Q2 2021 BlueCity Holdings Ltd Earnings Call
[music].
Good day, ladies and gentlemen, thank you for finding by and welcome to the Blue cities second quarter 2021 earnings conference call.
Currently all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time.
As a reminder, we are recording today's call.
Any objections you may disconnect at this time.
Now I'll turn the call over to Lincoln call head of Investor Relations for the company. Mr. Kang. Please proceed.
Oh.
Thank you operator, and Hello, everyone.
The state is second quarter 2021 earnings conference call.
Joining us today are Mr about Lima, Chief Executive Officer, Mr. Alpha <unk> Chief strategy Officer.
And Mr. James Hansen, acting Chief Financial Officer Wade.
We released the results earlier today. The press release is available on the company's IR website at IR docs below that she stated all com as well as from your slice of it.
A replay of today's call. We will also be available enough feel hours on our IR website.
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 Security Litigation Reform Act of 1995.
Forward looking statements involve inherent risks and uncertainties as such the company's actual results may be materially different from the expectations expressed today further information regarding this and other risks and uncertainties is included in the Companys public filings with the SEC.
The company does not assume any obligation to update any forward looking statement, except as required under applicable law.
Please note that during today's call management will also discuss certain non-GAAP financial measures for comparison purposes, only our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release.
Also please note that unless otherwise stated all figures mentioned during the conference call I didn't Chinese renminbi.
That let me now turn the call all of our charters see I'll Misstep Alima, Mr. MA will deliver opening remarks in Chinese and I will then translate his remarks after that our CFO, Mr. Wang will take over to discuss our growth strategy.
Then our acting CFO, Mr son will provide details on our financial highlights let me sum up his go ahead.
Good evening.
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Thank you Amy and Hello, everyone. Thank you all for joining our earnings conference call today.
With me today.
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One thing Jim Collins of them done.
We are faced with a healthy growth across all our business lines.
Total revenue grew by 18% year over year to $291.9 million with a strong revenue growth of 134, 5% year over year from key house.
813% year over year growth from membership services.
Oh, App I may use squirrel by 29, 3% year over year, reaching eight points to a million more excitingly the continuous user growth momentum set a solid foundation for expanding user engagement and incremental monetization opportunities.
In this quarter, our total paying users reached 724000.
Our 58, 1% year over year, they stood it out for their dummy straight our ability to drive steady and healthy growth through improving monetization capability and outstanding execution.
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All right.
Another exciting thing in this quarter, what the he house I don't I'll consultation services launched in late July dozens of doctors, some Chinese pop hospitals will available to interact with thousands of clients and patients on the platform.
He helped kickstart a wide range of activities aimed for appealing to more users as well as boosting awareness and knowledge of men's personal health.
It includes hosting three life training sessions, and allowing users based questions on topics such as HIV, Yeah life Q&A with doctors from China's top hospitals.
And offering us it limited time for a one on one consultations with special expertise.
This promotion events were very successful and brown over 50000 participants in each life training session setting our digital health strategy of a great smart with encouraging user feedback.
Terrific.
Thank you Linda.
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Antonio.
In addition to the launch of our successful online consultation services.
We are also extremely paced with the progress on the I try V related front.
First we have successfully expanded coverage.
Our two hour path post exposure prophylaxis delivery service from 40 to 55 cities in China recently.
Second our efforts in improving perhaps pre exposure prophylaxis awareness promotions also proved to be very rewarding.
Amber of domestic OEM manufacturer to prep orders travel to this quarter, whereas it was on shelf and sold out showing the increasing awareness of HIV protection as well as the huge demand for affordable prep in China.
Perhaps.
An important and useful actually IV prevention solution.
Yet awareness still remains low among at risk populations in China and elsewhere in the world.
<unk> committed to deepening our partnership with domestic manufacturers to further increase crap availability and accessibility in China.
Which they believe will be critical in value flower members into society.
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The other thing.
We are on the right direction to achieve our goals for he house with our unwavering mission and strong execution capabilities.
With the growing demand for China's allow house Consociate consultation and awakening HIV awareness, we're well positioned to capture this enormous industrial opportunity with our first mover advantage and inherent competitive value.
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People don't generally even put in Buena young horses in Lewis with <unk>.
On the overseas marketing front, we remain committed to actively organized and participant in a wide variety of activities in social and public events to continue building our global brand presence.
In this quarter, we launched the global lithium apply campaign during prime months 2021 to advocate inclusivity and diversity as fundamental everyday value.
Blued released.
Global television commercials, encouraging the LGBTQ community to live you applied to kick off the campaign.
The campaign featured online play party on the Polo App.
Librarians Rainbow App, UI and extensive regional activities across up at all.
And encourage individuals from all walks of life and cautious to share their real self on the blue App and connect with others, where social posts and lifestream.
Not worrying celebration of individual identity.
Also present at Jetblue com.
From June 15 to 29th in primates, which combines the Peru, which combines the apps that worst features to create immersive fan field experience.
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The campaign with extraordinary successful attracting our 8 million users and are generating over 8000 user policy.
Across multiple social media platforms, with one 5 million of wheels Global PVC.
Taking Latin American as example, AB rating of the Blue and mobile App increased from three nine to $4 four.
Ho store after the campaign.
Moving forward, we will continue to organize more whereas social events to further improve our visibility and brand awareness in the global markets and enhance monetization capability.
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Neil.
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We also continued to accelerate our product innovation and optimize our product offering and achieved meaningful progress.
In June we upgraded our location based social networking function and then I'm trying to edition to allow users to find friends in different cities.
That of just France located nearby.
In August we introduced a series of new features to protect users identity and privacy.
Edition.
Including prohibiting screenshots and screen recording Europe.
Like James and video calls.
In addition to this added protective measures for users acuity. The private album features ensure that spaces do not appear to income.
Albums public some now and access to the album photos allowed only when the owner gave individuals will be your authorization.
Wow users can choose to send photos that can disappear within seconds of being rat.
Preventing users from capturing screenshot.
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With Cingal is rolled out a new monthly service package, which allow subscribers to see visitors to their main page and put out.
This new function added efficiency matching and promoting user interaction.
Patrick have shown the paying ratio already exceeded 5% within three months after its launch.
Moving forward, we will closely monitor our user responses and we remain committed to further optimize user experience across all our platforms.
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For sure, but as we've done in Q2.
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Sure sure sure.
We remain committed to offering continuous value to our community.
And to the house services already in place he began focusing on the psychological issues in the LGBTQ groups are down nonpublic interest recently rolled out a video series called it online psychological insight, which is expected to increase awareness and interest of the mentor.
House issues within sex sexual minorities.
Meanwhile, the nonpublic interests will cooperate with established the psychological counseling institution with lots of experience for minority group to launch the 100 hour free psychological counseling project for supporting community members in need.
Because we don't get a lot of geographies. So he thought it was.
But other things don't go to that kind of approval.
Now, let me turn the call over to our CFO Alford, who will discuss about our growth strategy.
Thank you Mr Ma.
Thank you everyone for joining our call today.
This yourself or you.
Joining the company as a CSO.
July lithium.
Purpose, well, Mike joined paucity, he's menu painful business future.
Looking for ways to make a profit when the company maintain sustainable operations.
Our long term strategy is to pursue quality growth.
What I do for your company with quality growth is that it has resilient business income.
Relative market.
In order to achieve quality growth, let me give you some highlights.
Our latest thinking about our growth strategies.
The first.
It's about our business model.
We will continue to diversify revenue streams.
And monetization method.
When we maintain the leading position in the live streaming services with high quality content.
Long term goal is to have larger revenue contributions from social and they will keep membership services and health related products and services.
His own members and community continue to raise the awareness in house.
Sue.
Style.
He helped to achieve stronger growth momentum in the future quarters.
And then become the new driver of growth for the company.
The second is about our product offering.
We will continue to custom months.
We find our product portfolio.
<unk> provides different branding and unique services in different markets.
To serve the subgroup of LGBTQ through our R&D effort.
In addition to organic growth from the beta products via R&D.
We are evaluating potential strategic investments and acquisitions in the market in sectors, which have greater synergies to our current product portfolio.
Paul.
We will remain committed to exploring those opportunities to complement our current business.
And expand our reach to a broader range of users.
The third is about the profitability.
We are in the process to reassess.
Business model and the measure.
Our operating efficiency by users' lifetime value.
While the company was going through.
Expansion period.
We have invested a lot in there.
Products services.
Revenue.
Our solid user base.
In the community for all members.
We all know in there right.
At this stage to balance between revenue growth and profitability.
Before we.
We will not only focus on to strengthen our user engagement and increase retention.
<unk> products and services, while also we will implement majors for expense control to improve our operating efficiency.
Which starts from Q3 this year.
No no no.
Call over to our CFO Jean Hu.
Who will provide details on our financial performance.
So simply the outright.
Now, let me go through our financial highlights for the quarter.
Before I go into the details. Please note that all numbers presented are in renminbi.
For the second quarter of 2021.
Otherwise.
<unk> hundred although Europe.
Overall, Europe basis, unless otherwise specified.
Detailed analysis.
And our earnings press release.
She is available.
Site.
Our total revenue for Q2 would.
<unk> $291.9 million.
18% year over year, driven primarily by our growing user base and improved monetization of our work.
Sorry offerings.
In this quarter, our total emails from <unk> grew 29, 3% to 8.3 million with a strong growth up 58, 1% from our total paying users reaching 724 product.
Revenue from overseas contributed 12% to total revenue.
Slightly increased from 11, 2% in the same period last year, notably we also accomplished meaningful progress in diversifying our revenue streams with encouraging year over year revenue growth from our membership services and a hit this.
This quarter.
Yes.
Sure.
Revenue from live streaming services for the <unk> $223 million up six 1%.
Quarterly paying users for live streaming services increased 5% to 182000 from the same period last year.
Yeah, I'll give you what the NMB.
<unk> thousand 223, an increase of 1% compared to the same period last year.
Revenue from membership services was RMB $33.7 million up about 113%.
Our quarterly paying users for membership services increased 82, 9% to 599 for them and driven mostly from the new service offerings.
And I'll give you what renminbi $56 three up 16, 5% year over year, primarily driven by higher arpus for our pay per use services.
And this result fully illustrates our future monetization potential for our membership services and we expect accelerated growth for our membership services as we continue enriching and optimizing our service offering.
Revenue from advertising wasn't maybe $18 million up <unk>, 7%.
With the increase primarily due to our continuous type for us.
Cutting more advertisers with new advertising and marketing solutions as well as improved advertising efficiency.
Revenue for our merchandize sales akhil.
$15.3 million up about 134, 5%, we expect <unk> per share.
Stronger momentum into the future quarters, as our priorities and devoting resources to expand our health related service offering and geographic coverage remains.
Now moving to our cost.
Cost of revenues increased by 12, 9% to renminbi $192.1 million.
The increase was primarily due to the higher revenue sharing costs, along with the growth of premium services increase.
The increased cost of product.
With the growth of tea house merchandise sales as well as the increased stock expenses.
Gross profit was RMB 99.7 million up 29, 9% gross margin was 34, 2% up three percentage points from the same period of last year.
<unk> from the increased revenue from our higher margin membership and advertising services.
We expect to further accelerates revenue contribution from our membership services.
Achieved overall margin improvements.
Meanwhile, at revenue sharing is still the key components of our cost of revenue.
We remain committed to actively explore options to reduce revenue sharing percentage and implement a more sustainable model for our live streaming service.
Operating expenses.
<unk> $135.9 million up 64, 5% year over here.
Sales and marketing expenses.
<unk> $68.9 million Apple.
68, 2%.
The increase was mainly due to the increased advertising and promotion expenses as well as increased staff cost and the share based compensation expenses.
Technology and development expenses were 51.6 million up 64, 6%.
The increase was mainly due to the higher stockpile in the technology related departments increase in content production solar and the bandwidth cost as well as share based compensation expenses.
G&A expenses were $15.4 million up 49, 4%. The increase was mainly due to the increased professional fees and stock cost and partially offset by the decrease in <unk>.
Fast during to the stock option forfeitures.
Net loss was $35 million compared with a net loss of $3.3 million in the same period last year.
Adjusted <unk> was <unk> $38.4 million compared with adjusted net loss of $3 million in the second quarter of last year.
As of June 32021, we had cash and cash equivalents and term deposits of $453.7 million compared to $611.8 million as of December 31, 2020.
Sure.
Now moving to our guidance.
Due to the slower than expected growth from our last streaming services.
Limited monetization progress from overseas market impacted from the economy downturn, resulting from the pandemic. Our full year 2021 total revenue it was revised downward to the range between the NIMBY 115 billion to Renminbi 120 billion.
Representing 12% to 16% year over year growth.
We follow and achieve our long term growth objectives.
We are still confident in our business model and our ability to bounce back strongly.
And that concludes our remarks, our prepared remarks, let's now open the call for questions. Operator. Please go ahead.
Yes.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session to ask a question. Please press star one telephone and bakery needs to be announced.
Cancel your request please press the pound key.
Once again to ask a question.
One on the telephone.
The first question comes from the line of Laura Champine from Loop Capital Management. Please go ahead.
Thank you for taking my question I wanted to get more information about the slow down in the live streaming business.
What if you could be more give us more color on what is driving that.
If you've got any visibility on how long it lasts it looks like the guidance reflects it lasting through the end of this year and.
And maybe talk about what the trend was.
Before we started to see the delta variance impact sales or impact revenues.
Oh, Hi, this is <unk>.
Yeah regarding the.
Live streaming business in China as well.
No the market actually is pretty.
The competitive and they're complicated.
And especially.
Especially Lowe's company with short videos.
Have entered the live streaming business.
<unk> intensified the.
The market competitions.
And this the result is that you've got increased.
The sheer cost of the lifetime.
Somehow they have.
The impact on our.
Revenue.
The first reason the second reason is the <unk>.
Lisa was depth as you might know.
Starting from fourth quarter last year.
We adopt a new live streaming strategies.
To try to improve the trying.
Trying to improve the activity of users for.
For the tier two and tier three less treatments.
And these kind of adjustments.
Was taking a much longer.
Time.
Our original expectation.
That kind of adjustment probably will last two.
So quarter as well.
So what we are expert at that.
The competition.
In the market will continue.
We will try to.
Maintain try to maintain and improve our revenue.
On the luxury.
Business in second half this year.
The pellet business compared to our original guidance is out there.
It would be lower than our original expectation.
Okay.
Is there.
Are there actions that blue cities, taking to Reaccelerate the growth of that part of the business next year.
Or is the focus really on growing ancillary revenue streams such as <unk>.
Hum.
We are doing is doing is that we are trying to provide a lifetime service to our users.
Which is always our first priority.
The most important is that.
We will try to increase the.
The contribution is from the value added services.
So the membership service membership services.
And these two services.
On the one with the higher margins.
With that we think that we can improve.
Not only the revenue contribution from <unk> and also the margin improvement going forward.
Got it thank you.
Thank you.
Once again, ladies and gentlemen to ask a question you will need to press star one on your telephone keypad.
The next question comes from the line of Mr. Kevin Hung from Industrial Securities. Sir. Please go ahead. Your line is open thank you.
Oh, Thank you management for taking my question I have two questions here first.
You shared some color about the geographical distribution.
And.
The impact on the company's strategy about the overseas market.
Tommy and expense control from this quarter. Thank you.
When looking at the linked quarter and forget about the future.
You do not carry through on the mood here.
Sure.
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<unk>.
Users mainly in <unk>.
The Asian region.
Quick MLR Korea, Taiwan.
Specially inflation, especially associates associates in Asia for example.
Pylon.
Indonesia Melissa.
And so on.
In addition to Lowe's user in the Asian regions studied.
This year, we also have the users quite a number of uses from Latin America.
So Lisa many the distribution of our users.
<unk> you.
In terms of our challenges for our overseas market.
In the future as are we.
He will focus on.
Lowe's a market with a higher one.
We are not only looking at the number of users. We're also looking at the contribution there.
Real contributions from those of users from those new users versus market.
We will look at Lowe's, a market with a high ROI.
And also we will stop implement the measures call expense control because in the past we spend a lot of money.
For the user acquisition overseas.
Going forward, we will look at that kind of a spending very carefully.
With tight expense control because as I mentioned earlier probability is always one of our strategies going forward. So we will we will implement a strategy is for further expense control and look at the.
The profitability of the company not only in the overseas market in the future.
Thank you.
Thank you.
Once again, ladies and gentlemen.
You will need to press star one on the telephone keypad.
Thank you.
Okay.
Once again to ask a question. Please press star one on the telephone keypad. Thank you.
Thank you.
Seeing no more questions in the queue, let me turn the call back to Mr. <unk> for closing remarks. Please go ahead.
Thank you operator, and thank you all for participating on today's call and for your <unk> pumps.
And for your interest and look forward reporting to you again next quarter on our progress.
Operator, thank you.
Thank you that concludes our conference for today. Thank you for your participation.
Thank you.
Yeah.
[music].
Yeah.
[music].
[music].
Good day, ladies and gentlemen, thank you for standing by and welcome to the Blue cities second quarter 2021 earnings conference call.
Currently all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time as a reminder, we are recording today's call. If you have any objections you may disconnect at this time.
Now I'll turn the call over to Lindon calls.
Oh Investor Relations for the company. This call. Please proceed.
Thank you operator, and Hello, everyone.
With that he is second quarter 2021 earnings conference call.
Joining us today are Mr about Lima, Chief Executive Officer, Mr. Alpha E.
Chief strategy Officer, and Mr. Jean Kinston, acting Chief Financial Officer.
We released the results earlier today. The press release is available on the company's IR website at IR Dot Hello does she stated all com as well as from Newswire services.
Okay. All states call will also be available enough feel hours on our IR website.
Okay.
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 actual results may be materially different from the expectations expressed today further information regarding this and other risks uncertainties is included in our pumping public filings with the SEC.
The company does not assume any obligation to update any forward looking statement, except as required under applicable law.
Please note that during today's call management will also discuss certain non-GAAP financial measures for comparison purposes, only our GAAP results and reconciliations of GAAP to when they've got measures can be found in our earnings press release.
Also please note that unless otherwise stated all figures mentioned during the conference call I and Chinese renminbi.
With that let me now turn the call all of our charters see I'll Misstep alima, Mr. Mob will deliver opening remarks in Chinese I will.
Then translate Hanes Europe off after that our CFO, Mr. <unk> will take over to discuss our growth strategy.
Then our acting CFO.
Mr. Tseng will provide details on our financial highlights let me sum up his go ahead.
Oh, good evening, Idaho downtime.
I'm, John Lunger was indeed, our unions yard you tools, how we used to know how are you.
That healing and Hello, everyone. Thank you all for joining our earnings conference call today.
So anyway.
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<unk> got some challenges on Johan <unk> Daniela.
Danielle attention that's useful.
Thank you to a woman or somebody on board on food.
She saw there won't.
Tell me if I'm talking about back in June where somebody does.
Thank you Juan Jose.
So that doesn't mean something of an army.
When did you encounter them.
We are faced with a healthy growth across all our business lines.
Total revenue grew by 18% year over year to $291.9 million with a strong revenue growth of 134, 5% year over year from E House, and Ah handguns, 13% year over year growth from membership services.
Oh, App I may use grow by 29, 3% year over year, reaching $8.3 million more excitingly the continuous user growth momentum set a solid foundation for expanding user engagement and incremental monetization opportunities.
This quarter, our total paying users reached 724000.
At 58, 1% year over year, they started out for their dummy states, our ability to drive steady and healthy growth.
Improving monetization capability and outstanding execution.
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The woman that's supposed to Jim constantly getting all the headlines.
Another exciting thing in this quarter, what the he house all consultation services launched in late July.
Dozens of doctors, some Chinese top hospitals will available to interact with thousands of clients and patients on the platform.
Not off the loss he house kick started a wide range of activities aimed for are pointing to more users as well as boosting awareness and knowledge of mass personal health.
This includes hosting three life training sessions, and allowing users based questions on topics such as HIV, Yeah life Q&A with doctors from China's top hospitals.
And offering us it limited timeframe one on one consultation with special expertise.
This promotion events were very successful and brown over 50000 participants in each last training sessions setting our digital health strategy of a great spot with encouraging user feedback.
Colorado is going to unfold.
Thank you Linda.
Women beside each other reason I'm willing to treat other teams on kind of economy.
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In addition to the launch of our successful online consultation services.
We are also extremely paced with the progress after I try V related front.
First we have successfully expanded coverage of our two hour pad policy exposure prophylaxis delivery service from 40 to 55 cities in China recently.
Second our efforts in improving prep pre exposure prophylaxis awareness and promotion also proved to be very rewarding.
The number of domestic OEM manufacturer to prep orders travel to this quarter, where it was on shelf and sold out.
Showing the increasing awareness of HIV protection as well as the huge demand for affordable property in China.
Perhaps it's very important and useful <unk> prevention solutions.
Yet awareness still remains low among at risk populations in China and elsewhere in the world. We are committed to depending our partnership with domestic manufacturers to further increase kraft availability and accessibility in China, which they believe will be critical in value.
Flower members into society.
Well then in terms of our agenda, we either fishing Virgin homes automobile.
You will find a single chunky.
How different was that shouldn't cause confusion for.
Yes.
When when Celgene as you move through the ship I Olsher clause in gorilla.
Great geography to get out of hunger.
Great.
We are on the right direction to achieve our goals for he house with our unwavering mission and strong execution capabilities.
With the growing demand for China's allow house Consociate consultation and awakening HIV awareness, we're well positioned to capture this enormous industrial opportunity with our first mover advantage and inherent competitive value.
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Thank you.
Our Union God bless.
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You can put them on a long run of course as you come on Lewis with <unk>.
On the overseas market fronts, we remain committed to actively organized and participant in a wide variety of activities in social and public events to continue building our global brand presence.
In this quarter, we launched the global lithium apply campaign, you're implying about 2021 to advocate inclusivity and diversity add fundamental everyday value.
Blued released its new global television commercials, encouraging the LGBTQ community to labor applied to kick off the campaign.
The campaign featured online Pri party on the Polo App.
Wide range Rainbow App, UI and extensive grading activities across up at all.
It encouraged individuals from all walks of life and cautious to share their moves out of the blue App and connect with others, where social posts and lifestream.
Her worrying celebration of individual identity.
Also present at the below <unk>.
From June 15 to 29 D in primates, which combines the furloughs, which combines the apps that worth features to create immersive fan field experience.
Julia why don't you don't have to go.
Pulled out at Hopewell bothering them.
Cause I should touch on <unk> until Q1.
Joe here the total <unk> both on the on top of it you bet sure.
Sure.
Do you love it it's really all.
But I'm just hopeful but it is our guidance through the union PMT tungsten and Youll see centricity.
But I wouldn't jump to Jurgen Broadcom later sugar boardroom G suite.
<unk> hundred <unk> do see some slowing economy.
The campaign was extraordinary successful attracting our 8 million users and are generating over 8000 user policy.
Across multiple social media platforms, with one 5 million of wheels.
Global PVC.
Taking Latin American as a example, apple ratings of the balloon mobile App increased from three nine to $4 four.
That whole store after the campaign.
Moving forward, we will continue to organize more where social events to further improve our visibility and brand awareness in the global market and enhanced monetization capability.
This is wuxi, when which also over time in <unk> time to Johan <unk> that you've done.
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We also continued to accelerate our product innovation and optimize our product offering and achieve the meaningful progress.
In June we upgraded our location based social networking function and then I'm trying to addition to allow users to find friends in different cities instead of just France located nearby.
In August we introduced a series of new features to protect users identity and privacy and the global edition, including prohibiting screenshots screen recordings during life, James and video calls.
In addition to this added protective measures for users acuity. The private album features ensure that faces do not appear income outlook.
Albums public some now.
And access to the album Folios allowed only when the owner gave in debate you will viewer authorization.
Meanwhile, users can choose to send photos that account disappear within seconds of being that preventing users from capturing screenshots.
You too.
You should either to Cathay life onto the two year guidance at all.
So there's no change at all our people.
<unk>.
Could you just share going forward. Thanks, so much and suddenly you can talk all about June.
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With Cingal is rolled out a new monthly service package, which allow subscribers to see visitors to their main page and closed out.
This new function added efficiency matching and promoting user interaction.
Patrick have shown the paying ratio already exceeded 5% within three months after it launched.
Moving forward, we will closely monitor our users' responses and they remain committed to further optimize user experience across all our platform.
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But I agree with you.
As you can see there should be more.
<unk> software engineering team.
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For sure, but I really don't know.
Tanya in terms of reinsurance <unk> excuse me because when you go to the peso for me and switching decision point, you will see though you'll see all of the surgery.
So.
We remain committed to offering continuous value to our management.
Dish into the house services already in place he began focusing on the psychological issues in the LGBTQ groups are down nonpublic interest recently rolled out a video series called <unk>.
Psychological insight.
<unk> is expected to increase awareness and interest of the mental health issues within SEC sexual minorities.
Meanwhile, the nonpublic interest will cooperate with established the psychological counseling institution with ease of experience from minority groups, along the 100 hour free psychological counseling project for supporting community member needs.
Because we don't know Bob Douglas or she thought it was a great <unk>.
I'm going to that guidance.
Now, let me turn the call over to our CFO Alford, who will discuss about our growth strategy.
Thank you Mr Moore.
Thank you everyone for sure.
During our call today.
This is <unk>.
Joining the company so.
Yeah.
Well, Mike joined OCD is mainly plenty full of business future.
For ways to make a profit when company maintain sustainable operations.
Our long term strategy is to pursue.
Quality growth.
I defy company with quality growth is that it.
As resilient business in a competitive market.
In order to achieve quality growth.
Let me give you some highlights.
Ladies thinking about our growth strategies.
The first piece.
He is about our business model.
We will continue to diversify revenue streams.
Monetization method.
We maintain the leading position in the live streaming services with high quality content.
Long term goal is to have larger revenue contributions from social and they will keep membership services and health related products and services.
His own members and community continue to raise the awareness in house and pursue.
Style.
We expect.
He helped us to achieve stronger growth momentum in the future quarters.
And it becomes a new driver of growth for the company.
The second is about our product offering.
We will continue to customize and refine our product portfolio.
<unk> provides different branding and ULE services in different markets.
To serve the subgroup of OTB TQ through our R&D effort.
In addition to organic growth from the beta product via R&D.
We are.
18 potential strategic investments and acquisitions in the market and sectors.
Have greater synergies to our current product portfolio.
<unk>.
We will remain committed to exploring those opportunities to complement our current business.
And expand our reach to a broader range of users.
The third is about the profitability.
We are in the process to reassess our business model and the measure.
Our operating efficiency by users' lifetime value.
While the company was going through the.
The expansion period.
We have invested a lot in there.
Our products.
Services.
Revenue.
Our solid user base.
The community for our members.
We all know right at this stage to balance between revenue growth and profitability.
Therefore.
We will not only focus on to strengthen our user engagement and increase retention.
<unk> products and services, while also we will implement majors for expense control to improve our operating efficiency.
Which starts from Q2 this year.
No no no.
Call over to our CFO Jim <unk>.
<unk>, who will provide details on our financial performance.
Thank you Alfred.
Now, let me go through our financial highlights for the quarter.
Before I go into details.
The phone numbers presented are in renminbi and now for the second quarter of 2021, 30th.
30th otherwise.
Oh presented hinges on a year over year basis, unless otherwise specified.
Detailed analysis this content in our earnings press release.
She is available.
Site.
Our total revenue for Q2.
$291.9 million.
18% year over year, driven primarily by our growing user base and improved monetization of our diversified service offerings.
In this quarter, our total <unk> from <unk> grew 29, 3% to $8.3 million with a strong growth of 58, 1% from our total paying users reaching 724 product.
Revenue from overseas contributed 12% to total revenue slightly increased from 11, 2% in the same period last year, notably.
We also accomplished meaningful progress in diversifying our revenue streams with encouraging year over year revenue growth from our membership services and a hit this.
This quarter.
Yes.
Revenue from live streaming services for the <unk> $223 million up six 1%.
Quarterly paying users for live streaming services increased 5% to 182000 from the same period last year.
<unk> revenue.
1223 and income.
<unk> of 1% compared to the same period last year.
Revenue from membership services was RMB $33.7 million up about 113%.
Our quarterly paying users for our membership services increased to 82, 9% to 500 like night potent and driven mostly from the new service offering.
Iraq, If you was reminbi $56 three up 16, 5% year over year, primarily driven by higher arpus for our pay per use services.
And this result fully illustrates our future monetization potential for our membership services and we expect accelerated growth for our membership services as we continue enriching and optimizing our service offering.
Revenue from advertising was <unk> $18 million up <unk>, 7% with the increase primarily due to our continuous efforts.
Attracting more advertisers with new advertising and marketing solutions as well as improved advertising efficiency.
Revenue for our merchandize sales of <unk> reached $15.3 million up about 134, 5%, we expect <unk> to achieve stronger momentum into the future quarters, as our priorities and devoting resources to expand our health related service offering.
And the geographic coverage remains.
Now moving to our cost cost of revenue increased by 12, 9% to renminbi $192.1 million.
The increase was primarily due to the higher revenue sharing costs, along with the growth of streaming services.
Increased cost of products.
Along with the growth of key health merchandise sales as well as the increased stock expenses.
Gross profit was RMB 99.7 million up 29, 9% and gross margin was 34, 2% up three percentage points from the same period of last year and benefited from the increased revenue from our higher margin membership and.
Advertising services.
We expect to further accelerates revenue contribution from our membership services.
We achieved overall margin improvements.
Meanwhile, at revenue sharing is still the key components of our cost of revenue.
We remain committed to actively explore options.
To reduce revenue sharing percentage and implement a more sustainable model for our live streaming service.
Operating.
Expenses.
Maybe $135.9 million up 64, 5% year over here.
Sales and marketing expenses were RMB 68, 9 million up 68, 2%.
The increase was mainly due to the increased advertising and promotion expenses as well as increased staff cost and the share based compensation expenses.
Technology and development expenses were $51.6 million up 64, 6% the.
The increase was mainly due to the higher stockpiled in the technology related to the departments increased in content production solar and the bandwidth cost as well as share based compensation expenses.
G&A expenses were $15.4 million up 49, 4%. The increase was mainly due to the increased professional fees and stock cost partially offset by the decrease in <unk>.
During to the stock option forfeitures.
Net loss was $35 million compared with a net loss of $3.3 million in the same period last year.
Adjusted <unk> was <unk> $38.4 million compared with adjusted net loss of $3 million in the second quarter of last year.
As of June 32021, we had cash and cash equivalents and term deposits of $453.7 million compared to 611.8 million as of December 31, 2020.
Now moving to our guidance.
Due to the slower than expected growth from our live streaming services and limited the monetization progress from overseas markets impacted from the economy, Hong Kong, resulting from the pandemic.
Our full year 2021 total revenue is a revised downward to the range between the NIMBY 115 billion to renminbi 120 billion, representing 12% to 16% year over year growth.
We follow and achieve our long term growth objectives.
We're still targeting our business model and our ability to bounce back strongly.
And that concludes our remarks, our prepared remarks, let's now open the call for questions. Operator. Please go ahead.
Yes.
Yeah.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session to ask a question. Please press star one on your telephone and wait for I need to be announced.
Cancel your request please press the hash key.
Once again to ask a question one on the telephone.
The first question comes from the line of Laura Champine from loop capital management.
Please go ahead.
Thank you for taking my question I wanted to get more information about the slow down in the live streaming business.
Well, if you could be more give us more color on what is driving that and.
If you've got any visibility on how long it lasts it looks like the guidance reflects it lasting through the end of this year and maybe talk about what the trend was before we started to see the delta variance impact sales or impact revenues.
Hi, this is <unk>.
Yeah regarding the <unk>.
Live streaming business in China.
No the market actually leaves pretty.
Competitive and they're complicated.
And especially.
Especially our lowest company with short videos.
Have entered the live streaming business.
<unk> intensified.
The market competitions.
And this the result is that you've got increased.
The sheer cost of the lifetime.
Somehow they have.
The impact on our.
Revenue.
The first reason the second reason is the secondary.
Lisa was that as you might know.
Starting from fourth quarter last year.
We adopt new live streaming strategies.
To try to improve the.
Tried to improve the activity of users for <unk>.
For the tier two tier three less treatments.
And this kind of adjustment as well.
It was taking a much longer time.
Than our original expectation.
That kind of adjustment probably will last two.
The third quarter as well.
So what we are expertise.
On the competition.
The market will continue.
We will try to.
<unk> tried to maintain and improve our revenue.
Leslie.
Business in the second half this year.
Pallet business compared to our original guidance is out.
It would be lower than our original expectation.
Is there.
Are there actions that blues city is taking to reaccelerate the growth of that part of the business next year or is the focus really on growing ancillary revenue streams such as Ehealth.
Hmm.
We are doing.
He is done we are trying to provide a lifetime service to our users.
Which is always our first priority.
The most important is that.
We will try to increase the.
The contribution is from the value added services and also the membership service membership services.
And these two services.
The one with the higher margins.
With that we think that we can improve.
No the only the revenue contribution from live streaming and also the margin improvement going forward.
Got it thank you.
Thank you.
Once again, ladies and gentlemen to ask a question you will need to press star one on your telephone keypad.
The next question comes from the line of Mr. Kevin Zhang from Industrial Securities. So. Please go ahead. Your line is open thank you.
Yeah.
Oh, Thank you management for taking my question I have two questions here first.
Could you share some color about our geographical distribution.
And things like.
The impact on the company's strategy about the overseas market.
The economy.
Cultural from this quarter. Thank you.
Okay.
Well this is not a good quarter altogether. These users that had to do.
Ali.
Okay.
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At home.
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The ecosystem, whether it's the calendar the total value.
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Okay.
Okay.
Good translations.
Users, mainly in the Asian region.
Quick MLR Korea, Taiwan, and especially your dish inflation, especially with yourselves.
Sure Felicia.
Someone like that.
Pylon.
Indonesia Melissa.
So long.
In addition to our lowest user in the Asian regions starting from this year. We also have the users quite a number of users from Latin America. So Lisa many the distribution of our users done overseas.
Most of our challenges for our overseas market.
In the future. So we will focus on.
Those are market with a higher one.
We did not.
We are not only looking at the number of users. We're also looking at the contribution there.
The real contribution from those new users from those are users in overseas market, we will look at Lowe's the market with a high ROI.
And also we.
We'll stop implement the measures all the expense control because in the past we spend a lot of money.
For the user acquisition overseas.
Going forward, we will look at that kind of a spending very carefully.
With tight expense control because as I mentioned earlier.
Ability is always one of our strategies going forward. So we will we will implement a strategy is for <unk> expense control.
The profitability of the company not only in the overseas market in the future.
Thank you.
Thank you.
Okay.
Once again, ladies and gentlemen to ask a question you will need to press star one on your telephone keypad.
Thank you.
Once again to ask a question. Please press star one on the telephone keypad. Thank you.
Thank you.
Seeing no more questions in the queue, let me turn the call back to Mr. Stone for closing remarks. Please go ahead.
Thank you operator, and thank you all for participating on today's call and for your response.
And your interest and look forward reporting to you again next quarter on our progress.
Operator, thank you.
Thank you that concludes our conference for today. Thank you for your participation you may all.
Disconnect your lines. Thank you.
Yes.