Q2 2021 Sohu.com Ltd Earnings Call
[music].
Yes.
Ladies and gentlemen, thank you for standing by.
Thank you for joining <unk> second quarter 2021 earnings conference call. At this time all participants are in listen only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded if you would.
Have any objections you may disconnect at this time.
I would now like to hand, the conference over to your host todays conference call Guang.
Investor Relations director of Sohu. Please go ahead.
So could you send him for joining us today to just on the so who was talking on a quarter to the net when he was out on a call a channel on the Chief Executive Officer, Dr. Charles Zhang CFO generally on is that's probably been Oklahoma's Jamestown also with other day I'm trying to stay on the island churn on the Cfe all being long Beach.
Before my son.
They probably remarks I would like to remind you of the company's safe Harbor statement in connection with today's conference call, except for the historical information Pantani convenient for.
The matters discussed on this call may contain forward looking statements. These statements are based on kind of pulse estimates on the projections and therefore, you should not place undue reliance on them for them.
These statements you know you hit on risks and uncertainties line.
Caution you on that and number of important saboteurs may cause actual results to differ materially from those content on a forward looking statement.
For more information about the potential risks and uncertainties pushing for to the company's filings with the Securities and Exchange Commission, including the most recent annual report on form 20-F.
Please also be reminded that so goes the result of operations have been excluded from our results from continuing operations retrospective adjustments for the historical statements have been made in order to provide alcon sits on the basis of comparison.
As indicated otherwise, but it was off the other way to talk about are related to continue operations only.
I will now turn the call for the Dallas Charles Zhang Charles Please proceed.
Okay.
Thank you.
Oh.
For the second quarter of 2021.
Right.
The impact of COVID-19.
We are exploring new monetization opportunities.
Controlling the budget.
Thanks to the outperformance for <unk>.
On game business.
Stability exceeded the prior guidance.
For Sohu media, we focused on innovating, our products and technology and effectively promoting the generation and distribution of high quality content.
For Sohu video, we continue to execute on our twin engine strategy of developing a high quality long form and short form content.
On the same time refining our event live broadcasting technology domains on.
How to various applications.
We're also able to diversify our revenue sources and a better capture advertising budgets by integrating our live broadcasting technology into our unique events.
For triangle online games performed well during the quarter and its revenue exceeded the high end.
Items.
Let me now go into more free.
It's about these businesses.
While growth going through.
In a moment.
Now let me first look at the quick overview on our financial performance.
For the second quarter of this year.
Total revenues 200.
$204 million.
28% year over year, and down 8% quarter over quarter.
Brand advertising revenues.
$7 million down 3% year over year on the up 20% quarter over quarter.
On our game revenues, a $151 million up 43% at year over year and down 14% on a quarter over quarter.
GAAP net income from continuing operations attributable to <unk> Dot Com limited was $22 million.
Paired with a net income of $11 million in the same quarter last year and net income of $32 million.
In the first quarter of.
20 of this year 'twenty 1.
Non-GAAP net income from continuing operations attributable profit without Com limited was $25 million.
<unk> with net income of $12 million.
On the second quarter last year, and a $37 million.
In the first quarter of this year.
Lastly, please be noted that for the GAAP and non-GAAP net income for the second quarter of last year.
And above and additional withholding income tax accrual of $888 million of triangle has to be excluded.
Now let me go through some of the key businesses.
First media portal and the total video.
For Sohu media portal, we continue to innovate our products and technologies with stimulated.
Yeah.
The organic generation of premium content further enhanced our social network distribution features.
We kept extending the presentation.
For them on from a content and introduced audio feature in this quarter on a total Tac <unk> and AI conference we launched.
We hosted in May we rollout Inc.
Exclusive new feature.
AI anchor.
By integrating <unk>, so growth advanced technology, AI technology, we kind of synthesize the image on the voice of our well known celebrities.
Start using artificial intelligence AI.
Embedded the anchor in a certain channel with a 24 hour channel will be silver news app, where viewers can catch up with real time views in hot events.
And also added an audio function.
And for the new feet on the EPS, each article, enabling users to listen to articles on updates of their choice at any time.
These initiatives have comprehensively improve the audio video experience of the Sohu News App.
<unk> and allowing users to more easily consume our news and premium content.
As a limited time.
For Sohu video, we continue to develop compelling long form and short form.
Content with the twin engine strategy.
For original content we.
Launched the mosquitoes love original drama on combining Idaho enrollments on our premises.
Became a hit big had during the quarter, attracting a lot of public attention on further buoy.
Boosting our subscriber base and the revenues.
For the short form content library, and the live broadcasting we capped optimizing our advanced line broadcasting technologies on these operations and consolidate our strength on your value broadcasting on committed towards reporting because the reporting on major <unk>.
<unk> news events and emergencies.
Witness.
Non.
Screaming in real time.
Further reinforce our brand.
<unk> is an influence.
Influence as a mainstream media platform.
Moreover, we also combine the advantages of our both our social media and took a video platform carefully exploring new monetization opportunities by integrating advanced live broadcasting technologies for our unique and creative content marketing campaign. For example in July we successfully hosted.
Total news no amount an expedition.
She mirth to users in the unique and visually spectacular mountaineering experience over a 5 day period of non stop live broadcasting.
For participants the participants including tough start.
And celebrities share their feelings and directly with audience, rather live streaming on there on our platform.
During the event during the climbing.
Live streaming streaming content allowed us to create a huge amount of net.
Great derivative content, all of which turn that expedition into 1 eye catching event.
Real time event for audiences and advertisers for.
Creating and providing these unique.
The opportunities, we are able to better meet advertiser demand and the capture of the on budget.
So next turning for triangle for the second quarter of 2021, Honeywell launched new expansion packs.
Both <unk> PC and the legacy <unk> mobile.
These updated proved to be well received by players and helped the overall performance of our on our games to remain stable, which is better than we expected.
As a result revenue from our online game business exceeded for Hi crush.
Price.
For PC games, we launched a series of in game events for regular <unk> to celebrate its <unk> anniversary.
We also launched a new downward for <unk> vintage and improve.
For the game the game based on player feedback.
On mobile games, we launched an expansion pack for the anniversary of legacy <unk> mobile with some holiday events and upgraded its rapid growth.
Thanks for this.
Thanks to these efforts both user engagement and payment payments remains stable and revenue was broadly flat on a sequential basis.
Next quarter, we will continue for rollout new content for <unk> on the legacy <unk> mobile to sustain the vitality of these games.
For new games Tango launched a licensed car game called Little Raccoon heroes.
On August 4th.
2 days ago.
It performed well well so far in terms of pipeline in several key games are being developed on the fine tuned on will introduce them for players later.
Looking forward looking ahead, we will continue to execute our top games strategy promote innovation and the rollout more high quality mobile games, including <unk> or Rpgs and of games and other general generals.
Now, let me turn the call to join our CFO, who will walk you through our financial results.
Thank you Charles.
Now.
Key financials.
Our major segments for the second quarter of 2020 well on.
All of the numbers that I will mention I owe him a non-GAAP basis.
You can find a reconciliation from non-GAAP to GAAP GAAP measures on <unk>.
Website.
Total media portal.
Quarterly revenues were $22 million down, 3% year over year and up 21% quarter over quarter.
The quarterly operating loss was $28 million.
Compared with net operating loss of $18 million in the same quarter last year.
For Sohu video quarterly revenues were $23 million.
Up 1 percentage year over year on a 16% quarter over quarter on.
The quarterly operating loss was $13 million.
Compared with operating loss of $10 million in the same quarter last year.
So changyou quarterly revenues, including $17173.154 million.
41% year over year, and down 14% quarter over quarter.
<unk> posted an operating profit of $75 million.
Compared with $37 million in the same quarter last year.
For first quarter of 2021 day.
Expect.
From advertising revenue to be between $35 million on.
$39 million.
Online game revenue to be between $145 million and $155 million.
Non-GAAP net income from continuing operations attributable to Sohu Com limited.
To be between nil and $10 million.
And GAAP net income on the loss from continuing operations.
Attributable to silver talk on limited.
<unk> to be between on net loss of $4 million and a net income of $6 million.
This forecast reflects our current and preliminary view.
Which is subject to substantial uncertainty.
Lastly, please be reminded.
Q&A section we want.
2 questions regarding Sogou business update on.
The agreement with Tencent so simple.
Privatization.
This concludes our prepared remarks.
Operator.
I'd like to open the call to questions.
Certainly ladies and gentlemen, even now begin the question and answer session. If you wish to ask a question. Please press star 1 on your telephone keypad and wait for your name to be announced.
The first question coming from the line of Eddie Leung from Bank of America Merrill Lynch. Please go ahead.
Good evening, Thank you for taking my questions.
I would like to get a sense on the recent regulation.
Changes.
The impact on your advertising pieces, because we know that there has to be not tightening on.
The education as well as property factors. So wondering how important piece on 2 subtypes.
Advertising pieces and what could be the Inc.
2 the ERP says I know that you guys have already provided for Florida guidance. So just wondering if all we do not have the tightening on these sectors how deal flow.
Quarter on top line and then similarly.
Flow and follow up on.
I'll, let alone for now.
Please go ahead.
1 wondering what would be the upper Sunday each of revenue.
From a young people in the second quarter for watch on Yelp.
So.
You mentioned that 2 factor right education on what the what's the second factory has been publicly.
Good day Funky time, okay. Okay.
Well in our.
Total advertisers that we don't have allowed us for application.
Advertising so.
<unk> revenue is not impacted.
Hi.
And for the regulation.
Development.
Education.
Probably property a little bit.
Impact.
But since our revenue base is still relatively small so it's not.
Not a major factor.
Tonio basically for questions about.
Charles users.
Users with a young people or the recent regulation.
Toyota more channel it to them I think youll see the 13th on hand dosage on this scenario.
On the oil and gas a tangled Yoshida Soho Chiba zone.
Naomi.
Our major products are designed for mostly so contribution from teenagers.
Teenagers are very true.
Nearly from February tenant level right a lot of openings are priorities for us.
Yes.
Sure.
Got it thank you Charles and Alan.
Okay.
Thank you Charles moves for the next question.
Okay.
The next question comes from the line of Alicia Yapp from Citigroup. Please go ahead.
Hi, I think you are.
2 questions.
First 1 is can you elaborate what is the effective tax rate for Changyou entity is currently paying and that's tongue you actually entitled True Key software enterprise tax rate would there be any changes to effective tax rate in the coming quarters.
Second question is.
Just wanted to get your opinion on Charles given your SB range and yourself operating Internet companies in China.
What is your view of these latest on tightening ranked <unk> nationally.
No. It's almost the outcome you for C E.
For the industry and how it is so for position in the current environment on any potential impact to our current business model. Thank you.
Yes.
Tyler attacks.
Credit make tying all the data for let's say the 1 here so as you saw.
Yeah, well the <unk> sensing.
So since you got from Darren Jensen here, that's not true.
Sure.
Finishing line thanks for in cash from El Dorado Pizza Downhole, and then once you're in not just share.
Talking to achieve this surely hydro free on them now commentary.
So on air again share deal.
You can count on that John I told me the tunnel that day, that's only for the larger indirectly kill him and he called high that's put out was about 1 day.
In the past.
Several of our subsidiary will apply and enjoy.
Non preferential tax rate.
As for the receipt received the key national software under price data, but our application for this year was not approved so for a high on new technology enterprise sales are still okay. In the future. We expect there will be 4% to 5% impact on this issue.
Yeah.
Yeah regarding.
The regulation of Internet reputation I think what happened on recently more company specific.
I don't see any.
On a general policy side.
Tightening or any change for us.
I see.
Definitely.
Evolution of the on Prem.
The privacy and others.
<unk>.
I think it should be done because it's important.
And.
I think so.
<unk>.
As do I.
I think the entire industry.
True to develop.
Robustly and.
Do you have other EBITDA.
On a lot of new products future.
Developed.
Yes.
I see thank you Charles thank.
Thank you for lunch can I just quickly ask 1 follow up I think according to some of the media interview.
You did mention debt as an intention for future potentially debt changyou could.
Could be listed in Hong Kong, just wondering any timeframe for these 10. Thank you.
Yeah, Yeah. During my interview I did mention that.
Yes possible growth profitability than that next year.
Okay, great. Thank you Charles.
Yeah.
We have the next question coming from the line of Thomas Chong from Jefferies. Please go ahead.
Hi, Good evening management, thanks for it.
My questions.
I also have a question regarding the advertising space.
Okay management comment about our thoughts on the advertising outlook given that I think I'll call represents about 1 first half revenue.
Want to see.
Trending in Q3.
Because we are seeing the production capacity of a lot of.
OEM is suffering.
These days and then on second question.
Regarding our pocketing technology.
Charles you also talked about.
Our content strategy.
So for them it alone from strategies that we do that pocketing, but given that other regulations are also talking about.
Maybe there will be more stringent regulations on pocketing.
Should we expect our content distribution.
If these moves.
England.
And also.
First question relating to the book.
Gaming.
In general.
How should we think about.
<unk> gaming regulations should we expect that the free.
Gaming space.
This is expected to be.
Relatively stable or relatively steady.
If we think about.
The other black lechwe impact other than mine.
Thank you.
Yes, the first congrats from me on.
The other industrials.
On the product.
It looks like the shortage of chips right. So I think in Q3, the RV industry.
Not too good not too bad it seems flat flattish.
Yeah.
In terms of content distribution.
We rely on them more on the debt.
Part of the distribution also on social media distributions, so targeting is not on.
Loss from half of our products.
No problem I think.
Yeah.
On our video long form and short form video side on exploring.
Exploring our social media.
Total social media distribution.
Yeah.
In terms of gaming sector I think my answer will be similar because I think it's more I think more it's company specific.
Overall, I don't see any.
Resolution <unk>.
Yeah.
Right yes.
Got it thank you Charles.
Uh huh.
Okay.
Once again, ladies and gentlemen, as a reminder, it is star.
Followed by 1 on your telephone keypad, if you wish to ask a question.
Once again it is star 1 on your telephone keypad to ask a question.
Okay.
Ladies and gentlemen that does.
Our conference call for today. Thank you all for your participation you may disconnect now.
[music].
Yes.
[music].
Okay.
[music].
Yes.
Inc.
[music].
Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining <unk> second quarter 2021earnings conference call. At this time all participants are in listen only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is free.
Recorded if you have any objections you may disconnect at this time I would now like to hand, the confidence or book.
For your host for today's conference call.
Investor Relations director of Sohu. Please go ahead.
Thanks for Great Joe. Thank you for joining us today to just on the <unk> second quarter..2 was on a 10 day results on a call on chairman and Chief Executive Officer, Dr. Charles Zhang CFO generally and that's probably been vocal on this gemstone also with other day trying to let's say other Lin Chen on Cfe all being long.
Before management begins their play probably remarks, I would like to remind me of the company's safe Harbor statement in connection with today's conference call except for the historical information contained herein. The matters discussed on this call may contain forward looking statements. These statements are based on kind of Paul automate on the projections on therefore.
You should not place undue reliance on them for local.
These statements involve risks and uncertainties.
You have that on a number of important factors may cause actual results to differ materially from those content any forward looking statements for me.
For information about the potential risks and uncertainties pushing for each other public filings with Securities and Exchange Commission, including our most recent annual report on form 20-F.
Please also be reminded that so it goes to the results of operations have been excluded from our results from continuing operations.
Introspective adjustments to other historical statements have been made in other.
To provide alcohol assist on the basis of cash.
Unless indicated otherwise.
The other will talk about are related to continuing operations only.
I will now turn the call over to Dr. Charles Zhang Charles.
Steve.
And thank you everyone for joining our call for the second quarter of 2021, despite negative impact of COVID-19.
We are exploring new monetization opportunities quickly.
Controlling the budget.
Thanks to the outperformance of our online game business, our profitability exceeded the prior guidance.
For Sohu media, we focused on innovating, our products and technology and effectively promoting the generation and distribution of high quality content.
For Sohu video, we continue to execute on our twin engine strategy of developing a high quality long form and short form content.
On the same time refining our advanced on live broadcasting technologies on a rolling them out for various applications.
We're also able to diversify our revenue sources and a better capture advertising budgets by integrating our live broadcasting technologies into our unique events.
For China online games performed well during the quarter and its revenue exceeded the high end of our prior items.
Let me now go into.
Details about these initiatives.
While growth going through.
Each business in a moment, but now let me first look at the quick overview on our financial performance.
For the second quarter of this year.
Total revenues 200.
$204 million.
For 2008% year over year, and down 8% quarter over quarter.
Brand advertising revenues $37 million down 3% year over year on the up 20% quarter over quarter.
On our game revenues a $151 million.
Up 43% at year over year, and down 14% on the quarter over quarter.
GAAP net income from continuing operations attributable to silver Dot Com limited was $22 million.
Paired with a net income of $11 million from the same quarter last year.
Net income of $32 million.
In the first quarter of.
20 of this year 'twenty 1.
Non-GAAP net income from continuing operations attributable to silver Dot Com limited was $25 million.
Compared with net income of $12 million in the second quarter last year, and a $37 million.
In the first quarter of this year.
Lastly, please be noted that for the GAAP and non-GAAP net income for the second quarter of last year.
I mentioned above.
No withholding income tax accrual of $88 million of triangle has been excluded.
Now let me go through some of the key businesses.
First media portal and the total video.
For Sohu media portal, we continue to innovate our products and technologies with stimulated.
Uh huh.
On the organic generation of premium content further enhanced our social network distribution features.
We kept extending the presentation.
Forum on from a content and introduced audio feature in this quarter on a total Tac <unk> and AI Conference. We launched we hosted in May we rolled out an exclusive new feature called approvals.
AI anchor.
By integrating <unk> <unk> advanced technology.
Normally we kind of synthesize the image and the voice of our well known celebrities nustar using artificial intelligence AI.
We've embedded the anchor in a certain channel with with a 24 hour channel with the silver news App, where viewers can catch up with real time views in hot events.
And also added an audio functions into the new feed on the EP each article enabling users to listen to articles on updates of their choice at any time.
These initiatives have comprehensively improve the audio video experience Oh for Sohu News App.
<unk> and allowing users to more easily consume our news and premium content.
They're limited time.
For Sohu video, we continue to develop compelling long form and short form.
Content with the twin engine strategy.
For original content, we relaunched the mysterious love original drama on combining idol romance on their premises.
And became a hit big hit during the quarter, attracting a lot of public attention on further.
Boosting our subscriber base and the revenues.
From the short form content library, and the live broadcasting we capped optimizing our advanced line broadcasting technologies on these operations and consolidate our strength and value broadcasting uncommitted towards reporting because the reporting on major brie.
Breaking news events and emergencies.
Witness.
Live.
Screaming in real time.
Further reinforce our brand.
Is it an influence.
Influenced as a mainstream media platform.
Moreover, we also combine the advantages of our both our social media in total video platform catheter exploring new monetization opportunities by integrating advanced live broadcasting technologies for our unique and creative content marketing campaign. For example in July we successfully hosted.
Sohu news flow Mountain expedition.
When she mirth for users in the unique individually spectacular mountaineering experience over a 5 day period of non stop live broadcasting.
For participants the participants including pop tarts.
And celebrities share their feelings and directly with audience, rather live streaming on their per on a platform.
Okay.
During the ascent during the climbing.
The live streaming streaming content allow us to create a huge amount of net.
Great derivative content, all of which turn that expedition into an eye catching event.
Real time event for audiences and advertisers.
By creating and providing these unique.
Mark the opportunities, we're able to better meet advertiser demand and the capture of their budgets.
So next turning for triangle for the second quarter of 2021 trillion remarks from new expansion packs.
<unk> on the legacy <unk> mobile.
These updated proved to be well received by players and helped the overall performance of our online games to remain stable, which is better than we expected.
As a result revenue from.
Our online game business exceeded for Hyatt.
Our prior guidance.
For PC games, we launched a series of in game events for our regular <unk> PC to celebrate its anniversary.
We also launched a new downward for <unk> vintage and improve.
True the game the game based on player feedback.
For mobile games, we launched an expansion pack for the anniversary of legacy <unk> mobile with some holiday events and upgraded it rapidly.
Thanks for this.
Thanks to these efforts both user engagement and payment payments remains stable and revenue was broadly flat on a sequential basis.
Next quarter, we will continue to rollout for new content for <unk> on the legacy <unk> mobile to sustain the vitality of these games.
For new games.
From you launched a license car okay.
Called Little Raccoon heroes.
On August 4th.
For 2 days ago.
Performed well well so far in terms of pipeline in several key games are being developed and fine tuned and we will introduce them for players later.
Looking forward looking ahead, we will continue to execute our top games strategy promote innovation and the growth more high quality mobile games, including <unk> or Rpgs and again, the other general generals.
Now, let me turn the call to join our CFO, who will walk you through our financial results.
Thank you Charles.
We will now flow through.
Financials, our major segments for the second quarter of 2020 were.
All of the numbers that I will mention Oh on a non-GAAP basis.
You can find a reconciliation from non-GAAP to GAAP GAAP measures, our IR website.
For Sohu media portal.
Quarterly revenues were $22 million down, 3% year over year and up 21% quarter over quarter.
The quarterly operating loss was $28 million.
Compared with net operating loss of $18 million in the same quarter last year.
For Sohu video quarterly revenues were $23 million.
Up 1 percentage year over year on a 16% quarter over quarter on.
The quarterly operating loss was $13 million from.
Compared with an operating loss of $10 million in the same quarter last year.
So changyou quarterly revenues, including 17173 for $154 million.
41% year over year, and down 14% quarter over quarter.
<unk> posted an operating profit of $75 million.
Compared with $37 million in the same quarter last year.
For first quarter of 2021.
Expect.
From advertising revenues to be between $35 million on <unk>.
$39 million.
Online game revenue to be between $145 million and $155 million.
Non-GAAP net income from continuing operations attributable to Sohu Com limited.
To be between nil and $10 million.
And GAAP net income on the loss from continuing operations.
Attributable to silver talk on limited.
To be between on net loss of $4 million and a net income of $6 million.
This forecast reflects our current and preliminary revealed.
Which is subject to substantial uncertainty.
Lastly, please be reminded.
Q&A section we want.
Hi, Charles regarding Sogou business update on.
The agreement with <unk> for simple.
Prioritization.
This concludes our prepared remarks.
Later on.
I'd like to open the call to questions.
Yes.
Certainly ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question. Please press star 1 on your telephone keypad and wait for your name to be announced.
We have the first question coming from the line of Eddie Leung from Bank of America Merrill Lynch. Please go ahead.
Good evening, Thank you for taking my questions.
I would like to get a sense on the recent regulation.
Changes.
The impact on your advertising pieces, because we know that there has been a tightening on the education as well as the property Fac tests. So wondering how important piece on 2 sectors are true.
Advertising pieces and what could be the Inc.
On to the IP says I know that you guys are already providing our first quarter guidance. So just wondering if all we do not have the tightening on these factors how deal flow.
Quarter on top line and then similarly for us.
So a follow up on.
A reconciliation on our fleet.
1 wondering what.
What's the upper Sunday each of revenue.
From the young people in the second quarter for watch on Yep. Thank you.
So Eddie.
You mentioned on 2 alright.
Alright education on the what's the what's the second factory Houston property.
Hey, Jeff on <unk>.
Okay. Okay.
Well in our.
Total advertisers that we don't have a lot of application.
Advertising so.
Advertising revenue was not impacted.
Hi.
And for the resolution.
Development.
Applications.
Probably property a little bit.
On impact.
But since our revenue base is still relatively small so it's not.
Not a major factor.
Hum.
I'm, telling you basically the question is about.
Charles.
For the young people or the recent regulation.
Toyota more channel it too and I think youll see the Turkey, if I hand dosage on this on your yeah.
He's on the line sorry, Tony on the you'll see that total Chiba zone.
Naomi.
Our major products are designed for multi.
Contribution from teenagers or issue.
Nearly 70% on level right a lot of openings are priorities for.
Yes.
Sure.
Got it thank you Charles and Alan.
Okay.
Okay.
Thank you Charles and move to the next question.
Okay.
The next question comes from the line of Alicia Yapp from Citigroup. Please go ahead.
Hi, Thank you.
Hello, Good evening, Charles and management, Thanks for taking my questions I have 2 questions.
First 1 is can you elaborate what is the effective tax rate for Changyou entity is currently paying and that's tongue you actually entitled to take yourself from that enterprise tax rate would that be any changes to your effective tax rate in the coming quarters.
Second question is just wanted to get your opinion Charles on given your OSB range and yourself operating Internet companies in China.
What is your view of these latest on Titan vaccinated in Nash.
On a somewhat outcome.
<unk> loss for the industry and how it is so well positioned in the current environment any potential impact to our current business model. Thank you.
Tyler Texas.
Credit Bank Tango other data so what I say day, 1 it sounds like you saw.
Yeah, well, the ammonia and <unk> sensing will net debt.
So essentially you got from Darren dense here, that's the true fashion Tinyurl EMEA channel that's true in cash for meals that other pizza.
And then what's your and just.
According to what she had a fairly high especially on the <unk> commentary.
So on average density I think from that you can say on that John I told me the tunnel that day that don't actually.
For the larger indirectly kill him and he got that that's at all with what's happened here.
In the past.
Several of our subsidiary will apply and enjoy.
Tom preferential tax rate.
As for the receipt received.
Key national.
It's also our other cross data, but our applications. This year when other approved so for a high on new technology Enterprise sales are still okay. In the future. We expect there will be for 2.5% impact on this issue.
Yeah regarding.
Regulation of Internet Revolution, I think what happened on more company specific.
And items.
On a general policy.
Alright.
Tightening or any change for us.
I see.
Definitely.
The more regulation the on Prem.
User privacy and others.
Let's see.
I think it should be done because it's important.
I think I don't see.
Sure.
Alright.
I think the entire industry on continuing through to <unk>.
Develop.
Robustly in them.
Still on other pieces EBITDA losses.
<unk> products can be developed.
Well.
Sure.
I see thank you Charles.
Thank you Dylan can I just quickly ask 1 follow up I think according to some Master Media Inc.
You did mention debt E intention for future potentially debt changyou could be listed in Hong Kong just wondering any timeframe for these 10. Thank you.
Yeah, Yeah. During my interview I did mention debt.
Yes possible responsibilities on that next year.
Okay, great. Thank you Charles.
Yeah.
We have the next question comes from the line of Thomas Chong from Jefferies. Please go ahead.
Hi, Good evening management, Thanks for taking my questions.
I also have a question regarding the debt.
Hyphen space Okay.
Can management comment about our thoughts on the auto advertising outlook given that I think I'll call represents about 1 first half hour for Neal just want to see.
So trending in Q3, because we are seeing the production capacity of lots of OEM gears suffering.
These days and then on second question.
Can you speak guarding our pocketing technology I think Charles you also talk about.
Our content strategy.
The true.
So from a long term strategy is that we do that pocketing, but keeping that other regulations on.
Also I am talking about.
Maybe there will be more stringent regulations on pocketing should we expect our content distribution.
Yes.
If these moves.
<unk>.
And also.
Our first question relating to the for.
On the gaming sector in general.
Should we think about the gaming regulations.
Should we expect that the gaming space.
It could be.
Relatively stable on.
Relatively steady.
If we think about.
The other likely to impact other than mine.
Thank you.
Yeah. The first congrats from me on <unk>.
The other industry I think there is on.
From a color on like the shortage of chips right.
So I think in Q3, the RV industry not too good not too bad it seems flat flattish.
Yes.
In terms of content distribution.
We rely on them more on the.
On the part of the distribution also social media distribution, so targeting is not on.
About half of our products.
No problem I think.
Yeah.
On our video long form or short form and also on video side.
Lowering our social media.
Social social media distribution.
Yeah.
In terms of gaming sector I think my answer will be similar because I think it's more I think more it's company specific.
Overall, I don't see any.
Resolution <unk>.
Yeah.
Right yes.
Yes.
Got it thank you Charles.
Okay.
Once again, ladies and gentlemen, as a reminder.
Followed by 1 on your telephone keypad, if you wish to ask a question.
Once again it is star 1 on your telephone keypad to ask a question.
Okay.
Ladies and gentlemen that does conclude our conference call for today. Thank you all for your participation you may disconnect now.