Q2 2021 Bilibili Inc Earnings Call
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Good day and welcome to the BBB drinking 21 second quarter thinking financial quarterly results and business update conference call. Today's conference is being recorded at this time I would like to turn the conference Juliet Yang execute the director of Investor Relations.
Please go ahead.
Thank you operator.
During this call well discuss our prison.
This outlook.
We're looking statements. These comments are based on our production and patient as we see actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with the SEC.
And Hong Kong stock exchange, the non-GAAP financial measures, we provide at all for comparison purpose only.
Nation of these measures and a reconciliation table are available in today's news release issued earlier today. As a reminder, this conference is being recorded in addition, an investor presentation and webcast replay of this conference call will be available on <unk> IR website.
<unk> and I are dropping a bit of dot com joining.
Joining us today, so I'll be able to do with senior management are Mr. Wei Chen Chairman of the Board and Chief Executive Officer, Ms. Colleen Lee Vice chairwoman of the board and Chief operating Officer and Mr. Sam Fan Chief Financial Officer.
I would now turn the call over to Mr Fan, who will read the prepared remarks on behalf of Mr. Chen.
Thank you Juliet and thank you everyone for participating in all the countries.
Got it.
I'm pleased to deliver today's opening remarks.
Right.
In August 2019, we announced that our ambition to further grow our user base.
They do get later, we found ourself on the fire trucks to executing that strategy.
We remain equally milestone along the way.
And the second culture, we added 14 million that may use sequentially, bringing our total and they use to 237.
Adding up to 8% year over year mobile and they use also rose by 44% year over year, reaching $220 million and.
And the deal use reached 60 seem really.
A 24% increase year over year income.
Italy, our users become even more engaged spending an average of one minute per day our platform.
Marking the highest second quarter level operating system.
As we move into the peak summer season, we are pleased with the increasing momentum we have seen so far which places us firmly on track to achieve our growth targets.
Our robust user growth also translated to strong top line expansion.
In the second quarter, our total revenue reached RMB, four 5 billion up 72% year on year.
Once again, beating the high end of our guidance.
Driven by improved products and the services M. P youth was up 52% year over year to 21 billion and our paying ratio improved to eight 8%, let's say a seven 5% in the same period last year.
As the go to destination for young Chinese.
Our platform is also again, there's wider recognition among advertisers across different either political.
In the second quarter.
Revenue grew by an impressive 201% year over year.
She had a break in our 12 year anniversary on June 26, we all know demand a year, we have grown with our users.
Over the past 12 years, we have remain true to our original ratios, but create an outstanding community for all of our users and the content creator.
Two green Chinese original content to users worldwide.
With this mission and our Hearts.
We continue to uphold our public responsibility drove a community.
Just on data authenticity content positivity.
Matt.
Maybe turning to our original content in July of this year, we published our first ESG report.
Here, we already have.
Do your policies.
<unk>.
Deepening our commitment to being a responsible public company with a goal of bringing positive social and cultural impact to the work.
Looking ahead, the transformative efforts, our visualization is creating a year of massive opportunity for us.
Graphics and attacks being read and interpret it into video formats to deliver information and more lively.
And powerful ways.
And we see it.
Video platform will be the new gateway for people to connect to the internet and excess to work.
And the BD is on track to be one of them.
The momentum from video trends, along with our soldiers strategic acumen.
And our content community and commercialization.
That's great company the future of September growth.
With that overview I would now like to provide more granularity on our second call to the operation.
Beginning with content.
Our <unk> ecosystem continues to thrive.
Representing 93% of our total video views in the second quarter.
Over the past 12 years, we have accumulated our platform as a destination for young people to showcase their talent and they realize their career goals and professional content creator.
We continue to improve our services to a truck content creators launch more truth and modify our app to make contemplation easier.
In the second quarter.
D D D was home to $2.4 million content creators up 25% year over year, mostly because of emission Roe to $8.4 million in the second quarter of <unk>.
Three 1% year over year.
The increase now a matrix of no small feat given last year's high base.
We continue to improve our charter distribution mechanism to less high quality content creators quickly match with the offense.
In the second culture, the number of content creators with more than 10000 followers increase by 47% year over year.
Our live broadcasting platform and Thats possible advertising platform.
It means all of our content creators to unlock their commercial value.
Why showcasing that highlights.
By the end of the second quarter.
For Hendry and lifestyle of income and greater had also joined our ongoing cash incentive program.
For the second quarter, our top five most populated verticals with the lifestyle entertainment.
Tech knowledge an enemy.
In lending, we want to coat on their life.
The relationship from declaration fitness beauty and cosmetics.
The emerging popularity of gift category reflects the evolving content needs as we expand to wider demographics.
Being a hub for Yamana.
<unk> is exploring various interests.
They believe the content, we provide a positive impact on People's minds.
We actively promote content informative engaging perfusion and help our users to become to a better shape.
It could be more pressure.
Such as how to Cook baked cookies.
As usual in deeper thinking through our guidance into the Cosmos.
In the past 12 months over 130 million users access Penn knowledge content across a variety of subjects are preferable.
Such as solidifying the Marsha.
Users of the Lumpiness.
Turning to our what would you be content.
Ultra mounting our P O G V and unlocking commercialization potential of high quality OTV content continues to attract new users and the cover page.
Our platform.
In addition, many of our self produced titles had become valuable IP assets and we can do that.
As we leverage our network to further.
And for Us.
Representing Chinese culture, and a part of China soft power tiny.
These animation have become increasingly popular domestically and internationally.
And our investment in this category are paying off.
A primary example quality while the equation our cell production capability.
Inc. Click should once again produced by law and then they do do is BBB the original IPO assets.
And you need to shoot for.
Good evening Errol.
Accumulating over 150 million video views.
Partnering with Sony condemnation UK was released in multiple countries and regions, where it's continuing to highly rated.
Other popular Chinese anime titles have also helped us to attract many New York, Utah.
It had been well received by overseas enemy lover.
These titles for the solidify our leading position in the ACG space.
Including the final chapter of intake single legend, Hey, what's up anytime cheat sheet into a cup reborn alone and Havent officially policing.
And once people.
Our self produced matchmaking variety show.
So.
The launch last week and the music prior to show. The next banner, whether you 18 months will be released in August.
With this new <unk> offering we'd hope to attract more young minds with relevant interest in the silver Lake even more.
Discussion within our community.
Turning to our community.
Our community continues to be a vibrant.
Users are incredibly engaged and they're tied to the boundary both through our content with our platform.
Over time, we have become a part of many people's regular daily routines.
The second quarter Daily video views were up by 48% year over year, reaching one 7 billion.
Most of the injections was also up by 13, 9% year over year with user generated $7.3 billion with a chart.
Oh man life really be the moment posts and the virtual gifting.
The number of official members on BD also increasing with high retention rates.
By the end of second quarter.
121 million people will officially be remember an increase of 35% on the end of the second quarter of last year.
And now our 12 month retention rate remains around 80%.
That's where the 50% of our richest user in 2011 still remain active to just stay tuned.
And yesterday too.
Over the years, we continued to involve our community management system to ensure a friendly and well come in coming to deployment and inspiring positive social interaction.
We strongly believe that our community is a place for people to reach consensus Nacho.
It also creates dispute you in addition to our efficient member mechanism.
To your reading forthcoming in team member patrol and enhance our detonated response team to protect the integrity of the company.
With these efforts, we hope to create an enjoyable and lovely place for users and creature to ship, none and fraud.
Now, let's look at our commercialization progress.
We continue to provide more products and services.
As we execute our commercialization strategy.
Realizing the deep value up a high quality either.
Starting with our games.
In the second quarter revenue from mobile game and it remains that it's a flat year over year RMB, one 2 billion.
Going into the second half of the year, our priorities are to expand our mobile game goes to domestically and internationally while.
While our next stage of course, we're committed to building out how we can look at it.
And capabilities.
We current have fixed games do do with over 1000 member working on the project.
Leveraging our GAAP operating experience.
P O G D a LIBOR cap in Pakistan.
Strong distribution power and our deep understanding of users.
We are confident we can bring exceptional internally, but under GAAP.
Yeah.
We will come to screen titles to our roster in the second quarter of the exclusive distributor in China.
And probably will do that and it can be promotion technique, such a club of me.
And the ph UV content play out immediately impressed that entails kangols, you're going to hear it again with banking highly on China's iOS top grossing and top download chart a week following its release.
Our exclusively licensed indicating that sells torturing people with another plenty example ability the distribution power.
By the end of July.
Over 2 million coffee I think so.
Overseas market again with another growth opportunity.
May be succesfully bounce and we final gear towards one times in South Korea.
<unk> four is dedicated to all get done.
Egypt gameplay refined Nokia quickly one house of luck Margaret Barbara.
Three weeks up itch relief refund, though do you continue to hover.
We'll go place top 10 grossing chart in South Korea.
The success story of chemistry, all of that established.
Teeth, and gums selection and execution overseas market.
We believe we can build on the success with our other titles.
Region.
And for our game pipeline. We currently have 11 titles approved for domestic relief and the number of ACG titles later.
International usually come in culture.
During our recent Billy Billy can press conference, Los Angeles, where we introduced 16 Grand New titles, including 10 exclusively licensed games and six health care than project.
<unk> to a new generation of cameras.
These titles covers a wide genre, including sandbox to.
They play a puzzle solving real perfect you got active RPG simulation and the mobile.
Each type of features.
Graphic design and they started setting reflecting BBB understanding of J&J, plus gamers tastes and preferences.
Looking at all of that business.
Back then there remain strong with revenue reached RMB, one 6 billion in the second quarter up 19, 8% year over year.
Be a natural extension to a bigger ecosystem.
<unk> is a better way to bring high quality video content probably either.
And if all of our content creator.
He is also an important channel to engage with their photos and the realized commercial value for the operation.
<unk> liver, we are a one stop platform for GAAP related issues.
Spot terminal and a place to engage with Kols.
So ACG and entertainment enthusiasts.
Content continues to expand with our huge anime library and unique live broadcasting Entertainment.
Particularly virtual steamer V of content.
Over 60% of top global the ups have now joined our BTB live Broadcasting network.
Making us the largest community.
Community in China.
Turning to our premium member business our dominant.
<unk> plus users continue to show growing profit duty to pay for premium content.
By the end of the second quarter.
Number of premium memberships reached another record high of $17.4 million, an increase of 56% year over year.
As for our advertising business.
We are pleased with another quarter of explosive growth for that business.
Revenue grow by 200, and a 1% year over year to RMB 1.05 billion.
More and more advertisers.
Ah is a must invest platform to get visibility around Gen D plus demographics.
For the second quarter.
Pulse I would target verticals, where mobile games did.
Digital as we see product skincare, and cosmetics e-commerce and food and <unk>.
Along with increasing our brand awareness, we continue to improve.
You can see of our AG matching algorithm.
Strength in our airports.
Given us confidence in our ability to secure continuous AD revenue growth.
In summary, we are pleased with our progress so far.
<unk> set the bar high and M to be higher.
Building, our content ecosystem driving model will continue to grow our router right community and enhance our commercialization capabilities.
At the same time, we place great importance, our social responsibility.
With a goal of branding productivity to the world around us.
Whether it be through our ability both schools.
The relief effort Pandemics court.
Central was.
To always be the weak and progressed.
Integrity and to get back to society.
This concludes Mr. Chen's remarks, I will now provide a brief overview of our financial results for the second quarter of 2021 and outlook for the first quarter.
Total net revenue for the second quarter was $4.5 billion.
<unk>, 2% from the same period alternative drinking we continue to see a more balanced revenue mix driven by our diversified the commercialization channels. Our total net revenue breakdown by revenue streams or approximately 27% mobile games.
So the 6% in the past and the Super Center advertising and 40% E Commerce and other business wholesale revenue increased by 74% year over year to RMB three 5 billion run their shiny caught a key component of cost of revenues of RMB, One 7 billion, representing a 17% increase on the same period in 2020.
Gross profit increased by 64% year over year try and deny Hendry and 18.9 million and our gross margin was 19, 2% in second quarter.
Total operating expenses was RMB, two 5 billion of 117% from the same period in 'twenty.
Selling and marketing expenses were RMB, one 4 billion, representing 107% increase year over year.
The incredible economy attribute to increased channel and marketing expenses to promote our app and Greg as.
As well as promotional expenses for mobile games, and increasing head count in sales and marketing personnel G&A expenses was RMB $436 million, representing 109% increase year over year increase was primarily due to increased headcount and general and administrative.
Personnel increase of share based compensation expenses and higher rental expenses.
<unk> expenses were RMB $674 million, representing 104% increase year over year increases were primarily due to increased how company research and development personnel and increased share based compensation expenses.
Net loss on the $1.1 billion for the second quarter of 2021.
Compared with RMB 571 million in the same period of 2020.
Adjusted net loss, which is a non-GAAP measure that excludes share based compensation expenses amortization expenses and income taxes related to intangible assets a partial business acquisitions was RMB 800 and a.
8 million compared with RMB $476 million in the same period of 2020.
Basic and diluted net loss per share were RMB 291.
Adjusted basic and diluted net loss per share was RMB 212 or three.
As of June 32021, we had cash cash equivalents time deposit as well as short term investments of RMB 27.6 billion.
I'm here with RMB 12, 8 billion as of December 31, 2020.
Our cash reserves gives us more comfort does our ability to execute.
With our growth strategy.
Which we believe will yield comfortable return in the long run.
With that in mind, we are currently projecting net revenue for the third quarter of all kinds in 'twenty one to be change on the $5.1 billion and RMB five 2 billion.
Thank you for your attention we would like now to open the call to your question operator. Please go ahead.
As a reminder, ladies and gentlemen, it is star followed by the number one on your telephone keypad. If you wish to ask a question.
Okay.
Please press the pound or how should be.
Please note that might be a slight pause as we collect the Q&A roster.
Once again it is star followed by the number one to ask a question profit.
Benefits for all participants on today's call if you wish to ask a question.
Good management and Chinese teasing it didn't repeat your question in English. Please limit your questions to one at a time if you wish to have follow up questions. Please rejoin the queue. Once again it is star one to ask a question.
Do you have the first question is coming from the line of.
Hey, Zhang from Bank of America. Please go ahead.
Oh, Hi, My name's, Pat myself, I think that there's all of that for some time now hold I wanted to ask you claim you know of course, they acquired Oh come along and Q are you seeing them for that.
Yeah. So you don't feel that then got a 40 F O b.
And you can only put value on mountains.
Okay.
Oh, yeah, downhole, not arguing that what makes that many and now you can go down it won't be all high all wondering if you can get that it seems like how am I going to go.
Uh huh.
And they found out Oh, what do you think Oh, Thanks management for taking my question and congrats on Scott. That's all from me about my questions mainly on the other girls can you give us a little color on the second quarter. If you would have got also I think typically a low season our standby.
Standby output was pretty good and then secondly, how can we look at the second half new their trend and our downtown go their target. Thank you.
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So it seems to me anyway.
Children with Tim Conder.
The name of a time, yet, but children who've got more.
And the first half performance, we did a pretty good job I think that's all thanks to our content driven.
Kevin business model.
Modest character as that longer term the MAU we.
We think the more competitive as it has.
This is a truly healthy business.
Model.
After that and sustainable.
Thank God I prefer to see those have all played a pretty similar quarter program Mcgill with offers these on their own.
So really nothing of that guidance.
In the middle.
You gotta be iPhone.
Typically with a woman and they don't seem like Florida down there you go.
She told me as appropriate.
We're gonna wages.
He runs our neighborhoods sit downtown Franklin who was on the realized real quick so you got a base on two.
Two things.
You've got some time to.
What can be done as a whole, we're looking probably seems kind of odd cause I mean, yes.
We're looking at.
Zero down the middle.
What does it take them more suitable person way Kashi.
So how can we see between home comedy, but even more so okay.
A more relaxed receiver.
You made it even more so when I see that that will come down when you got sort of behind the scenes.
So I believe many of the participants for today's call has evidently user itself and I believe you might have the same feeling as well.
Do you think the lay down meaning that the content on dividend.
More and more diversified and more high quality, sometimes for my personal views on Covid.
I won't be surprised to find out the diversity and fast any and that of our content offering so I believe.
Business model that where money is very they are healthy and well.
Okay, Frank our long term sustainable growth.
Okay great.
Maybe the cause.
Got it.
So you'd see a.
Do you think there are two things what are you.
In Panama.
So what are you looking to kind.
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Uh huh convincing them, both I don't think automobile census, hovered at Mcdonalds.
For our long term guidance, apparently we have already happened in Q3, so far what we have observed and I can see that we see are American progress in terms of the future.
For both quality and quantity and early this year, we have got an airport in their forecast for this year.
You will reach 260 million, so far and we think we should be quite on track to delever.
Cheap backhaul or even surpass that goal.
Hum romance movies cohort saw R&R tenure.
Cleveland Premier beautiful about the medical need.
Mobile.
I'm looking at that how what's your thinking.
That's where our long term goal of 400 million and then you buy and that's going to need to do three.
Great.
We so far we feel very confident to achieve that goal.
Well on track.
Sales of our high school based on some of the other things.
For example, dongguan.
See the other uses of that will go down even to that cause.
As a woman putting games.
Looking like.
Harsha cuts I'm not sure who's going to core disciplines.
Again, you can see the you know what kind.
When looking at Pandora.
So you know we work with them down.
Okay.
That's all I'm amazed me only Florida roofing Israel for Honda.
So the food the pieces of that so that's in Ghana.
Actually even though.
And one thing I want to emphasize active user growth.
Best of it and its quality.
We have maintained very high quality growth from our perspective, we're not not only just attacking either to join them at daily, but they actually really recognized the value of the platform and they are willing to stay with us for a long time.
Even though that we have experienced a very fast.
Healthy user.
In the past, we've noticed that engagement level and a bad active ness of our users still growing that in the second quarter, our daily user time spent.
One that is the baskin tougher.
Compared with our.
Previous second quarter at a time.
Okay.
We're not kind of it seems.
Go for it.
Does that make us so he doesn't gather people going on in your body and the Army Army in Sudan.
Yeah.
Oh, the argument, but I think when I think about four years, how do you see it should've been putting somebody on beef it sounds on the physical plant.
And Additionally, we see that long term engagement for our user is also improving actually we've seen that that registered user in 2018, 19, and 2020 guarantee a UQM a union.
And the level in 2021 is actually improving on a year on year basis.
I don't know I'm looking at kind of as a woman named global warming to her leaving.
Sitting though I think Oklahoma absolutely yeah.
The whole foods, they're coming down, particularly as.
So it's all you on that.
It would've come down.
And every quarter and believe our daily BD and our monthly user engagement number and that you're on your front, so, yes actually faster and I do think so though.
Bill this is normal seasonality.
Putting all of those things that I can't.
Yeah.
So all of those metrics shows that we are not only being able to attract people to join our platform actually stay with that thing become line changed.
Hey.
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So Tony I don't know.
You've done it for sure, but I got to go hard on their own.
Okay.
Thank you.
But we have the next question is coming from Alex Poon from Morgan Stanley. Please go ahead.
So if you got any conversation with the tier one don't see figure I'm counting, but yet you publish coupon codes and Jonathan.
When do you see when you can call the singing somebody of women going out in town Sogou total by them to buy that income.
So when you say all of them and some guidance on what kind of Siobhan here, So a way life, the Guangdong and Zhejiang.
Sogou, that's your cyclical downturn.
<unk> got on the James Lime Gaucho B Russo.
So D cutting Quangos W E T.
So.
Hum.
I'll translate my question My question is regarding.
The advertising business Ah congrats on very strong growth of over 200% for two quarters.
Given that there are recently regulations around data privacy.
That screen at education et cetera, how should we forecast and looked at the second half growth.
There were the growth drivers come from thank you.
It very much.
So it's sort of a table with that title shows how he says how ball Sydney, Tony Jones on talking about Hey, I'm back.
She was she cannot tell what people are telling you see the jonestown.
So for second quarter, our quarter AD revenue has surpassed 1 billion for the first time and achieving 200 over 200% year on year growth and that is the 19th consecutive quarter that we've never over.
Hum.
Pete advertising advertisement income.
Oh wait I saw that and yeah, you can count T, but I can't yes, I have been in Saudi we have gone kind of a.
So that doesn't do well not high since we're a niche player.
Hi, sure like again to your question.
Yeah.
As we look into the second half and.
For the next few years when you've done several things to continue to improve our AD efficiency and baseball a foundation for our future AD revenue.
And so I thought I.
I saw your time, King Solomon I shouldn't say, yeah, coupled official copies on tour that thought hunting question. Yeah, just sit here and you say yokokohji outside these I'm thinking up hold on can you give us some kind of pro forma Tommy simple downhaul things on board for that.
So occasionally you found yet another team pad quite should again be cheeky and switches into the guidance.
So the <unk> you didn't give us I'm trading Michigan.
So first of all we have continued to explore multiple scenario for our AD products based on our clients' needs and we hope to help our clients to precisely reach their target audiences.
People time across various scenarios across the middle East product ecosystem and quickly ran image to just one campaign investment and we have already achieved that.
Quarter.
That's a GAAP on a more.
Since our husbands south of us well not an easy entry Chancellor Handoffs testing had a much keisha bonga all of a sudden quadrant, one golf he up to Tony and tier down which is about half that because I can't yet tell what he said.
Yeah, I don't know what you can do.
Bosch Honeywell Salvation Bank culture that sometimes that's a kind of income that should be done in a bronco loyalty.
Well my thought outbound call center.
To answer the one positive media the idea until the soil upon gosh, well, maybe you can tell me Naoki, Guangdong tomato harden their young patients.
Yeah.
So that's just a settlement of some kind into her himself excuse me, yes. So let me just suddenly tongue again.
Second secondly, we are also actively suddenly pouring new AD formats, including adding a liter format as well as connect advertising revenue.
Content creators creativity.
The regulatory environment, you mentioned, we believe that the foundation or the watch it behind us.
The regulatory hope our consumer won't be notified.
Hi.
And what we're doing has been practicing it's first time Halloween.
All of our advertisements.
<unk> be a blockage type of advertisement, we hope really too.
Bad income net and combined content.
Advertisement.
Make it more interchange focused content could be a good commercial and become Marshall.
Okay content and from that perspective, our integrated marketing solution as well as our content creators are own creation.
Their own production towards native ads, it's a perfect solution to work that problem.
Yeah, no problem I should finish it up all of them that sounds I've heard that a society, sometimes I think people that downtown Joe Shan Shan Li.
Sure the golf on T cells.
And switching why wouldn't I simply want to couch it.
Thank you Angela.
And secondly, our AD efficiency was also greatly improve in this quarter, thanks to our AD Tac and Arco team and we're also investing in frontier AD Tac related R&D.
I decided in Oklahoma I shouldn't way back on line.
Keith I don't know if I'm wrong, you don't see from a child. So I was thinking that was not good.
So it turns out I can't tell you what my I should think either towards that La Quinta Hong Yeah, then you signed up.
The U T Charles I feel more confident.
People, who don't I'm kind of a.
Yeah.
And currently is that we will be focusing on our leading vertical and provide industry based solutions, such as game technology education e-commerce, and food and beverage and et cetera.
And as we expand to extend our user base, we hope to further expand our.
New AD vertical industry verticals and are very close with sufficient at budget for example, such as.
Automotive and new domestic consumer good and all of that has been reflected in our second quarter outperformance.
Okay.
It doesn't seem to want a high says I shy of our time do the same thing for myself.
Yeah, the Cheyenne nailed down and that's what I see from one car T E. Baba cheap Homesites Altamira began selling its own time to young she wants it to be that Shanghai sanya through that same pace, yeah posted you gotta be a hotel.
And most importantly, we have upgraded our organizational structure.
Actually I think she team and SEC.
<unk> quarter, and we have integrated that they were the only commercialization met where platform context of commercial traffic management system ASP is down and our sparkle advertisements system.
Purpose of doing so as to further optimize and allocate and we're doing some commercial resources and improve our commercialization efficiency.
Push it up.
So all I can tell time, but don't hurt yourself on that huh.
And several times a year.
Without I guess I'm talking like football cleats, he won't be there in person.
I'll find that forces will now play a powerful keep high fever shipyard Peanuts has had a sudden death.
I think on label Simpson without losing the nationwide.
And Additionally, we have also regroup recouped, our self from integrated marketing team and our content creator related sales team, forming one centralized South center.
So as to provide the liquidity featured integrated marketing solutions and help our clients to improve their brand equity and achieved solid clean corn thing marketing circulation on dividend.
Pink tied up on goes out to him and he said he was gonna vacancy here you don't go gotcha, sometimes just really going to get 514, I'll, let neel.
Well I would say is that since we know who the Nancy Keisha dollar outside in Boston.
It's a little drop off I should say I should say.
Hello, Tien Tsin had dabbled fans at Samsung.
That's helpful.
Jonathan since one ball mill I celebrated reaching now these are essentially and I. Thank God, our phone call Josh.
Pin Tai Chi back on offense, and you'll see our MAU I should say again think about Guangdong.
Yes.
Siobhan yen may lie the eval Daniela.
Thank you. She bought so you don't see in Congress also gaucho lunch on top.
There's a saying that the platform value equals the users value on the platform and innovate and Mr. Chen has they.
We mentioned the value of the user our current average age of our user is around $22 eight yourself.
And 60, 86% of our user are under age 35, and a majority of them are in first and second tier city and for this group of cohort. They are the main consumption.
<unk>.
Or put in China, and they represent the highest value.
Demographic and building on that advantage will continue to reinforce our infrastructure and continue to improve our apt profit.
And for the second half of this year and one two to one to three years ahead.
<unk> confident to maintain a healthy and fast growth for our App ad business.
Thank you.
Okay.
Got it.
The next question comes from the line of Alex Yao from Jpmorgan. Please go ahead.
Okay.
Hum.
No one wants you to do.
Subsequent see Peter on China.
No Connie comes at some point corner chart Chinese Sean do you do the gimbal undue counterparties.
I don't want to go playing a joke to attrition.
You too.
Shortly you look on him to be assure you wish you would shoot for.
For two young Uh huh.
Uh huh.
From a beach on the year.
When you shop.
So my question is about the revenue treatment.
Amy and the ninth Dreaming operation.
Given the changing revenue between environments.
And potentially more policy coming out in the next couple of quarters, how should we think about the impact on our gaming and live streaming operation. Thank you.
She's a genius females and you'll see her be slipping to the whole year.
Timberland, though I mean, you cannot be in APA.
Would you, let's say James Doyle claim years ago, Youll see there should be and how you think about being fiber colorant, what kind of a system. That's amazing for me on the call.
We'll then get clean eager to her casual her daughter appeals or neither.
For example, do you pause today, but that's a woman first of all have some goalpost somewhere on the female country at all.
Part of its own accord, because they give us even sitting in front of me and it seems like that's maybe the cause there.
<unk> from our Panama, where if you look on the order to the country issues or permitting how long COVID-19 who was on the.
However, not all of them I don't see now.
High School football families.
Female so much is that what kind of a female.
So really those are going to go.
You triage hurt either.
So her what she isn't good in Asia.
Maybe like maybe like you will hear how do you sitting at home soon as resources.
Yeah.
It tends to be a cause of what that does is coming to your ticket.
And the children.
Yeah, you place on them.
Oh.
<unk> female.
I think we're being there with a multi modality sitting going in April.
You'll see from here.
Actually for 2020, one while we have I'm sure there's no significant change.
Treat environment towards games or towards lifestyle.
<unk>.
That's speculation.
And in fact, all over the Internet.
Based on the media team came from the immediate level and as a company. Our staff we have kept our regular dialogue with different government authority and from the company's perspective, we're actually haven't heard anything here.
And that discussion if you found the media or the Internet users and.
Just based on their own.
Speculation.
Vaccination and Theres no ground to those discussions.
And for our from our perspective, we think that.
<unk>.
From a global perspective, and regulation towards internet content game or or by broadcasting it won't be more and more standardized Andrew Bay and that hasn't changed.
Two without that we'll talk to you about this.
Cause.
<unk> two for women.
Eli I too want to maybe go out to her through improving lithium glass is a woman the HIFU with both of them.
Even with you though are pretty.
<unk> Sagar.
Acquiring the hunger.
They've got some improvement Jim glass processes.
So I can kind of find out about that is it beyond.
And from our perspective.
Do we have.
Find it very actively towards.
All kinds of regulations.
Income from and we believe our industry that experience in fact, well certain regulation, that's actually beneficiary for I guess industry long term and healthy growth.
So I'll, just say, who you are the higher the better.
It has to be see a sofa.
And of course, if we are not because you don't you can conquer cause or do you see the hunger games.
We've done because of the season.
Switching to the hunger realized he was just how broad you anything the sensor youll see realized.
You know that you don't foresee three wasn't where it was a political to be honest with you talk to them because they're thinking about.
Simply put it all creatures of acute mi because TSMC.
You also see here the hungry this idea.
You find out I guess I'm sure you can lever that up how do we see that some of the gaucho camellia.
Okay.
And we think as the industry development as they have more endpoint in St may impact towards the society.
It was very natural profit point of regulation to be kind of our rule based and standardized and I believe the video industry and will be a multibillion dollars trillion.
RMB worth of industry and gain probably won't become there will very likely could become the mainstream format of entertainment and in the past, it's probably at the emerging new vertical.
And the details of those reclamation, we're not mature and asset growth bigger, it's very natural for it to regulatory to warm up.
A more standardized in rupee.
Fabulous free environment.
It's simple to.
Sitting here, how you will hear from Tim Glenn Hubbard's. He goes of course, those as they come to FID on since either just so we can.
I'm not sure Negros Q1 kind of at a high up I don't know how much easier the hunger didn't help either.
Sort of a common theme Nathan.
We're going to get there and how many ultimately if they don't even feel it'll be resolved.
We come in and you'll see that you got you got you got dominant video sensor fusion.
Needle coke leasing or financing or anything else, so those will be coming to them.
Thank you.
One was on some of just the VITAS airports as I see the world The peninsula. It needs. This will continue.
I mean.
Yeah.
Thank God.
Government regulation towards video content and game content has been very clear.
And in general they do hope this industry working now and encourage the development of this industry and they have been very specific on the things that and hope to practically one as on the minor protection to S. A.
Compliance of the content itself and in the past and up to now Billy Billy has been very.
Clear on both requirement and have follow and implement all the regulatory requirements.
Or what kind of it slipping a bit you'll see a fun time for visa.
You should conditions colonies of lung problems with the phone.
Yeah.
You know how to answer that.
Hi, John.
The <expletive> putting on going through them at.
Some brand or does it.
Yeah.
If you indulge what people thought that <expletive> between New York, Yes, you heard that the state on the co packing for raising I was just thinking if I'm in.
Sure.
So we're currently kind of parts of the world.
Maybe just a little glimmer.
Yeah, you can query.
Further helping too.
Income.
So.
Generally I think that the game industry will definitely move forward and experience that are novel.
And as an Internet company will be fully compliant with the key areas that the government has specifically required one F on the minor protection and two ads on the compliance of the content itself Mike.
My personal view is I feel very optimistic I believe.
Industry will only become better and better on de Densification at the Academy.
Okay.
Yes.
As an example younger.
Anybody who is listening to them.
You see you mentioned that you got.
Due to the holiday weekend.
So for us it's clear they're going through.
Yes.
Yeah.
So either hydrogen or was it all.
How many of the 20th Covid Goldman.
Since you're the neighborhoods instead at all Tim.
Tim composite pieces of hardware.
Who knows.
So a typical sort of hung up with some frequency was on that down the yugo vivo cancer or something that maybe people towards the at home May go away from you or why you will see that you wish again.
People tornadoes Covid icon Nathan.
The shopping patterns et cetera.
Sullivan.
Our union.
It sounds like maybe you will see the silver slipper easily.
So as Antonio said once we get through that.
Let's see that's all this is done with kind of the fee income.
Okay.
Three though hydrogen.
That's interesting.
Because this is how can people find out about it.
Generally I think that this industry is quite different from 10 years ago, probably in 10 years ago.
Early stage, there is not a very precisely.
Precisely calculate at 10 years later this industry has become much more mature the participants in the industry also game.
More experience.
With 10 years of experience I think we have already reached a consensus in the industry players and the regulatory and that the industry needs to be backend weighted towards a healthy development path and from the billings perspective, we have 64.
All of our rules for example on the minor protections that the revenue generated from you said that below 18 years old.
The <unk> revenue only takes it out.
It takes around 1%.
Total total gaming revenue now we have been in.
19 restrictions and rules to protect better protect our miners and followed that regulatory requirement. So I think overall industry.
Growing towards a more healthy and positive track and I personally feel.
Quite comfortable with the existing environment.
But ultimately you got that sort of thing.
We're killing it accordingly.
Frankly, I thought that you will see them switching to Kim.
Timberland from English south of downtown.
Sure.
We'll need to get or it sounds like I, just don't remember Jim glass crusher that because of course, there's no arguing about hungry ghost town.
Yeah.
Timberland somehow if there's going to.
It seems only the hunger games.
Three awards for senior citizens.
So to summarize in the past few months I per.
Personally don't believe there is some fast change regulatory environment towards games or video and we believe that regulatory and make existing practice and requirements from the government.
Very appropriate and signed 10 things and we believe our peers.
Industry also agree with that and already reached a consensus.
This industry needs to be moved towards a more healthy and rapidly.
Pat.
Okay.
The next question comes from the line of Phoenix Hughes from UBS. Please go ahead.
Consequently, she can control them and teach that they found something they are.
Well, even when Keith as you claim you want them now.
Jacob J P Tau molecule.
On the go Saturday lately.
Q2, the weakness are withheld.
Horton.
And Kevin May take them I'll leave that to.
Sure Don.
I'll need to take our mobile.
We've taken the update let.
Let me translate myself. So first congratulations on the strong set of results. My question is on the GP margin.
The GP margin. This quarter was that showed some weakness in Q on Q and year on year. So may I know the reason or any color behind that and what is the.
The management.
GP margin trend for granted this year.
But for the longer term potential thank you.
Okay.
Let me take your question.
You are right a slightly decrease of the margin in Q2 actually as many cases or change of sales mix. In Q2, we saw a contribution of our GAAP revenue I felt it was accretive.
Revenue.
Also lower contribution from our cooperation GAAP.
So and also for our novel accounting revenue. The gross profit margin also declined a little bit due to COVID-19.
We launched a campaign inclusive of a higher revenue sharing ratio.
It's not like a performance based incentive as well.
Are those new host OLED.
Actually if you look at the short term.
You can imagine we are still in the early stage on the monetization side as.
Well it'd be flattish over the over the quarter.
Before we get into the details of our long term margin trend.
To emphasize the owned or the way, we our strategic thinking.
Uh huh.
On the profitability.
Why do we have the opportunity to quickly you'll know extend our user base.
Our priority at all away for some unit growth in top line.
Fashion, rather than to limit our growth potential for the pick off the breakeven.
We are thinking about the path to the profitability actually we're thinking.
The sensible you'll know.
Our revenue level to achieve a healthy breakeven status and whether it's sustainable to keep improving the profitability after the breakeven.
For example are coming.
We like the RMB 20 billion revenue in the same company, we RMB 15 billion revenue the bigger revenue side is surely you'll know more sustainable for long term development.
Over the past 12 months, we successfully achieved.
Quality revenue growth, especially our user base.
Our <unk> went up 38% year over year and monetization if its a fee per Mou, but also increasing.
Separately, the lending against revenue per Mou actually increased by 72% year on year to.
To around 13, eight RMB per quarter in Q2, GAAP. We believe there are plenty of upside because we grow our user base and improve our monetization efficiency and also on the cost side, our key really relatively fixed operating costs, including the content.
And the staff cost decreased from 34% of the total revenue in 2019.
8% in Q2 this year as we grow our top line and improve the efficiency of our revenue mix.
Well also be more diversified and our segment margin as a local company.
All against that ambition to have them to improve.
That's it.
Once you look at the for the long term.
Our gross profit margin trend.
Thank you that makes sense.
I think you'd be up the next question from you anything from China Renaissance.
Checkpoints to watch all of course, if at all for yourself, what's it begs the question.
When it cut off somebody that's already also sogou to southern del she wanted to know your.
That's my country summer shutdown, yeah, but with Stephens.
Thank you Sundar.
I get what you pay for me on the call. The news, we all wish him well.
So if I can my question. So my question is regarding guidance.
In the first half hour to name the name is pretty stable or should they go okay.
Hubs and all sorts of hunger games revenue growth.
The only way to self developed became what can affect.
So its way too heavily in the country.
Yes.
Oh, well, we cannot agree it is how to continue with Sidoti.
Congress at Olympias.
This is also a major coffee with Ebola tens of them, you'll see those citizens, who that sounds like a home run.
Sure.
So the only thing just for other games.
It could go either way.
That doesn't go see their guidance.
Hi, all.
A year ago.
Cut it anymore, so that GAAP I don't feel like we can get a familiar with people who go to the general pessimism.
We reported a tenure.
I thought that harder to negotiate lifestyle.
So not just the seasonal woman.
Youll Silicones is a D V she'd like to reemphasize how are you doing now to answer the hot neither do you see you may point out anything.
The balance sheet.
Three of them have enrollment you'll see that come through.
Okay.
Indeed, when we look at our teams now for nearly a half extend some some of that slow down in the first half of this year. The main reason, how we see it because lack of supply for both of US are exclusively licensed game and jointly operated games for the <unk>.
To ground.
We're connected to all we need to get more new games.
And because of the overall permit issue.
In the past six months that there has been some.
And the supply has been slower than expected.
Same reason, our some of our projects have been delayed and that was the main reason for it.
So for our team.
Dennis political appointees Koreans whatsoever I cover.
To help you so long ago.
Excuse me.
So kind of just certain kinds of features so sometimes I'm from Cleveland, So kind of given some of the absolute top of women. Some key take some kid and they often are suitable for visa.
Okay.
How can you kind of attack, particularly because you put together you're looking like that will have a teaser for profit with you see the Soho.
Sometimes you'll see the kingdom.
But those are put together with them I think somebody asked what does this all kind of know how you thought about Anthony.
This income total quality due to the to me something that to me.
These are not going to you will see the Columbus took a pause here.
Well it depends on I guess the format because it's extremely popular.
So you will see a cut of soil. So yeah, they get caught up.
Ben.
And it sounds like the rest of them are kind of all of them they need the.
There'll be like hydro.
To go to their data center, maybe like how are we going to go through the third being towards the holidays.
How do you think Astoria that'd be great.
But you still need to be done to the tune hi.
Some are you'll see the courses being daughter things here.
He or she does.
Yes, it gives us extra Susan.
But we also see some positive signs.
Ask me.
As we operate our business inside that supply.
Supply issue, we've seen on the demand side there is many many positive signs.
We are all on the either the game really heating careful watch scheme related live broadcasting and video actually kept growing with our overall, even with the under supply pricing title for all of them for any new titles that we released in the first half.
This year, including.
Guardian, Pal and Florida.
Online.
New additions new downloads and user has constantly.
Single game record.
And on the other hand for the old game, we have we have seen a small operation cycle. Many of our games continue to grow in terms of revenue and users for example, our doorway exclusively licensed game.
Our jointly operated games income impact, we're seeing more Utica or Tony and it's working on continuously to well over a year.
Generally we think people building the team.
<unk> and.
Their desire and need for high quality game, it's also growing the fleet or how does a woman.
Kansas, a year with us give us some GAAP certainly inhibitor Joseph mentioned, she architecture computer Lindsay.
Okay.
Peter I think the phone talk to her settlement T SEC dotcom.
Got it back in those days.
July will now wait the three of them yet.
People, who hit all maturing until June.
You cannot handle just a real Iot hung I'll, let you go.
Tusa Tusa taxes was attributable to.
I, just don't see anti cyclical Buda that Peru is a free and I think of it.
So when you look at kind of how does a woman doesn't make a trend.
You'll just be on Sunday to the Greenway I work in Canada, helping tell me you're closest to you could count on that internally.
<unk> spending in the cornea appropriate which is not yet.
What it does make a tutor.
These are more kind of you will be more like three.
When the downturn began.
Okay.
Is it that you're holding guidance bundle, you'll be able to sort of an idea you obviously Amazon.
Hum.
We see it we think as long as we saw the.
So quiet.
We should be able to solve the bottlenecks that we see in the past quarters and the best solution towards the supply problem as well.
While we continue to enhance our licensing business.
Hunting will start to ease up.
The MAU schemes and actually from a in last year, we have already seen the trend.
Supply in the market and we started to invest in our self developed game business currently we have over.
1000 team members.
Our sales development team and there's multiple titles and project.
On the development.
I would be expecting to launch our own self developed.
Our own self developed games.
Next year and the year after next year.
From based on our existing business scale, we think our stock basketball team won't be our number one priority and I believe in few years later, our self developed games should be contributing over half of our.
In my opinion, but what else can I don't get it was not a decision that visa Europe related.
These are some if you will.
I think the short answer is yeah like disorder. So youll see that pendulum. So don't forget tiger so you'll see that the official yes, a printout here.
Milton Knowhow development altogether was also soybeans out of those games.
So darling themselves. So I wanted to just to go signal when he does it go faster.
Sometimes.
For example, they said that when she sees.
Is there a particular thing.
But even here with the Cmos element in Stockholm.
So when a woman in Saudi Arabia.
So you'll see some delinquency number when I went to Cleveland gardens in fulfillment of Korea.
Williams in the Sudan.
Here with the thumbs up.
To summarize we believe our future continues to expand we should have more gamers and more in demand.
And to solve the supply problem will continue to grow.
Great importance.
Licensing gain.
Okay.
While investing in self developed games.
And in the past we might have one engine for a gain revenue growth potential for licensing and in the next few years. Some of these dual engine South development life licensing enjoy operation.
Thank God.
That <expletive> power our.
Rapid sustained revenue growth.
Okay.
Thank you and that concludes our question and answer session for today I would like to turn the conference back to management for any additional or closing comments.
Well, thank you again for joining us today.
Have any further questions. Please contact me till a young IR director or TPG Investor Relations, our contact information for IR in both China and the U S can be found on today's press release have a great day Bye bye.
[noise].
[music].
[music].
Good day and welcome to the Baby Bunting 21 second quarter second financial quarterly results and business update conference call. Today's conference is being recorded at this time I would like to turn the conference contribute Yang execute the director of Investor Relations.
Please go ahead.
Thank you operator.
During this call well discuss our business outlook.
We're looking statements. These comments are based on our production and exploration Athens say actual events or results could differ materially from those mentioned in today's news release and in the discussion due to a number of risks and uncertainties, including both mentioned in our most recent filing with the SEC.
And Hong Kong stock exchange, the non-GAAP financial measures, we provide at Aqua comparison purpose only.
A nation of this measure and a reconciliation table are available in today's news release issued earlier today.
A reminder, this conference is being recorded in addition, an investor presentation and webcast replay of this conference call will be available on IR website at IR adopting a bit of dot com joining.
Joining us today, so I'll be able to do with senior management are Mr. Ray Chen Chairman of the Board and Chief Executive Officer, Ms. Colleen Lee Vice chairwoman of the board and Chief operating Officer, and Mr. Sam <unk> Chief Financial Officer.
I would now turn the call over to Mr Fan, who will read the prepared remarks on behalf of Mr. Chen.
Thank you Juliet and thank you everyone for participating in our country.
So.
I'm pleased to deliver today's opening remarks.
Mr. Chen.
In August 2019, we announced that our ambition to further grow our user base.
Today two years later, we found ourself on the five trucks to executing that strategy.
Achieving many milestones along the way.
Second culture.
14 million that May you have sequentially.
Our total and they used to have 237.
Really upset the 8% year over year mobile and they use also rose by 44% year over year, reaching $220 million and the da use reached 60 seamlessly.
I'm trying to a 4% increase year over year income.
Ultimately our users become even more engaged.
An average of 81 minutes per day our platform.
Marking the highest second quarter level operating system as well.
We moved into the peak summer season, we're pleased with the increasing momentum we have seen so far which places us firmly on track to achieve.
Our gross target.
Our robust user growth also translated to strong top line expansion.
In the second quarter, our total revenue reached RMB, four 5 billion up 72% year on year.
Once again retail.
The high end of our guidance.
Baidu food products and the services M. P youth was up 52% year over year to 21 billion and our payout ratio improved to eight 8%, mostly a seven 5% in the same period last year.
As the go to destination for young Chinese.
Our platform is also gander is wider recognition of our titles across different either geopolitical.
In the second quarter and revenue grew by an impressive 201% year over year.
She had a break in our 12 year anniversary on June 26, we all the demand a year, we have grown with our users.
Over the past 12 years, we have the med true to our original Escalations to create an outstanding community of users and the content creator.
And two green Chinese original content to users worldwide.
We'd give mission Yamaha.
We continue to uphold our public responsibility drought religion.
You hit on data authenticity content positivity.
But in making time that original content.
Your line of this year, we published our first ESG report.
Yeah, we all like.
Your policy.
Sure.
Deepening our commitment to being a responsible public company with a goal of bringing positive social and cultural impact to the work.
Looking ahead, the transformative efforts, our visualization is creating a here or that type of opportunity it bought.
Graphics, and the tax being really tempted into video formats to deliver information and more lively and vivid and powerful ways.
And we see it.
Video format or platform well be the new gateway for people to connect to the Internet and ex out the work.
And the BBB leap is on track.
<unk> to be one of them.
The momentum from video trends, along with our solid strategic acumen.
Then our content community and commercialization.
That's great comfort.
Our future September growth.
With that overview I would now like to provide more granularity on what the second cause of operation.
Beginning with content.
I'll, let Pete would you be ecosystem continues to thrive.
So evidently not just 3% of our total video views in the second quarter.
Over the past 12 years, we have accumulated our platform are the destination for young people to showcase their talent and they realize their career goals and professional content creator.
We continue to improve our services like truck content creators launched more tools and modify our app to make content creation easier.
In the second quarter.
<unk> was home to two 4 million contemplates her up 25% Yoga you, mostly with your permission ROE to eight 4 million in the second quarter.
Three 1% year over year.
The increase now of matrix no small feat given last year's high base.
We continue to improve our chart distribution mechanism to let high quality content creators quickly match with the offense.
In the second culture, the number of content creators with more than 10000 followers increased by 47% year over year.
Our live broadcasting platform and that's thoughtful advertising platform by means of our content creators to unlock their commercial value.
Why showcasing that pilot.
By the end of the second quarter.
400, and lifestyle of income and greater had also joined our ongoing cash incentive program.
For the second quarter, our top five most populated verticals with a lifestyle entertainment.
In fact, our knowledge an enemy.
But many will want to coat on their lives.
Relationship home decoration fitness beauty and cosmetics.
The emerging popularity of gift category reflects the involving content needs as we expand to wider demographics.
Being a hub for Yamana.
<unk> is extraordinary interest.
We firmly believe our content will provide a productivity impact on People's lives.
We actively promote content.
Summer to engaging.
Helium and help our users to become a better shape.
Could be more pressure.
Such as how to Cook baked cookies or you can get yogurt in deeper thinking so our guidance into the cosmos.
In the past 12 months, although 130 million due to excessive $10 ish content across a variety of subjects and I'll have Paul such.
Such as solidifying the mindshare.
Users often does not compete.
Turning to our what would you be content.
Ultra mounting our GB and unlocking commercialization potential of high quality OTV content, continuing to attract new users and the cover page.
Our platform.
In addition, many of our self produced titles had become valuable IP assets that we can do that.
As we leverage our network to further.
And for Us.
Representing Chinese culture, and a part of China soft power.
This animation has become increasingly popular domestically and internationally.
And our investment in gift category are paying off.
A primary example quality, while the IP equation cell production capability.
Inc. Click Siobhan Davita produced by law and then they do do is really be the original IPO assets.
And you need to hit.
Good evening April.
Accumulating over 150 million video views.
Patently, we found your condemnation UK relief in multiple countries and regions, where it's continuing to hydrate region.
Other popular Chinese anime titles have also helped us to attract many new young yoga.
It had been well received by overseas enemy lover.
These titles for this how they define our leading position in the ACG space.
Including the final chapter of Vacates single legend, Hey, what's our H I G G them to our company both alone and have the operational policing.
And what is it.
Our self produced matchmaking prior to show.
So.
The launch last week and the music prior to show the next banner, whether you like it.
<unk> will be released in August.
With this new <unk> offering we'd hope to attract more young moms with relevant interest and assimilate even more.
Discussion within our community.
Turning to our community.
Amenity continuing to be a vibrant.
Users are incredibly engaged and they're talking about your both through our content with our platform.
Over time, we have become a part of many people's drug relocated routine or the SEC.
Quarter Daily video views were up by 48% year over year, reaching one seven bidding.
Most of the injections was also up by 39% year over year with user generated $7.3 billion with HRS comment lifestyle at the moment and the virtual gifting.
The number of official members on BD also increasing with higher retention rates.
By the end of second quarter.
121 million people official BTB remember the increase of 35% on the end of the second quarter last year.
And now our 12 month retention rate remains around 80%.
Well, the 50% of our religious user in 2011.
Active to DSA.
And year to data.
Over the years, we continue to involve our community management system to ensure a friendly and well come in coming to the bornemann.
Positive social interaction.
We strongly believe that our community is a place for people to reach contact us.
Nacho creates dispute.
In addition to our official member mechanism, we continue to be reading forthcoming if you remember patrol and enhance our debt related with bulk team took a tad the integrity of the company.
With this effort, we hope to create an enjoyable and that'll be great for our users and equates to ship, none and <unk>.
Now, let's look at how our commercialization progress.
We continue to provide more products and services.
As we execute our commercial navigation strategy.
Further realizing the deep value up a high quality either.
Starting with our games.
Second quarter revenue from mobile game and it remains that it's a flat year over year RMB, one 2 billion.
Going into the second half of the year, our priorities are to expand our mobile game goes to domestically and internationally.
While our next stage of coals that are committed to building out our internal development capabilities.
We currently have six games do do with over 1000 members working on that project.
Leveraging our GAAP operating theaters.
<unk> and LIBOR has been purposeful.
Strong distribution power and our deep understanding of user progresses.
We are confident we can bring exceptional internal but I'm again toll users.
We welcome the three new titles to our real estate in the second quarter as the exclusive distributor in China.
You can probably do the same again the promotional technique such a club of me.
And the ph UV content play out immediately and Brad.
Entails Kangols you Glenn here is again, the banking highly on China's iOS top grossing and top download chart a week following relief.
Our exclusively licensed indicate that sales culture and people with another Prime example, ability the distribution power by the end of July.
Over 2 million copies had been so.
Overseas market.
With another growth opportunity.
In May we successfully bounce and we final gear towards one times in South Korea.
<unk> four is dedicated to Hagen dazs and innovative gameplay. We final gear quickly won the hearts of Likeminded ACG saga.
Well three weeks up itch relief refund on gear cutting into hulbert.
We will go place top 10 growth in China, and South Korea.
This success story demonstrate our debt established capabilities and game selection and execution oversea market.
We believe we can build on this success with our other titled other region.
And for our game pipeline. We currently have 11 titles principal domestic relief in a number of ACG titles later.
International usually come in culture.
During our recent <unk> Press conference, Los Angeles, where we introduced 16 Grand New titles, including 10 exclusively licensed game and six south get them project.
Touching to a new generation of cameras.
These titles cover a wide.
Genre, including sandbox to.
Plenty of puzzle solving real perfect you got to give RPG simulation.
On the mobile.
Each title feature.
Graphic design.
Alright, setting, reflecting BBB understanding of J&J, plus Denmark taste and preferences.
Looking at all of that business.
Back then there's moments along with revenue reached RMB, one six bidding in the second quarter up 19, 8% year over year.
Natural extension 12 video ecosystem Ladbroke hunting is a better way to bring high quality video content, probably do that.
And of course, our content creator.
He is also an important channel to engage with their photo and they realize commercial value for the operation.
Again, we are a one stop platform for GAAP related issues.
E sports tournaments, and a place to engage with Kols.
While ACG and entertainment enthusiasm.
Councillor content continued to expand with our huge anime library and unique live broadcasting Entertainment.
Particularly virtual steamer of VR content.
Over 50% of top global the ups have now joined our BTB live Broadcasting network.
Making us the largest b.
Community in China.
Turning to our currently member business our dominant.
<unk> plus users continue to show growing profit ability.
To pay for premium content.
By the end of the second quarter number of premium membership reached another record high of $17.4 million.
Increase of 56% year over year.
And for our advertising business.
We are pleased with another quarter of explosive growth for that business.
Revenue grew by 200, and a 1% year over year to RMB 110.5 billion.
More and more advertisers have recognized at the must invest platform to get visibility around Gen D plus demographics.
For the second quarter, the top five of a tightening of verticals where mobile games.
Digital and so we see products skincare, and cosmetics e-commerce and food and <unk>.
Along with increasing our brand awareness, we continue to improve.
Fancy AG matching algorithm.
Strength in our airports.
Given us confidence in our ability to secure continuous AD revenue growth.
In summary, we are pleased with our progress so far we have set the bar high and end to reach higher.
Building, our content ecosystem driving model, we will continue to grow our community and enhance our commercialization capabilities.
At the same time, we place great importance, our social responsibility.
With a goal of branding positivity to the world around us.
Whether it be through our busy bidding sprout schools exempted relief effort Pandemics court.
Okay essential for us to always be the wheat and progressed integra.
Integrity and give back to society.
This concludes Mr. Chen's remarks, I will now provide a brief overview for our financial results for the second quarter of 2021 and outlook for the first quarter.
Total revenue for the second quarter was $4.5 billion a 72% from the same period. All 20 countries. We continue to see a more balanced revenue mix driven by our diversified commercial validation China. Our total net revenue breakdown by revenue stream was approximately 27% mobile games.
Yeah.
So the 6% in the past and a 3% advertising and 40% <unk>.
Another billion cost of revenue increased by 74% year over year to RMB, three 5 billion revenue shiny caught a key component of cost of revenue log the one seven bidding representing a 17% increase on the same period in 2020.
Gross profit increased by 16, 4% year over year to RMB, 918, 9 million and our gross margin was 22% in second quarter.
Total operating expenses was RMB, two 5 billion of 100 or so.
And on the MPL rate in 'twenty.
Selling and marketing expenses was RMB, one 4 billion, representing 107% increase year over year.
The incredible economy attribute to increase triangle as marketing expenses to promote our app and Greg as.
As well as promotional expenses, while mobile games, and then creating her come in sales and marketing personnel G&A expenses was RMB $436 million, representing 109% increase year over year increase was primarily due to increased headcount and general and administrative.
Personnel increase of share based compensation expenses and higher rental expenses.
R&D expenses were RMB $674 million, representing a 104% increase year over year increases were primarily due to increased how company research and development personnel and increased share based compensation expenses.
Net loss was RMB, one 1 billion for the second quarter of 2021.
Compared with RMB 571 mandate in the same period of 2020.
Adjusted net loss, which is a non-GAAP measure that excludes share based compensation expenses.
Amortization expenses and income taxes related to intangible assets, a partial business acquisition was RMB 800 and a.
8 million compared with RMB $476 million in the same period of 2020.
Basic and diluted net loss per share were RMB 291.
Adjusted basic and diluted net loss per share was RMB 212 or three.
As of June 32021, we had cash cash equivalent time deposits.
Well at a short term investment of RMB 27.6 billion.
Compared with RMB 12, 8 billion as of December 31, 2020.
Also I think on the casualty book gives us more comfort does our ability to execute our growth strategy.
We believe will yield comfortable would return in the long run.
With that in mind, we are currently projecting net revenue for the third.
Cause of all 2021 to be change RMB, five 1 billion and RMB five 2 billion.
Thank you for your attention we would like now to open the call to your question operator. Please go ahead.
As a reminder, ladies and gentlemen, it is star followed by the number one on your telephone keypad. If you wish to ask a question.
To come to your request please press the pound or <unk>.
Please note that might be a slight pause as they connect to any roster.
Once again it is star followed by the number one to ask a question profit.
All participants on today's call if you wish to ask a question.
Good management in Chinese easing would it need to be to your question in English. Please limit your questions to one at a time if you wish to have follow up questions. Please rejoin the queue. Once again it is star one to ask a question.
Do you have the first question is coming from the line of.
He sang from Bank of America. Please go ahead.
Uh-huh, Glenn who tell us that they thought that you'll have once you're talking about yes, yes, yes.
I wanted to ask you Glen you know of course, they acquired Oh Wow you.
You are to the single product than you thought.
Yeah.
Thank god for the ethanol blending and home depot hung Hom medallion.
Tyler.
That's been going on now holding Oh Youre welcome that wouldn't make a lot of money and now you can go down it won't be all high all 110 days I would say is that if at all.
One in 10.
In fact with them I found out Oh, what do you think that Ah. Thanks management for taking my question and congrats on Scott. That's all from me about my questions mainly on the U.
Can you give us a little color on the second quarter, it's either golf, which is typically a low season our.
Standby output what pretty good then.
And then secondly, how should we look at the second half new their trend and our downtown go their target. Thank you.
Well some of them yes.
We've learned at home in sort of investors before assuming I guess, so Andrew are you on that.
Sometimes you don't want to take on working even if you don't walking through with no don't get a whole man.
Because it seems I mean can you give me how can you the syndrome that Tim Conder.
Yeah.
Sure the Ito forgot one.
And the first half performance, we did a pretty good job I think that's all thanks to our content.
Kevin that model.
A modest character as that longer term is the power we think the more competitive edge because this is a truly healthy business model.
Self driven and sustainable.
Jumping to her.
Our team CAGR type operator, thank you Sundar quarter program Engelke with all three of these on the encore, so really nothing of that guidance I mean, the NATO.
We gotta be a phone call.
There's the wall that European they don't seem like they're going to choose only the proteus.
No way.
Neighborhoods sit downtown Franklin, who is out there I realize some of which are either.
Hum.
You bet.
Now two or three years.
It can be done as a whole, we're looking probably impact us.
Yeah, we're looking at we didn't kind of you're a hero jamba tailor made at all three of those.
Let me go what does it take them more suitable person way Kashi.
So it's how can we see between home care and comedy, but even more so actually at the heart or these are more relax either.
Mhm.
You might even more so.
I don't know who comes out or when you guys were pretty tightly.
I believe many of the business.
For today's call has significantly easier itself.
And I believe you might have the same feeling as ICU, while you think gayla delly bad declines hands on diligently as more and more diversified and more high quality, sometimes for my personal use ponca their daily I won't be surprised to find out the diversity.
Fast any in depth of our content offerings. So I believe.
Business models that were running very they are healthy and well.
Okay, and Frank our long term sustainable growth.
Glenn in your neighborhood.
Maybe the cause or when are you going to go there.
Got it.
So you'd see.
You can go to Daniel calling in Panama.
Georgia.
No.
Sure.
And then you work with them.
Now, let's sit down through high school holidays.
And then the insurers of autoimmune disease progress, we're making and I'll go through it all.
Either because of your airport auto mall.
Convincing them, both I don't think that mobile sensors algorithms.
As for our long term user guidance currently and we have already experienced half of Q3, so far what we have observed in Q3 that we see very good progress in terms of sneaker.
For both quality and quantity and early this year, we have gone out of court in their forecast for this year.
And you will reach $260 million. So far we think we should be quite on track to delever achieve backhaul or even surpass that goal.
It goes on C&I power romance movies cohort, so our opinion.
Cleveland Zone three.
One of them and you go make a mobile phone.
I'm looking at that as how what do they get certainly we're thinking not only of the Mcdonough.
While our long term goal of 400 million and then you by end of 'twenty three.
Great.
So far we feel very confident to achieve that goal.
Well Pat.
Our high school based on talking to all of the visit.
Uh huh.
For example, the zones out here.
See the other uses of that will go down and you got to that.
Cause a woman putting games.
Looking like Cat harsher cuts I'm, not sure where they're getting close to the pin pad on it at all.
Again, it's hung together.
Okay.
With him down.
When will you had I thought that's what I'm amazed me going forward on the roofing Israel Shlomo.
So the food the pieces of that so that can gather.
Actually even though.
And one thing I want to emphasize that the user growth.
Best of it and its quality that we have maintained a very high quality and he care gross profit.
But we're not not only just attacking user to join them at daily, but they actually really recognized the value of the platform and they are willing to stay with us for long term.
Even though that we have experienced a very fast.
Healthy user.
In the past, we've noticed that engagement level and that active net of our users.
And that in the second quarter, our daily user time spent.
Wanted to ask that is the best we can help them see compare with our Oh.
Previous second quarter timeframe.
Okay.
What kind of things that we don't see.
Go for it or how do you suppose that regard so he doesn't gather people going on in your body and the Army Army in Sudan.
But.
And I think what I think about four years, how do you see it sort of going to push it down being on beef it sounds opportunity before you do.
And Additionally, we see that long term engagement level for our user is also improving actually we've seen that that's not just true either in 2018, 19, and 2020 guarantee a Youtube you engaged in a level in 2021, its actually improving on it.
We're on year basis.
Okay, and kind of as a woman named us easily onboard who am I to her levy to her.
No I think what sometimes shortly.
For those who don't know how it's Eva suit that comes out.
So Paul you on that.
EMEA order comes out.
And every quarter, we believe our <unk> and our monthly user engagement number and that you're on your grocery as an action faster.
So those are buildings local teams.
Uh huh, putting I'm going to send out a I can't.
Yeah.
So all of those major accounts that we are not only be able to attract easier to join our platform.
Stay with us and become <unk>.
Okay.
Cause I think Arizona.
These young kids for sure that got to harden it at all.
Good day.
Yes.
But we have the next question is coming from Alex Poon from Morgan Stanley. Please go ahead.
Well anytime potential with a tier one don't see figure out <unk>, probably a fifth.
With one goal in California.
When do you see you can call the singing somebody in women go on garden Sogou total by them.
Hi.
Net income.
So when you say all of them and some guidance on what kind of job on me as a way of life the Guangzhou thing done.
Sohu dot you're cyclical downturn.
You called it out <unk> got on the James Lime Gaucho, even weeks or should you showed the cutting guangxi <unk> W. Dunbar.
I'll translate my question My question is regarding.
The advertising business Ah congrats on very strong growth of over 200% for two quarters.
Given that they are recently regulations around data privacy are flat screen ads.
Education et cetera, how should we forecast and looked at the second half growth.
We are with the growth drivers come from thank you.
It very much.
Oh, yeah, so it's sort of a table that Taiwan, Sogou Shao pieces, how ball Sydney, Tony Jones on talking about Hey, I'm back.
Yeah, Joe Let me do the how you see the Jones Act.
So for second quarter, our quarter AD revenue has surpassed 1 billion for the first time and achieving 200 over 200% year on year growth and that is the 19th consecutive quarter that we get over.
Pete advertising advertisement income.
Oh, we're not shy about EMEA you don't car T.
Yes, so I again in Saudi we have gone kind of shows you guys are the key though well not high since we're a niche high since <unk> one being the sheets.
As we look into the second half and for the next few years, we've done several things to continue to improve our AD efficiency and baseball a foundation for our future AD revenue.
So again no class I saw your time, King Solomon I shouldn't say yellow coupled official copies on toward that thought hunting questions. Yeah. Just sit here and you say yokokohji does that is that going to help hold on please.
Sometimes I put on the tower than Portola downhaul things on a budget for that.
Occasionally you found yet pin pad quite should again be cheeky and sensors into the size of the CBOE team give us I'm sleeping dishes.
So first of all we have continued to explore multiple scenario for our AD products based on our clients' needs and we hope to help our client to precisely reach their target audience.
Multiple times across various scenarios across the middle east product ecosystem and quickly pay their rent and matched to just one campaign investment and we have already achieved that.
In this quarter.
These aren't that much.
Since our husbands all of us at well not see DLC Chancellor Hon. Dorothy is you can have a more ship he said Banca all of a sudden.
Bob Young Kwon golf, he ought to Tony and DHT I wish it about how's that goes out you shouldn't yeah Tebow terawatt events.
Yeah.
Gotcha.
Sylvia I shouldn't say gold silver talked actually kind of income that should be done in a bronco loyalty each of those in Walnut Hill, Florida, Guangdong phase two lifestyle gather data.
Until the soil upon gosh, well maybe you.
As you can tell me I don't think one golf on car T Mayo holiday may okay.
Yeah.
No that does just that will make up for.
Hi, Vishal.
Excuse me, yes, so let me just suddenly told all of you.
Second secondly, we are also actually typically pouring new AD formats, including adding a liter format as well as connect advertising with content.
Content creators creativity.
The regulatory environment mentioned, we believe that the foundation or the logic behind it.
The regulatory hope our consumer won't be notified.
Advertising and what they've been doing has been practicing its first on Halloween.
All of our advertisement.
Not be a blockage type of advertisement we hope will meet you in bad income net and combined content with advertising.
Make it more interchange focused content could be a good commercial and become Marshall.
Okay content and from that perspective, our integrated marketing solution as well as our content creators.
Own creation.
Our own production towards native ads, it's a perfect solution to work that problem.
The audio and Oklahoma.
He showed up all of that sounds I call. It a science, sometimes I think people that downtown so she felt.
The Ocean <unk>.
And switching why am I, so if I take one couch.
Thank you Sir.
And secondly, our AD efficiency was also greatly improve in this quarter, thanks to our AD Tac and Arco team and we're also investing in frontier AD Tac related R&D.
I decided that I will fall on my high school way back on line.
People are I don't know if I'm right. I mean, you don't see former Joe Diaz shall I was thinking that with no.
In our guidance range I guess, John I can't tell you what my heartfelt thanks, either towards that La Quinta Hong Yeah, then you signed up.
She took I assume ballpark.
But with all of them kind of okay.
Uh huh.
And apparently is that we will be focusing our leading vertical and provide industry base as solutions, such as game technology education e-commerce, and food and beverage and et cetera, and as we expand to it.
And our user base, we hope to further expand our.
New AD vertical industry verticals and are very close with sufficient at budget for example, such as.
And new domestic consumer good and all of that has been reflected in our second quarter outperformance.
So you're going to end I think it doesn't seem to Omaha shy of our time there the Cabo. Thank you Michelle.
So no.
Yeah, I don't know why people won't call. It cheap easy qwaqwa cheap home thought that was kind of behind us on its own two young she wants it to be that Shanghai. That's I agree at some pace Yeah posted you gotta be a hotel.
And most importantly, we have upgraded our organizational structure of our commercialization team and that second quarter. We have integrated that they were the only commercialization knitwear platform cockpit us commercial topic management based in Amsterdam, and our sparkle advertise.
And at this time.
Perfect that's doing so as to further optimize and allocate said, we're doing some commercial resources and improve our commercialization efficiency.
Push it up a chunk so all I can tell time, but don't hurt yourself on the obsolete and several times a year.
Caller, you thought I guess I'm talking like football cleats, he won't be done until the third.
So I think they'll find that forces will now play a powerful keep high fever shipyard peanuts had a trend yet.
Yes, I think on label system without losing the nationwide.
And Additionally, we have also regroup recoup our self from integrated marketing team and our content creator related sales team, forming one centralized South center. The goal is to provide you haven't been a featured integrated marketing solutions and help our clients.
To improve their brand equity and achieved solid clean corn thing marketing circulation.
<unk>.
Pink tied up on caused us to show them and you said they were gonna.
Yeah, you don't go without you.
It's just really going to get fast food to eat all of these are you with us.
Well James I think you know who the Nancy tissue at all a Saudi in Boston.
So a little drop off I shouldn't I should say how.
Hello, Tien Tsin had dabbled Sunday Samsung.
That's helpful. Jonathan.
Balancing system.
Neil I celebrated region now these are essentially I think all the phone calls that actually doesn't shouldn't.
Hi, So you back on the 10-K, you'll see our MAU I assume again think about Guangdong.
Yes.
Siobhan, Yeah, I realize it outstanding.
Thank you. She bought so you don't see in Congress also gaucho that downtime.
So, they're just saying that the platform value equals the users valeo on this platform and we had Mr. Ken has they.
<unk> mentioned the value of the user our current average age of our youth area and around $22 eight yourself.
And Ah 60, 86% of our Utica are under age 35, and a majority of them are in first and second tier city and Beth Cooper cohort. They are the main consumption.
Group.
Or what in China, and they represent the highest value.
Demographic and building on that advantage will continue to reinforce our infrastructure and continue to improve our apt profit.
And for the second half of this year and one two to one to three years ahead, we're still quite confident to maintain a healthy and fast growth for our App ad business.
Yes.
Yeah.
Okay.
Julien.
The next question comes from the line of Alex Yao from Jpmorgan. Please go ahead.
Okay.
Gunny pen.
No one wants you to do.
Yeah.
We're going to see a chunk of media.
No colleague Tom.
One corner chart food Chinese Sean do you do the jumbo.
Yeah Noah.
No language ought to just yet.
Do you do to them.
Shortly you know pumps can be assure you wish you could shoot for two young.
Uh huh.
Jim.
Uh huh.
From a beach on the yield management in Shanghai.
I don't want to be guidance.
So my question is about the regulatory impact.
Gaming and live streaming operation.
M D.
Given the changing revenue between one of them.
And capacity more policy coming out in the next couple of quarters, how should we think about the impact on our gaming and live streaming operation. Thank you.
She says Union females.
You will receive a royalty slipping into the home.
Im glad you cannot be in APA.
Where does the thinking soil plenty years ago, Youll see there should be and how he is still going to.
Fiber colorant, what kind of a system that's amazing for me on the call them even more.
I guess you know cleaning.
So her casual her daughter appeals or neither.
For example, do you pause today, but that's a woman first of all have some goalpost on female country at all to the acquired southern core different youll see that sitting in front of me in the timberland that someone could neither for <unk> from our P&L. How would you look on the order to the country issues or permitting called out weather as a loss on those.
However, the I'll call them the don't see now.
<unk>.
Where do you live.
High school hooked out families.
Female so much is that what kind of female from us.
So it doesn't take on Youtube today, though.
Her where she is a journey.
Maybe like maybe you'll hear how do you sitting at cynosure, So listen so you put it.
Yeah.
You tend to get approval with that maybe just a comment to your ticket.
In the Delaware.
Great.
Oh, just opinion females.
So I think we're being somewhat similar to the shipping in April.
You'll see from here.
So actually for 2020, one while we have I'm sure. There is no significant change.
Regulatory environment towards games or towards the live broadcasting.
That's speculation.
Gotcha, and then back all over the Internet.
Based on the media Kings came from the immediate level and as a company. Our staff we have kept our regular dialogue with different government authority and from the company's perspective, we're actually haven't heard anything here.
And that discussion if you found the media or the Internet users and just based on their own.
Speculation.
Vaccination and Theres no ground to those discussions.
And for our from our perspective, we think that.
<unk>.
From a global perspective, and regulation towards internet content game or or by broadcasting it won't be more and more standardized and grew bay and that hasn't changed.
We've heard that we'll talk to you about this.
Because.
<unk> got her a woman besides rely on do you want to maybe go out to her through improving lithium glass is a woman the HIFU with both of them.
You bet.
With you the three.
Sato, Peter part of acquiring the Hong yet.
We've got some improvement Jim glass purchases at the heart of it.
So Tim kind of playing off either because it would be up.
And from our perspective in the past when they do we have to.
We find it very actively towards.
All kinds of regulations.
The government, we believe our industry that experience in fast growth Ceragon Vacuolation, that's actually beneficiary for this industry long term and healthy growth. Okay. So I'll just refer you to the higher cost.
How should be thinking it's simply that you've got.
Unfortunately, Jonathan can conquer cause or is it the hunger games.
Please under new feature we're gonna get something for that but certainly for the hunger realized he was just how broad you want anything to Tencent I hope you'll see realize it is a toyota.
You know what are they don't faster.
It was a political to be honest with you talk on the season.
How can I put it all features of the chip.
T. J you also stated that you.
I guess, how much will you can't lever there that how do you see this on the go to conveniently likely if that were to stay at the front end up.
So we think as the industry development as they have more endpoints and may impact towards the society. It's a very very natural profit for deregulation could become a rule based and standardized and I believe the video industry.
Will it be a multibillion dollars trillion.
Yeah.
R&D work in the industry and gain probably won't become there will very likely to become the mainstream format of entertainment.
In the past, it's probably at the emerging new vertical and the details of those regulations were not mature and asset growth bigger it's very natural for it the regulatory to warm up.
More standardized in rupee.
Regulatory environment Okay.
Okay.
Yeah.
And you know how you'll hear from me, Tim Glenn Hubbard's he loves horses, so to speak how many chips for financings either so again I'm not sure Negros Q1 kind of at a high up I don't know how much easier to Hungary.
It's sort of hydrocarbon.
So for.
So strong.
Can they get there and how many you also is that they don't even feel it'll be resolved.
We took an annuity that you got you got you got.
Yes.
Needle Coke racing robots in the yard so those will be coming together.
Bye now.
Q1 was also modestly VITAS airports as I see the world the Bulldog it needs. This will continue through different means.
Yeah.
Thank God.
Government regulation towards video content in game content has been very clear.
And in general they do hope this industry will develop and encourage the development of this industry and they have been very specific on the things that they hope to practically one as on the minor protection to comply.
Compliance of the content itself and in the past and up to now because it really has been.
Very clear on both requirement and have follow in employment.
The regulatory requirements.
So we will what kind of did the stripping and hopefully you'll see there's a process of visa finfisher conditions called Haynesville lung problems with the phone call.
Oh tortured, Ohio.
The <expletive> putting on going through them.
We saw some glenda.
Yeah.
He didn't even go Tokyo <expletive>, which when you are in New York you heard that stayed on the co packing for reaching out to see if I'm in.
<unk>.
So we're currently kind of hard to do it we'll take it from a just a little later.
Yeah, you can quickly I think.
So I really like helping here.
Income.
So.
Generally I think that the industry will definitely move forwards and experience that are novel.
And as an Internet company will be fully compliant with the key areas that the government has.
Typically required one app on the minor protection and two ads on the compliance of the content itself my personal view.
Still very optimistic I believe that this industry will only become better and better under the supervision of the company.
Okay.
Hi, Bruce.
And <unk>.
But who is listening to them.
Do you see you mentioned.
Got it.
She reductions coming through it's clear they're going through.
Yes.
Yeah, David listen Leland, so either hydrogen or develop hung over 10 years since either of those interest at all Tim comes out that piece of that.
Who knows.
So a typical sort of hung out with it sounds like you were talking about maybe you could give a concert series or something that maybe people who looked at all may go away from you or why you will see that you wish again.
People tornadoes COVID-19 outcome.
So if I put together.
Tom Sullivan.
Our union, it's obviously tough times itself.
So easily.
We easily.
So as I'm sure you'll see a bunch of your book.
Let's see I saw you did cause itself what kind of income.
Finally in the U K.
So even though how does that work.
Let's see who can be the things such as how can people find out about that.
Okay.
Generally I think that this industry is quite different from 10 years ago, probably in 10 years ago. It's still very early stage there is not a very precisely.
Thankfully vacuum late at a 10 years later this industry has become much more mature.
Participants in the industry also game.
More experience.
Over 10 years of experience.
We have already reached a consensus in the industry players and the regulatory and that the industry needs to be backend weighted towards a healthy development path and from <unk> perspective, we have strictly follow the rules for example.
The minor protection that.
Revenue generated from you said thats below 18 years old.
And that game revenue only takes about flat.
Around 1% of our total total gaming revenue now all we have been.
Implementing restrictions and rules.
Protect better protect all miners and followed that path of increase requirement. So I think overall industry.
Growing towards a more healthy and positive track and I personally feel.
Quite comfortable with the existing environment.
So ultimately you got to sort of angle here.
Liquidity.
Youll see the incipient Kim.
Kim with Suntrust.
That would be helpful.
Sure.
Well these are 200 or so forth I, just remember Jim glass crusher that features a cookie.
Arguing about hungry Ghost town.
Timberland it sounds to.
It seems only the hunger games three.
So you'll see some good senior citizens.
So to summarize in the past few months.
Personally don't believe there is some fast change of revenue.
Retreat environment towards games or video and we believe that regulatory.
In practice and requirements from the government.
Very appropriate and scientific and we believe our peers.
Industry also agree with that and already reached the consensus that the industry needs to be moved towards a more healthy and back to delay our path.
Okay.
The next question comes from the line of Phoenix Hughes from UBS. Please go ahead.
Uh huh.
She can come through on the pizza take on company here.
<unk> disclaims woman MAU Didier.
Jacob J to digital mammography.
Don It sounds like lately.
Q2 weakness hotels.
And you see that.
And Kevin Richardson.
Sure <unk>.
<unk> mobile.
We've taken the update.
Let me translate myself. So first congratulations on the strong set of group out My question is on the GP margin.
They keep the margin this quarter was that showed some weakness in Q on Q and year on year. So may I know the reason or any color behind that and what is that.
The management.
GP margin trend for this year.
But for the longer term potential.
Okay.
Let me take your question.
You are right a slightly decrease of the margin in Q2 actually it's mainly due to the change of the sales mix in Q2, we saw a contribution of our GAAP revenue, especially what's accretive.
All revenue and there were also lower contribution from our cooperation GAAP. So and also for our novel accounting revenue. The gross profit margin also declined a bit due.
Due to the global launch of <unk> through two to offer higher revenue sharing ratio.
Just like the performance space incentive.
For those new host OLED so.
Actually if you look at the short term.
GP margin.
We are.
Still in the early stage on the monetization side as well directly over the over the quarter, but before we get into the details of our long term margin trend I would like to emphasize holder.
So the way, we the strategic thinking.
All of US a call at home the profitability.
Why do we have the opportunity to quickly you'll know extend our user base.
It always hooks on user growth and top line.
Expansion rather than to limit our growth potential for the pick up the book, even when we are thinking about the path to the profitability actually we are thinking.
Tentpole you'll know.
Revenue level to achieve a healthy breakeven status and whether it's central to keep improving the profitability. After the breakeven. So for example, a company we like the RMB 20 billion revenue in the same company with RMB 15 billing revenue the bigger revenue side.
Surely you'll know more sustainable for long term development.
Over the past.
Yes, I think the we successfully achieve out.
Quality revenue growth, especially our user base.
Our <unk> went up 38% year over year and monetization if its a fee per Mou, but also increasing.
Separately, the lend against revenue per Mou actually increased by 72% year on year.
Year to.
Around 13, eight RMB per quarter in Q2, GAAP. We believe there are plenty of upside because we grow our user base and improve our monetization efficiency and also on the cost side, our key really relatively fixed operating costs, including the content.
Sure.
<unk> cost decreased from 34% of the total revenue in 2019, 2% in Q2 this year as we grow our top line and improve the efficiency of our revenue mix.
Well also be more diversified and our second one in margin as a local company.
All again as I mentioned to have them to improve.
That's it.
Once you look at the for the long term.
Gross profit margin.
Thank you that makes sense.
Thank you would be you have the next question from you anything from China Renaissance.
Checkpoints to watch.
Once you if at all for yourself with a question.
When you cut off somebody that's already also silver which was similar to our Q1.
That's my current Yosano Chevron yeah, okay.
Sundar platelets, which is I get what you're saying.
Yeah on the trial court in Israel Shlomo.
Thanks for taking my question. So my question is regarding guidance.
In the first half hour to any of our name is pretty stable how should we look for them.
And also for Boulder Canyon revenue growth.
Especially on the way to self develop became.
Can you talk to us way too heavily in the country.
We're looking at that number it is how to continue with Sidoti.
So they went through that.
This is also a major of course the receivable our kinds of them you'll see those are the things that sounds like a home run for the business.
So the only thing.
Other gains.
It could go either way.
That doesn't go to the bathroom payoffs.
Hi, all.
A year ago.
So that the GAAP.
I don't feel like we can see the familiar with people who go to the tier two.
It's amazing to.
We reported a tenure.
Now not all of that harder to negotiate price off the other.
So not just the seasonal woman.
Youll silicones is a D. We see that too.
So the fact that hydrogen now constitute a hot neither do you see how things are going well.
It would hit about.
Three of them have enrollment, you'll see that the solar coming through.
Okay.
Indeed, when we look at our game revenue you have extended some some of that slow down in the first half of this year. The main reason that we see is because lack of supply for both of those are exclusively licensed game and jointly operated games.
Revenue to grow.
Our next two we need to get more new games and because of the overall permit issue.
As in the past six months.
There have been some of the display and the supply has been slower than expected.
This increase in our some of our project has been delayed in Dallas The main reason for it.
Now for our team.
Dennis politically proteins, which are all of them are kind of on a going forward.
Using the tool to help you so unethical.
Okay cool.
So kind of just simply don't go over kind of a feature for the going forward so sometimes quite so.
So how does that kind of a woman sung kyu Kim from BMO.
Okay I apologize.
Kind of at that particular histological closely looking homes that will have a teaser for profit with news feed as a whole.
Sometimes you'll see the kingdom.
All of that though to put deal with them with one I think somebody asked what does this all kind of $105 standpoint, you will see this income total quality due to the to me someone there Tony.
These are not going to you will see the Columbus.
Took a pause here.
It took us.
Well it depends on how well that does it mean that you'll hear part.
So you will see a cut of soil. So you don't get caught up.
There have been taking in account the reservoir in a kind of a debate.
Uh huh.
Yeah. So maybe like how do you think will go through the third being towards the holidays.
How do you think the Astoria that'd be about three parts, you still need to be done to the tune hi.
So you'll see the courses being daughter things here.
Who do you see this.
Yes, it gives us extra Susan.
But we also see some positive signs as we.
As we operate our business beside that supply.
Supply issue, we've seen on the demand side. There is many many positive signs first of all on the geyser gain related to heat a careful watch game related Libra halfway and video actually kept growing with our overall <unk>.
Even with the under supply for a game titles.
For all of the remaining new titles that we released in the first half of this year, including.
Guardian, Pal and Florida.
Online.
New additions new downloads and user has constantly Greek a single game record.
And on the other hand for the old games, we have we have seen a small operation cycle. Many of our games continue to grow in terms of revenue and users. For example, our doorway are exclusively licensed game until early in our journey.
Operating gains income impact, we're seeing more use or Tony and its growth and are continuing to grow year over a year.
Generally we think it'll be.
Tobey the gamers.
And their desire and need for high quality game is also growing nicely.
Our development plans on intangibles here with the cause of films, Yeah, certainly inhibitor. Joseph mentioned he also gave you consider lindsay.
You won't see that I think the phone factor for settlement seafood dotcom woman satisfying those as well.
July will now wait the three of them yet neither chunky Colo.
Hum.
You cannot handle just a reliability.
Sure sure sure.
Apache's was attributed to Covid.
I, just don't see anti cyclical Buda that Peru is a free and I think.
So when you look at kind of how does a woman who's been funded at Greenway Our U K.
How can you tell me if youre closer to Cook County that income.
So near term, we're sending them to the cornea propylene, which has not yet.
What's the other thing is just the pizza.
These are more trying to get them more like three.
Yeah for sure.
Kent.
Okay.
Is it that you're holding guidance bundle youll be able disorder for library, you honestly unaffected.
Okay.
And we see a.
I think as long as we saw.
Quiet.
We should be able to solve the bottlenecks that we see in the past.
At quarter's end.
And the solution towards the supply problem is.
While we continue to enhance our licensing business. We will continue we will start to invest in our self developed games and actually from in last year, we have already seen the trend.
Supply in the market and we started to invest in our self developed game business currently we have over.
1000 team members in our self development team and there are multiple titles and project.
On the development and we will be expecting to launch our own self developed.
Our own self developed games.
Next year and the year after next year.
From based on our existing business scale, we think our stock self developing won't be our number one priority and I believe in few years later, our self developed games should be contributing over half of our GAAP.
In revenue.
Asked another way is that a decision that visa Europe.
I'm not sure if you guys have.
Yeah.
You'll see that I think the short answer is yeah like disorder, So youll see that.
So don't forget Tiger, so you'll see that the official yes.
However, <unk> you'll have the assortment you'll hear was also saw in some of those gains.
So darling themselves. So I wanted to hit a particular wouldn't hit us even faster.
Sometimes one.
For example in it because that will mature.
Okay.
You can deal with it seemed like element in Stockholm.
So when a woman sadly similar mccoughtry youll see some delinquency number when I, when we complete with guidance and fulfillment of Korea.
In the Sudan, Youll hear with the thumbs up simply you know your client.
And to summarize we believe as our future continues to expand we should have more doors and more demand.
And to solve the supply problem will continue to.
Great importance our licensing in that.
Business, while investing in self developed game and in the past we might have one engine for a gain revenue growth, which is the licensing and in the next few years. It will be due in June South development life licensing enjoy operation we think.
That <expletive> power our growth.
Profit being revenue growth.
Okay.
Thank you and that concludes our question and answer session for today I would like to turn the conference back to management for any additional or closing comments.
Well, thank you again for joining us today.
Have any further questions. Please contact me Juliet Yang <unk>, IR director or TPG Investor Relations.
Contact information for IR in both China, and the U S can be found on today's press release have a great day Bye bye.