had not close it's Tim so that we can better subset broadcasters and then Tyson timely this is to generate more quality content.
[noise], let's say I think a where it's about time mm answer any further questions no. Okay. Thank you. Thanks for joining todays conference call and if you have further questions. Please feel free to kind of asked at IR App, we out outcome and we look forward to speaking with your international.
Okay. Thank you.
This concludes this conference call you may now disconnect your lines. Thank you.
Yeah.
[music].
[music].
[music].
[music].
Hello, Ladies and gentlemen, thank you for standing by for the fourth quarter 2000 might be.
The conference calls we incorporate them.
This time, all parties listen only mode to be gone right.
I don't know during the call over <unk>.
<unk> Company Investor Relations. Please go ahead.
Hello, everyone and welcome to <unk> fourth quarter 20, Nike Inc. earnings conference the Communist financial and operational results were issued earlier today and I posted online you can also mail. They are NAND flash released by visiting the IR website at <unk> Dot Dot com a replay of the call will be available on the.
Yeah, our website <unk>.
It is a back on today's call will be Mr. <unk>, Chief Executive Officer of we ask me as Katherine Lil Chief Financial Officer Management will be game was prepared remarks. After the call will conclude with securitization.
Before we can see no. Please note that predict discussion will contain forward looking statements made on or this is harder for leisure is up the U.S. Private Securities Litigation Reform Act. This 1995 forward looking statements in Bobby she around risks and uncertainties.
The communist wears off maybe materially different from the wheels expressed today further information regarding these and other risks and uncertainties is included in the Communist perspectives and other probably Follies, that's always the U.S. FCC accommodate does not assume any obligation to update any forward looking statements except as required on that.
Applicable law.
Please also note that we have earnings press release, and this conference call equal discussions of RBC GAAP financial information as well as obviously non-GAAP financial measures. We ask rationally is contains a reconciliation of the I'll now they didn't non-GAAP measures to the on all they'd be most directly comparable GAAP measures I will now.
The call right now I see all Mr. with the adult please go ahead.
Hello, and thank you all for joining our earnings call today, we are happy to speak with you today.
Following the completion all that great yeah, whereas that's Joanne pools balls on the 19 was that yeah, well, we for the Jenson our leadership position and any inquiries are mark this year in China booming game live streaming that's right by leveraging and does Janssen.
I mean, our comp and there has to and the sale <unk> Dream quoting Ecoson Tim.
The holdings <unk>, Yeah, we continue to English and that I was there by all our content offering by Bro, whereas they re investing in high quality below the cost of expanding our youth sports pulling them and cover on the coverage and the great Quieting Neil.
Self generated content.
As a result audio is that coming that they continue to spend oh opportunity on life and they all this increased by 10.8 Fontane Santiago yet to 150 bond that 2 million equaled pool in line with all I'll do that target.
Among all off we online.
Our yields that.
Mobile M. Aaos oral contained one part of the 5% year over year too soon to pay 1.6 minute driven by all our effective mobile.
Today.
How are you the seasonal but OLED <unk>, let's say for our use as as more and more about yields as come to our platform during the summer locating quota city and there's a winter of occasion in call. It the way.
And the more P. C O does come to all our platform during the quarter was it because he supports thought of men in quarter, one 2010 thing on mobile and mail it.
Hi affected the two huge historical high all old 17 million Guild pools are willing to occasioning seen season.
And so new center lopped off Palisades buildings, a current wireless outbreaks.
No bio and males inquiries stuff so that they four to five cents year over year, mainly deal with those that Dick I used sports pulling them and in the quota. So in game Pol pot streaming windows and promote here that by our games do I pod popping up and as a corporation.
He was offline internet cafes yelling that quota.
Monetizing capabilities also continued to improve their though thinking that the cooperation with El Abra contests and talent agency pop in.
Our revenue grew by 15 full pinter.
5% to yeah, well, yes, what thorough cuts in Italy, I M. B 2.5 billion during the fourth quarter. What she is a seventh kind of second consecutive quarter set we exceeded our management guidance since our IPO.
So with all done the 19, well, yeah, 11, Neal with new choose the I'm. The eighth upon 10 cities seven go down a inquiries all the 79 upon the 6% yeah, we yes.
Revenue growth also come along with gross margin and the operating margin improvement.
Once again.
Demonstrating our outstanding because their code sharing capabilities.
These are compressed she men in 2019 positioning us for our strong stop and the we head into the new Yeah, Oh 2000.
And that I'm very pleased to without human or business run so far in 2010 thing.
Our primary objective.
For the year to strengthening our leadership position in China and overseas, but that domestic market. We will continue to bring more high quality content to argue with us and et cetera, right to our new product and the service. They went up and then to happen.
Some of the neo called that well be in bad debt.
Within our core who we are alive.
Well, then well become stand alone as a separate today.
We will also continue to inquiries or influence in overseas markets.
John TJ occur initiative designed to capture the tremendous growth potential.
We believe our platform came out too.
As we continue that.
As we continue to improve and diversify our content, we expect that to Florida Coral Ah you use a base enpro ammonia ties aging and they increase so when do we bring to all our.
Counsel.
Yes, Jim.
Our company, our yields as a lot of putting us and our inventus.
Turning to that business that humans.
We made during the quarter.
Hi, there like to take a moment to talk about to the ongoing novel, Colorado virus outbreak donations outbreak weve right.
All that ties to the house, our employees by taking his salary but of course you.
Match us and the operating flexibility to look for our home so far no Oh out in Polys was in fact here.
In addition, we have always been committed to maintaining high standards, our corporate social responsibility, we put a why did the pro Bono services for the public or then including online tilt towards real streaming for color.
Uh huh.
Yes prevention Jared genotype music.
Sure and streaming service is full and do occasion ings to change and he had anything to that donating made up by a company and our broad contests and that talent aging things pop enough.
Limited.
Tendering set feel VIP 919 has increased Oh, I use as well about usage and that as a result on mobile Emily's new Cheetah medical at a high in called away.
So did the some mobile use us time spent but we will continue to close the rain money monitor involving the situation and assess if the impact.
Of course, accordingly, we believe that current virus outbreak will be overcome event, Charlie and our path toward the future growth prospects will remain intact.
With that said I went long terms on cool all that to our.
Neil CFO.
Considering Neil who hasn't been without slow several men says now instead of time her swift and active engagement.
As being pretty impressive and that we deep deep great value, so as Jeff TJ insights and extensive experience in that Chinese TMT sector. She will now provide the you was operating metrics guys in more details and our assessment.
How is that financials. So cancering. Please go ahead.
Thank you Mr. Dong I appreciate that well warm welcome any has been a pleasure to jointly asked management team.
Now fully mature don't remark and movies, specifically onto our content Richmond and diversification effort and important growth pillar that has supported our ability to meet the evolving preferences of our users.
In the fourth quarter of 2019 aboard captures licensing 45.6 million hours, both games and other entertainment content on our platform representing an increase of 37% from the same period last year.
We will continue to partner with talent agencies and recruit more broadcasters to ensure we are providing high quality content that remains relevant an interesting to our users.
Another important content source.
Fortunately remain vibrant and prosperity on our platform.
During the fourth quarter, we broadcasted 117 third party for tuning, including words to sound 19 PTC.
Yeah, that's okay winter and keeping our fall in Q4, I'll eat what to do a should exceed 530 million representing more than 830% year over year increase well the full year 2019, we broadcasted over 403rd party sports today.
The total viewership.
Over 2 billion, representing a 25% year over year increase.
Yeah, we have some exciting updates about El al tournaments broadcasting rights for 2020.
Following the strategic partnership that we signed with rising and this to me.
Exclusive Chinese broadcasting rights of LDK between 2000, 22021, 22, we also loved it down the exclusive broadcasting rights.
Lcs and out you see what you're down 20, Exclusivities well make we are the only live streaming platform for all four major al Regional beat in China as we also have broadcasting right.
Yeah.
We are also continues to proactively produce Alison organized E sports tournament that further complement the viewing experiences of game inclusive.
During the fourth quarter, we successfully produced a 30 branded tournaments generating total viewership of over 70 million, representing an increase of more than 20% year over year.
In November 2019.
We aligned and Nimo TV co hosted Asia, Influencer Sports Festival with Africa.
In Korea.
Lighting gaming broadcasters from good three platform to compete and touching and tough T mobile.
This is the first time that the company has organized a multinational event abroad with an overseas hardener, demonstrating we ask Steve immersion in E sports analogy, Chen and growing recognition on the global stage.
Full year 2019 will produce 120 branded tournament generating total viewership over 280 million, representing a 79% year over year increase.
Constant diversification is a long term strategy for yeah.
In addition to bringing more games and east what tournaments.
Growing user base.
Also cultivate non gaming content, such as enemy and comics outdoor traditional sport.
Well my theater and education.
In the fourth quarter over 55% of our users what's the non gaming constant.
Hi form.
Non gaming content generated around 25% of our stream in gross revenue.
Here, we have initiated two further enrich our non gaming content as being made to capture the growth opportunities. Let me share with some wouldn't use. Some recent example, such as we are electronic night and easy to use event featured performances.
Virtual broadcaster together with actual broadcasters and their digital thing there.
Taking a meaningful step toward our HCT.
Duration.
Outdoor and traditional sports content from the organized we are comfortable kind of a.
A mixed martial arts competition that you might here, we are celebrating outdoor broadcasters to join the stage and compete with professional fighters.
The last even generated even more viewership and average daily viewership of El Al All Star.
All that being said, we continue to see tremendous opportunities to serve beginning population with comprehensive coverage of different content categories and we are on the right track to cease the writing up potential.
Looking at the advertising side of who asked business 2019 was a landmark in here, both advertising and other business with full year revenue growing at approximately 80.6%.
Despite the macro headwinds in advertising sector.
In 2019, we put happening more experience the team extended our advertiser portfolio diversified our AD product offerings and launch that add distribution platform.
Selecting on the work we have done we have made great strides in gaining more recognition across advertisers, both gaming and non gaming Brent.
Internationally, we have gained a significant overseas cousins in less than two years without overseas and may use reaching approximately 20 million in the fourth quarter.
Capitalizing on the growth opportunities in the emerging market.
Overseas cousins, well continue to serve as a core differentiator for us.
In the game live streaming landscape and who will persist.
Total expansion effort as the year progresses.
In addition investments in our technology capabilities with immediately evident and the positively received my I was really user base and improve the video quality of our lives streaming content.
Yes, the interaction between our users and broadcasters and increasing the efficiency of our bandwidth usage.
I believe our high definition screening capabilities on mobile devices.
And our cutting edge AI technology are among the best in industry in the fourth quarter, we signed a strategic partnership and established a joint innovative central with Molly.
Well more opportunities in Fiveg.
Now services and game like streaming.
We still believe Fiveg will serve as inspiring catalyst was driving error of cloud gaming.
This could you, especially be the case, what driving like streaming to be more relevance in the game industry upstream market and we are continuously updating supporting technology to best to prepare ourselves and leverage this exciting movement.
Now, let me walk you through our financial highlights.
Fourth quarter financial results reflect we absolutely.
On both the driving user and revenue growth and improving operational efficiency and margin.
In the fourth quarter, our total net revenues grew by 64% year over year to RMB 2.47 billion, our non-GAAP gross margin improved it to 19.5 per cent compared with 18.3% in Q3 2019 and 66.
18.1% in Q4 2018.
And our non-GAAP operating margin improved to 7.4%.
And it was 6.5% in Q3, 2019 and 5.5% in Q4 two HM.
Our lives streaming revenues increased by 62.7% to RMB 2.3 billion in the fourth quarter of 2019. The increase was primarily due to the increase in average spending are paying user.
Our pool as well as a larger number of paying users.
Hi.
Online streaming ARPU increased about 53% year over year, and 13% quarter over quarter due to our year end promotional activities.
Well as our enhanced the constant and user experience.
The year end promotional activities, we're focused more on improving existing paying users ARPU.
Acquiring new paying users correspondingly the total number of paying users was 5.1 million representing year over year rose, 5.9% leased some sequential fluctuation.
Yeah, I would like to App that we typically look at this two metrics together, both the number of paying users and the ARPU to determine the engagement level of our users do the business team with the take the strategic priority between the two.
Measured depending on a quarterly line up of activities. They open eyes, and then the seasonal circumstances they have.
In the first the quarter of 2020, driven by the strong mobile and meet your growth resulted from school holidays and the reason lockup loved policies. We expect the total paying users will reach and historical high.
Over 5.5 million.
Advertising and other revenues increased to 92.1% to RMB 121.3 million in the fourth quarter of 2000 2019.
Primarily due to higher demand for more advertisers more diversity, our new advertising distribution platform that we launched in Q3 and de strengthens recognition.
Brand name.
As we continue our innovative product development to offer more diverse forms of advertisements on our platform, we can create more value for our advertisers.
Cost of revenues increased by 58% to RMB 2.0 billion.
In the fourth quarter.
Increase was primarily attributable to the increasing revenue sharing fees and the content costs.
Bandwidth costs and personnel related costs.
Revenue sharing fees and content costs increased by 51% to RMB 1.6 billion in the fourth quarter. The increase was primarily due to the increase in virtual item revenue sharing fees in relation to higher live streaming revenues continued spending in content creator.
An E sports content in both domestic and overseas market.
And was partially offset by benefit from economies of scale.
Then was caused increased by 39.6% to RMB 225, 6 million in the fourth quarter increase was primarily due to increasing bandwidth usage as a result of our larger user base and he has a live streaming video quality.
Partially offset by improved efficiency in bandwidth utilization, we will continue technology enhancements Stafford.
Gross profit increased by 95.5% to RMB 46.
466.6 million in the fourth quarter gross margin increased the to 18.9% in the fourth quarter from 15.9% in the same period of Tucson 18.
Non-GAAP gross profit, which excludes share based compensation expenses increased by 98.7% to RMB 481.4 million in the fourth quarter.
And non-GAAP gross margin increased to 19.5% in the fourth quarter or 16.1% in the same period of 2018.
Gross margin improvement was primarily due to economy of scale and improved efficiencies.
R&D expenses.
Greece, the buy at 125.4% to RMB 178.
3 million for the fourth quarter, many attributable to increased personnel related expenses.
Sales and marketing expenses increased by 97.6% to RMB 118.3 million for the fourth quarter. They increase was primarily attributable to an increase the marketing expenses associated with the promotion we asked products.
Brent name in both domestic and overseas market.
Well as increased personnel related expenses.
General and administrative expenses increased by 4.5% to RMB 96.4 million for the fourth quarter. Many due to increased the personnel related expenses.
Operating income increased by 448.7% RMB 100, a one point sixmillion well the fourth quarter of 19.
Operating margin increased to 4.1% in the fourth quarter from 1.2% in the same period substitute HM.
Non-GAAP operating income, which exclude share based compensation expenses increased by 122.8% why RMB 183.8 million well the fourth quarter and non-GAAP operating margin increased it to 7.4% in the fourth quarter.
5.5% in a same period of two HM.
Operating margin improvement was primarily due to the improvement in gross margin.
Income tax expenses.
Were RMB 27.6 million for the fourth quarter compared with the income tax benefit of RMB 31.8 million in the same period of 18.
Net income attributable to we out in the fourth quarter increased by 60.3% to RMB 159.7 million.
From RMB 99.6 million in the same period of 2018.
Non-GAAP net income attributable to the fourth quarter, which excludes share based compensation expenses increased by 44.9% to RMB 241.9 million.
[noise] net income increase was primarily due to the increase in revenues the improvement in gross margin and partially offset by income tax expenses.
Diluted net income per ATM.
The.
<unk> 0.68 for the fourth quarter compared with RMB Zero point 45, well the same period of 2018.
Non-GAAP diluted net income per ATM.
Was RMB 1.0 to where the fourth quarter compared with RMB zero point 76, well the same period of 2018.
Now turning to the full year 2019.
Our total net revenues grew by 79.6% to RMB 8.38 points 37 billion. Our lives extremely revenues increased by 79.5% to RMB 8 billion.
Due to both the increasing ARPU and then the number of paying users.
Advertising and other revenues increased by 18.6% to RMB 398.3 million, primarily driven by rising demand.
From an increasing number of advertisers more diversity advertising clients, the new advertising distribution platform and the further recognition of we are running in Chinas online advertising market.
And for the full year 2019, our gross profit increased by 100 or 3.1% to RMB, one point 48 billion.
And gross margin increased to 17.7% in 2019 from 15.6% into some 18, our non-GAAP gross profit, which exclude share based compensation expenses increased by 100 or 4.5% to RMB 1.51 billion.
In 2019.
And the non-GAAP gross margin increased to 18.1% in 2019 from 15.9% interest on 18.
Gross margin improvement was primarily driven to economy of scale and improve efficiencies.
In 2019 of operating income increased by 880.3% to RMB 261.4 million.
Operating margin increased to two or 3.1%.
In 2019 from 0.6% into some 18.
Non-GAAP operating income, which excludes share based compensation expenses increased by 100.
14.4% to RMB 543.1 million in 2019 and non-GAAP.
Operating margin increased to 6.5% in 19 from 5.4%.
[noise] operating margin improvement was primarily due to the improvements in gross margin.
And operation efficiencies.
Net income attributable to from Yang Ming 19 was RMB 468.2 million compared with a net loss of RMB.
1.9 billion.
In 2018.
Non-GAAP net income attributable to yeah in 2019.
Which exclude share based compensation expenses fair value losses on derivative liabilities and gain on fair value change of investments and equity Investees investments increased by 62.7% to arm B.
And 149.9 million.
I knew the diluted net income per ATM was RMB 2.0 to 2009, <unk> compared with diluted net loss or Ats of RMB 15 point here too in 2018.
[noise] non-GAAP diluted net income per ABS was RMB 3.23 in 2019 compared with RMB 2.06 inch was on 18.
As of December 31st the 2019 the company.
Cash cash equivalents short term deposits and shortcoming investments.
Total RMB 10.1 billion compared with RMB 6 billion.
As of December.
First the 2018 and net cash provided by operating activities was RMB 571 point Sixmillion for the fourth quarter compared with net cash provided by operating activities of RMB 191 million in the same period of 2000.
18.
Well the full year 2019, net cash provided by operating activities was RMB 1.9 billion compared with net cash provided by operating activities of RMB 701 7.5 million.
In 2018.
To be mindful of the Len about earnings call for the full for the other full year 2019 financial results I'll encourage listeners to refer to our earnings release, well so that each house.
Turning to our guidance for the first quarter of 2020, we currently expect total net revenues to be in the range of RMB.
200.
2000, 360 million to RMB, 2000, 400 million, representing a year over year growth of between 44.7% and 47.1%. This forecast the considers the potential impact of see over 99.
19 outbreak and reflects our current all current and preliminary views on the market and operational conditions, which are subject to change, particularly to the potential impact of the corona virus on the economy in China and elsewhere.
With that I would now.
Turned a a open the call for questions.
Ladies and gentleman, who will now begin the question answer session. If you wish lots of questions from spots are wanting a telephone adequate singing.
If you wish to cancel your question. Please press the pound attached.
On the Internet Simon just call. Please only ask the question.
For the benefit of all participants on today's call. It at least unless your questions a management in Chinese. Please immediately beat your question English.
Your first question comes from the line ups Thomas Chong from Jefferies. Please ask your question.
[noise], John how especially I body Chong jets hold at U.S., Oh, there wouldn't be issued why Reenrollment challenge either time that.
D shots you thought you saw that Joe Shan woman side, we don't see if I'm fall I O Joshi fail should you bought it with a pilot woman relied upon them on the final south issue yeah.
The father Doshi warm and why that time that oney chunky. It been shop, you saw that moment try a high why the total geopark offense management for taking my questions and my question is about the long term strategies.
Oh, Yeah, a first Oh can management comment about our strategies in called painting distribution and opportunities that we are embracing and second the east about the on game bought cost paying.
Apps our strategies.
And then my second question is about our investment <unk>.
In overseas expansion I can management talk about.
Our investment focus okay P.I.S., we go into overseas market. Thank you.
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Okay.
Oh I first question regarding the o'clock in hand, I'm actually they have being closely paying attention to victory I'm in the year I financing and Oh here. This year, we started to reveal a specific sector and we have not just at the.
Rather nail per year, there and as a cost of the user the gap between the revenue per year. They entered the coffee or there is actually lap narrowing down and we think the economy Alpha clogging currently within kids, so probably a rack ready and or whether it takes his time for us to entry this specific sector and.
And Hmm efforts that Oh, yeah.
Premiers Cogs will close way paying attention to this coffee me, but let's just had means that it's still early stage, where those before this whole industry to grow and so for the users well informed we wouldn't think alister for this year when would I think.
Talk any is going to impact the laws on the you'll then rose last for your question before they talk any for you our country regarding the non gaming <unk> long game, a live streaming I'm actually this cost of quickly non gaming live streaming users is actually picking up too.
Half half the users of the platform, it's actually a watching the non gaming live streaming and waiting in the Oh for 2019, the growth rate of seven non gaming a ics streaming users is actually faster than the bras rates offset 18 years.
We see the rising on content categories, such as H.T. outdoor 40, and traditional sports and it is ours or a fastest growing arconic categories as well <unk> power or content Jairam a specific we're focused on a year.
Sports and we always do we will towards non game streaming as a strategic priority and disaster two hours. He does not only include a live streaming but also to a anchor for sure if one or two in core the videos.
So for the non gaming I wonder just to try and that attracted to explore more opportunities whether if one of our lives Cheney and a immediately for you all Oshkosh parents RMB Orthofix nationalising for the performance I will oh, its its business, it's actually being leased.
Management expectation as they sat Eau Claire and with that shifted their 20 my way I mean, you in the fourth quarter. After 19, and I think we'll capture that well they'll keep that whilst momenta and they Ah for 20, Twond can you, maybe two or 50% CEO are way up rose four hours is I mean you.
That's it.
Your next question that was in line.
Your next question comes from the line up late from Bank of America. Please ask your question.
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Hi, Mike what job Gulf won't be quite Flaminio mail, just missing that downside.
Sensitive myself, that's management for taking my questions first question about a user growth in Tempe trends.
All what's our targets that you see a and each and the are wrong all corner ballots outbreak, especially a woman sounds that no way rich a historical all you there all historical high in the fourth quarter, but well see all naik low down ops or are people come back to work and the second.
I want to follow up on over keep that she was in our targeted to constrain Penske trends that are what's your workers. The on that your March in market.
Plan to go to that you've had some arcade and at what is our plant in monetization of the overseeing intensive pennsaid. Thanks, so much.
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Your first question regarding the euro growth there are several dimensions to it I finish best friend afraid flavor.
Is that we will keep call on our across Africa. It seems like him why streaming factor.
Especially expectation for the new blockbuster games coming into your off at 2020 for example, like downturn. So fighters mobile version in the first half and a league of Legends Mobile version, probably later this year and we think Wabash her it's actually will help style.
We added user growth and then second growth driver could be the east west ornaments and they actually have seen enter your friend 19 game developers Hatton has been and lock down a lot to deployed there is forged ornaments and away thing.
That will further how Pos so maintaining I went browse momentum in the users and a the third one as the product the diversification.
Yeah. It's about 2020, we have some products up perhaps lives are lining up a like for example, the first one is the EA sports community and secondly is a co plays down alone App and Ah for apart from apart from the live streaming business.
So we have always been doing we will also.
Spasm efforts in the and every I'm video services, especially in the entertainment sector and also clocks gaming proud that there will be a another I'm proud that our diversification effort for this year and we'll closely monitored the.
Industry Hoffman and for the fourth was rather for the users is that a way have Oh, we're always things here. So.
Great growth potential for their non gaming sector, whether in the form of our lives training or and a form of a video service. It there's a greater market there and it's going to be a strategic priority for us into your Alpha 2020. So that they are there for your first first question regarding the use of wells.
And secondly, whether people are getting back to work will impact our rollups. After the lost on policy and they extend these holidays of people because that's a call that 19 on wasting the impact so it's not so big and it based on that it's the team.
That way Sol and.
Because there's a real time for you then, especially the students there still oh, there's deal I'm getting classes or at home and we can consider this specific time affect your as a similar to a winter holidays, where summer holidays Wow historically this.
To this school this two kinds of for school holidays are at the time that way experience. They use there was a lot.
For your [noise] <unk>.
Question regarding our hours this strategy, a and whether we will only do the emerging markets. We think afford that they lost some market, Japan and Korea as going to be our next the targeted asked me see there's a lot Ross potential here and.
And for the European countries, and the United States waste, we don't really think there's two reasons won't be will be easy Oh focus because it's gonna be a long shot. So now for now for European countries, and the United States and monetization and it's going to be a focus for the.
How many in the always is mark has only if we have a I'm not sure metanor has enough on monetization that away located our content Atlas is 10 vibrant.
So that's out let's Oh before the next question.
Your next question comes from a line of them Chen from JP Morgan. Please ask your question.
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I would try to play myself or my first question. It's a follow up on the use of world. So much money, maybe talk a little bit on your usage growth strategy, especially lower tier city.
The second wise on the modernization front. So we have a very good run in revenue growth in 2019, so what's the key strategy to strengthen and what that station a impose gaming and non gaming segment in part D. Twentys. Thank you.
Our football Ziggo, you sentences on their phone within sensor.
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The answer is under that there's a minimum pull the trigger ticked up you don't the agenda, the woman's leasing fees on its own convincing and where you. They said that if it I mean, who could.
So we had essentially the took a younger table on sentiment towards closer to the downtown.
[noise] for you. Our first question regarding our deployment strategy in terms of seat here three and here for users and we think actually observed that sands cash or have some <unk> and she'll be analyzed streaming.
Sector and a with their special I'm penetration into that here shortly and here for a Cds we have observed.
It's a positive impact on the you'll deferrals on memoranda. So a in other words and because the <unk> entrance, we see that's where panning treating deeper into that hears me and it here for cities and also another observation from the common as I as I always think system.
And the types of students users are taking a larger proportion of the overall user base and it is our us all penetration ancient history and here for cities and she palm to serve these are rising a user well stuff.
Students I will be as a tool or strategic focus for us in the off a 2020.
And if we were second question of monetization.
We think that Ah first so we will still are trying to attract more new users and then I'll keep converting the new users and they says he users to paying users and then second to increase our pool of we will continue to one is to improve our current product offerings.
Such as a enrich and diversified content.
And also we were trying to develop somebody innovating new products to offer to our users to help monetized.
Thank you for question and then please move to the next.
Your next question comes from the line Alex you from China.
Please ask your question.
She said why it's called thinker well kind of MPRP, you got hurt us already question time country managers or whatever.
Okay, well I think a trend since you've got solid I should then I'm not sure as a secular troubles in others.
Offerings radio for the metrics.
Yeah, I hope you're showing interest in that your folks out so it sounds as if it you somewhere it before or since you made a triple or your performance. We tripled you don't virtual centric so she ownership.
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Maybe I could tell what is your once they're actually go fight on budget and that kind of course yourself El Dorado sandal juggernauts it moves on the future.
Juices source they choose how they got kicked in so far but it won't stereo Milton lets walk.
Which is that something.
But trust me myself, so on a new product side or what's what's the.
I would imagine pressure more color on the on the on your product for example, okay, one place together and and and that's the potential expansion into new verticals.
Lets such as these new initiatives over existing platform and the second question is on a cash allocation the usage caught us a management think about a current not cash balance.
Well first a question for our new product. He was a is one of the categories. That's a war growing pretty fast and Ah and leveraged at a pretty.
Significant scale in terms of the girls billing. So currently we we plan to.
To a stand alone that oh that probably won't be long.
[noise] definitely.
<unk>.
Okay to share with with usage analysts and investors are you seeing in probably the second quarter.
And in terms of your second question of net cash we will we are still actively looking at the opportunities of potential investment and acquisition targets and the cashmore, mainly reserved for for the potential investments.
And our position.
We will update a investors or on the the investments and.
Organizations that we do when this happens.
Thank you for a question Oh sector.
I think this.
Our that came along for the next question. Please.
Okay last question comes from the line Binnie Wong from he chips BC. Please ask your question.
[noise] Shibani time, I'm talking how you said today hedges and short woman and that kind of RG don't come out and get I guess, you that ran a woman the deal bushel, whereby we will just should revenue sharing that neither suncoke central boys I'll add some color.
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So on smartphones.
Sizeable among the someone told us.
I will quickly translate myself. So the question here is on the Reformation season cotton costs, given that all competitors entering the market and they have also been emphasizing bops and 2028 will eat knowing that revolution, increasing the revenue sharing to make it more I tried to.
To incentivize the streamers to go to on that platform. So in between these Wendy what this whole expectations on our doesn't Sherri in terms of Directionally and then also our whether there will be able to just in terms of competitive strategies to hopefully to keep finish your concern.
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Oh historical way, we'd have thing happening a tri party structure and putting the platform, which is we are alphaville the talent agencies and other broadcasters we have been catch her captain destruction for a long so the revenue sharing between among those three parties half saying.
Stay at all or the past few years and when you're thinking along the main direction for their ravenous shown I will will be stable as well, but since we have thing on keeping Amy Nm rock has to strategy I will think Oh, we have a and we will be.
Writing subsidies to those meeting and I can comment broadcasters, so I'm African slowed down when will.
Let them more Andy keeping assay a broadcaster upon kinda back office 10, so that we can better subset broadcasters and then Tyson timely this is to generate more quality.
[noise] [noise], let's say I think a where it's about time and answer any further questions. No. Okay. Thank you that go for joining today's conference call and if you have further questions. Please feel free she'll kind of asked at IR App, we out our common and the way I look forward to speaking with you.
The next quarter. Thank you.
This concludes this conference call you may now disconnect your lines. Thank you.
Yeah.