Q4 2020 Momo Inc Earnings Call

Thank you operator. Hello everyone and thank you for joining us today for March fourth quarter and fiscal 2020 earnings conference call. The company's results were released earlier today and are available on the company's website on the call today from Moana our Mr. Lonely CEO of the company. Mr. Wang founder and CEO of content and Mister Johnson Johnson came with the company. It will discuss the company's business operations and highlights as well as the financials and violence. We will all be available to answer your questions during they will all be available to answer your questions during the Q&A session that follows before we begin. I would like to remind you that this call may contain forward-looking statements made under the Safe Harbor provisions of the private Securities litigation Reform Act of 1995. Such statements are based on Management's current expectations and current market and operating conditions and relate to events that involve know or not all known risks or uncertainties and birth.

Factor is all of which are difficult to predict and then if which are beyond the company's control which may cause the company's actual results performance or achievements to differ materially from those in the forward-looking statements for the information regarding these and other risks and uncertainties and factors that included the company's filings with the Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information future events, or otherwise except as required under law. I will now pass the call over to a mr. Wang. I will translate for him. It's still on C ROM ROM ROM

Please hold.

Good morning, and good evening everyone. Thank you for joining our conference call today 2020 was the tough year for all of us and proud that my teens were able to navigate through the many challenges with Relentless focus on our core Mission which is to help users discover new relationships and build meaningful interactions the commitment to that core Mission also enable us to make difficult decisions in the past year for the long-term well-being of the company and our communities getting through that bumpy Journey was also a valuable growth experience for my teams. I'm happy to see that we have finally come out of those temporary drawbacks stronger and better poised to see if the growth opportunities ahead of us.

For today, I'm going to review the key operating and business results for the fourth quarter and fiscal 2028. And then I'm going to run through our strategic priorities for the year 2021 and perhaps more importantly how these meat from strategic priorities fit into our Ambitions over the longer-term her eyes, so she could just take it off.

No.

First of all a brief overview of the financial performance for the fourth quarter 2020 total revenue was 3.80 billion feet down 19% year-over-year, but up from 3.7 billion in the last quarter Revenue came in better than our original expectation mainly because of the outperformance from almost livestream business in the year-end competition event adjusted net income for the quarter was 836 million be representing a 22% profit margin excluding contacts Network. Just in the income for the quarter mile was 845 million MB or a $28 percent profit. Margin have a total revenue came in 341 million remedy for the fourth quarter up 100% year-over-year, but just in a loss of contents further narrowed down to 3.3 to 8.84.

Million wouldn't be as a result of.

Strong top-line growth as well as temporary scale back of marketing investment in the fourth quarter or so years, but she she let me tell you. How long is this happening for the war 15.0 billion in D M 17.0 billion Timothy last year adjusting that income was 2.9 billion and then be compared to 44.49 billion in India last year the years already Kris a top-line and bottom-line level or mainly caused by the impact during the first half and the structural reform in the second half of the Year $2 off.

So here you should see you Thursday Monday through Thursday.

Now if you could dive into other aspects of the Year first operating metrics or any of the year with 113.8 million m a used slightly bed and last quarter are still below the peak level in the year 2019 primarily due to the due to us optimistically lowering marketing stand in November and December but our light considerations as we expected our last earnings call. The the acquisition cost per user was either was at a hyper level of due to heavy stand out from the education eCommerce and to some extent gaming companies. We therefore would rather defer part of our marketing stand or after Chinese New Year when when the marketing costs came down page account, which has Prix has been pretty much in correlation. So I may use any 9.0 million for the core Momo plus is over last quarter.

The post Chinese New Year user recovery on the court has been pretty encouraging which can be attributed to our successful campaigns during after Chinese New Year as well as the team's efforts to improve basic social experience, which I would like to elaborate a little bit later.

Has been user account. Can you 3.8 million end of 2020 now farmed 4.1 million from the previous quarter. The net decrease was attributable to the following factors. Number one a continuous roll out of the svip premium package, which had a positive impact on our people a negative impact on the number of paying users due to its price list. You said the second Factor pertains to the pressure on Mau as we substantially lower sometimes investment in the paid marketing channels due to the same hour. I considerations as mentioned in the earlier part of my remarks. The user acquisition cost came down during the Chinese New Year holiday. So we stepped up our marketing efforts and to capture the window of opportunity took over his birth.

You suck you suck you suck at this moment and more broadly. It's marketing office has so that we can see substantial Improvement in its marketing efficiency. This is an area where more team has extensive expertise and experience to land Moma undertook the same.

Formed in 2017 and have since made significant improvements in user acquisition and step to quit and subsequent conversions.

To implement the same Playbook on the marketing front at sometime this year. Our marketing team has already started some initial work since the beginning of the year these early Works confirm that belief that sometimes still has significant have room to grow its user base by optimizing its marketing and conversion approaches or February campaign shows that even the initial change in the market approach could make a difference for example, the initial adjustment to the marketing materials and the data management system brought in a substantial increase in the female percentage in the new users off and same time. We were also able to see some initial improvements Improvement in managing the unit acquisition Parts as well as the user retention ratio. Of course, we still have a lot of hard work ahead of us and making this one of my biggest priorities for the year off.

Now, let me switch gears a little.

Fair to review the key things that we did last year to better serve our users and communities. I'm going to break this part down by the core Huntin and then the newer bucket within our product portfolio.

So she took some kind of odd, but I don't think that's an issue.

First the first of all, my side the biggest focus of the team last year was to improve the basic social infrastructures and user experience on the platform including the nearby of people nearby post optimizing our own boarding experience and making initial upgrade to the user Resurrection model as a result of these products and operational efforts off for 20. We were able to see me for improvement in some of the most important metrics reflecting a social efficiency Momo among them. The number of impressions of the user profile page the number of two weeks conversations as well as the number of interactions around nearby content has reached their Peak since the beginning of the 28th of 2018 at the same time the 30 days to attention ratio for resurrected users improved three percentage points versus the beginning of the year the 30 days retention racial for complete new registration.

Swedish if he ever since the beginning of 2019 is Improvement engagement metrics show that even amid tremendous external challenges of the year the fundamental of course as a social platform to build new relationships are strengthening that constitutes a solid foundation for more more to pursue further growth opportunities in the year. 2021. Yeah, I've had that what do they seem to be honest your song long? Have you lived here with the details wrong you later in his speech. If I were to name only one most impressive progress made in the year 2020 it would have to be that we've taken a few concrete steps to Thursday.

In which in the peripheral?

Social experience around the courts Wi-Fi match system will further accelerate and has product efforts this year aiming at taking the court dating experience to the next level and making it better fit with the Asian dating culture kind of July month. You don't really I told the user. Can you play Los Angeles it took off?

In addition to the mountains in the year twenty-twenty. We have met only progresses with Endeavors to build new applications. For example hers a voice-based dating application primarily serving the Gen Z in lower-tier cities and food way a video and voice based matchmaking application serving users seeking more serious relationships have all hit their respective retention and targets for the first date this year. We're putting these two applications into the second phase where we are going to demand the growth of users as well as the Fulfillment of Roi to which means having enough Revenue generation power recovery revenue-share and the marketing costs. This is an important Milestone metrics in our new project management system because once the new application reaches that stage it is rolling grog.

To a self-sustaining cycle and have the ability to contribute to the bottom line.

Other than these are I focused new applications. We we are also working on a couple of projects that aim at establishing new touch points in the social as well as the pen down payment industry and as compared with the year 2019 now have a much more mature system that effectively evaluates and manages different types of new projects that different pages off somebody took off.

App Ki business lines. I'm going to focus on the core Momo and leave times has Parts while you currently live broadcasting 2020 was a challenging year for the live streaming team or during the first half the business, especially the top spending was struck hard by the COVID-19 impact in August. We undertook a structural reform to do I stream everything in order to revive the lump elk hunting for system and to make sure this cash cow business continues to grow healthy the in the new external environment the waveform touch the mini-dome areas on the product and operational side, although the initial product adjustment in August, cause significant negative impact on revenues. It was a critical step in eradicating wage.

Wang desirable practices that were harmful for the long-term health and needs of the business after several months of hard work. We have started seeing positive signs for improvement in a constant input system revenues have also shown stabilization and a gradual improvement from the bottom seen in August. So the issue or do you want them?

It's also worth mentioning that by the end of last year with a new incentive plan. We have successfully achieved our goal in the golden broadcasters contract renewal project securing the big majority of the high grossing performers by multiple years, exclusive contracts. It won't provide it will provide a solid base for us to drive continuous Improvement in the livestream business at at 4 a.m.

Soon as you can find well, she she's in with her. She shouldn't I told you she she gave birth to hardwire 6:00 appointment of the year and competition was a good example of that. We had quite a few new agencies and performers emerging from the competition as hard-working and dedicated batting practice for a moment platform moreover. We were able to manage cost structure while enough to fully absorb the impact of the increase in the payout and gross margin level, which remain Flatbush

Towards a much better outcome than we originally expected demonstrating our focus and ability to grow the business at a gross profit and cash flow level rather than purely as a revenue level. How do I any appointment? You guys are playing 20 21 is to continuously support newcomers, right diverting more traffic toward the mid-to-long tail. We also have plans to increase the content verticals in a remote content that emphasize on emotional companionship in particular in order to further cultivate the social attributes of the mobile platform choice, but to put you in your last name

To not be able to do something else so you don't cut off.

No turning back on the core. I'm quite satisfied with the team's execution on the vast room during during the past year in a tough external environment with my life and not only deliver robust growth also successfully control the pace of growth to make sure it plays a positive role in the overall structure ecosystem last year the growth of that wage primarily driven by Innovative product and operational ideas. For example, we continue to introduce new moderated shows into the chat room experience. In addition. We also brought in a interactive gifts into the audio and video social entertainment experiences. This has proven to be a sustainable lever that we can Community for us to drive further growth best. We can go to the kind of laptop do it actually.

I don't hear you. Do you know what year?

Monster fries are the batching Focus not only on the quarterly revenues, but also building future drivers for the long-term throughout twenty-twenty person graduate continue to age. So gradual Improvement both in terms of retention and users scale. We now have establish a clear roadmap and the standard fully booked for monetizing. These experiences came in early part of my speech 20-21 will still be a year focused on product but we do expect hurts and graduate to contribute more meaningfully to the bass line offensive to last year. We also believe that they have the potential to become longer-term driver to both the top line and the bottom line is dead. Yeah the Jenna Julien

Those are the business update now moving to the most important part of my speech today our strategic priorities for the year 2021 and how these midterm priorities fit into our Ambitions off the long-term Horizons again, I'm braking this section down by the core content and the new Endeavors remove age you sir. Yep. Yep.

Teaching function Force so I'm pleased to meet you at 4 a.m. And we also have another chance or opportunity feeling. I have two goals for the team. Number one other world record user base with limited marketing budget and improved our versus last year. I plan to this goal consists of three key tasks a new social experiences within the core to better serve under-served user demand for example wage.

Clearly seeing the social.

Desire from female users on mobile, but the product and services we currently have on the core could clearly work much better for men rather than women. This is an area where we should I can do much better than before.

Penetrate deeper into lower-tier Market with normal light. This was a key product project for last year. We actually made some good progress has on the product side in the second half of 2024. The marketing plans got stuck due to the measures in different regions that keep the virus and the control as COVID-19 continues the tale out this year. We still have that opportunity to push a plans forward and see substantially refining our user Resurrection model complete your registration or increasingly becoming a scarce and expensive resource for every social media operator that makes it crucially important to cultivate the value of it says existing users as well as the users in dormancy. This is an area where Mom has lots of edge because we have a large pool of format users and can leverage new social experiences to call them back.

Focus this year is to improve our current Resurrection model so that we can do much more effective targeting and conversion and direct letter arrived from the reactivation.

Yeah the movie I'll see you suck you suck you suck.

Chicken go for the core. Of course. It's to get the business owns for the growth track. We need the cash call to remain productive not just as a revenue level at the gross profit level as well as compared to the user goal, which one is easier to fulfill because from the trends we've seen within seen so far into March. It seems that we have already completed completed the month as part of the journey and get the live streaming business on track for Recovery vas or having been growing robustly for the past two years still has plenty of growth opportunities working from sub traffic and in terms of new Revenue features as a social platform seventy plus percent of RDA you and eighty plus percent of total time and are not related to live swimming at all.

Having baths at the main Revenue Source will eventually prove to the investor Community or potential and Advantage as a social networking product as opposed to a live streaming product. That's an important goal. I set for the team for 20 21 and Beyond she's dead dead dead dead.

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Now we'll be able to 10 time or goal for the year is to deliver solid user growth is substantially improving the marketing efficiency and the poor dating experience. As I said on a previous call have not had huge room to grow its user base and engagement due to the secular trends that were seeing China and currently we can say with full confidence that in China Club is clearly the most committed as well as the most effective dating product-focused down connecting people for romantic purpose and offline relationship conversions. This is a fundamental and proven throughout human history.

I see no reason why it cannot be as large as Momo today in terms of user scale as a matter of that. It should be much bigger than it should be much bigger than that. We see as we see how today's young people evolve as it relates to dating culture. Now, the question really is why we are not growing as fast as we should be the answer is that not because the opportunities are not there or somebody else is stronger than we are in serving that demand but because they are important areas where we need to improve we should make our product and marketing efforts more effective and execution more efficient so that we hit the nail right on its head to pin down the growth opportunities that we're seeing. The two teams will need to work more closely together in order to push forward faster this year. You will see the collaborations between moment. I'm moving to a deeper level. Who is your boss.

Thomas a good job, so you don't walk walk walk walk.

Are you open the page one time this of course involves the new applications that we're working on about which I've already talked a lot in the previous section. There is something more to it than many of you would agree with me that the coming ten years. We'll see continuous boom of China's private consumption and it will be going up from a good driven mode toward a service and new construction to model. The coming decade will also see phenomenal changes and advancements in communication technology and Hardware devices moreover with the rising personal life and education level the world's highest level of digitalization and increasing focus on individuality. Today's younger. Generations are becoming increasingly. Yep.

Glenn toward the idea of online dating and brought a

Social product and services providing emotional companionship. It's quite possible that we will see the cultural reflection inflection point in the dating and social space off within the coming decade.

The company that focuses on helping people build new relationships. We stand at a cross-section of all those who are friends. That's why I'm extremely excited about the growth opportunities that we have ahead of us in order to capture these opportunities. We need a drill down deeper in our strong areas namely the open social space and see push the boundaries May extend the footprint in other adjacent areas along the value chain and last but not least stick to our long-term Mission and have sufficient patience and tenacity to push through

home page

Lastly I'd like to finish my speech today by announcing that our board has declared a cash dividend in the amount of 0.6 $4 US dollars per ATS, which will amount to a total cash payment of approximately 132 million US dollars or 30% of our adjusted net income attributable tomorrow in 2020. This is dead more than 20 20. This is the third consecutive year that we've shared the fruits of our operation with the shareholders demonstrate Management's confidence in the fundamentals of the come off as well as our commitment to creating and delivering shareholder value for the long-term. Thank you for trusting Momo Team Dodge the things I like to cover on this call now, here's what I need to talk about contacts product and service the product and Business Development. Mr. Wang, please.

Thanks. So let me briefly review sometimes operational and business development in the past quarter and the sense a quick review page. The user Trends and related metrics you and paying users were impacted by the cold outbreak in early 2020 in May and then and demek in China Club under control and we subsequently sought decent used in Calgary from May to early August since mid-august. The user acquisition cost has started to rise dramatically. Do mm the aggressive marketing investments from medication online gaming companies and into poor joined by e-commerce players as well or Roi considerations. We scales by a car sending in a channel compute for which put some pressure on the user trend for our team fully focused on improving the marketing efficiency and lowering the unit acquisition cost team conducted.

so it's not a walk-through of the system to

Identify potential areas of improvement and augmentation. We realize that marketing and top of the funnel conversion is indeed an area where we need to make liquid investment improvements in order to get more efficient in grabbing user growth. There's actually a great deal essentially can cultivate you include four in January twenty Twenty-One thousand we quickly put two things in place for Chinese New Year's campaign. Number one building up the back-end infrastructure to enhance our Data Tracking capability so that we can provide a more effective feedback to our Channel Pockets number to beefing up and materials to make it more appealing to our Target users. We stepped up our marketing efforts went off and became Malibu towards mid February. We were able to see some initial positive results on the cost side the new ad materials and uh channel strategy. We are also birth

In the significantly higher percentage of women in the new users at the same time the retention ratio in users also improved meaningfully overall. We're on track down a better Marsh you than that? That's the the temperature more importantly we should be able to achieve that while further lowering the marketing calls from cute for which was a step down from the street. All of this gave us the confidence that this is the right path to go down from March onwards. We are going to take bigger steps to refine our marketing approaches God. I'll give you more details later. No, no turning to paying users paying users for the fourth quarter of tum total of 3.8 million from 4.1 Million last quarter of the $300 decrease, which what was due to the combination of the full-scale pulled out of a VIP package as well as the pressure on the user's due to the decrease marketing spending money.

I'll briefly on revenues total revenues for the fourth quarter of reached 740.5 million up 100% year-on-year growth was driven by the increase in average revenue agent user which is contributed by the live streaming service as well as users continuous shift towards higher price membership services or fiscal year 2020. Total revenue was 2.037 billion R&B up 88% from last year live streaming contributed not majority of the incremental Revenue, which amounted to 999 million R&B despite the decrease the number of 10 users cost Revenue still grew 90% on a year-over-year basis driven by the city our our people increase

Nick let me give you an update on the progress that we made against our other strategic Priority First and retained product experiences one of our biggest Focus off $20 to build supplementary features and services around the court Driving Experience. So so we can offer rich or canvas for users to discover and establish new romantic relationships and it's just half of the year. We introduced a brand new version of town town with Discovery page and nearby post and activities which paved the road for further diversification of our offerings is a particular may be helpful for users who probably less affected connect in the interact based on the swipe and match mechanism providing something users would ritual ways to connect beyond our signature swiping experience. It's an important step that would take in to enhance usually engage ments retention and time spent towards end of the last year. We have also begun a limited scale testing on a new voice dating experience, which yep

Sundar early data, we have been seeing that we

On the engagement in Revenue driver in the computer quarters another team for 20 20 and what's the successful introduction of video service which has clearly helped us further all out the application value of the platform this which was particularly helpful when our membership business was under in COVID-19 pressured the same time we have also have been extremely careful monitoring and pasting the growth live streaming service to make sure that the place a complimentary role to the coding experience and does not harm the overall dating ecosystem. So far live streaming has been a fitting well into the dating ecosystem without showing any significant undesirable results in comparison with Cortana live streaming tampons pay paying user structure em,

And perform any condition on much more decentralized and long-tailed driven compounds showrooms are relatively small but fewer computer users a very interactive. The smaller showroom is not have to pay a huge amount in order to get a quality interactions with the relatively status distribution structure is very helpful in a hunting the social attribute to the live streaming experience or something Our intention is to keep our lives, uh, our Bloodlines video channels that way this year that reason we're going to continue to gain control the pace in adding Revenue were into the operational Network efforts, especially those the team at increasing the are people who otherwise cost centralization.

Lai Q3, they also started rolling out the new svip membership package new package includes some existing popular membership privileges as well. As a number of new project features added to the package the goal of introducing this reality is of course to offer new value, uh-uh added services to dating Community, whatever we do have a rational on the business front as well during the past couple of years. We have consistently observed a key Trend that young people in China are demonstrating strong willingness Dead Rising consumption power to pay for dating services.

I believe that such trend is going to continue or even accelerate in the coming decade.

Voice the best way to take advantage of such secular trend is certainly to supplement the subscription-based model with a good non sub-bass value added service mechanism. This is indeed a key priorities becoming two years, but for the time being within the subscription model, we also need a method mechanism. Whereby we can adjust the average selling price, which is by nature of budget within the sub Model S. P i t is our attempted solution here so far such solution have been uh working pretty well both in terms of how the user receive it. And in terms of hitting wage is we're trying to achieve on a business side after the rule out that we cease to offer some previously previously existing features such as uh said that I am a principal in making decisions as to maximize Revenue the combination of merchandise replacement and the price strategy led to a defect or price list.

Effect which caused the number of subscribers to decline in our people on the contrary to rise has to be expected to four batch Revenue indicates that full-scale dollars for them at least.

Offensive to the overall revenues for the users who churn the previous package but yet subscribe to svip who plan support him back over time. He up a wall strategy or new boss features there for this approach actually least bigger room for us to drive paying user expansion as well as Revenue growth in the futures.

Those are the key updates about the year twenty-twenty now that we've started the new year. I'd like to briefly talked about the key things on our agenda for 20 20 21 mentioned about our growth is the top of the top priorities for for this year to areas that are crucially important for us to achieve the code this call first thing we improve marketing efficiency II make the coordinating experience more appealing on the marketing side. There are a number of things that we need to do. Number one. We're going to further optimize our office position system. Although we have made some initial profits in beefing up our Channel marketing approach. We still have a lot of work ahead of us these efforts range from making fundamental changes. The back of the box is such as enhancing our Data Tracking capability and feedback system to improving the ad materials and adjusting them based on the outcome of the campaign number to optimize our usage.

Model so we can drive better r i for a user a position number three enhance our brand awareness. Sometimes it's a relatively young brand there are still many people were not using, because they have not heard of us before where he has to be fully aware of the core values of the improvised who invest more to empower our brand equity and drive user awareness this year. The second thing we need to improve is is to enhance the coordinating experience while sometimes is undoubtedly the most dedicated and effective dating app in China. We do have many opportunities just mice so we can do better in connecting the users for dramatic purposes. The most new term priority is to make our swipe the match system more effective our efforts include upgrading a tagging system to generate better portraits of each of depends on users and based on the tagging in other aspects of Big Data Mining optimizing the recommendation engine to make more relevant pushes.

We want the users to genuinely genuinely feel that sometimes understands what they're looking for on the platform while continuing to strengthen our dating related product offering. We're also going to keep exploring more Diversified features and services to make something experience better fit for Asian dating culture this in turn will further improve user engagement and retention which will transition to user growth. Those are the key things that like to cover for today. So let me pass the call over to mister Johnson job for financial review, please thank you. Hello everyone. Thank you for calling our conference call today. Let me briefly take you through the financial review photo revenue for the fourth quarter 2020 3.8 billion thousand be 19% year-on-year up 1%

Round quarter exceeding the high end of our Revenue guidance primarily due to the better than expected outcome from the year and computation event in live streaming business.

Not getting that income attributable to Memorial 830 6.4 million MB compared to one point five billion. I mean before the same. 2019 or a 33% decrease year-over-year.

Total revenue for fiscal year 2020 was 15.02 billion MB compared to 17.02 billion for five fifteen and 12% Year-on-year. Net income attributable tomorrow more for twenty twenty two point nine billion R&B compared to 4.49 billion MB for 2019 the decrease of 36% year-on-year.

Year-over-year decrease in top-line and bottom-line was due to the impact.

From the pandemic during the first half of the year and the structural reform in the second half in twenty-twenty partially offset by 10 times rapid growth in revenue and narrowing loss.

Looking into the key Revenue items for the quarter firstly on light broadcasting total revenue for Life broadcast in business for the fourth quarter 2012 was 4.33 billion RMB 31% from the same period last year and 2% from last quarter.

Live broadcasting Revenue 1.92 million for the fourth quarter and 43% from the same period last year off and 3% from last quarter. Well, ten times live broadcasting Revenue amounted 404 million R&B 2% up from previous quarter.

moving on to vast revenue from the

Revenue from the value added Services 1.4 billion MB up 18% year-on-year 5% off the quarter revenue from vas excluding.

336 million from Panton reached 1.07 billion Raymond be for the fourth quarter of 2020.

A certain year 30% increase year-over-year 7% increase sequentially a solid performance of Momo's Corvettes business was primarily wage even buy teams focus on product Innovation and effective operational efforts audio and video-based social entertainment experience continued to generate strong growth momentum. And what's the biggest Revenue driver for the core mobile vas services?

Let me briefly review the costs and expenses items for the quarter.

Or non-gaap cost of revenue for the fourth quarter of 2020. It was 2.02 billion MB compared to 3.32 per month for the same period last year non-gaap cost of Revenue as a percentage of total revenue was 53% and increase from 50% from June 2019, and I've got gross profit margin for the quarter was about 3%

From a year ago. The decrease was attributed to the following factors.

Number one high payout ratio from the core most live broadcasting business number to lower gross. Margin for Kenton. It's life or has stinky Services Revenue has it become increasingly increasingly sizeable number three higher payout ratio from Como vas business due to the rollback growth coming from audio video based software entertainment business a big part of which involve third-party professional moderators.

And the number for so I can fix Nature Calls items such as headcount depreciation of fixed assets related impacting the gross margin actively as the total revenue declined and this items represent a higher percentage of total net revenue.

On a sequential basis and gross margin remained flattish compared to Q3 much better than our original expectation as well. You mentioned earlier in Q4. We successfully logged out and a vast majority of existing high-grossing broadcasters are rolling out a new incentive program. We originally expected this new plan to have a couple of percentage adverse impact on the gross. Margin. However, the team was able to optimize the overall cost structure so that the gross margin remained the same as in Q3

This demonstrates the Management's commitment to drive Healthy Growth of the business. Not only for the revenue aspect but also as the gross profit and cash flow level.

This year we will focus better supporting me too long tailed broadcasters and the further strengthening the content ecosystem a very important step for us to achieve that goal is to provide better motivation to recruit new talents so that we can maintain a good metabolic system.

The surf that goal in q1 we made another adjustment to our incentive program to make make it more attractive to the newcomers wage currently expect this new program to have a couple percentage impact of our gross margin starting from you one in return. We now have a walk around it incentive program that can provide sufficient motivation to all important.

Total revenue respectively. We ended the quarter with 2394. Totally employees of which 800

7 or form ten times R&D personnel as a percentage of a total employees for the group was 57% compared to 58% off.

I've got sales and marketing expenses for the fourth quarter was $600.

54.1 million MB or 17.2% of total revenue compared to $554 million years or 14% of total revenue for the same. The last year.

No GNA expenses. What's 134.5 million MB for the fourth quarter of 2028 compared to one hundred fifty one point seven million or maybe for the same quarter last year representing 3.5% and 3.2% for the total revenue.

respectively non-gaap operating expenses as a percentage of total revenue was

Twenty 8.3% and increase from 22.4% from Q4 2019. The increase was mainly due to the negative operating leverage as a result of decrease in total revenue.

I'll briefly income tax expenses in queue for the company is the rate for the for the entity from 25% to 10% off for physical year 2019.

Therefore we subsequently reversed over a prude Excel ability of R&B 113 million to reduce the current quarter income tax expenses. As this qualification application is assessed by the relevant authorities. Annually, we make this extra judgments upon receipt of birth notice going forward.

Laura turn into balance sheet and cash flow items December 31st 2020 almost Cash Cash equivalents short-term deposits and long-term wage is 16.48 billion MB compared to 15.23 billion. You mean be as of December 31st, 2019 NASCAR net cash provided by operating activities in the fourth quarter was 1.04 billion MB.

Lastly business all looked we estimated our first quarter Revenue.

for 2021 is probably in the range from 3.36 billion to 3.46 gallon be representing a decrease 6.5% to 7.37% year-on-year to a decrease of

11.5% to 8.8% quarter-over-quarter for

Four Q121 on a year-over-year basis. We expected a total revenue from kormo to decrease in low teens percentage of revenue from is expected to grow in the high forties percentage. Please remind for that the forecast represent the company's current and preliminary thoughts on the market and operation conditions.

Which are subject to change that concluded our portion of today's discussion with that. Let me turn the call back to Kathy Q&A, please.

Yeah, actually just a quick reminder for people who are in the queue to ask the question in Chinese birth, and perhaps follow with English translation by yourself. And also if you could lead limit the number of questions to 1 to 2, that would be more time for other people to to ask questions operator ready for questions. Thank you. Thank you a question. You need to press star one on your telephone and who do all your questions press account and hashtag as we stand by while we can file a two and a roster. Once again, please press four one three questions. First question on the line for Thomas Tom Jeffries something. Yep.

Just got a sound when you saw that old woman took off. Someone is not your boss. You can't run in the holler back. I will I took a marketing strategies that we can sell woman. Can I can even the time make a marketing spending? I am checking margin to catch up on some questions. I have two questions. The first one is about the user and the revenue Trent during an a phone number.

Chinese New Year for poor mobile and Huntin and also management comments about uh whole year outlook, uh, if possible and my sister is a question about the spending. Can you comment about the marketing spending for this year as well as the overall Market Outlook? Thank you.

She's dead dead. Let me let me translate first. It has been around five weeks off the lunar year holiday during that period of time it's fair to say that the Momo core has been seeing pretty encouraging recovery Trends both in terms of traffic. And in terms of boxing I would attribute that positive trajectory to three major factors one is the progress is that we made in improving the basic social experiences last year.

On the core and the second factor is the fruits coming out of the structural reform in the second half of the year and the sir factor is right, right approaching. We adopted on the channel marketing side both during and after Chinese New Year for the core Momo. Who am I?