Q2 2021 Douyu International Holdings Ltd Earnings Call
Good morning, and good evening, ladies and gentlemen, Thank you and welcome to Joe You International Holdings Limited second quarter 2021 to earnings conference call. At this time all participants are in listen only mode. We will be hosting a question and answer session. After management's prepared remarks.
I will now turn the call over to the first speaker today, Mr. Min Xu Chief strategy Officer at W. Please go ahead Sir.
Thank you Hello, everyone welcome to our second quarter 2021 earnings call.
So the cheapest oriented officer, joining us today are Mr. Chau, Cheng Chairman and Chief Executive Officer.
That means it I'll call my surprised they didn't all findings.
You can refer to our second quarter 2021 financial results.
Well I hope Riboside high that I always thought, though he thought that.
You can also check a replay of this call when it becomes available.
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IR website.
Before we start please note that this call may contain forward looking statements made the choice to the people who have a rope probation by the private Securities Litigation Reform Act, although 1995.
These forward looking statements are based on management's current expectations and are almost ambition.
Oh no.
Unknown risks.
And the other factors not under the Companys control, which.
Where did you make called Echo to Europe.
The job performance, all but two men, although the company to be materially deeper into pharma that resolved.
A woman all expectations implied by these forward looking statements.
Forward looking statements.
Expressly qualified E B R E.
Hi paid by the cautionary statement.
Thanks, Kurt and he counted all.
All of the Companys filing with the S E T.
T.
The company undertakes no duty to revise or update any forward looking that's my fault selected the event all of the tumor bank. After the date of this conference call.
I will now speak on behalf of them.
Our chairman and CEO, Mr. Tom Gibson.
During the second quarter 2021.
Oh, well outperformance it remained stable as we continue to upgrade our business at this time.
Total net revenue for the quarter reached RMB two point to three fault, beating while quarterly every dropping user account reached at some point to meet them.
Do you already though the second quarter.
However, you know mobile E mail inquiries dropped by three point to nine let's income.
Yeah over here to dig the pointer Saturday meeting.
And they will grow with well, it's mainly driven by two factors.
What's sort of wave a check to the U S policy you Dara.
Gamma knife.
Return Oh, Oh their users.
Zero now that Q E sports tournament out farther Cobb.
We've included a major events such as our I P. O Brien grinder final trying to teach them to act.
Well need to see the invitation and the K P. R. O spring granted final 22 months.
Thank you Scott.
We refined our operation.
See our collaboration fall Aitken, Inc. Rudy.
And Oh now the key.
While exploring partnership basis did you know game you bad aboard to introduce the MAU made and the long tailed games and it's strengthening operation for you again.
Oh Narrowcast Black point, a major H game launched in the quarter.
We collaborate together with its game you bad of her to the bathroom and launch various promotional content on the event side.
He is the 13th Cid.
These are four pattern have gradually attracted a high quality player to our platform.
Now turning to our content update.
You already have the Porta wait continue though to expand our content ecosystem, both upstream and the downstream to cover the entire esports industry value chain.
To wrap it up.
To construct.
Frankly, the same content library.
Focusing on battery as it came down the road.
My brother, Kaki understanding or what you would think esports tournament in the event you can bare reality formats, we continue toward your bathroom MAU high quality esports content.
And so at the same time, we also continue to actively monitor and are in Baxter.
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E sport.
Jim.
You already have the corridor wait for other parts of the over 50 large scale, it's about putting them in.
Some argue with dry more than happy high quality, it's plastic ban.
Among them.
Never enjoyed Oh, Wow pre season, China, India matched to actively cultivate new high quantitative framework and organize the matching between street Dreamer and a young training team to engage.
The content on our platform during the off season for Premier esports events.
In addition, the summer.
Summer 2021 tournament wage hike.
Hi, good to level out while we're all impact you know fundamentally in China.
Also in June we borrowed the couch, the turn them into through our platform in constructive ways, either released or that sounds pretty once their program at all.
I'll come right to live streaming coverage, although the event.
To finish.
Well our P O S. One tournament the Highgate Sendero professional neither for peace keeper.
We rolled out a theory of the hour.
Almost a known events such as the Libra watch parties, but one of them is match anchored by popular neither streamer to further improve the user engagement.
Meanwhile, we continue though to figure all that you brought up Amanda although our content library by it and what do you think what you should know game developers to make our content library more comprehensive and cover additional games down the road.
We utilize around esports tournament the borough they're constantly to further enrage covered Asia for our Boca Park jerky.
During the quarter.
We hosted them or trying to economize ballgame, although very hard to generate income.
E L MAU on Albert King and the Peacekeeper.
I can do where you can either the I T. Although popular framework to create a more high quality P. D. C can tend to.
With me to the diverse content among all the users.
Binary way.
Wait for the income you want that engagement it basically all their interest the aim high and the serenity and gameplay.
By delivering content related to real time, Sanjay and the advice from Dreamworks and the high ranking professional mentioned income inscription and equipment.
Election.
We also implement.
They are symptomatic marketing program.
You made and the long tail game.
This is a campaign a multi step process that we can include that you brought up the mind and the deliberate although our emotional content and event.
Basically on the video game live recycled.
We began incorporating the game you brought aboard prior to the launch of old.
Beta testing for new game to filter anticipation and excitement among targeted consumer.
We don't deny that the influence of our powerful framework to increase.
Brian to abandon these new game.
Meanwhile.
Recruiting youth Dreamworks as both GAAP and the demand we are able to quickly fill the gap in game content. After the cancer I'll be show launch.
For the mall way actively copyright to that it gave me the bank to launch a Crs event to fourth Jersey bathroom into engaging video content.
So are there other costs that probably this content more potential players.
Checks to them to bear on gaming or the cost.
Additionally, our branch formal generates a gain related to the hot topic introduces a compromised or program.
And the content tool for almost of that game.
And along the player to have interaction.
K O N.
Enabling us to attract you.
New users and are in who you were there you can eat.
Now turning to monetization.
In the second quarter, our coordinate yogurt or seven point to me at least.
I ask you to heal.
M D C behind right that's right.
The slight year over year, a D grade E. P. P O. What's it primarily due to abnormally high user activity and abbey deal during the second quarter of 'twenty 'twenty related to stay at home or there's pharma the pandemic do you.
Only the corner user behavior normalizes to where he plans to make levels.
So while our operating strategy and our execution, we continue to focus on improvement in user engagement and the paying user consumption.
Going forward, we will work to further uptake by our product diagnostic by our painting their dinner.
In Europe and to enhance our overall pay that you were there.
To achieve a healthy growth rate.
We remain calm.
Nature of the two refining our operations are Carl deeper in a segmented way.
She was a habit tool for the airports drove Sacramento efficiency.
We are also making good progress on the R&D front.
During the quarter, we launched ABB, one coding technology.
The fourth of a plant in China to support of everyone to Cody Eli screaming.
Comparatively our brewery RCT coating technology, and we ran it at lower band of East Coast.
And Uh Huh eliminator lacker, while maintaining the same video quality.
Income with all the paradox function innovation.
As a former upgrades at mid roll around to the evolution in our game content.
Nothing formal library screening, we have extra banker to into parity with ROE video and other content.
Content.
We our popular and a new game pigment.
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Have a fortune and integrated the game's documented that the combined ninth screaming.
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Leave your graphic rent.
When did it guy.
Interactive will culminate in the E M gave me.
We have also adapted our platform with the search function. So it's a part of the multiple forms of content.
By providing support for searching and extra thing he's already called Livestream video and the zero profit content on our platform.
We can now better satisfy users search for a basketball.
Game content.
We also continue with the tool.
Fortify our foothold.
Over to you.
You don't need a corridor.
We continue to increase our investment in overseas market.
In particular, I would like to highlight our achievements in Japan.
Oh cookie according to the latest threat APB any steps you've taken.
Neither is the wind power without mainstream video game live streaming a P. P E J P and the maintenance and industry, leading unit are paid in the country.
In terms of all the field tourists or entity, maybe they'll continue to strengthen our monetization capabilities, although milton.
Other tool for the solid by its market position in tray pack.
I also expect us to achieve better economics of scale.
Scale in Japan.
In summary, you're already the second Dakota, although tons each in Dubai.
Leveraging of our platform the bumpy road to achieve what success on numerous fronts.
We expanded our multi mission no collaboration with the mobile game tobaccos.
It also provides the gamers and the.
With a comprehensive.
<unk> operates combining live streaming videos, they look graphic and I interact cable I mean anything.
Looking ahead, we plan to continue exactly how well.
Oh Doctor screaming and contenders renda J to further augment our monetization capabilities and improve our overall financial performance.
With that I will now tell you the call two hour widespread ended up finding meets the Holly Paul to go through the details of our financial performance in the second quarter.
Yeah.
Thank you Li Ning Hello, everyone.
Although net of revenues in the second quarter 2021 well on beef to 23 four.
That's true I mean revenues were RMB 2.18 billion compared with RMB 2.32 billion in the same period of 10 to 20.
At Haile and other revenues were RMB, 105th E. T. One 7 million come out at least RMB $188.3 million in the same period of tiny tiny.
The year over year decrease in live streaming revenues was mostly due to abnormally high user activity.
In the prior year period cost.
The at home orders during the pandemic.
In the second quarter of this year.
Pandemic was gradually brought under control in China.
That behavior had a largely normalized reverting to pre pandemic levels.
This decline was partially upset MAU.
First to improve their spending my alcohol paying users.
So you have over in Europe.
Flying in advertising and other revenues was mainly due to the fact that.
Game advertisers increase their marketing budgets.
Quarter of last year use of that pandemic.
Related to stay at home measures.
The result.
Okay.
Revenue in the second quarter of last year reached a relatively high level.
During the quarter and the pandemic was continuously brought under control in China and in the number of paid games featured passports was reduced okay relate T tiny revenue decreased pardon me.
Cost of revenues in the second quarter of 221 increased by two 3% to RMB 2.03 billion from RMB 1.99 in the same period of 10 to 20.
More specifically revenue sharing fees and content costs increased by 3% to RMB 1.81 billion from RMB one point.
5 billion in.
In the same period of 10 to 20.
This increase was mainly due to increased investment in overseas streamers.
We continued to expand overseas market.
Licensee cost due to more investment in esports tournament broke her team rights and additional investment in proprietary content production.
Families cost in the second quarter up $10 in Tijuana decreased by three 9% to RMB $161.8 million from RMB 168 point for me to be in the same period of the 10 to 20.
This decrease was mainly due to the successful execution of our ongoing in house technology upgrades, which led to higher bandwidth efficiency.
Lower bandwidth usage cost during the period.
Gross profit in the second quarter of 2021 was RMB 306.5 minutes.
Powder with RMB 592, 9 million in the same period of time that Andy.
Gross margin in the second quarter of pundits in Tijuana was 13, 1% comparatively tiny 0.8% in the same period of time to attend.
This decrease was primarily due to the decrease in revenues, resulting in an increase in revenue sharing fees and content costs as a percentage of total net revenues.
Sales and marketing expenses in the second quarter of 2021 were RMB 295 minute comparatively RMB $142.1 million in the same period up 10 to 20.
This increase was mainly attributable to the increased costs from utilizing additional promotional channels.
The acquisition and continued spending on both official and self produced like esports tournaments, and a corresponding sponsorship fees as.
As the pandemic was gradually brought under control in China.
Research and development expenses in the second quarter.
What were RMB 123 million, which represented an increase of 29, 6% from RMB 94.9 million in the same period of 10 to 20.
This increase was primarily due to additional investments in technical personnel and so we continued our overseas expansion and technology infrastructure upgrade.
User experience.
General and administrative expenses in the second quarter of 2021 while RMB 102, 6 million compared with RMB 79.5 minutes in the same period of time.
Primarily due to the increase in professional service fees during the quarter.
Adjusted operating loss in the second quarter, Apple 10 different you want which adds back share based compensation expenses was RMB 165, 1 million compared with an adjusted operating income of RMB 217, two plus seven meeting.
In the same period 10 to 20.
Net loss in the second quarter of 'twenty to 'twenty, one was RMB 181, 7 million come out with net income up.
RMB 319.3 million in the same period of time.
Andy.
Adjusted net loss in the second quarter of 2021, which exclude share based compensation expenses shelf income in equity method investments and impairment loss of investments was RMB 145.1 million compared with.
Adjusted net income of RMB 392, 9 million in the same period of uncertainty.
For the second quarter, 'twenty, 'twenty, one basic and diluted net loss.
Well, RMB 1.5, and RMB <unk> 45, respectively.
While adjusted basic and diluted net loss, but yes, we're on B O 0.35, and RMB opine, a three point respectively.
Going forward, we will continue exploring new methods of improving our monetization capability and efficiency.
Additionally, as we continue to grow we will focus on further utilizing our operating leverage to seal up the sustainable some element of our platform.
This concludes our prepared remarks for today operator, we are now ready to take questions.
We will now begin the question and answer session to ask a question Press Star then one on a touchtone phone.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
And your first question comes from Lee Jay with Bank of America Merrill Lynch. Please go ahead.
Okay Bonnie Zhang.
Alcohol.
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Sure.
Yeah.
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Yeah.
Okay.
Thanks, Matt.
Question two questions.
Sure.
A little color on the new format.
In the quarter, and we look out into the second half.
New games.
Oh.
I want to hear.
Yes.
What kinds of channels, Okay and.
In terms of time and that's.
That's okay.
Oh, Oh, Oh, how can we do.
Sure.
Paul.
Thank you.
Okay.
Thank you that's my answer to Chris Ferrara.
According to our platform data new games, such as the naira kayak, we try to point us in the CF S. T caused the fire HD, having performed about since the second quarter of this year.
I'm enjoying into July we are without a doubt that's at the overall live streaming volume and you were there and get them in the fall.
Narrowcast Black point increases led by MAU that 400%.
We have continued to generate a P. S. A video and then be able to our content ecosystem for this.
New game.
Actually I have four would have played an important role in promoting this game and the evolution.
And elevating our Europe right up almost equally.
Based on our based on expected of the launches scheduled fall campaign in the second half probably this year, we expect it to that's a new catalyst for the gaming market that will include a L. L mobile pokemon go neither.
Our Japanese online.
Two the launch of new games, we plan to recover late to the game developers.
Votes to anticipation and excitement among target consumers and to.
To deliver sufficient and the rich game related to the contingent ballgame.
And the users of our platform.
And the second Newcrest friends.
The moratorium to all our public 10 glad the form gamut.
For a more traditional it's false image on Earth.
By long life cycle, and Hyatt entertainment to quality.
According to our platform of data.
Our top 10 game in general to have a remainder.
Like are they similar in the past there are several corridor.
There's also so that does that are you there at the time of Spender novel non top 10 game over there a positive toll brothers has gradually increased compared to the same peer with a year ago.
We believe the primary reason behind this trend, what's the right trying to dig out the breadth of our platform.
In the past.
Pure pizza assay platform.
He was at our tool only over gaming with it to the lab, a screaming contender to cameras on either.
However.
The only problem with easier we have a focus to the MAU, none if Bob King.
We have tried to to create Ah.
A separate the segmented for each new game.
Platform.
We are also camera a comparative base came with your backwards towards the Baidu mall comprehensive plan and the quantity of content.
Game promotion through live streaming video and a car I think attached to content as well as our user community.
Sometimes the income with all of a lot of screaming way kind of leverage.
Or toggle extreme Arthur tool for sort of anticipation and excitement among target consumers.
Prior to the launch of a new game.
Okay.
Game with the bad part.
I'm, a crazy multiple P. G SEC videos and increase our number of old promotional promotional channels.
For Europe, I mean native way guidance invite up Carryout she'll have a indirect interaction with our users.
That's generating more relate to the hot topic and engaging content as.
As we continue to execute to this product the tragedy.
We expected that the time spent by users.
Esports games game with documents, they will increase and our platform of content will become more diversified in the long run. Thank you.
Thank you that was helpful.
Yeah.
Yeah.
Yeah.
The next question comes from he Wednesday with China Renaissance. Please go ahead.
It's just quite as high.
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<unk> consulting Uptown girl Slash, a bunch that Doug Chocolatiers deals with you Soma just housekeeping telecast.
No for chartering she had such a size that total.
Like a battery of chocolate or shelf or anything like that.
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But I will tell them onto the corn you just she also converted at a couch. It all with you quite sharp on your kind of.
Other titles, some oh southern tropical Italian 20, myself, you know well, but what's your two boats almost constantly all elements. We are towards mouthful amount of thousands I. Just so you guys feel sure Joseph Osha doesn't go to cope with the board for Dana.
Finding yourself first.
Thanks for taking my question. The first question, we hear of a cognitive self produced a ton of money and upgrade her remarks management del Webb.
Separate produce columns underway also note that there was a point in the enterprise license. Some of US thought that tells you what type of off the self produced content investment.
Taxable income increasing by something called the trend right now.
Secondly on the.
Okay and preparation you might have.
Hey, guys.
Question for example, I think of that your mobile Oh, Here's our latest progress Alta streamer coolant and what's the way where we Oh.
If you adopt a top cohorts trimas into new game.
And you can't preparation thank you.
So even if you don't know.
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You bet.
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No.
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Yep.
Julie do you want even to precision.
Yes.
So we shouldn't have the country lenient.
Uhm.
Ed.
Okay.
Uh huh.
Yeah.
Yes.
Sounds good.
So the other countries that have been on this journey.
Thank you gentlemen.
So that's actually if I mean, just your.
I mean, it's one of those examples.
I'm also told you that 'twenty.
Yeah.
But your guidance.
Sure.
Sure.
She told.
To use the bathroom.
Sure Steve.
Chuck.
Tonight as much in Europe.
Sure.
Okay.
It's actually Josh on the piece in Europe.
Uh-huh tailings from him shortly.
Sure.
You may even have much interest in Europe.
Sure.
Womens seamless.
Yes, what are you doing.
Some in southern cone.
Uh huh.
Okay.
So at a minimum critical fortunately with political but the pay off from you.
Sure Jimmy.
Okay.
Now some of that.
Uh huh.
Sure.
And then.
Yeah.
And now let me translate it.
So basically this year, we have witnessed an increase in licensing costs.
Or tournament's broadcasting right across the industry. So however, we expand the licensing costs for the broadcasting right.
Our major esports tournament to remain relatively stable over the next couple of years.
And our expectation is based on our observation of current market conditions and the fact that the esport industry has reached a pretty much war.
Oh development.
<unk> ambition.
All produce tournament in content has been a pretty important part of our content strategy as well.
And the cells produce hormones, such as the Gordon Brian tournament, and the DNF or start they both have a pretty produced outstanding results on our platform.
And especially you go to the Grand tournament, which has seen how for around.
Around 11 seasons already and.
Now it has become one of the most important branding off though yeah, well and going forward. We will definitely continue to bolster the organization of our east or evening and focus more on the generation of PTC content for not just for game.
And we are pretty confident that we will be able to leverage our enormous amount of quality streamer video creator resources to ask he was discharged.
Yeah.
Thank you.
Next question please.
The next question comes from Alex Hung with Morgan Stanley. Please go ahead.
Fisher Quant anytime.
Loyola uncle and Chi.
Did you go see people, which I got a sort of a central and they know what's happening she says that guy soon.
So now that you've got to see a quarter ago change, let's say such channel Sunshine Tycho downtown.
She wants to.
We lie woman NIE guidance.
Patrick I don't know if I'm trying to think of something that's a more fun.
Yeah, Hey, guys, so really always guarantee I shop on Etsy.
And what the AGA when she shook when you say good seafood woman.
Oh, you know what it's like a P C.
And what triggers you to obviously somebody dragging a local woman she's Hangzhou Logica P. She found that young food she said that guidance.
Sure.
Yeah.
I have two questions.
First question is regarding the revenue share and content costs.
Trends in second quarter.
Including these different components, including the sign up bonus revenue share and content procurement cost et cetera.
How should we forecast space segment costs in the future given we have a little bit of a revenue decline. My second question is related to D. C and are you a number of these.
We have not disclosed the PCM number what is the reason behind this and if we remove duplicated users how much how.
How many PC users.
Actually you have thank you very much.
A bunch of expression revenue sharing costs.
We will maintain our 50.50 revenue split shedding policy.
Streamers.
For our platform.
Please.
Doing promotional promotional Jarvis.
Awesome.
Incentives to streamers.
Therefore.
Revenue sharing ratio.
Fluctuations nicely quarter over quarter.
Also remain stable in general.
The increase in content cost in the second quarter of 221 was primarily associated with higher legacy costs and increased investment in sales produce programs.
The increase in licensing cost was due to more investment in esports tournament for cat funds across the industry starting from this year.
At the tournament as tournament FSD becomes higher we expect licensing costs in the second half of this year increased slightly from the first half of this year.
Our self produced programs.
We invest more in programs to produce PUC content to support the upgrade of the content and functions of our new businesses. We expect associated costs to continue increasing our moderate moderate opinions from outages this year.
Let me answer your second question.
First our <unk> have remained relatively.
Relatively stable within the range of Abo 110 to 100, and it's certainly meeting.
Since our IPO in July I will.
2019.
Quarterly flagship were mainly driven by Dr. Pepper as our periodic collaboration aims to be the P. T K you've ever.
In addition.
Revenue contribution from our language streaming our PC portal has it definitely lighter over there are parts of Europe.
Several quarters.
In the long run way expected of our mobile portal to be the primary driver.
All are attracting users and generating revenue.
And I tell you later, they haven't decided either to dabble with disclosing our PC EMEA or jobbing pharmacies in the quarter.
They are a girl with default now it's while it's a blockbuster games. They are relatively under penetrated the way. We believe there is plenty of opportunities in the mobile market.
Future, where they all depend our collaboration with <unk> is Scott came with the bad part to better how to reach you there.
Spending habits and the courage.
Mo bio coming contender ecosystem for our users. Thank you.
Yeah.
The next question comes from Daniel <unk> with J P. Morgan. Please go ahead.
Yeah.
Anyway somehow by yourself.
Yeah.
So it will take quite a bit.
Kind of arguing that chipotle solar cell phone Bill Chuck young.
It seems like why are you selling them and thought behind and I think a painful.
So all of them most of them are kind of did they start by again Oh, that's supported by the full payoff of Salt life is obsolete.
Oh gosh.
Sure I told you to downsize Hill.
So he may seem that things are changing.
Let's see on paper.
Yeah, I would translate myself.
My first question is on the rather than side, you actually see that in the second quarter revenue.
Two final year over year basis management.
Just some more color on the rationale behind and whats.
Paying user and then absolute trend for the second half of Bcf of live streaming.
The SEC that'd be.
It's all cash so currency.
Second quarter outside.
We still have over one one feedback himself 1 billion dollar of net cash. So how are we going to use cash in the future. Thank you.
The year over year decrease in revenues was mostly due to abnormally high on these activities in the us.
In the prior year period caused by the stay at home orders during the pandemic.
In the second half.
This year to further stimulate our paying users. So it is what it is and again reach their consumption scenarios.
We will continue to focus on that.
It's Asian activities and put it through our continuous focus on improving engagement and consumption on existing paying users we help to bridge it.
Rates are up.
As to the cash on hand.
Both of those effectively using our strong balance of cash going forward.
All right archives distributions out of patient, Okay, two operational initiatives.
That's right.
Indeed, the betterment of all gaming related business.
This initiative includes exploring strategic content upgrades more actively developing new business Simmons and co.
Continuing to invest in new growth drivers.
For example at the end of last year.
Wrote out our strategic plan to further enrich the content on our platform.
It also increased investments in MAU esports game segments to attract new users.
Finally, we escalated R&D spending to further explore new monetization models, which was inline with our aim to make games a major monetization channel for our game centric Apple.
On the other hand, we will take more initiative.
Proration of suitable investment and acquisition opportunities in all gaming related segment, that's been a downstream and upstream the esports value chain.
Through these investments and acquisitions, we will expand the depth of our exposure to a wider range of industry segments.
Generate more synergies within our existing businesses. Thank you.
Thanks.
The next question comes from Thomas Chong with Jefferies. Please go ahead.
Oh I see I said why don't you tell him I said, it's all about that's U N T.
Sure.
Well my knowledge any change I'm sure it's been a widening there.
Oh sure.
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So enrollment beginning.
Well you have some other units.
So a woman at Chipotle.
Tyler.
Yes.
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All right.
Good to hear that.
Oh sure.
M&A tends a lot.
Hum.
That seemed to agree with you.
It's either a branch.
Many children are taking my questions I have a question relating to the homes false E M&A.
Yeah, what should we expect.
Cancellation Halsey deal to our operations and.
My comments about our business our strategy.
As an independent platform and the second question is relating to the competitive landscape.
When you think about.
The competition, you're just going to be more intense.
After the merger or just cancel all thank you.
So John So we cannot sell it at much you don't even connect all of those claims that you got.
Sometimes I think the gentleman in the general Hemostat for sure Ginny mentioned according to Braemar.
Gotcha.
A question on someone.
Hum.
Sometimes you've got Jim right now.
But astronauts who don't do mobile airline huh.
Got you and kind of bunch on gene button, so it not because of its clinical parameters.
John Thank you.
So Cleveland syndrome, just the Genmar J E T.
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Great.
Yes.
Digitally.
To lead Union.
Gotcha.
Each of the 10 events or is that just the trading income.
With help from pump, it's awesome to not put it in chunks.
No that's too easily without leaving the bank.
But it's come down tissue bartoo at noon.
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Sure.
Shingle.
Triple AAA.
AAA have shipping window.
And so a lot of that hung on the use of that with you just yet but.
So you cannot answer so you can use you said you don't see them in June without.
Jenny you will see my question John.
Thank you Jonathan.
She doesn't go through the hard times that article.
Do you see what are you seeing.
Hum.
Okay.
Neil Mitchell.
That's helpful.
Egypt behind you treat Washington.
In the future and when do you imagine that AAA.
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So which one of them.
Me too.
So although the Phoenix, so you'll need to do.
I don't know if you've ever done.
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If I'm gonna do eat tissue TCW transfusions.
You should talk with you about your thoughts when you touched on it just to touch on the stuff that they can use C. B C.
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Josh Let me wish you can switch production from Chile.
You got me Josh.
So a few times on the Virginia.
Not only do that if we didn't do that you can make a bunch of them.
You should watch it when they need to the UCP question that China is one such risks.
Richard.
Okay. Thank you for your question so since the rapid development of the domestic internet industry over the past few years. So that's already have gradually improved the industrial policy and regulation as well. So we believe that the antitrust regulation are in line with the economy in school.
Noting positive peer competition among the internet industry.
And to encourage a level playing field across the industry and therefore, so you truly respect this regulatory decision actively cooperating with the regulatory requirements and operate in complying with the law.
It has been an independently operated and managed company.
It's deception.
As a result, so we don't expect a decision well to hit our proposed merger with <unk>.
I, I think and Mark which stands for the state administration for market regulation of the People's Republic of China to have a material impact on our operational and financial performance.
Okay independently operated and managed company. We welcome we will make continuous efforts to maintain our steady growth more maintenance and also expand our content ecosystem, both on upstream and downstream to cover each link of esport industry value chain.
This shows you bolstering our industrial leadership in the traditional E sports live streaming industry, we will continue to fortify our operation not eat for Sakhalin Q, a salary of our growth and cultivate our game centric content ecosystem.
Sure.
The second question.
So the game live streaming industry competitive landscape has not changed.
And equally since the second quarter of 2021.
So streamer Lombard from moving between platform competition in the industry has remained pretty healthy so on top of this our premium top and mid tier.
So the long tail streamers resources help us to create a strong competitive advantage in terms of both content and number of premium streamer. So therefore, enabling us to continuously maintain our industry leadership.
So we have increased our focus on leveraging our unique competent competitive advantage to create more games century content and also felt esport content community to attract new users. In addition to our continued effort and actively cooperating with conditional <unk>.
For game developers, we have left no stone unturned to any spending on cooperation with other games developers.
In our non E sports segment, we have not only covered entire industry value chain, but also reinforce our leading position.
Games century, and community banking platform in China.
Oh, that's a cheaper and is primarily attributable to our execution of operation initiatives based on the unique feature of not esports games, such as user performance is for graphic chat and video content our initiatives included in.
Encouraging live streaming video and income in any function integration, so strengthening our operations for the full life circle game. He has his platform interactions between users and content creator and also creating a high quality proprietary content. Thank you for your question.
Thank you.
Okay.
The next question comes from Ritchie Sutton with HSBC. Please go ahead.
Finally, I want somehow a while you're not but what are sort of Santos Oh Gee do the central feel something that should be done.
Is that what you're touching reality games, Oh, gosh, a T cell.
OMA onboard Chambal bunch, we all woke up to something a satellite.
Choose to have wasted that my young I Hope you all got once you do sound quality.
Yeah.
The woman, sorry, I agree but.
Thoughts on that.
A woman.
Agenda inside.
I would translate myself all thank you for taking my questions.
So first one is on the sales and marketing expense was growing very rapidly in the second quarter why is that and what are the major profit acquisition channels for us and how would the traffic acquisition cost trend in the future second question is on <unk> can you share.
Expect some progress in the Japanese market in more detail and when will that monetization kick Kim. Thank you.
Yeah.
Sales and marketing expenses include stuffs.
And Louise the tenant promotion costs.
Esports teams sponsorship fees and expenses for online and offline activities.
Second quarter 2021 the increase in sales and marketing expenses was primarily due to promotional activities and new product functions and increased marketing budget looks at your users.
Which was in line with the development of our new business.
Our primary promotional channels.
As a physician.
Through dose advertising agencies associated with Tencent.
It creates.
We also leverage other news feed platforms and content libraries as traditional user acquisition channels.
And we're quite positive about the vitamins.
It was industry into new rug.
We will continue to increase our investments in it.
Bus related activities.
T sponsorships going forward.
Meanwhile, we will upgrade our product features improved efficiency of traffic conversion.
We intend to continue.
Channel promotions, therefore in the future, we expect our sales and marketing expenses to remain at a relatively high level.
But let me answer your second question.
During the second quarter, our 2021 we've continued to invest and to explore either do you have any.
But it's market.
Our terminate lie with streaming platform marathon, we were able to maintain its market leading position and product.
Generally.
And contend to general diversity that you work with you.
Driven by the higher quantity and tend to operate with them and continue with it too quickly attracted new users.
According to the latest APB any that is taken to meet with them or is it.
One topic there are men Scream mobile game live streaming have babies in Japan.
That's great.
Leading Europe based in the country.
Income at all for a future strategy, where we will continue to strengthen our monetization capabilities of our mill down in order to for the Saturday.
So did they buy its leading position in Japan.
And also expect a table better economics of scale.
Japan.
No market strength okay.
Thank you again for joining us today, if you don't have any further plans for instance play a spray to contextualize all requested or through our IR website. Thank you have a good day.
Okay.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Okay.
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