Q3 2020 Douyu International Holdings Ltd Earnings Call
rule our financial and operational results maintains the stable growth rates in the third quarter of 2020 with our total net revenues increasing by 37.0% each year to RMB to 2.75 billion. We also achieved the 7th conductive quarter of positive. Non-gaap. Net income at the same time our Average Joe Mobile account maintained its robust growth trajectory increasing by 14.4% year-over-year to 59.6 million while our quarterly pay users with the group by 12.7% year-over-year 27.9 million during the quarter.
Despite the lingering effects of COVID-19 and brother macro and 72 all throughout the country users continue to flock our equal Centrex masculine form or its vibrancy and instrument our total average m a used reach $194 million during the first quarter of 2020 which was attributable to five fact our collaboration with hands and painting we added more users especially those users on the PC platform also broadcast of wage scale for tournaments such as the Chinese summer tournaments helps expand our user base while engaging those leaders laid inactive users at the same time in the month. You can launch has attracted a wave of brand new users to our platform during the third quarter.
It's summer holiday boosted students dealership and contributed to the positive impact of a more hour continuous refinements of like platform applications has enabled us to see these options opportunities emerging from East events and tournaments and help us to achieve steady growth in all of our operating Matrix took our content ecosystem. We continue to enhance our in Centric is Bob platform increase the content stress and death in every segment of our platforms develop a variety of innovative content floor mats and expand our coverage up and down the info industry value chains during the quarter. We achieve Superior results in investing high-quality fourteen. For example, our sponsors League of Legend teams such as the LTD and Gigi or advance to the birth.
1320 summer Playoff Series championship when you lease signed pubg in 200mb emerge as the dock whole team of twenty Twenty-One the public place in another world participation in this year's tournament meanwhile off our collaboration with ten cents and other game developers and Publishers and successfully broadcasted more than 15 large-scale official Esports tournaments during the quarter month. For example, we obtained the exclusive broadcasting rights for a mega League, which was one of the largest professional Championship $4 to in the world the further of our platforms Grant English.
in addition we sell
Produce more than fifty high quality is poor parliament's to do. Most mostly with organized the 10th consecutive production of our proprietary is what event a Golden Gloves tournament which has gone into one of the largest pubg tournaments in China.
As we continue to innovate our business model, we improve our user experience significantly by launching the beta version 2.0 of cloud game, which has a Brand New Jersey you are designed as well as optimize server functionality and compatibility going forward. We plan to explore further into Cloud games. Also as we almost completed the design and development of the mobile application for pre-recorded game videos. We were able to rotate pre-recorded game broadcast with live stream content wage, but a more diverse supply of contents to a platform expand our coverage of various user scenarios and stimulate our user engagement.
On the streamers front we continue to improve our efficiency in managing and monetizing the mid-tier and long tail streamers during the. We are glad to see that it has become a norm for our panel kind of agencies to proactively uncover and grew music streamers. Also Revenue contribution from our mid-tier and Lounge of streamers have been increasing may have been increasing continuously position by recruiting the new game streamers to our platforms. We have been able to cover a broader array of user demographics.
Looking ahead. He showed continue to execute. Our game comes in Centric growth strategies engage more than users through diverse Concepts capture you the additional twenty one out of new game title launches. That is by a wider range of user viewing demands through supplementation of mundane content for actively explore new business and invest in those areas along with our long-term strategy.
In terms of Education as we continue to refine and optimize our interactive product functionality. We were able to grow our economy pay users by 12.5% over here to 7.9 million an hour paying ratio to 4.1% during the quarter while our will also increase by 25.2% off of year 297 R&B in addition to solidify our existing users paying habit. We wrote out additional Innovative. They did add more pages and lay a solid foundation for our sustainable growth in both pay users and overall revenues.
Looking ahead. We will continue to explore new product functionality and revenue models has our platforms overall operational efficiency and Advance the politicians capability for every platform segments or even every livestream you at the same time. We will bolster our Management in the design and production of events. Do you promote when it has he shouldn't consistently?
On the research and development.
Will you continue to invest in our technology development capability during the quarter with our support for the display functions of the more efficient video compression technology package. What users can enjoy videos of the same building quality was only half of the previously required bandwidth the leading to a closer viewing experience, especially with our mobile users as we continue to implement the display functionality of H, 265 across all platforms will folk 44 see more room to optimize them with cars in addition. We wrote out the real-time playback function as a large-scale on our platform by leveraging AI Technologies to accurately Tak PK moment to just kill and Tim Roth. We enabled our users to replace precisely the moment of the choice the significantly improving their viewing experience.
On the globalization front we continue to increase in our investment and exploration in the Japanese Market as we made further Improvement to the product functionalities off the content varieties of our Japanese live streaming platform Milton. It was able to maintain a steady growth trajectory.
Summary during the quarter. We sustained our continued growth and exploration in our user base pension and the content ecosystem development looking ahead replace. You took out our bank account and Central platform deployed resources goes up and down stream the East Coast industry better chains poster our operational performance package of effort and optimize our user experience for the more. We remain committed to upgrading our platform monetization capabilities improved operating efficiencies and enhancing our financial performance over the long run.
On October 12th, 2020. We entered into an agreement with who we look forward to working together with we are by providing our users with high-wage accountants and services and creating long-term value for our shareholders in the future with that. I will now turn the call to our vice president of Finance Mister how long to go through the details of our financial performance in the circle?
Thank you, Mama. Hello everyone in response to the sales performance of Southern major plan events with 256 action shifting application in the second half of the year to the development of content and acquisition of casting rights for his first game in addition. We also maintain a focus on new and innovative ways to further optimise user streamer interactions on platform as a result of other revenues in the subject 20 increased by 37% to R&B 2.5 billion from R&B 1.86 GB in the same period of 2019.
With live stream eruption. He was in the same.
Increasing by 41.3% year-over-year. Meanwhile also improve Network on that income in the third quarter of an advantage R&B 59.6 from a net loss of R&B 465.4 in the same period of 2019 while adjusting that income in the month of 2020 increased by 36.8% R&B. Ninety-eight point seven million from arm be seventy two point two million in the same period of time, please allow me to provide you with some more details regarding of financial metrics.
Total revenues in a supporter of 20 increased by 37% year-over-year R&B 2.5 billion with armed be 2.35 feet it in live streaming revenues and R&B 197.8 M as in Isaac and other revenues.
That's truly revenues in support of 20 increased by 45.3% R&B 2.35 billion from 1.6. The same period of 2019. This increase was primarily like sugar to the improved. They have it for existing users as well as our successful Track Shack up a new and users resulting from our continued requirements of events becomes McAdams as a result paying users in a certain quarter of 2018 compared to 5.7% to 7.9 million from 7 million in the same period of last year.
In addition improvements made interactive features also helped to raise user payment frequency platform and drive the growth of money. Yeah over here basis and other revenues quarter of ten twenty increased to the farm beef 197 for eight minutes off on be 196 when 1 million the same period of 2019.
Which was mainly driven by ongoing growth of a brand recognition and the corresponding increase in demand was dreamers integrated advertising and promotion Solutions.
Avenues in a set of quarter of 20 increased by 41.2% RMB 2.1 billion from 1.5 months in the same period of the nineteen more specifically revenue-sharing fees and the current costs the third quarter of 2020 increased by 48.9% off the arm be 1.95 billion from R&B OnePlus 3 1 billion in the same period of 2019 the increase in Revenue sharing fees and The Cotton Club and generate explain why the following driver's first during the quarter or revenue-sharing fees increased which was mainly due to increases in livestreamer news in the same. And the increased incentives given to streamers to read certain major events.
Looking cause increased which was mainly driven by three factors first. We continue to engage with party streamers abroad expand our footprint wage overseas markets, especially in Japan second. We continue to focus on innovation of Platforms in sports related content and 3 a.m. We purchase additional live streaming rights for a sports games in the second half of 2020, which was previously in late in the first half of 2020 as a result of authors of COVID-19. I wish cost in the third quarter of 2020 increased by 12.1% The arm be 169 Point 1 million from a 150 point the same. 2019. The increase is to bandwidth costs were mainly driven by increases in both mobile user profile.
And the user engagement partially offset by the efficiency improvements regarding from technical upgrades.
Profit in the third quarter of 2020 increased by 16.6% to arm-based 369.4 million from R&B 316.8 million in the same period of 2019 plus Martin in a certain quarter of 2020 was 14.5% compared to about 17% the same. 2019 now turning to operating expenses.
those are the marketing expenses in the first quarter of 2020 decreased by 7.5% Farm be 160 + 3 million from 173.2 million in the same period of 2019 mainly due to the decrease in service compensation expenses recognized in the quarter of 2019 calling off of
research and development expenses in 1/4 of 20 decreased by 8.6% to RMB 109 point six million from R&B 105.9 million in the same period of 2019 just increase the decrease was primarily due to the decrease in shows based compensation expenses recognized in a supporter of 2019 IPO, which was partially offset by increased expenditures for the research and development of new products as well as the The increased head, overseas research and development personnel.
During the quarter of 2020.
General and administrative expenses in a certain quarter of 2020 decreased by 59.6% the R&B 94.2 million from I'm be 832 point nine million in the same period of the nineteen many as a result of the reduced service conversation expenses recognized instead of quarter of 2019, which was partially offset by increased increased in professional service fees.
Showbiz conversation expenses allocated operating expenses in third quarter of 2020 was armed be thirty three point two million compared to R&B 228 submit in the third quarter of 2019 and R&B say 3.9 million in the second quarter of 2020.
Operating income net in a certain quarter of 2020 was 32.5 million compared to the farm beef 11.8 minute in the same thing. 2019, but just the operating income in the third quarter of 2020 which excludes your first conversation expenses increased by 100% off 8.7% to farm P 71.2 million from R&B Thirty point eight million in the same period of 2019.
Income in in the first quarter of 2020 was R&B 59.6 compared to a net loss of RMB 165,000 meet it in the same period of 2019 but just in an income in the third quarter of 2020 which excludes service conversation expenses Shuffle off inactive Investments and income loss of Investments improved to arm B 98.7 minutes from R&B 72.2 million the same. Seventeen flying and just in in the margin of 3.9%
What's the corner of pretending that income or arm be .27 and R&B .26 respectively why the gas T basic and diluted net income editors or R&B 0.39 and R&B point three nine respectively.
A result of the uncertainty surrounding the current medicines action, which we believe could potentially affect your views on both operational conditions as wage Market. We will not provide guidance for the first quarter of 2020 and we prevailed throughout remainder of 20 and Beyond we remain committed to improving when it says it is and operating efficiencies and the same time. We also plan to continue upgrading our user experience that was fine a platform of choice and building of international initiatives to capture additional market share you selected overseas markets.
This concludes our prepared remarks for today operator ready to tell questions to ask a question isn't one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at anytime your question has been address you would like to recharge your question, please press star them to please note. We ask you first close your question in Chinese and then repeated in English at this time. We will pause momentarily Thursday roster.
and today
First question comes from Daniel China would JPMorgan please go ahead?
Why nobody is here. Hold one moment. Let you shooting the sequel so radius 2.4 engine see some ideas changing the bulb. All right, you want me to tell you I mean YouTube. I have a question on the on the merger deal with who? Yeah. So how do you throw you off at 10:38 EST in exchange for 7.3 of who you are and what are the major process in the future for the merger to and which we think we receive on the financial release that will happen in the first half of the new one. Thank you.
2018 Honda. How are you? Do you go to the machine off a mass on the telephone and gender woman make a month. I think it's under attack. Don't wait that he change.
Translate to English regarding the question on who we are and so you have established a special committee composed of independent directors and with the assistance of financial advisors and legal counsels. So special committee conducted due diligence on their respective companies accounting tax business operation. They go and other relevant matters and carefully evaluated Financial forecasts and battery issues and engage in the negotiation of agreement on behalf of their respective companies on this basis. Both companies independent financial advisers have provided the special committee may have finished opinion on the exchange ratio and based on the special committee's recommendation and our board of directors approved the merger dead.
When you who should I hear tomorrow's going to talk?
Yes, pink or the public to go to Thursday. Thursday, so I'm not yet. I'm waiting for me enjoy that she she she said as he took off.
Regarding the key Next Step, you know a few hours ago. We are has filed a form with is coming to be waiting for review page, which is a form for forming issuers in relation to you. I mean, they trying to connection it serves as a registration statement for a we ask you the issue staff which also includes a down payment for a W-2. So this is vote from its own shareholders had the upcoming shareholder meeting. So for my poor also contains other crucial information, I can get you the manager. And in the meantime, we have submitted a form 33 to the SEC for its approval which is an application form for existing and, efficient way up to getting approval on at 4 and we will hold and extraordinary general meeting to vote on this merger and was the number of votes for the emergencies.
Tuesday of those both presented at the meeting the merger will be considered approved by our shareholders and regarding the timetable. We don't have a definitive answer yet. But you know, these are working towards, you know finished or closed the the transaction.
Thank you. Our next question today comes from Alex with Renaissance, please go ahead.
And this is his voicemail and see if I could find Beach on hold on. Could you share with us? Where are we going to see the the Synergy on both revenue and cost side going forward? And the second question is that I noticed our bandwidth cost on the job slash sequentially this quarter. What are the main reasons? And how should we take about decided in the longer-term? Thank you.
You'll have to take off the trickiest location that you guys took off off off.
26 for the month of June due to the fact that the merger has yet to clothes. We have not reached a conclusion on the potential Synergy effect. We could achieve on the merger and neither have responded by these synergies, but I am from a higher level. We believe there are a number of areas that we should explore for the synergies. First of all users and revenues. We believe the content of mobile and PC game.
Respective platforms are complementary to each other and the merger should result in more comprehensive content coverage to further improve the death and breadth of the Consolidated College to further boost you the traffic and using a judgment and secondly from cost-effective. We think the merger will create a better economy of skill on Thursday, for example streamers signing bonus. And certainly we think there could be further synergies to be achieved from other operating expenses such as g n a r d and it infrastructure expenses and in the future, we believe that both platforms tangling will be able to you know, leverage their respective leading Adventures on getting content and the strengthen our joint cooperation and she developed more Innovative user interactions accounting format dead.
and in addition method
Thanks to be shut off. I need you phone calls.
Regarding your question on the reason. We are seeing an increasing trend on the bank account. So increasing trend on on the basis of life in the so-called their bandwidth costs increased slightly due to the fact that we have seen increased with the traffic as higher use engagement as well as more intensive tournaments off doing the. But just increase was partially offset by our video coding technology, which helped us to achieve more efficient bandwidth usage in the colder months and we expect the bandwidth costs in fourth quarter of 2022 increased slightly on a sequential basis. Do you two more equal tournaments during that time?
Thank you know next question comes from Bank of America, please. Go ahead. What do you guys offer higher wages that shipping here for the service department and she goes off.
Well, that's good.
Stop, please. Find out who called to the competitive landscape. Could you share with us your update you on the competitive dynamic in recent quarters? And do you see any change in the industry after our motor with a second today? We noticed that some of our shop we do here is also doing like a trouble with you and Ecommerce streaming. So can you hear me some updates on your game video and e-commerce like Jeremy business and another Hub shipping question on the OPAC. What are the main reason of the increase of old packing? That's so important and how to do I do keep the old faction, and that's why not to. Thank you.
I'm just going to send it to the wrong question the noodle bowl. Let me see what you see is what you could you hold off, so you don't have to use to call you the $5 a month.
Can you see your new network name of your dealership higher wage? If you're looking at you guys can contribute to a question mm. Wait to see you Monday through Thursday.
Okay, I will translate for the the response to the first question regarding the competitive landscape. We have nothing has been changed in the last quarter received a leading change my screen platform. We continue to view our game Centric content inconsistent and energized our import community and the for other users excitement such as banking short form short form video platform enter the game live streaming space. We seen both you the traffic and customers application to increase accordingly, which has also helped to raise the seating of the entire game matching market and the further accelerated the development of industry and from Thursday competition productive who believes in the truck runs the industry conditions. We are mainly revolved around the requirements of marketing efforts the birth
The patience of high-quality accountants and the innovation of Nations Bank in the long run. We expect the condition to focus on more rapid.
Product update and innovation of content form such as review and entertainment content and the establishment of social communities that Iraq has been held such as you know equal energy and the for the integration of the resources of up and down the industry that'll change and we have been focusing on building both the same Centric content platform conception and we have clear advantages in terms of professional content creation and constant stimulation vertical gain user-based permission and just do that agencies as well as population of the professional sports legal system. Now, we have created a stronger content barrier and Thursday we have here the advantage in attracting and maintaining for of game users. So looking forward with the league with racing ceiling of the entire month.
More advantage of the above-mentioned counting and the value change plan to further expand our use the coverage and with traffic and lastly after we expect more in-depth commercial competition between the uh, the two platforms as well as with peasants, which we believe will cross. It has the positioning of the confinement.
Well that gives you how you should do. What should be in the finance office TV needle nobody. Could you give me one time I think we done the shooting off the you know, who you spoke with whom you can go to it. Yep.
I told you know.
Regarding the question on the shop videos and comment system. So believe that the Prima call is being videos including Shop videos and come back and tell you is more suitable for it's also more inconvenient for the users to share and forward on the social platform which in turn will help us to obtain more money and increase the topic as of the third quarter. We had essentially completed the design and development of our application or pre-recorded game videos Thursday through this application. We are able to provide our users with an organic Venetian of rotating the pre-recorded game broadcast and it's live streaming content with hopefully a more diverse supply of content to our platform extending the coverage of the Seminoles and ultimately stimulating our user engagement.
And speaking of our customers business. We are position it as a compliment.
I'm holding on live streaming business considering the unique user profile on which many male users. We believe that thing and both related product for more suitable for our e-commerce live streaming and in the short run. Our main goal will be achieved in Commerce last change is not able to further 75 our content and uh increase the single income.
Thank you today before we pick up next one.
When they when I just took a bath bath bath bath. Table, so you will I saw something on its way possible, you know.
Anything on the fox home phone from being shut off.
Regarding the change already senses. First of all sales and marketing issue with the channel promotion cost of ownership fee for our 14 as well as suspended for the online and offline events in the search for this year. The the increase on all your bases mainly due to I will increase Marketing address for the resulting from the increase the price it was also gives you our increased investment into the 14th with no
We have quite positive about the long-term development of the responsibility and we will continue to invest in default events and 14th Street from home while we're also consistently upgrade on product to improve our user to version and we will also enhance entrepreneurship month in the future weeks back to the absolute value of our sales and marketing sense to increase well as a percentage of total revenue to continue to improve Thursday and 8 for the third quarter of 2020 and then a sec increase on Central basis may need you to hire professional service fees resulting in the future and not going forward. We believe the gym mate then approached at a slow and steady rate with higher operating leverage. We expect the g n a f n as a percentage of wage
Is that we use to further deplete?
And mostly on the on D card in the first quarter on the increase of a color remaining because the increase in wage expenditures for the research and development of new products to maintain the building position on what technology and products in the industry as well as the increased life or the overseas armed personnel and the stuff generates accounted for more than 80% of our total R&D been. So going forward. Hold on we will continue to invest in our development of now to maintain our industry leadership. We think our overall armed defense will grow steady and off-road we expect our R&D costs as a percentage of Revenue to further improve.
Thank you next Monday.
Thank you. Next question comes to go ahead and page. You cannot issue regarding early music off inside the ink48 gaming thank you for taking my questions asked you questions. The first question is a gated to the recent, LOL Grand finals the competition. So from our perspective has the uh has easy sport events being bringing a lot of traffic in
and uses to our platform
And the second question is related to our cloud gaming can management share some color in terms of our our gaming has been developing. I thank you. She down to that trigger a million new jobs. What yourself may not going to check to see when he's not on the people that you guys committee to me? That's kind of going for the majority of your products. We have Thursday.
Yeah, okay, so the month and see if it's dead we all know that the League of Legends World Championship as official event for Thursday until it's always been attracting Voice number of users. Especially this year given many last few of my events have been delayed or cancelled as due to COVID-19 Makena have one of the really remaining Global events the year besides being held in Shanghai also helps it to attract a large audience dead.
Domestically and attention over the Internet the AOL has always been a premium, the segment for the we have many well-known singers and a multiple layers incontinence supplies system. We also signed many famous. Ll14 at home in a blog including energy d j d g t f m and the champion team DC GG and these advantages helped the L to reach historical highs in many operating Matrix during the championship making them read the first choice for audience and attract high-quality user traffic on my English it off and have someone that you can sure should not weekend or the to each month.
yeah, the
Even the should you should talk with you see, you know, I want to know that you usually like off.
Regarding the cloud gaming. We believe that the cloud gaming industry and related infrastructure construction is still underway. And as Pioneers the industry will continue to tour in cloud gaming the color. For example, we launched the beta version 2.0 of cloud gaming disorder. The updated version has a Brand New Jersey you understand and support for two hundred games today. We also optimize the server functionality and compatibility reduce the current time in delay, which help you further afraid our users overall any addition. We also explored the application for the cloud game plus live streaming user scenario birthday with game developers and Publishers in the future. We interact creating new business models by helping users experience things directly or compete with other plane.
from a different live streaming room
Thank you.
Thank you. Next question today comes from Thomas Thomas Chong with Jeffries.
Throughout the whole week Sunday through the woman. So do I have the same question? My question is about our content strategy in the next couple of years as well as the driver in Chicago Avenue as well. As I would like the key factors in driving. The revenue will be in future. I think you may actually you seen a dog.
Yep, you do that when I get home. I'm going to need smart bulb to make sure someone who I have to ask.
On the content strategy for for which position?
Century, and the live streaming is just one way to play I will come to so in the future would believe it's still our first priority to meet you. I'll keep raising you the traffic through constant engagement and certainly well continue to be apart from both the managers use existing incontinence. We also pay close attention to the new blockbuster game before other Magical games suitable for live streaming and create a religion comes in events and programs. For example in the third quarter. We noticed a member of new game titles delivered strong the Trends on all platforms off while we continue to recruit new streamers for different game titles to maintain a steady supply of high quality content and attract more users to authors.
And at the same time we will continue to enrich in vain comes in either of like talent show outdoor and which would help us to better meet our users took so long. She went off you want me to just go home?
Am so happy birthday to both inform later. Yep. Yep.
Let me get you some prices. That's okay.
On the revenue growth Trend in the third quarter our revenues around the routine event continue to grow although the event at the end of the quarter did not meet our internal optimized and improve our introduction product function. Well holidays ended up a habit of kissing users and actively acquiring new ninja and as a result on my screen revenues in the first quarter continue to grow on the year and meanwhile, I was paying users increase by dead dead continue to improve the efficiency and revenue contribution from blinking.
We also no further improved the efficiency of humor to a deeper collaboration with other agencies as well. As long as you can call back and on the advertising I mean
Just pulled over quarter increased with maybe I should do the increase in streamers promotion at the same time the launch of new game titles, which had mentioned a further increase advertising money and inspect the brand advertising. I mean to increase in the fourth quarter as a result of completing Bank lending activities during that period including those that will take place during December eleventh shopping.
Thank you.
I'd like to turn the conference back over to the management team, please. Thank you for joining us today. You have any further questions, please. Feel free to contact us through our website. Thank you, and have a good day. You may not just make sure my eyes and have a wonderful day.