Q2 2021 HUYA Inc Earnings Call
[music].
Hello, Ladies and gentlemen, thank you for standing by.
For the second quarter 2021 earnings conference call Little who yacht Inc. At this time all participants are in a listen only mode. Today's conference call is being recorded I will now turn the call over to MS. Dana Cheng Company Investor Relations. Please go ahead.
Hello, everyone and welcome.
21 second quarter earnings conference call.
And its financial and operational results were in Asia earlier today and are posted online you can also meal in the earnings press release by visiting the IR website at IR stuff where out of home.
A replay of the call will be available on the IR website.
Please.
Participants on today's call will be nice turnaround schedule, Chief Executive Officer, and MS. Catherine a little Chief Financial Officer.
Management will begin with prepared remarks, and the call will conclude with a Q&A session.
Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Forward looking statements involve inherent risks and uncertainties.
As such the company's results may be materially different from the views expressed today.
Information regarding these and other channels enhancements included in the Companys prospectus and other public filings as filed with the U S. S E.
The company does not assume any obligation to update any forward looking statements, except as required under applicable law.
So now we have earnings press release and this conference call include discussions of all Nowadays hit GAAP financial information as well as all nowadays and non-GAAP financial measures.
<unk> press release contains a reconciliation of the non.
Non-GAAP measures to the unknown to most directly comparable GAAP measures.
I will now turn the call over two hours the OOO Mr. Jia Dong. Please go ahead.
Hello, everyone.
Okay.
The conference call today.
During the quarter, we simplified.
Yeah.
Offerings.
Uh huh.
Yoga, which.
<unk> drove top line growth along with mobile user base expansion.
Great.
Net revenue in Q2 increased to apparel to fit Mitre and B should eat for them.
With 10% year over year and.
13% quarter over quarter.
We all love mobile e-mail NIS 70.
San Jose seven playing to $6 million in the quarter slides.
Slightly yes.
Quarter over quarter.
Well as of next month.
Pinching later.
We are like hip remained.
Stable, that's L a san Fran to 8%.
In this quarter mobile users continue to contribute to over 85%.
Thanks.
Streaming revenue.
With a relentless commitment to providing users in the broader context with a better.
Got it.
We have always been deepening our.
Technology and advanced.
And their folks.
Product.
My vision.
You laid to me.
Great.
While we are alive.
It was a working <unk>.
Sure.
Which introduced new functions.
Such as mounted MAU.
Just being female female opinions muni.
And longtime highlights.
And exiting Golden Guernsey is uneven.
For example in the latest the washing.
As I've said to our multi screen viewing panel to watch given culpa broadcast us.
If at the same time.
Sizes, Steve never aging Helios AI capabilities, so new working 10, no water medically identify a highlight.
Meantime, our streaming finishing and that generates a video clip.
Making video products gene easier and more efficient.
In the second quarter average M AOS.
Videos on our platform increased too.
Broker in Missouri.
$13 million.
Our open platform for third party application developer.
We also continue to expand in the second quarter.
By the end of June more than 250 <unk> 12.
Had there been developer to own all of our open platform and so.
What you expect by over 740, <unk> falls in the broad context I'll.
On a quarter over quarter basis, So daily active broadcasters, who use the thirdly further puppy.
Vacation on our open platform grew more than 50%.
Moving on to our.
The relation with Tencent.
In the second quarter average and mills.
We watch them without a live streaming content costs and things.
For.
Which are not counted in our reported emails.
Doug.
10 page hit 8 million nearly doubling year over year.
Notably our live streaming content related to the <unk>.
Okay.
Third birthday, Oh stock tournament attracted a large number of users for rebuilding QQ mobile.
Lastly, I would like to provide more context.
Rhonda.
Strategies after the merger termination with <unk>, we announced last month.
Adding to the announcement.
Posted by the state.
Ministration for marketer.
Regulation of peoples to recover like Oh, China.
On July 10, 2010 pay when the proposed merger between <unk> and <unk> dose was for a bit to the following.
M a M us antitrust.
Brazil.
We fully respect and we are by the buyer.
And that decision.
And that will combine with all regulated leffew lottery requirements and the conduct of our business is in.
In accordance with our athletic apparel.
Cabo realists and our radio stations.
As we remain committed to further expanding our user base and strengthening our.
Leading position in the game live streaming market, we are focused on effectively in.
Men team Hello.
Our growth.
Strategy.
I will continue its investment in content, including.
Wiring.
The rating and the amazing quality broadcasters.
The painting broadcasting rights for Paul Gula, esports tournaments, and developing attractive self generated content. Meanwhile, we will endeavor to advance product update my vision and deliver.
So that user experience.
We also expect to further deepen our.
Cooperation with Tencent.
We are confident that our capabilities in fostering and retaining streaming talents in reaching and.
But producing quality content as well as our expert expertise in technology and products.
Innovation will continue to underpin.
Cool.
<unk> two <unk> in there.
M Labs do you mean, that's right.
With that I will now turn the call over to our CFO Catherine to shock her insights.
The operating metrics and the financial details answering please go ahead.
Thank you Mr. Dong Hello, everyone. Following Mr. Johns remarks, I will start from the updates on content enrichment and diversification in the second quarter. We Broadcasted 122 third party E sports tournaments, among which the top tournaments, including LPL spring and summer.
Ppl's screen, Hello, Ellman season.
In the personal and Patchy Champions League Green total dealership for this tournament reached around $673 million in the quarter.
On the front of our self produced content, we organized a 45 E sports tournaments and entertainment shows and generated total viewership of $116 million.
In particular, our self branded tournament the sixth OEM mobile game arena dealing with you we actually European team, that's at or HMA has hit outstanding viewership in the corner.
Covering 14 popular mobile games, including actual pay CFM battle of boss and see ODM.
<unk> is now a leading comprehensive mobile game tournament in China.
Additionally, following the traction from LPL, we produced a commentary show we are gain more true we have one site com to provide professional gameplay analysis for game lovers. The show went viral during the LPL season, and became a major alternative channel for <unk>.
No offense to watch the game.
In terms of entertainment P. G. C shows we are comfortable carnival season, four we are going to Tania Party city, a mixed martial arts competition joined the bank, whereas outdoor broadcasters and celebrities with the leading example of the season.
This in June we also introduced the golf player how could that Nishu.
Live action roleplaying show to capture the younger generation squarely interest in such categories.
Since we took the initiative to introduce more video content last year. There has been a clear trend of development and diversification on our platform, particularly in the sectors such as food video animation video and phone moments sharing videos.
Moving on to our overseas business in June the overseas I mean, you picked up to close to 27 million, mainly driven by local esports events.
Discuss the previously we have been focusing on monetization driven growth.
Overseas revenues increased by approximately 200% year over year and then the contribution from overseas revenue is also coming up with the margin drag from overseas business declining.
Next I will walk you through our financial highlights.
In the second quarter, our total net revenues grew by 10% year over year to approximately RMB 3 billion.
Our live streaming revenues were close to RMB, two 6 billion in the quarter up slightly from the same period last year.
The number of paying users.
In the second quarter came in at $5.6 million lower than the same period last year, mainly due to the pandemic lockdown last year setting a higher base.
Advertising and other revenue increased by 190% year over year to almost RMB $383 million in the second quarter.
On second quarter profitability, our non-GAAP gross profit was RMB 594 million and non-GAAP gross margin was 21%.
Our non-GAAP operating profit was RMB 249 million and non-GAAP operating margin was eight 4%.
Our non-GAAP net profit was RMB $215 million and our non-GAAP net margin was eight 4%.
Now moving onto our financial details.
Unless otherwise specified all of the growth rates are on year over year terms.
Cost of revenues increased by 12, 2% to RMB, two 4 billion for the second quarter, primarily attributable to the increase in revenue sharing fees and content costs.
Revenue sharing fees and content costs increased by 21, 2% to RMB 2 billion for the second quarter, primarily due to the increase in revenue sharing fees.
And the increase in spending in E sports content and content creators.
Bandwidth costs decreased by 35, 3%.
RMB 171 million for the second quarter, primarily due to improved bandwidth cost management and continued technology enhancements.
Gross profit increased by one 1% to RMB $581 million for the second quarter and gross margin was 19, 6% for the second quarter.
Research and development expenses increased by 15, 6% to RMB $208 million for the second quarter.
Many attributable to increased personnel related expenses.
Selling and marketing expenses increased by 45, 9% to RMB 167 million for the second quarter, primarily attributable to increased marketing expenses to promote the company's content products services and brand name Gen.
General and administrative expenses decreased by 48, 5% to RMB $72 million for the second quarter.
Due to lower share based compensation expenses.
Operating income increased by 0.3% to RMB 182 million for the second quarter and operating margin was six 1% for the second quarter.
Interest and short term investments income was RMB $58 million for the second quarter.
Compared with RMB $78 million for the same period of 2020, primarily attributable to the decreased interest rates.
Income tax expenses increased by 13, 7% to RMB $58 million for the second quarter.
Net income attributable to <unk>, Inc. For the second quarter was RMB 186 million compared with RMB 200, Osama million for the same period of 2020.
Non-GAAP net income attributable to <unk>, Inc. For the second quarter, which excludes share based compensation expenses gain on fair value change of investments and equity you must chiefs investments and equity Investees partial disposal of its investment net of income taxes was RMB 250.
15 million compared with RMB 331 million for the same period of 2020.
Diluted net income per ads was RMB <unk> 77 for the second quarter.
And non-GAAP diluted net income per MBS was RMB 1.04 for the second quarter.
As of June 30th Tucson, when he wants.
He had cash and cash equivalents short term deposits and short term investments of RMB 10, 7 billion compared with RMB 10.6 billion as of March 31, 2021. The increase was primarily due to net cash provided by operating activities.
<unk> of RMB $174 million for the second quarter.
With that I would now like to open the call to your questions.
Yeah.
Felipe.
I will begin the question and answer session.
If you wish to ask a question.
Star one on your telephone keypad and wait for your name to be announced.
If you wish to cancel your request you can press the pound or hashed E. Once again it is star one to ask a question for the benefit of all participants on today's call. If you wish to ask a question to the management in Chinese. Please immediately repeat your question in English once again it is star one to ask a question.
We have the first question coming from the line of almost Chong from Jefferies. Please go ahead.
Somehow I was I said my name is how long it takes all of that to you in a way of life in Gabon T. O P. Tau ASO said when you saw those should have more months I mean, I'm trying to tie a shop on their in their wallet.
He can pick up on something you saw well might not by Kylie how do the our spending.
So you'll hold off on Oh, just on can you sort of don't share woman Sharp island.
So I put Honda operating metrics, but your final charge I M P.
So oh I'll call it the truth.
By accomplishing.
Oh, Thanks management for taking my questions I have two questions. The first question is about our content strategies, Okay management comments about our thoughts in the second half as well as the spending that we are looking at a M.
And my second question is about.
Our key operating metrics.
In terms of the.
But maybe you are paying users as well as Apple.
How should we think about the trend not actually come into the second half. Thank you.
Hello went off with a few inches as well.
Yeah.
So does she says zander just through a machine you answered it a funny thing because it's all around that.
The Cleveland <unk>.
For being so good.
So he just isn't even though there's a.
Well the only change diseases Enzo just so it's a 10 minute.
So you go to the Chihuahua.
Roommates junior when minutes and goodness.
So at this time, we also need on Saturday.
International non-GAAP.
It tells them they.
Just a bigger yogurt are all done really to just.
So is it just sort of as you go to the incident.
Moving on to the.
And you can close the deal.
There's room in turnkey languages, and Michelle can be too good.
Women can then Jonathan and then zinger chicken in collusion, we instituted and Jeff is on minimum wage in guidance.
Has it gotten so good Suzanne she should be able to be done.
Okay.
I'll I'll transfer formats towards regarding your first question on our content strategy.
That's helpful.
Here are our management to make television set.
So she will cause for sure different scenarios, whether the seller will pass or not pass that you up until we always take the notification of sandler to prohibit the merger deal.
We're still stick to the original plan in terms of our content strategy. So now that we have planned for me is from Sandler about hitting the emergency arbitrage Oh, yeah and so on.
Their wallets for major adjustments to our strategy, especially the Comcast strategy.
And now that we are competitive.
I'm here with US who are lagging a little bit of change that you have a semi question.
So you're right.
A certain degree of clause for the content investments from our perspective.
That's where I will take the second question.
And then regarding her.
I mean your questions because we will continue to invest in our content and broadcasters in the second half. So in the second half we do expect that all of them are use will continue to grow and probably reaccelerate the growth rate for mobile and they use.
And then I think you know in the second half hour, our food cost method, because they're still trying to grow our mobile and they use them and this is still probably our key goal in the second half.
Our next.
Thank you.
Yeah.
Thank you.
Our next question is coming from the line of Lei Zhang from Bank of America Securities. Please go ahead.
Oh, Hi, Bonnie so I sound hospice, they just don't want it sure no.
While young one here you got yourself sounds daunting task and so on.
Hoping to haul cause your way of life.
Does that sound real quick what cause that yamana, Apple goggles for not being clear things, yeah, but youll shut down $2 that control and that's M. Keybanc Sundar golf talk on yeah, you'll see I think Doug what would you say that.
Does that go sure things I'm, Donna Oh, Geez Theyre crowds worked it out when you fine. Thank.
Thanks management for taking my question two questions airports. So can you share with us the fitness strategy posted a clogged up merger with Dow you second delay and any more color on the integration or the tencent without rates into that thank you.
Although sugar.
So solving.
Oh just a.
Women's in doing that.
Sure.
Got it.
Uh huh.
Sure.
Uh huh.
Sure.
I can tell you this is I see nothing wrong with it.
Sorry <unk>.
So we.
No we are the citizens.
Long way to go.
Some minutes ago.
Sure.
So it is the Gallagher.
101000 runs off.
Good evening everyone.
Linda I'm feeling wages.
Just as an integrated services on from the SEC.
<unk>.
So it just is it just the Vega.
Do you have enough on that.
Sue them and don't eliminate so much anyway.
Hmm.
Good to go a whole lot of time and when when can we get digital and kind of how long to do so Tim Goodson typhoon zones.
It's only going to be awesome.
So is it okay.
And I would just say women.
I mean, it gives what we can do this.
Okay.
Oh I need to go to the tendering cause others as you come into the future.
Let me tell you in terms of the dividend and Jean <unk> <unk>.
So good to hinder the advantages.
So the furniture and then goes to go for algorithm Ginza James They didn't go and then go down.
Yes.
Alright, I will translate for Mr. Dong Ah without even more fresh cut trend for the post combination.
Termination of the merger impact just COVID-19 changes.
Actually there is not much of which hauls. Therefore, he did he get planning Oh, yeah, and I will stick to the original plan until finally, our roadmap for the year and going forward and what do you have confidence to strengthen our leadership position going forward.
Yeah, Secondly, Ah I will like to mention that winter will have canceled as well. They all are assessed markets, especially whereas our country Foundation school performed better in building up the content Apple.
And a business model and that we are we feel are they're gonna have a brighter future and you'll have commented I think that for a second question Bonnie.
Cooperation with Tencent, we are actually in close conversation with Tencent.
Regarding to carry out more innovative collaborating.
No.
Working less and more ways to play out the business to play out the operational models of the true up the.
Collaboration so more things to be carried out Hollywood Tencent I hope that answers your question and that's it.
And then to add regarding to the cooperation with Tencent.
We have continued to strengthen our cooperation with Tencent in various funds and do we believe that in the future there would it be more cooperation between us and our Tencent.
And we will update our investors if we have some major updates.
Yes.
Yeah.
And I Hope this answer your question our next okay. Thank you helpful.
Yes.
Yeah.
We have the next question is coming from the line of you anything from China Renaissance. Please go ahead.
Got it.
What's your opinion of element to touch controller, Chuck This should help too many shots on goal.
So some ambiguity in central Europe.
Can you please switch with Peru companion side, especially I would say.
So I know what I was talking before Europe.
No no.
Yes.
Okay sure Daniel Meron shifts in our culture.
I would tell them to call you counted.
Counted on us looking at all the Oh.
Quarter, two its really a terrible Thomas Cook County courthouse looking at alternatives from a holdco.
Sure.
Uh huh.
Oh, It was just playing with shock.
Taking my questions I have two questions.
Cardio, let's say it's been names.
And that's where they will assist them in Europe.
We wish to 27 million and also to profit.
That's what the law says because we just feel more colour on income.
And in terms of opinions localization content built up on the monetization.
Secondly, it's onto video content.
This is a we're discussing in the past few quarters can you share some color on your income is hotel video content.
No acquisition.
Okay two months I never attention. Thank you.
Thank you.
Regarding our overseas business, we have seen a pretty good progress.
As we have being emphasizing on monetization in the overseas market, we haven't seen significant results.
In the second quarter, our overseas revenues actually increased by approximately 200% year over year and also the the the operating loss has also been narrowed down so we're pretty confident in our overseas business and we do expect it.
That the overseas business will contribute you were much more significant a revenue contribution to us in the next year and in terms of.
Our video business, we have been.
Developing I'm sort of a new video content and then in the second quarter. We also noticed that that our video content users have been increasing them.
And Mr. Don just mentioned in the second quarter average and May use watch video on our platform actually increased to approximately $30 million and Hum in the second half we do consider to also launching E. A new a P. P. Specifically.
For our video product hope this answers your question.
So I presume.
Yeah.
So there's a sitting who lives in January this year, you're down to zero you John.
Each other and boom.
So the neighbors.
One board of education.
So you just to do with them.
Language.
Looking now at the National Museum leases, Vodafone Susan I Felicity.
Great.
And then with Hana.
Exactly.
I also translate Shannon just to provide some more color tower weight is what I'm going to start on national and thus far there is a second form of video that's myself, we have a platform that.
That is the lag in between the traditional way it is and how that's trending questions.
Our form of radio cortisol or in other words, I'm going with layoffs that streaming and some of it so far.
That said the handsets that we have I think like Welch way of such category are quite high and in a way believe angle for I Love doing training business, we can actually make our video business Pos for sure and as of now we think that way.
And we know that all of the we'd of course for a business that's actually quite satisfying.
Okay.
Yeah.
Thank you. The next question from Richard Sun from HSBC. Please go ahead.
Yeah.
Got you.
Do you want <unk>.
So what you acquired.
So quiet.
So when you say, you'll see two P M.
Yes, you have the funds to the shelf.
Thanks, so much.
Uh huh.
Oh somebody E filing with New York Shanghai.
But once you start what are your thoughts.
Yes.
Our thinking on Dol.
Legal judgments you won't want me to income.
Great.
Ohio.
Yeah.
Close to.
Yeah.
Hum.
Great job on cold rolled sheet.
Yeah.
I will translate the questions myself. So first question is about games video can management discuss the potential monetization model and also progress Paul.
Amortization for games.
And one of the areas that we need to improve for bulk and video content and the second question is on regulation, we see heightened regulation risk or the industry.
Let's discuss how large should may regulation online games, as well as cyber security and data privacy regulation.
Impact on the platform and especially on the.
Profit and loss.
Hi, all.
From this regulation and a week away to incur more cost to fulfill these recognitions. Thank you.
Okay.
So you can easily I'm wishing he does all of them into the agenda in the Chongqing Azalea and Jewish Samsung through her about assuming you were going to civilians.
So look versus a year, where you go if you just zoom phone.
So you're not so much angry suiting.
Most of the chips.
The Huntsville she thought.
Women 70 languages through a phone call English disappear when you go to pitch out somehow things almost.
Great.
Sure.
Hoya first Cartwright outlines the media monetization like that Carl Lee is a top priority for the company.
Regarding the Windows business.
To consider how to better integrate the life changing business with India business and just saw that the video business can be extended but probably currently SLM. It's early to talk about to talk about the business model, but Oh, my well wishes.
Now for the video business advertising.
Probably the top twice for the monetization method.
Yes.
Okay and then for your second question of D. R. A D. A reason to record literary changes, we do believe that the recent regulatory changes I think it will help the industry in <unk>.
Long term and then we as a company was definitely a buyer for all the regulatory changes or or guidance and then so far I'm thinking you know we have received and also are expecting some of the probably the details of the guidelines to come.
And so.
So we will update with investors. If we saw some of the detailed guidelines are for potential regulatory guidelines.
Hum.
Hope this answers your question next.
Thank you. The next question is coming from Tien Ho from Th capital. Please go ahead.
Yes, good evening management are too small.
Oh damn good shelter.
Service at Lids and shopping a woman she was head count will not change.
So you see nickel she function right.
As you know sometimes right.
Dr Gonna do <expletive> to machine.
Some oh, yeah Dominion Neil show that dose without cool downhole yields in Q2 in each of the teams such as the brown to Chew button.
Uh huh.
Yeah, sorry, Jacobson and pay some of that take us.
Because they ensure Chinese language Gulf.
He suddenly disappointing.
But you are asking is I saw that in Belgium.
Okay.
Notwithstanding shops are.
The first question was about so what's management see the second half.
About the game content, you know are there any major content going to come out. The second one is you know are on the platform what does management see the usage and activity level I students has licensed schoolwork.
So not much change to go to travel Oh first one is regarding the cloud game.
Company has been that the volatile clocking four wells so.
Can management share some color about the trip wise.
Thank you.
Yeah.
Oh, yes.
Understood.
And then I'll kind of answer this without Samsung as a whole.
Jewish Mb Suzanne.
And when we come.
She's not going through the usual.
Sure.
Do you get.
Uh huh.
This is good January seven integrated chips reopening.
Sure.
I'm guessing this with Apple.
Who do you go if you're looking at for this.
Initiative.
So hopefully I can issue onshore so they don't necessarily anything or things like that.
Therefore.
We actually easy life Sciences, because I mean, just on the new Covid.
Yeah go ahead.
So these are not necessarily an encouraging classes.
You didn't go into this with Vodafone.
Yes.
Thanks Felicia.
Oh, Dan from sorry, all women shooters in Shanghai.
Hi, Susan data.
Oh man, yes, she does cause it to.
Go down here's an interesting way to southern timber.
Yes.
So why a refresh club channels.
Sure.
Yes.
And our teams that we have observed so far during the summer school holidays, there will be a sudden guava sounds like is it.
Coming to the school holidays and summer out again, we are seeing Aqua, Pennsylvania, there's a small but regarding the other factors that you mentioned and we havent really we havent really seen much and for your second question was on any of the new game titles and.
We have seen I'm, hoping that the two pop up potential blockbuster games are they enough mobile and illegal weapons mobile can be a little knee system.
That's who we are as quite a stout.
It is quite it's quite a cell that are promoting the mobile games that have been made.
Sure that's.
And make sure that ultimately the mobile games on our last training platform can be a strength.
Maintain our leading position it actually looks like Malaysia, where those two again or has already been initiated.
For example for legal legend of small ball as fans Donnie.
I see.
Beginning of 2021, and a claw Jorge enough mobile warehouse and preparing for the launch of that well.
Last year, so and really what we're really hoping that holds true potential ballpark.
The second half.
Okay.
Hum and regardless of the cockpit.
Cool.
Yes regarding to your question about the cop game actually since we launched our card game platform <unk>.
We have been covering over 200 games right now and then we have been improving our product since the launch in the country, we believe that our product.
In terms of the technology and then the user friendliness is is in the sort of the industry leading level and currently we are still focusing on trying to reduce the bandwidth cost are per user and then and increase our M. A user.
And do you use actually since I'm, the CTO of our launched D users growth is pretty fast.
So currently on the phone because they still own growing users improving products and they're trying to reduce the bandwidth cost for each user and then probably next year, we will consider trying to do some commercialization for the account game, but currently is still at early stage.
This answers your question.
Yes.
Thank you do you have the next question from Vincent Yu from Needham and company. Please go ahead.
Most disappointing.
With that she wouldn't know what I'm going to your ego just sure plenty of women just to take a.
Pictures say, a J that you're hoping to take up the cause of the trees at Yahoo now women.
She is changing for accommodation senior would you be able to allow women should we should hopefully with the same things that I want.
<unk> Yoshi, if somehow you broke into a closed of course for us.
It's been going up.
No whole with younger ones you sure Blayne VJ, good anyway that you're shipping both Joel.
Joe will touch on our reach on Google.
With that we will mentioned for each of those types of banks and the general logic.
Obviously conduct.
And then she bought a gimbal busters for nickel Clinton should we kind of logic chip in the timber. Please shall we can go again not shocking.
Noteworthy Chico's Asia.
Management for taking my question. My first question is about nothing.
So now that the merger has been called off over the company now look to acquire.
The other companies within other verticals so overseas.
Considering we have a big cash balance most of my questions is where we see increase in content costs were they to purchase.
<unk> broadcasting rights up to this merger has been called out.
<unk>.
Regarding to your first question. In addition to our operational passion is I E continue to investing in content and broadcasters.
We do we will.
Consider them.
The sort of the investments or potential acquisition, along our value chain, both domestically or in the overseas markets.
Currently we Havent really we haven't really done any significant investments or acquisition them, yet and then regarding to your second question I'll refer to him Mr. Dahl.
It sounds a bunch of them.
As a long way to.
And good to Tianjin Honey bunches in okay.
It says on the Manchester Young Lee so the Tianjin meetings of its incidence to the gym.
Jim.
This is diego.
Understood.
Tissue imaging Marcelo.
Yeah, you did you did.
So it's M. P language is windows.
He knows the.
To close on soon.
Yeah.
Regarding your question on the E sports tournaments pop culture alive, I think from our perspective, our Ramsey Paul Kratz from alive hospice ornaments.
In corn in the sector, but esports actually all in on that esports has become a professionals can that happen.
And he is also included in the Asian, <unk>, Yeah, Yeah, absolutely announced that but for US we have already got me Hum.
That's right that's why our T L. A and it's the only game broadcasting rights for going forward are we believe Oh boy I will continue with the acquisition of Hudson arrived in eight.
Loud play.
Okay.
Okay.
Thank you.
Thank you.
No further questions I would like to hand things back to the company for any ending remarks.
Thank you all for joining our conference call. Today. If you have further questions feel free to contact IR Apple that economy in a way and look forward to speaking with you in the last quarter.
Yeah.
Thank you that concludes our conference call for today. Thank you all for your participation you may disconnect your lines now.
Yeah.
[music].
[music].
[music].
[music].
Hello, Ladies and gentlemen, thank you for standing by.
For the second quarter 2021 earnings conference call, who Yeah, Inc. At this time all participants are in a listen only mode.
Today's conference call is being recorded.
I will now turn the call over to MS. Dana Cheng Company Investor Relations. Please go ahead.
Hello, everyone and welcome to 2021 second quarter earnings conference call, the company's financial and operational results were in Asia earlier today and are posted online.
You can also really earnings press release by visiting the IR website at IR <unk> com.
A replay of the call will be available on the IR website.
Yeah.
Participants on today's call will be nice turnaround Chantal, Chief Executive Officer, and MS, Catherine Little Chief Financial Officer.
Management will begin with prepared remarks, and the call will conclude with a Q&A session.
Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Forward looking statements involve inherent risks and uncertainties.
As such the company's results may be materially different from the views expressed today further information regarding these and other waste ban on certain statements included in the Companys prospectus and other public filings as filed with the U S. S E.
The company does not assume any obligation to update any forward looking statements, except as required under applicable law.
Please also note that we have the earnings press release and this conference call include discussions of all Nowadays hit GAAP financial information as well as all nowadays and non-GAAP financial measures <unk> press release contains a reconciliation of the non-GAAP measures to be I'm not abated most era.
Comparable GAAP measures.
I will now turn the call over to always be OOO, Mr. Huang Jia Dong. Please go ahead.
Hello, everyone.
Okay.
Hum.
During the.
Okay.
Oh.
Yeah rich content offerings.
Uh huh.
Yeah.
Which drove sandy topline growth along with mobile user base expansion.
Great.
Net revenues in Q2 increased to apparel to fit.
B should eat for them.
That's a 10% year over year, and 14% quarter over quarter, we aren't live mobile email its niche.
San Jose seven playing to $6 million in the quarter slightly.
Slightly yes.
And Uh huh.
Water.
Well the next months.
The retention rate.
While we are alive.
The main.
Stable that's L a San Jose.
You can see quarter mobile users continue to contribute to over 85% of our lives.
Streaming revenue.
It was our relentless commitment to providing users and the broad concept with a better.
Got it.
We have always been deepening our technology advanced.
And our folks.
Product up to my vision.
In late May we created Oh, we are allowed to.
He was a working nine zero.
Once you introduce the Nielsen machines, such as mounted suite.
I'll just screen female female opinions muni.
In the long time highlight.
And exiting government induces in England for example in the later the world watching.
<unk> has access to our multi screen viewing panel to watch given proper broadcast us right.
If at the same time.
Sizes fifth leveraging <unk>.
AI capabilities.
New working and Oh water medically identify so highlight momentum our streaming finishing and then generate video flavors.
Making video products gene easier and more efficient.
In the second quarter average emails, which videos on our platform increased to approach in Missouri.
13 minutes.
Our open platform for third party applications developers they went up but also continue to expand in the second quarter.
By the end of June more than 250 <unk>.
Had there been developer.
Our open platform and those those tools.
We'll use that by over 714000 the broadcasters.
On a quarter over quarter.
So daily active broadcasters, who used a third a.
Third party applications on an open platform grew more than 50%.
Moving on to our relation.
Relation with Tencent.
In the second quarter average M Mills.
Watch, though without a lot of streaming content across tencent platforms.
Which are not counted in our reported email as well.
Rhonda.
10 days.
<unk> million nearly doubling year over year.
Notably our live streaming content related to the fuel.
Third birthday or stock tournament attracted a large number of users for rebuilding QQ mobile.
Lastly, I would like to provide more context.
Around a lot.
Strategies after the merger termination with <unk>, we announced last month. According to their announcement post close here by the state.
It is tracing for marketer.
Regulation of the people to be a Cabo <unk> Oh, China.
On July 10, 2010 pay with the proposed merger between <unk> and <unk> dose was the profit.
Get you there.
<unk> S a.
M.
M off.
Antitrust.
Revealed.
We fully respect and we are by the by <unk> S. A and my decision.
And that will combine with all regulated leffew necessary requirements and the conduct of our business is in.
In accordance with our athletic apparel.
Cabo realists and our radio stations.
As we remain committed to further expanding our user base and strengthening our leading position in the game live streaming market. We are focused on effectively in.
Mmhmm team.
Growth.
Strategy.
I will continue its investment in content, including Apple.
Wiring.
The rating and the amazing quality broadcasters.
The painting broadcasting rights for policyholders esports tournaments and developing.
Back to self generated content. Meanwhile, we will endeavor to advance product upped it modernization and deliver.
<unk> per user.
Yoga is perez.
We also expect to further deepen our cooperation with Tencent.
We are confident that our capabilities in fostering and they're retaining streaming talents in reaching and.
Right.
Producing quality content as well as our expert expertise in technology and products.
Innovation will continue to underpin.
As cool cockpit to nip in the game lives do you mean that train.
With that I will now turn the call over to our CFO Kathy.
Ari to shock her insights.
On the operating metrics and the financial details answering please go ahead.
Thank you Mr. Dong Hello, everyone. Following Mr. <unk> remarks, I will start from the updates on content enrichment and diversification in the second quarter, We broadcasted 122 third party esports tournaments, and MAU, which the top tournaments, including LPL spring and summer.
Ppl's screen overwhelm in season.
In the traditional and Patchy Champions League Spring total dealership for this tournament reached around $673 million in the quarter.
On the front of our self produced content, we organize to 45 E sports tournaments, and entertainment shows and generated total viewership of $116 million.
In particular, our self branded tournament the sixth Cui our mobile game Arena.
Yeah, we actually European team, that's at or HMA has hit outstanding viewership in the corner covering 14 popular mobile games, including actual pay CFM battle of boss and see ODM.
<unk> is now a leading comprehensive mobile game tournament in China.
Additionally, following the traction from LPL, we produced a commentary show we are gain more true.
Wednesday com to provide professional gameplay analysis for game lovers.
So went viral during the LPL season, and became a major alternative channel four L. P. L fence to watch the game.
In terms of entertainment P. G. C shows we are comfortable carnival season, four we are going to Danielle <unk>.
Keith.
Mixed martial arts competition joined the pipe, whereas outdoor broadcasters and celebrities was the leading example of the season. Besides this in June. We also introduced the card player how could that Nishu a live action roleplaying show to capture the younger generation squarely interim.
In such categories.
Since we took the initiative to introduce more video content last year. There has been a clear trend of development and diversification on our platform, particularly in the sectors such as food video animation video and phone moments sharing videos.
Moving on to our overseas business in June the overseas and May you picked up to close to 27 million, mainly driven by local esports events.
We discussed previously we have been focusing on monetization driven growth overseas revenues increased by approximately 200% year over year and then the contribution from overseas revenue is also coming up with the margin drag from overseas business declining.
Next I will walk you through our financial highlights and the SEC.
Second quarter, our total net revenues grew by 10% year over year to approximately RMB 3 billion.
Our live streaming revenues were close to RMB, two 6 billion in the quarter.
Slightly from the same period last year.
The number of paying users we are live in the second quarter came in at $5.6 million.
Other than the same period last year, mainly due to the pandemic lockdown last year setting a higher base.
Advertising and other revenues increased by 190% year over year to almost RMB $383 million in the second quarter.
On second quarter profitability.
Our non-GAAP gross profit was RMB 594 million and non-GAAP gross margin was 21%.
Our non-GAAP operating profit was RMB 249 million and non-GAAP operating margin was eight 4%.
Our non-GAAP net profit was RMB $215 million and our non-GAAP net margin was eight 4%.
Now moving onto our financial details.
Unless otherwise specified all the growth rates are on year over year terms.
Cost of revenues increased by 12, 2% to RMB, two 4 billion for the second quarter.
I'm really attributable to the increase in revenue sharing fees and content costs.
Revenue sharing fees and content costs increased by 21, 2% to RMB 2 billion for the second quarter, primarily due to the increase in revenue sharing fees.
And the increase in spending in E sports content and content creators.
Bandwidth costs decreased by 35, 3%.
RMB 171 million for the second quarter, primarily due to improved bandwidth cost management and continued technology enhancements.
Gross profit increased by one 1% to RMB $581 million for the second quarter and gross margin was 19, 6% for the second quarter.
Research and development expenses increased by 15, 6% to RMB $208 million for the second quarter mainly.
Mainly attributable to increased personnel related expenses.
Selling and marketing expenses increased by 45, 9% to RMB 167 minutes for the second quarter, primarily attributable to increased marketing expenses to promote the company's content products services and brand name.
General and administrative expenses decreased by 48, 5% to RMB $72 million for the second quarter, mainly due to lower share based compensation expenses.
Operating income increased by 0.3% to RMB 182 million for the second quarter and operating margin was six 1% for the second quarter.
Interest and short term investments income was RMB $58 million for the second quarter.
Paired with RMB $78 million for the same period of 2020, primarily attributable to the decreased interest rates.
Income tax expenses increased by 13, 7% to RMB $58 million for the second quarter.
Net income attributable to the army for the second quarter was RMB 186 million compared with RMB $207 million for the same period of 2020.
Non-GAAP net income attributable to <unk>, Inc. For the second quarter, which excludes share based compensation expenses gain on fair value change of investments and equity you must cheesy investments and equity investees partial disposal of its investment net of income taxes was RMB 200.
15 million compared with RMB 331 million for the same period of 2020.
Diluted net income per ads was RMB <unk> 77 for the second quarter and non-GAAP diluted net income per M. D. S was RMB 1.04 for the second quarter.
As of June 30th Tucson, when he wants.
He had cash and cash equivalents short term deposits and short term investments of RMB 10, 7 billion compared with RMB 10.6 billion as of March 31, 2021 income.
Greece was primarily due to net cash provided by operating activities of RMB 174 million for the second quarter.
With that I would now like to open the call to your questions.
Yeah.
Yeah.
Suddenly.
I will begin the question and answer session.
If you wish to ask a question.
Press Star one on your telephone keypad and wait for your name to be announced.
Wish to cancel your request you can press the pound or hashed E. Once again it is star one to ask a question.
All participants on today's call. If you wish to ask a question to the management in Chinese. Please immediately repeat your question in English once again it is star one to ask a question.
The first question coming from the line of almost Chong from Jefferies. Please go ahead.
What is that how authorship on each home, let's say, it's all of that to you in a way of life in Gabon T I D.
Awesome said when you saw as I'll show you a woman giant me on China.
Hi shop online you.
He can pick up on something you saw well might not by County, Colorado.
Our spending back I wish it also you'll hold off on Oh, just on can you say I don't share Woman's eyes Sharp Island, Oh, sorry, foothold in the operating metrics, but your final thoughts I am Eagle.
Looser, Ohio I'll call it the truth.
We see.
Oh, Thanks management for taking my questions I have two questions. The first question is about our content strategies, Okay management comments about our thoughts in the second half as well as all the spending that we are looking at and my second question is about.
Our key operating metrics.
In terms of Ah, but may you are paying users as well as Apple how should we think about the trend now as we come into the second half. Thank you.
Hello went off with a few inches.
Yes, it other than anything.
She says is done there just as a woman junior answers if anything since it's all along.
Great.
You can see.
The rules are being.
So he just has done.
Well the only equity I'm sensitive reasons I'll, just so it's a 10 minute.
So you know.
And I'm Gonna roommates junior one minute and good news is it's.
So at this time, we also need on Saturday.
International non-GAAP.
So it's just a bigger yogurt are all done well.
So as you know, we're just starting to go today.
Due to aging in Colorado.
So theres room in turnkey languages, and Michelle can be too good.
Women can the job on and then as you go chicken in collusion, we instituted and Tencent is on minimum wage in Russia.
Has it gotten so good Suzanne she should be able to be done.
Yeah.
Yeah.
I'll I'll transfer formats.
Regarding your first question on our content strategy.
That's helpful.
Here are our management make television set.
So to the cars for sure in different scenarios, either as a seller a little patch, we're not past that you up until we received the notification of stellar to prohibit the merger deal what's going to stick to the original plan in terms of our content strategy. So now that we have clarity.
Is some center about prohibiting the emergency arbitrage Korea and so on.
There are also major adjustments to our strategy, especially the Hong Kong strategy.
Now that we are.
Comparatively.
Compared with the who are lagging a little bit of change that you have a semi question.
So there might be a certain degree of well, it's why they compound investments from our perspective.
That's why I will take the second question.
And then regarding her.
Your questions because we will continue to invest in our content and broadcasters in the second half. So in the second half. We do expect that all of them are used will continue to grow and probably reaccelerate the growth rate for mobile and they use.
And then I think you know in the second half hour focused mental because they're still trying to grow our mobile and they use them and then this is still probably our key goal in the second half.
Our next.
Thank you.
Thank you.
Our next question is coming from the line of Lei Zhang from Bank of America Securities.
Oh, Hi, Bonnie So I sound Hawkins, they just don't want it now.
Yeah. Once you negotiate now sounds daunting task and so on Oh, you're hoping for hull cause your way of life.
You've got all sorts of great, Washington, goggles for not being clear things out yeah, but youll shut down $2 back into them that some keybanc tongue Sundar. They go well. It's welcome yeah, you'll see I think Doug what would you say that that Oh sure things Donna Oh.
So you're saying that.
Thanks management for taking my question two questions here first though.
Can you share with us on the business strategy posted a clogged up merger with W. A second delay and any more color on the integration with the tencent without rates into that thank you.
Yeah.
Although sugar.
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Oh the.
Women's and doing that as well.
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Manchester U T at all.
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Sure.
So he doesn't get along with Europe.
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The minutes ago.
But it's not.
So these are the Gallagher.
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And those are the Jos.
Good evening everyone.
And then 20 languages.
But just as you know.
I'm from December into women's shoes, as a journalist.
T J.
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Sue them and don't eliminate so much anyway.
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So good to.
Okay.
I mean can we get digital news and kind of how long to do so.
Tim Goodson typhoon zones.
So I'm going to be awesome.
So is it okay.
So the woman.
Just two things I mean tickets, who can do this.
Right.
Oh I need to go to the tendering cause others as you move through the same teacher.
And in terms of dividend 10, gene goldman's or nims.
Sure.
So good to the cylinder.
Advantages totaled agenda to differentiate and then goes to go for algorithm usage and then they can go and then go down.
Yes.
Alright, I will confess I might start on a lot of Europe Bretts question for close to a termination of the merger one peso with strategic changes.
Actually there are not much changed their core E planning Oh, yeah, and it was I'll stick to the original plan until finally, our roadmap for the year and going forward and I will have confidence to strengthen our leadership position going forward.
Yeah, Secondly, Ah I will like to mention that winter will have counseled and they all are assessed markets, especially whereas the contract that region school performed better in building up the content ecosystem and a business model and that way.
We feel our they're gonna have a brighter future and you'll have commented I think that probably your second question Bonnie.
Cooperation with Tencent and we are actually in close conversation with Tencent are regarding to carry out more innovative collaborating.
Where can matter.
There are more ways to play out the business to play out the operational model that's out there too.
Ah I see a collaboration so mark wants to be carried out Hollywood Tencent I hope that answers your question and that's it.
And then to add regarding to the cooperation with Tencent, we have continued to strengthen our cooperation with Tencent in various funds and do we believe that in the future there would it be more cooperation between us and a 10.
And and we will update our investors if we have some major updates on this.
Scott.
And I Hope this office will be a question and next okay. Thank you helpful.
Yes.
Yeah.
We have the next question. This is coming from the line of you anything from China Renaissance. Please go ahead.
Going forward or what's your opinion element to touch controller, Chuck finish hotel <unk> in sarcoma.
Got me here, but also some ambiguity in central Europe.
But your total companion sorry first of all the charge offs I'm aware that sucker for Europe.
Sure So I'll pick what they said they were finishing their culture.
So tell me if you recall it was something that go into looking at all the Oh.
It was closer to its really up to them. Our competitors of course I was looking at all three it's a little quicker.
Yeah sure.
Sure Oh.
I was explaining in shock.
My question I have two questions firstly on the cardio, let's say it's been there.
We match with the older system in Europe, So 27 million and also to see where we're at right now.
That's what the law says because we just feel more color on income.
In terms of opinions localization content built up.
Sure.
Secondly, it's onto video content.
This is a we're discussing in the past two quarters can you share some color in Commerce hotel video content help too.
Acquisition.
Okay, two months and that retention. Thank you.
Thank you regarding our overseas business, we have seen a pretty good progress as we have been emphasizing on monetization in the overseas market, we haven't seen significant results.
In the second quarter, our overseas revenues actually increased by approximately 200% year over year and also the the the operating loss has also been narrowed down so we're pretty confident in our overseas business and we do expect.
That the overseas business will contribute you were much more significant.
A revenue contribution to us in the next year and in terms of.
Our video business, we have been developing I'm sort of a new video content and then in the second quarter. We also noticed that that our video content users have been increasing them.
Mr. Don just mentioned in the second quarter average and May use watch video on our platform actually increases to approximately $30 million and Hum in the second half we do consider to also launching E. A new a P P specifically for <unk>.
Our video product.
Hope this answers your question.
So I was hoping you could just generally.
Just once again it all goes.
So there's a series of Dawson James.
This is unique its own page you'll need each other limbu homes will enable us to get out on the one board of education.
So you're just dealing with it.
So I'm just looking that way at National Museum leases, Vodafone Susan I Felicity.
And then just.
Remember, China, Tencent I shall Raj I agree.
I also translate Sharon <unk> to provide more color tower, where it is.
Let's start on national and thus far there is a second form of I've laid out that's myself, we asked platform.
That is the lag in between the traditional media and analysts training sessions.
He was a form of radio cortisol or in other words, I'm going to rip layoffs of streaming and from us.
From that type of headsets that we have I think like Welch way of such category are quite high and in no way believe angle for I Love doing training that we can actually make our video business path for the future.
And as of now we think though he's out that way.
Well, we know there are the.
We'd of course for a business that's actually quite satisfying.
Thank you.
Yeah.
Thank you. The next question from Chi Tsang from HSBC. Please go ahead.
Yeah.
Oh excuse me.
There's a lot to you on a whim.
So what you acquired.
So quite a challenge so what you saw you will see T mobile.
Yes.
Thanks to the shelf.
Thanks, so much.
Uh huh.
Somebody E filing with New York Shanghai.
Once you start what are your thoughts.
T J.
Our thinking on Dol.
Legal judgments you won't want me to take that one.
Great.
Ohio.
Hi, all.
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The pilot.
Hum.
Well not quite at that level.
Yeah.
I would translate the questions myself. So first question is about games video can management discuss the potential monetization model and also progress Paul.
Amortization of old games.
And one of the areas that we need to input for Falcon video content and the second question is on regulation, we see heightened regulation risk or the industry.
Management discussed how life should may regulation online games as well.
Fiber security and data privacy regulation.
Impact on the platform.
Actually on the profit and loss.
All from this regulation and a week away to incur more costs to.
Regulation. Thank you.
Yeah.
The stripping you equally I'm wishing he does owe them into their design is launching a zillion Jewish answer.
But assuming you against civilians.
So lucas sort of year over year.
If you just zoom phone student angle.
So yeah, that's what I'm, saying with the switching their timelessness Chisholm.
So you'd be also Qi Dong women's MP language is look on golf and golf disappear. When you go to pitch ultimately how things homelessness.
There's.
Hoya first Cartwright online media business might have been something like that Karl we talked about R&D for the company regarding the windows business.
To consider how to better integrate the life changing business with India business.
And I just saw that the video business can be extended but probably currently.
So it is still early to talk about to talk about the business model, but oh by the way.
So right now are for the video business, our tightening as probably the top twice for monetization methods.
Okay.
Okay and then for your second question of the the reason to regulatory changes.
We do believe that the reason regulatory changes I think it will help the industry in the long term and then we as a company was definitely a buyer for all the regulatory changes or or guidance and then so far I'm thinking you know we have received.
And also are expecting some of the probably the details of the guidelines to come out.
So we will update with you I'm not sure. If we saw some of the detailed guidelines are for potential regulatory guidelines.
And the <unk>.
Hope this answers your question.
And next.
Okay.
Yeah.
Thank you.
The next question is coming from Tien Ho from Th capital. Please go ahead.
Yes.
Yes, good evening management are too small.
Good shelter egos.
<unk> shopping a woman she was head count.
So you'll see.
She phones right.
Right.
We are gonna juices.
So Oh, Yeah me and Neil show that dose without cool downhole yields in kids and in each of the teams are such a brown to coupons.
Who come down I'd say take ups and pay.
Uh huh.
Because then sure triangulate Chico.
He suddenly disappointing.
He was asking was I saw that in Belgium, two way or something.
Notwithstanding shop, but the first question was about Oh, what's management see the second half.
About the game content, you know are there any major content going to come out. The second one is you know are on the platform what does management see the usage and activity level I students you know has licensed schoolwork.
So not much change to go to travel.
The first one is regarding the small game company.
The company has seen that the volatile clocking four wells so.
Can management share some color about the progress.
Thank you.
Yeah.
Uh huh.
And then Susanne.
Those of US who doesn't sound as a whole.
Jewish Mb Suzanne.
And that will come.
She's not going through the usual.
Sure.
Do you go.
This is good January seven integrated chips reopening.
So it could be also another.
Secondly, I'm guessing this.
With Apple you go if you're looking at for this year.
Initiative.
Right.
So hopefully I can use to onshore.
I'm not sure exactly.
It is easy to answer this.
So when the new Covid so at this time.
Yeah.
So you shouldn't necessarily assume then into reading glasses.
Zynga into this award is one of them, which is it's really.
So they shouldn't be.
Oh, Dan from soil women shooters in Shanghai.
Susan data says it all.
Yes. She does is it good to go down there's an interesting way to southern timber.
Great.
Oh software refresh class Charles I don't know a seller early in Florida turbine and our teams that we have at surface. So far.
With that let's go Hollywood there'll be a sudden guava sounds like is it.
It's coming to the school holidays in the summer that again are we are seeing a quad play you know there's this fall, but regarding the other factors that you mentioned.
We havent really we havent really seen much and for your second question was on any of the new game titles.
We have seen.
I'm, hoping that the chill pop all potential blockbuster games are they enough mobile and illegal wagons mobile can be a little knee system.
Because <unk> is quite excel at.
Because it's quite a cell that are promoting the mobile games.
Sure that yeah.
And make sure that promoting the mobile games on our live streaming platform can be a strength.
To maintain our leading position it actually looks like Malaysia, where those two again.
In Asia.
For example for legal alleging that small ball S band, starting fresh I think beginning of 2021 and as far Jorge enough mobile warehouse.
<unk> ran quite a launch of that well.
Last year, so and really what we're really hoping that its true potential ballpark to instill more often in the second half.
Okay.
And irregardless of the cockpit.
Yes regarding to your question about the cop game I'm actually since we launched our card game platform. You are we have been covering over 200 games right now and then we have been improving our products.
Since the launch and currently we believe that our product.
In terms of technology and then the user friendliness is is in the sort of the industry leading level and currently we are still focusing on trying to reduce the bandwidth cost are per user and then and increase our M. A use in.
You use actually since I'm, the CTO of our launched D users growth is pretty fast.
So currently I would feel because it's their own growing users improving products and they're trying to reduce the bandwidth cost for each user and then probably next year, we will consider trying to do some commercialization for the account game, but currently is still at early stage.
This answers your question.
Yes.
Thank you we have the next question from Vincent Yu from Needham and company. Please go ahead.
Well I'll say two points.
Q1.
David I'm going to Eagle just shook when you women just to take a.
There should say.
David Youre, hoping to Jacob.
Oh no women.
She is changing but it's one we issued senior would you be able to allow women should be should go away with the same things that highway.
Yoshi just somehow you broke into towards the course of action.
It's been going up.
Now home with younger ones you sure Blayne VJ good anyway, I guess, you've been both Joel.
Joe will touch on those niche on Google.
With that we will mentioned for each of those types of banks and the general comment.
On the earthquake conduct claim she bought it with a gimbal busters should enable Clinton should we kind of logic chips and the trombone player shall we can call you didn't notice anything in Queensland.
No it was chicken finisher.
Thanks management for taking my question. My first question is about nothing.
So now that the merger has been called out over the company now look to acquire.
The other companies.
Like other verticals so overseas.
Considering we have a big cash balance my question is will we see increase in content costs relate to purchase.
Uh huh.
Twin appointments broadcasting rights up to this merger has been called out.
<unk>.
Regarding to your first question. In addition to our operational passion is I E continue to investing in content and broadcasters.
We do we will consider them the.
The sort of the investments or potential acquisition, along our value chain, both domestically or in the overseas market.
But currently we haven't really.
We haven't really done.
Got any significant investments or acquisition.
Yes.
Regarding to your second question I'll refer to Mr. Dong.
It sounds a bunch of them.
He has a long way palisades and good attention, both honey bunches and somehow.
This was on the Manchester Yung Wei Qing.
So the Tianjin and the use of its incidence to the gym.
This is diego.
Understood.
Tissue imaging Marcelo.
He did.
So it's M P language as a window.
And he has a clear Samson.
Oh My God I have question on the E sports tournaments for customer life, I think from our perspective, our partners need more customer lives of course ornaments, that's quite important in the sector.
Esports.
Actually all in on that esports has become a.
Professional can that happen.
And he is also included in the Asian games for next year.
And actually announced that works for US we have already got me closed the broadcasting rights on flat L. T. L. A and then slowly gain.
All right.
We're going to fall our Liberal leave Oh, Yeah, we'll continue the acquisition of Hudson arrives.
Loud play.
Okay.
Thank you.
Yes.
Thank you.
No further questions I would like to hand things back to the company for any ending remarks.
And thank you all for joining our conference call. Today. If you have further questions feel free to contact IR Apple that economy in a way and look forward to speaking with you in the next quarter.
Thank you that concludes our conference call for today. Thank you all for your participation you may disconnect your lines now.