Q2 2021 LIZHI INC. Earnings Call

[music].

Hello, Ladies and gentlemen, thank you for standing by and welcome.

So that leaves your inc's second quarter 2021 earnings conference call.

At this time all participants are in a listen only mode.

The management's remarks, there'll be a question and answer session.

Be advised that today's call is being recorded.

But I'll now turn the call over to your host Effie King.

Head of capital markets for the company. Please go ahead.

Thank you very much Hello, everyone and welcome to the <unk> second quarter 2001.

Earnings Conference call, we released our financial and operating results, we our newswire services earlier today and available lines, but he said on today's call.

It will include all the founder and CEO, Mr. Mark who lives all C O O. Mr. Maloney and now acting CFO Ms. Joan song Madison, I will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded.

In addition.

This highlights presentation and a webcast a replay of this conference call will be available on the IR section of our website at IR Star Leach adult at that before we continue. Please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S pregnancy.

So Chris Your litigation Reform Act of 1995. These statements typically contemporary such as May will expect target estimate intend believe potential continue or other similar expressions.

Forward looking statements involve inherent risks.

And uncertainty the accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated many of which factors are beyond our control. The company is a fit advisors representative.

James and underwriters do not undertake any obligation to update these forward looking information, except as required under the applicable law.

Please note that he just earnings press release and this conference call include discussions of unaudited GAAP financial measures as well as audio.

Again by natural imagine need just perhaps with you can have a reconciliation of unaudited non-GAAP measures to unaudited GAAP measures I will now turn the call over to our founder and CEO. Mr. Marco. Please go ahead.

Hello, Mr Gong <unk>.

I've seen him.

It's not yes, you'd been awkward.

Hello, everyone and thank you for joining us today.

Well mountain gouging side.

In Q2.

Good how are you.

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Jonathan.

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Susan.

So the one.

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We are very pleased that theyre all aspects of our business handle the faster growth in the second quarter of 291, we aren't advocating to the audience.

Which is a globalization strategy and to breathe diversified audio products to a broader user base our continuous efforts to advance in house technology development optimized product features nature of user experiences, resulting in a steady growth of our user base in the second quarter with total average.

Mobile and they use the $69.0 million an average monthly paying users rose to 494000, driven by ongoing enhancements in our commercialization capability.

Revenue in the second quarter has reached another record high of RMB 559 million.

15, 9% year over year.

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In Europe on cars bought back quite a learning tool.

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Just switching pool.

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It's an important element in Europe.

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Yeah, So the gardens on T going up.

Susan.

Solid performance of core metrics during the quarter, we have from the effectiveness of our strategy and the increasing inflation seasonality execution underscoring our competitiveness in the online audio market in the second quarter, our audio Centrum UGC community built on.

Apple to appeal to the younger generation continued to demonstrate high levels of user engagement and interaction. In addition, we have further improved integration with our pre recorded content Division and audio Entertainment division and effectively increasing the penetration rate of all.

They determined two important things to put that in the second quarter of 2021 from 13, 2% in the same quarter last year.

Shipments also brings more space to improve pain, there conversion further strengthening our commercialization capabilities in audio entertainment and driving that strong.

Revenue.

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Joshua so that you can tap into loyalty.

Okay.

Those Apple hook them, though the general European Die guidance, so down.

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On the other hand, we have successfully expanded the user base to younger and middle age of the cohort in higher tiers digits supported by the effects of the operations of all vertical podcast Papon's Mitra Hawkeye three.

So innovation don't forecast pizza.

<unk> investment or multi devices acceptability, we accept to we expect to further increase the influence of podcasting and diversify our audio ecosystem.

The second quarter, we continued to leverage our live streaming podcast feature to generate diverse content creation.

Since I've been here for original forecasters, we have also partnered with several brands in the company's two device exceptional live streaming podcast programs delivering unique listening expenses two audiences.

Furthermore, we are working to strengthen our foothold in the in car audio market and export.

Opex for the implementation of our in car audio products. These efforts include expanding collaborations with a wider range of lending companies and technologies cap ons and optimizing mobile applications Kathryn to income using its narrowed which greatly improve the living expenses across multiple terminals.

We are seeing that users of mezzanine time only to podcast has increased substantially in the second quarter.

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P S O.

Yeah.

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<unk> been listening to you it sounds on that's how we'll send them.

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Turning to our globalization progress our T at half auto.

Adult social networking apps pocketing overseas market continued to grow rapidly highlighted by growing user base with meus heat you writing to more than three 5 million, representing a 92% increase over average and they use in the first quarter of 2021 in terms of.

The Attritional strategy for <unk>, we are committed to improving user engagement and user active minutes to continuous Apple keybanc optimization and integration of product as well as the enrichment often interactive features in these children. The number of active groups on kiosks increased by more than.

I'll I'll be 160% from the smart and the number of active Ted rooms increased by more than 180% from the Fox.

We are also seeing that the mountain diversity of social network and topics and interest accrue some of the pass on has increasingly expanding bringing more new users to join the platform.

And it's actually enhancing chia networking effect.

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Monthly volume.

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Technology co empowerment is a crucial driver while regroups business development in the second quarter, we remain focused on advancing our core technology capabilities.

For example, we are striving to make.

Thank you Remy our in house developed the audio technology solution compatible with more used car trading systems and the international vehicles Papon's outgoing to ensure superior audio quality across key French in car systems and satisfy user demand for real time audio interaction on.

<unk> technology is also driving our overall business development, including enabling a battery recommendation mechanism and delivering a personalized the audio experience across multiple devices.

In the future we will further refine our core technologies to support and empower our Alaska business growth.

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Alongside of driving the effective growth and then they've got cheesecake.

Substitution of ferrous business, we also actually undertake corporate social responsibility as a content of many to tap them for.

For example on the National Disability Day, we released a short documentary film to highlight the stories of audio content creators with physical disabilities will have showcased with their local.

So creating audio programs titled see the World three years owned Mitra App. We are also hoping to help young people with physical disabilities to create more value as we have with us through the influence of I'll tap on in addition, during the call non slots last month, leveraging the advantages of all of what.

Telephone we launched the veterans audio contents of supporting to announce two autonomous rally the power of voyages to encourage content creators to publish the emergency rescue nationally and to promote his technological counseling contacts and irrelevant science education on forecast.

We also showed.

Our support and respect for rescue staff, so whether it's content features delivering the heart warming initiatives to a wider range of audiences toys.

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Any change on how the year was how do you finance income can do to kind of machine.

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Now the CFO Susanne tons, you're the criticisms.

In summary, we are pleased to see that leaches global business continued to experience strong growth in the second quarter of this year laying a solid foundation for our long term growth going forward, we will remain steadfast in our commitment to globalization.

Income from strategy further promoting the development of our domestic business and unleashing the commercialization potential through effective operating strategies. We will further advance our podcast business development in the east toward Edwards audio applicable USA snackwell's, bringing the weighted forecast expenses.

Patients to a broader user base in overseas market, we will continue optimizing our audio social products, providing even bachelors social networking spreads to all users. Meanwhile, we will progressively explore barrels overseas market and create more possibilities for the long term development of our global visits.

Furthermore, we are committed to building a more competitive audio ecosystem to achieve sustainable long term growth as we continue to advance all of in house core technology capabilities.

So there's some ins and a woman she only so long Simpson.

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Is goodyear within the GTA partnership that's everyone with that I will now turn the call over to our CFO, Mr. <unk>, who will discuss our business developments in more detail.

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Hello, everyone and thank you for joining us today as Mark will discuss in the.

What are we then we maintained a strong growth momentum with a solid set of financial and the operating without I am happy to share with you a bit more than our operating achievements.

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<unk>.

Now he has a good chance a little actually.

And we'll do so in Ghana and Uganda.

So the young who buy into the dollar channel saw that Houston being able with Sunshine of women's our NDA under Psi upon.

Yeah.

First in terms of our audio commodity only chat a persistent efforts optimizing audio entertainment product and audio creation tools improve the overall user expenses increased a user active minutes and stimulate user engagement and audio content creation during the.

On a linked quarter users must be average totally interactions on the papillon reached $7.0 billion.

As of June 30th cumulative pieces of audio content upload your child Papon reached at 293 million in the audio Entertainment Division, we conducted a rigorous operational can paths to encourage.

Secondly, creatures to participate in audio entertainment.

Creation, which in turn attracted more users still trying real time audio interactions. These have further unleash the our auto entertainment business commercialization potential reflected by our growing audio entertainment user penetration rate, which trials.

Concept paying user conversion on the other hand based on our effective use of positioning we continue to develop.

Market, leading content categories, Kathryn to the younger generation to strengthen our content ecosystem and contact operations strategy towards higher commercialization potential such as.

Tried procedures centric interpreting fashion and emotion accompany programs, we have and you have to increase the user willingness to pay and further enhance our commercialization capabilities audio Entertainment Division.

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Jonathan.

Young with GTT, just how are you.

Of course to see who don't tell you yeah.

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Thompson.

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Yes.

Susan.

Got it.

Yeah.

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It sounds like well, maybe I Don T. She can do it doesn't change a hard target chunky certain in Philadelphia with the buybacks and then go element that I couldn't start up again.

In terms of our global business.

Jackie.

And an audio social platform targeting younger generation kill kids focused on optimizing product features to meet the social needs of users based on younger generations interests and hobbies.

In March 2021 we launched the kiosk group function, which helps users with common interests be connected.

Enjoy real time audio interruptions and become friends from all cap on the.

The number of active groups on the pass on has significantly increased in addition, we introduced a minute guidance such as Luna and sweet crush into live chat rooms, and launched the game sharing function in conjunction with the theme of Guinea.

And that promoting effective communication and interaction among users and need more user demands.

All continuous Apple product optimization, you talked to improve the user experience and the user engagement and we have Daniel growing number of new users from spontaneous imitations from friends.

As of June 30, the number of key a Facebook user friendship connections increased by 120% from this March looking ahead, we will remain committed to executing our globalization strategy as we believe that the divestment of audio based on social networking business is.

And so I want to bring more growth potential for the overall business.

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<unk> talked to them and try or other things in there.

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Well no.

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Some quarters anything Hernias name so good to see some bankruptcy that we didn't do anything to the both of them hanging out.

Tango two hand, thank you.

Since then some search and finally, Ebola the standby rate E. G I heard the hubs.

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<unk> got a chance on the book you shouldn't shock deluded. So soon.

So I don't know if the ball a bulk of that decision.

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And then you also know that some doors swinging jobbing without cookies.

<unk>.

Tom bolt ons to the job.

Oh goodness Shibam hockey season, the bottler.

So we came up with them in.

In terms of the development of our podcast business, we are committed to differentiating our competitive advantages through innovation of Fisher thing podcast content, including a series of flight training.

She's programs to increase user active minutes and interaction.

For example in children in collaboration with the Orion Theater Festival, we launched the micro data reports like radio project, which feature of the 300 of our nonstop audio live streaming for the first time in China auto industry.

Forecast build a mix of flat screen dialogues voice recording and outbound styling interactions. These pioneering live streaming fashion comprehensively showcases the communication and theater creation activities of 300 theater level practitioners.

Event spotlights our.

<unk> brought any approach to much live streaming feature into forecast.

Additionally, we elaborated that these teachers fifth session to create highlighted edition and inclusive podcast fashion available on all capital.

During the second quarter, we also hosted the voices of technology.

Our full lineup to be unlike korlym, China's first the luxury and forecast for one thing the one science and technology. This event featured a number of known speakers discussing a variety of trending topics through live streaming podcast great.

Great. He is stimulating interactions among podcast listeners.

And that's led to our broker netted him Hershey sounds interesting.

Tango two door her technical so they don't all cause I thought unbundling in Europe.

G. When the law. The law you can drop in centre TEP Trillium asking Idaho.

Alcohol Lima Cheetah Cheetah.

We can set ourselves.

Well, what I actually I want them to.

You don't lead the book out there who can do it she certain done.

So she can't go out of our income target congrats on the younger junkie.

Thompson.

Momentum.

Cause our accounting is our predominant.

GAAP champions intact.

For those who you don't done.

So that most of it.

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For the Yamal territorial hunting charter certainty yet.

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It's a trillion starz encore.

So total downloads or anything that you can shop.

John Walker target.

The graph on the younger 20 cable downtown Volcker, sorry, I hear them immediately.

In addition to all the innovation in podcast content. You can forecast features we have also formed a more strategic collaborations to increase.

Alrighty and availability of podcasts to multiple terminals with any incorporation with more leading automakers and the internet of vehicle platforms, including tablet and mobile me auto pencil me scenario and partial ILB Papillon, we've looked at to make me to forecast.

The portfolio, even more vehicles, providing a diverse audio experience to a broader user base at the same time, we continue to optimize our product features to ensure batteries and Carlos any experience. We introduced a calm on comm mode for mobile apps nothing users to enjoy personal lines of podcasts.

Jack content.

Much of the by AI powered content recommendation distribution mechanism with only one click we believe that all of you and car audio solutions and mobile apps can build synergies income.

<unk> seen podcast content across multiple devices spanning a variety of scenarios.

Nevertheless to bring Parker.

Caf offerings to a wider range of users and further enhance the influence of forecasting in the industry.

So all we are well.

Well my junked any woman, there's really some good things.

Same function you just little chunky.

Especially if they don't when they want the product.

The only way the agenda of change of our thinking going forward, we remain committed to our mission and to driving the development of our worldwide business to feel the leaching into a leading global audio platform through our continuous efforts on audio innovation and technology advancements.

She said our job as.

As I mentioned, a woman that already careful Luton findings that women's yourself.

Thanks to everyone with that I will now turn the call over to al.

Apple Samsung.

Got a natural result.

Okay. Thank you.

Hello, everyone.

Why.

Youre right about.

Second quarter.

As we move forward.

Strategy.

Yes.

Second culture continue to demonstrate our strong growth trajectory.

Jonathan are.

Commercialization capabilities.

We're also pleased to see gross margin, especially all 400 basis points year over year, alongside our strong top line growth during the quarter.

Looking ahead, we will remain focused on our globalization strategy and improving our operational and technological capabilities to bolster our global auto ecosystem.

But long term sustainable growth.

In the second quarter. Our total net revenue were RMB $562.0 million, representing an increase of 15, 9% well RMB $359.0 million in the second quarter of 2020, mainly attributable to our growing user base.

Deliveries in the average spending of paying users in our audio entertainment product.

And our cost of revenue was RMB $405.0 million in the second quarter opt into 'twenty, one representing an increase of 51% from RMB $267.0 million in the second quarter opportunity in 'twenty than.

And in a year increase was mainly due to our increase in revenue sharing fees to our content creators payment had in costs and bandwidth costs, which are generally in line with Alcoa finished girls.

Our gross profit was RMB $166.0 million in the second quarter opportunity to send you one.

Representing an increase of 85% from RMB $92.0 million in the second quarter opportunity in 'twenty.

Non-GAAP gross profit was RMB 161, 9 million in the second quarter of 2021, representing an increase of 17, 9% year over year.

Our gross margin for.

Quarter opportunity to do one increased to 28% from 24% in the second quarter of 2020.

Non-GAAP gross margin for the second quarter of 2021 grew to 29% from 26% in second quarter of 10 to 20.

Operating expenses increased by 72% year over year to.

Second life, Hangzhou, and $22.0 million in the second quarter of 2021.

Research and development expenses were RMB $69 in the second quarter up 2021 representing a year over year increase of 11%, primarily due to increased salary and benefit expenses related.

Our increase in the number of our research and development staff.

Selling and marketing expenses were RMB 100 at this point extremely late in the second quarter up 2021, representing a year over year increase of 241%.

I'm really due to our increased investment in branding.

You're choosing for our products and brand name.

General and administrative expenses were RMB $24.0 million in the second quarter up 2021, representing a year over year decrease of 7%.

Decrease was mainly due to the decrease in other professional service fees, partially offset by the higher salary and welfare.

Our marketing expenses.

Operating loss was RMB $37.0 million in the second quarter 2021 up by 26% from RMB 25 million in the second quarter of 2020.

Non-GAAP operating loss was RMB $28.0 million in the second quarter of 2021 compared to <unk> 11.

The bank, one 2 million in the second quarter of 2020.

Net loss was RMB 20 laminate in the second quarter of 2021 up by 32% to RMB 22 million in the second quarter of 2020.

And non-GAAP net loss was RMB $21.0 million compared to RMB eight 2 million in the second quarter of 2000.

11.

Basic and diluted net loss per Ats and B. They were plus five eight in the second quarter opportunity 20 watt compared to <unk> four eight in the second quarter up 2020.

Non-GAAP basic and diluted net loss per avs and is there a plus three eight in the second quarter of 2021 compared to <unk> two.

<unk> per <unk> in the second quarter of 2020.

As John said he is 2021 we had cash and cash equivalents restricted cash as well as children investments.

RMB four hunter analytical plus $7 million.

This concludes our prepared remarks today, we'll now open the call to questions operator.

Please go ahead.

Thank you ladies and gentlemen, we'll now begin that question and answer session. Just again, if you need to ask a question. Please press star one on your telephone and wait for your name to.

And so the.

All participants on today's call. If you wish to ask a question to management in Chinese please.

Operator, you repeat your question in English and for the sake of clarity and order. Please ask one question.

At a time.

Management will respond and then feel free to follow up with you and your next question.

But we have a question on the queue. So I'll first go to Vincent Yu from Needham and company. Please ask your question Vincent.

Thank you.

Thanks for taking my question and congrats for the strong quarter reserve.

I have three questions. The first question is.

One.

In terms of like on the recreation side, So heavy who we've been communicating with regulators on their rollouts.

Overall streaming industry.

Can management give us a sense of company.

<unk>.

And the impact on leeches operational Michelle on the second question is on the.

The apps themselves so can management share with us how big is the user base, who used to lead you all these podcasts.

In the car and its overall size podcast app.

So question is does the company see any material change in user behavior.

Uh huh.

The economies that continue to be open and.

It's like the Feeney hours.

Being changed or decreased or increased or maintained like can we get any sense.

So I will translate for myself into a man doing so.

Do you feel like you have.

Now we'll go into a hold yourself quite a switch that you can hit your stupid English and went up to <unk>.

Hello, Jim logical to assume that you got in Wichita.

And then taking charge, which do you think she could go home no woman continental people things like that things that she wants you to do them in Egypt with things.

Gil when you should continue to claims in lymphoma feature.

Egypt, ATP, who will Cook a pizza.

More.

People you circled each apple could ETP doesn't keep me more is that what you said, Mr. <unk> tissue, though because of what you just said.

Nothing conducted with here.

Unfortunately, you'll know passed since you.

You seem to be somewhat neutral Histogen circle condo, youll, ginger, how should which will get oxygen.

Okay.

A few are granted.

Tim one on Wednesday.

With our whole Minerva.

Are you seeing the windows to enrollment.

So you tell them Santana corridor.

Do you go and this is a quite a change when the women treated.

But so too young men's and once you go though is that those will be outsourced to whatever.

Hello, Javier the upward support hungry for containerboard.

So tien tsin, what they need to do with a chunk of our third once you make a teacher said if it goes through the year what are we doing the.

You can save you on mute.

Did you say one standard.

Jin Guan Jia chalk mango ginger.

Thinking about your boyfriends, and whether you do.

How many of the tongue Chico tissue for that.

Yeah.

I don't have laid for Michael So Michael will answer the first of all across Europe, and I always feel only says Hello.

I'll answer the other two questions. So mark holds the answer is that like for recent years the regulatory Arthur Arthur It also reaches have always the tactical edge and importance to regulating the online entertainment industry, including the live streaming industry.

Only we are tightened regulation may have some impacts and put pressures on some companies business in the short term, but we do believe that sounder regulatory policies can standardize relative business operations, which is good for the long term sustainable development of the entire industry.

So your job search and then you can go to sleep or minutes.

For the year with a hook with.

You used the dog and Jim Once you go back to the Chi deal we showed a good homes to a sale.

Although attendance that you do and then to see yeah, Quebec, So they wouldn't.

You wouldn't feel that you're fine.

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Well, maybe it's easier the a.

Teasing you say, it's as high the choices.

<unk> was able to locally switches are on trend.

Oh man I triple or whether you will find out seafood.

In the San Juan team.

As a.

Well My audio company, we have always try our tightest regulatory compliance and have been proactively and effectively communicating with regulators to have an accurate understanding of the relevant guidelines and requirements.

In the last few quarters, we also Havent reported.

Based on information and we have camera all some AR solutions regarding to the regulatory policies. Meanwhile, we are conducting.

Conducting yourself examinations of our internal compliance and data security measures to ensure that our business operations comply.

Tied with the regulation.

Gee this is a good thing.

You're going to sit on pony and its union, which haven't woman.

She will it sounds like my understanding is it's easily.

Two months. So it is a Jim what are the actual tons of our income sorry, So yeah, Hi C O film.

Father, Fernando Chan Leanne.

Well many of its easier to do an interview with the with being Jim kind of product.

Based on our years of experience in the industry are I think we have already have a relatively sound mechanism to meet the regulatory requirements in the long term.

My audio industry still has tremendous growth potential and E. G is committed to promoting is stable and healthy development.

For life with our shop here go into Europe.

Sorry, so is there anything to put your thumb at Comcast.

Our new leader, then Condolent tenet sketchy two for sure.

So is that generally the bulk of the turbine sunburn treat jurgen daughter, she hasn't done so.

Can do embark upon the younger chunky.

Sorry, so that's on the hotels com yet on the send side things are absolutely attention to that.

Is the bulk of the Dart doesn't daughter told me she's on time instead of Lucius Township agenda.

Yeah.

You have to treat drinking chi.

He says I took out on the water.

In Europe. This is John so let's again.

So let's see here.

I'm Gonna tours are easing.

I'm being told go truly unlocking Paris, Amsterdam, but it's.

Oh, He then suddenly hit them.

I will translate for Mr ammonia for the.

Second and third questions. So for the second question in terms of our in car audio strategy are we are actually working.

To expand collaborations with a wider range of leading companies to make our in car audio products accessible even more vehicles and to reach a broader user base. We have made a significant progress recently in all cooperations with auto companies and happy to Egypt podcast launched on more in car.

Audio are appraising.

Appraising systems as of now we have established collaborations with a total of 14 automakers. Besides those companies. We have mentioned earlier our in car audio products have also been launched the home bans and all these.

Income operating systems through the ILB Powerpoint.

He's a bouquet in Changsha, Pandora, sorry, I thought you got a chance to.

I have a mature them.

And the bulk of Chongqing.

So we'll go to the board, but without him with the familiar with other T cell that you know who they are.

Soon.

So I can guarantee to you.

James you're honest with Tangshan was stronger Tito teas, and juices and Don So you'll see a similar a woman does.

Can you show them.

You said that you know who they.

They can partake in Nanjing.

Need your podcast has been operating for over a half a year.

And now has performed well.

Sure I'll forecast innovations like live streaming podcast and inclusive podcast episodes, we have effectively improved the debt early.

<unk> user time spent only to podcast in the second quarter of 2021, the average daily.

<unk> spend per user only to park has increased by around 10 minutes compared with the previous quarter.

We should also shows the effectiveness of our operational strategies and the improved end user thickness.

Right well Mcdonald's associated children people book.

Times of our engineered wood products from Guadalupe in Dorchester going down.

Is this the bulk of the injury.

If I never really charge.

Our trial is the bulk of the punch on the Puerto.

We're gonna die on what you can control.

I'm Gonna trunk Zynga poker genes through nine months in the.

South Eastern Europe.

In the future we will continue to boost the development of NHL podcast and our in car audio business and increase the popularity of need your podcast by integrating into more in car systems. We will also continue.

Future until you reach niche podcast content offerings to deliver more interesting content meet users demand with innovation Park has features and improve user stickiness.

Fashion that all children.

In Kings Plaza. He leaves the bulk of the young women and women.

Continuing to Europe, where most of them tend to be happier.

The other guidance by year without all eating some be grandmothers to hold on to our pillow treated us with you but.

But at this moment the user base for <unk>.

In car audio scenario and of the need for podcasting is relatively small compared to our overall.

A woman 30 days, we will share more data when the business grows to a certain scale.

So I hope that you can keep in the churches and also therefore don't lose shoes with proton pack.

Some of them are kind of eating through them at a somewhat faster Tyler and Tor Suzhou sooner into your guidance.

Sure.

Dr.

So they can do what you can keep who can do so.

Yeah, Yeah yeah.

If you go then joked about Chile and holiday goods in stock price list.

The third question is about the user behavior for the Ti App.

Although most of the social activities are gradually.

Returning to normalcy, but we are still seeing a lot of lasting changes in people's lifestyle brought by the COVID-19 pandemic. For example, all night entertainment and online social networking afghani widespread popularity and chia maintaining strong growth momentum in the second.

Really weird.

So I know a man thing, Tom I'm going to end up or down a little path here.

Sorry to hear that Houston.

He sends a slowdown it ends up.

Oh gosh, Julian the Sudan he's done.

No. This is young Susanna sounds very sound that you do Europe, how big a pizza.

<unk> cost as we continued to optimize T has approved our features she has user active minutes continued to increase reflected by an increase in the number of active chat rooms, and the number of user friendship connections also the user time spent on <unk> also improved compared to the previous.

Culture.

Other income.

I'm really sorry, so they'll do that in some ways I misheard the answer the Dutch you sleep well.

Mcdonald's India Eastern.

So downtown Denver, Susana so sometimes in the dark Blue Lagoon, Dyer, who you're gonna conduct hypothesis suggestions.

Modular condo loans.

So the warehouse Adelphia Joel.

So we're aligned well.

Woman Justice of yoga he other countries in Europe.

The only thing you can do.

From a long term perspective, we believe don't want Michael now working is becoming a trend in the way people socialize the integration of audio.

The social networking activities provides users a differentiated form of social networking from an innovative perspective and satisfying more off their social networking needs.

Going forward, we will continue to optimize T. S product features connecting more users.

So why is it.

This concludes the answers for needles questions.

Thank you.

Yes.

Thank you next question comes from the line of Vicky Wei from Citigroup. Please ask your question.

Claims themselves our hall sensors this all that he's done.

Of course, I think all together.

Well the one thing you should go out and you heard too broad a French on between when we had kind of been they'll help them all in order to be able to ship it.

Sure.

Adult quote unquote swinging thing cause locating one button tokens that doesn't count.

I mean come about that.

People, sometimes you need to change that.

Yeah.

So good morning management, Thanks for taking my questions and congrats on the solid quarter. So what management share some color about revenue shattered they show leasehold as industry peers continue to investing or their life's journey. Thank you.

Uh huh.

I shall Vicki did when she also share insights on the French MPD that you'd want that kind of woman to it a little fungible dawn of Titans into southern natural hazards Jaco, you're a product we're going to put on the yoga quite vocal on them or you will show that she was like just can you go through a childhood.

Junior Dr. Jude without children woman, that's all for.

Yes, sure there'll be a chance that you could send up my posted an all woman Hitachi put childhood, but youll found doesn't keep us a vehicle Tony I'll shoot you that you want that complements and looking halfway a little towards water. That's when people Bento salma shoulder BD targets up happens. It looks also Europe now instead of shooting child. She had told you something that's the shackles that I spoke about India facing elements and commodity.

Did you say pieces, you're not you don't shut looks you Sir.

All told we like the fact that you call out how long has this shuang and go pump water little towards with the Disney you go to a home with a push to a bulk water vornado easily tap into optical forces that can cause a woman who will talk show called <unk> and it really is a general question that hold yourself I'm, yet a woman how should we couldn't go to revenue.

The new element that troubled us. This is the city of Charlotte City Center, not pay walnuts homeboy actually fallen she'll never preacher and then put it also tells US that we can have they shouldn't go Hudson and negotiate how much of a working relationship is that sequential user likes you show a months ago troubles of its own course sleep 91, I'll tell you we'll formulate.

Mahesh equate tissue silly reason, telling me don't go the way you do.

The bulk of the jackpot EG double them and he'll put you in that you saw him. It's anybody's associating well my sense is that the team had a useful shapes and parts of the niche on the sofa who've been with US a whole lot when when can that somebody owns homes with a simultaneous walnut that pendleton toggled with a completely the sort of magnitude.

It should also warmed up in San Diego, you Europe tissue Yoga Yakutia.

In cereal that you'll be right with me at the tissue type Ics you know you watch the bulk of that until probably late task, which is how do you see any of the shifts were tough on me She Warner Goldstone Boy do well with ideal because your Fox I'm hopeful maybe six industries with Houston and that goes for the outcome of the culture.

Not just that he was with you buy any stock.

I'll take the question from the queue actually we have diverse revenue sharing policies for.

For content creators across different durations and different stages.

In the second quarter of this year, we achieved strong revenue growth while also progressively.

Adjusting our revenue sharing structure in this quarter, our overall revenue sharing for content creators on our platform our content around 65% of total revenue representing a decline of about four percentage points year over year.

Which also effectively improved our gross margin.

And looking ahead, we will implement a comprehensive set of measures to calculate our content creators and keep a balanced picture as the income grows of content creators and improvement of our profit margin and driving the top line growth.

For the concentrate agers, we got off to various operate.

<unk> strategies, including traffic and creation support our attractive incentive policies and AI driven content recommendation.

Either to enable content creators to attract more followers in wider popularity and increase the success of our platform.

The use.

User side, we will continue to focus on improving user engagement promoting paying user conversion and interest users' willingness to pay to increase our overall revenue.

I believe with our platform remains a good growth momentum and our creators with experienced a corresponding increase in income.

And subsequently this will allow us to further refine our revenue sharing structure.

In addition, we will continue to innovate new based model and explore more overseas markets with growth potential to create new opportunities for our long term and sustainable growth.

With higher profitability.

Thanks.

Thank you.

There are no further questions now.

So I'd like to turn the call back over to the company for closing remarks.

Thank you once again for joining us today.

Dave.

If you have further questions. Please feel free to contact me just investor relations through the content contact information provided on our website at IR Don D. G Star FM other P&G group Investor Relations. Thank you.

Ladies and gentlemen that does conclude today's call.

Thank you again for participating you may now disconnect.

Yeah.

[music].

Okay.

[music].

[music].

[music].

Hello, Ladies and gentlemen, thank you for standing.

And welcome to the leisure Inc's second quarter 2021 earnings Conference call.

At this time all participants are in a listen only mode.

After the management's remarks, there'll be a question and answer session.

And just be advised that today's call is being recorded.

I'll now turn the call over to your host Effie.

But head of capital markets for the company. Please go ahead.

Thank you very much Hello, everyone and welcome to <unk> second quarter earnings.

France call Liberty East all financial and operating results. We are newswire services earlier today and they are available lives.

He says.

Today's call will include all of the founder and CEO, Mr. Mark who lives all C O O. Mr. Maloney and now acting CFO Ms. Madison I will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded.

So on future earnings highlights presentation, and a webcast a replay of this conference call will be available on the IR section of our website at IR started each adult fr. Before we continue. Please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the.

Private Securities Litigation Reform Act of 1995. These statements typically contemporary SEC has made we'll expect target estimate intend believe potential continue or other similar expressions.

Forward looking statements.

You asked.

And non circumstance the accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated many of which factors are beyond our control. The company is a fit advisors.

We can bring it down a bit and underwriters do not undertake any obligation to update these forward looking information, except as required under the applicable law.

Please note that he just unused press release and this conference call include discussions of unaudited GAAP financial matters as well.

Rep audited non-GAAP financial measures dangerous, perhaps what is kind of half of the conciliation of audited non-GAAP measures to our audited GAAP measures I will now turn the call over to our founder and CEO Mr. Michael <unk>. Please go ahead.

Hello, and thank you all.

Okay.

I'll begin.

Yes, you'd be halfway.

Hello, everyone and thank you for joining us today.

Well Mountain Gouging Syed Ali our Union the IC tool.

Got you on the year.

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Oh man <unk> using lasers I assume.

That's essential hot it's Andrew.

And then go through your own father.

Bob.

Thank you.

Treaty.

Congo Georgetown's, the NCS with a project with our <unk> acquisition.

Tissue is any liquidity yes.

Well.

That I think will be more popular when Tim that sounds 70 <unk>.

You don't do them up and junior volume also in the afternoon.

No Tien <unk>.

She's on you or Jason So she is no doubt about it.

This is Joe again.

So you saw your appointment.

My name is <unk> <unk> or <unk>.

As I talked about a single solution a boundary we will sit here without won't be done for that along with <unk>.

We are very pleased that theyre all aspects of our business maintained a robust growth in the second quarter of 'twenty 'twenty. One we are fabricated.

Neither the audio centric globalization strategy and to bring diversified audio products to a broader user base, our continuous efforts to advance <unk> technology development optimized product feature nature of user experiences without giving you a savvy growth of our user base in the second quarter with total.

<unk> average mobile and they use reached the $69 million and average monthly paying users rose to 494000, driven by ongoing enhancements in our commercialization capability all revenue in the second quarter has reached another record high of RMB 559.

Total cost of 15, 9% year over year.

So if you do go down closing at scale.

Got it down now.

He would tell me well menu, we saw that incentive would use hard tissue season that you see in the south.

It's also a level of insight into how Sony Jason.

Nine months.

Yeah, well I'm wondering antinuke always with the new teams to achieve these.

<unk>.

Just about the Gulf War, coupled on the search for the survey.

Sure why women, Singapore, Twiddling, our UK Europe on cargo lube I'm kind of looking for.

So the income.

And you'll lose Colin Shannon answer that Brian. This is Andy I will show that is in dollar balances the sedan nil.

Just switching pool, they don't put on car T will not go to <unk>.

Senior boats in Taiwan <unk> sells.

Pardon me.

Yeah. So.

Since gone down <unk> gone up Youll need at all.

Our solid performance of <unk> during the quarter reaffirm the effectiveness of our strategy and the increasing efficiencies in our execution underscoring our competitors merging the online audio market in the second quarter, our audio centric.

The coffee commodity built all the beach Apple to appeal to the younger generation continue to demonstrate high levels of user engagement and interaction.

We have further improved integration will follow a prerecorded content division in audio Entertainment Division and effectively increase the use.

Eugene and inflation rate of audio entertainment to a 14, 6% in the second quarter of 2021 from 13, 2% in the same quarter last year.

Shipments to also brings more space to ensure paying user conversion further strengthen our commercialization capabilities in audio entertainment.

Driving the strong growth in revenue.

Can you comment on what the trade generic.

<unk> and guy needs, a bulk of that you'll sell the union.

Senior Ball tour then.

In terms of the dosing and you don't see.

Sure I'll come to a book on most of those.

And.

Is your thought on the <unk> vehicle.

Your board Georgetown Volcker instantly.

Answer the phone for some time.

Yeah, well when you book the bold way to again.

We went on the broker to come.

<unk> father tons of the content.

Uh huh.

I can tell you it was asking Iot, yes careful about dollar book the border to your model.

We intend on keeping them, how you buy a broker to yet.

So why aren't women since this year that she is trade zone. So that you can you're going to put you Josh.

Joshua <unk> tank in the law.

Yes.

Oh cool Hogan.

Janet Youre looking at our guidance.

You can function in the flood zone.

You didn't go into other countries.

I'm in New York.

So you got a pizza.

I put <unk> on the <unk>.

<unk> without these the bulk of the.

So things just a moment that the ICP oes this yellow new sanitation.

On the other hand, we have successfully expanded the user base to younger and middle age of the cohort you hired two digits supported by the effects of the operations allow vertical forecast tap on my trip Hawkeye three.

Through innovation.

Features in development or multi devices obsessed ability we accept to we expect to further increase the influence of podcasting and diversify our audio ecosystem in the second quarter, we continued to leverage our live streaming forecast future to generate diverse.

Okay, Croatia opportunities for original forecasters, we have also partnered with several brands and companies to device exceptional like streaming podcast programs delivering unique mezni expenses two audiences.

Furthermore, we are working to strengthen our foothold in the in car audio.

Content and expedite the implementation of our in car audio products. These efforts include expanding collaborations with a wider range of lending companies and technology path.

And optimizing mobile applications Kathryn to encourage users to narrow which greatly improve the listening experiences all across.

Market eligible terminals, we are seeing that users of mezzanine time only to block out has increased.

Naturally in the second quarter.

Sachin Jain Joel Hawthorne man and the woman the highlights so the answer is absolutely so jumping higher tier just deposit garceau the turndown.

Yeah.

On our call Dr. Jean Ann.

Sure.

<unk> is in our semi will show up.

Joe I'll, let you do you have a Jim <unk> Apple is an advantage of sharp.

So you can figure it out.

<unk>.

They did by Johan will.

I will do my father photo Chongqing, She's our new hotels can you talk about what you're thinking.

Jean.

Yes, I mean the June slowdown.

<unk> it sounds like turbo tandem.

Always constantly.

The oil sands.

So Joe Sanderson the sooner it isn't up so how will you didnt Bobby pins.

I'm going out Hot Hot tea traveler synergy Shampoo Warner Center.

Seeing no <unk> impact.

Michelle downtown La tier one hotel.

Turning to our globalization progress our Ti.

Dan our audio based on social networking apps targeting overseas market continues to grow rapidly highlighted by growing user base with a menu into writing to more than three 5 million, representing a 92% increase over average and they use in the first quarter of 2021.

In terms of our operational strategy for <unk>, we are committed to improving user engagement and user active minutes to continuous though keybanc optimization and integration of product as well as an enrichment of interactive features in these Jim the number of active groups on kiosks increased.

And more than 360% from this March and the number of active chat rooms increased by more than 180% from the Fox.

We are also seeing that the mountain diversity of social networking topics and interest groups on the Powerpoint I increasingly expanding bringing more new users.

<unk> joined the platform and effectively enhancing chia network effect.

You would have <unk>.

Fulham Tigger T doorman <unk> problem, that's listening to you Susan Lee.

Sorry, so the autonomy, which is one woman.

We don't need this is Ian.

There is two inches, which is with long run do-re-mi figure pinkeye hook and pull the traditional you put them on the P&I to pay.

Does that not home Torre M is high school at home the third issue from Australia, I won't dwell on them in England.

It is important she settled on.

We need to manage through it.

So loyal with us as the income.

<unk> on the future.

So a woman that AIG Israel decision.

Houston for them.

Cause the yeah Warner Plaza.

Alcohol go demands on the system.

Thoughts on going to stay the course and while the <unk> yet.

A woman Jiangsu new Bluetooth.

So we don't go into sort of a father.

And in a year with Thompson excuse me will either Susan I'll call them.

Acknowledging co empowerment is a crucial driver while uighurs business development in the second quarter, we remain focused on advancing our core technology capabilities.

Example, yes.

By them to make Dr. Remy our in house developed the audio technology solution compatible with more income operating systems and the international vehicles cap ons I'll go in to ensure superior audio quality across differentially in car systems and satisfy user demand for real time audio interaction.

We have our AI technology is also driving our overall business development, including enabling a battery recommendation mechanism and delivering a personalized the audio experience across multiple devices in the future. We will further refine our core technologies to support and empower our Alaska business.

Awesome.

So in total you will find out as long as well.

<unk> name search you can have the.

She is surface.

Beyond two.

<unk> hundred the downturn Falbala, you sit down to Boston voice, which is a community in Oregon.

On a square seller way, Suzanne <unk>, who was our leases a.

If he really meant three two income via move you might book cancers in Tucson.

Soon as harmful well.

Well, many is young and golf operating how to use that lead.

The bonds were easier Susana Tucson, and neuroscience will now come to other jobs.

She is a woman sorry, when I say its attitudes in Shanghai and power boiler Zane can either usage.

Congress, Sony up on the roof and new.

July sung <unk> Fox.

Gotcha.

One final.

300, <unk> see the Chilean sources.

We want people, who can do that Sydney for someone to cope with the new co.

So don't go can I need boy on hardening dosing soon sounds soil.

<unk>.

Thank you.

Jim Young broadens <unk> singing and Sadat City had a win win.

Along side driving that you practice.

Gross so you've got cheesecake execution of various business. We also activity under GAAP corporate social responsibility as a content of many to pass along the way.

Example, on the National Disability day Rooney's their short documentary film to highlight the stories of audio content creators with physical disabilities.

Chip will have showcased at their local talent to creating audio programs title C that was three years old Mitra App.

We're also hoping to help young people with physical disabilities to create more value we have with us through the influence off I'll tap on in addition, during the call non class last month leveraging.

And the advantages of our voice platform, we launched the various audio contents of support including them to all panelists rally the power of voices to encourage content creators to publish the emergency rescue smashes and promote his technological counseling contests and irrelevant science education of forecast.

We also showed our support and respect for rescue staff through whether it's content features delivering the heartwarming initiatives to a wider range of audiences to Hawaii.

So and then I saw well non Gaussian kind of I'll say <unk>.

Yes.

Luke sorry, Gordon anyway that you choose.

Chanting that Tyson with Hunter Your father, Jimmy Dean Eliott of diesel.

That's the only line woman down extending existing Chenzhou pilots.

Sandler Singapore switching going on here with a father.

So the haynesville.

Two <unk> <unk>, sorry pardon me.

And then one or many of them can go a broker you will recall that.

Also at all on how the numerous hunting jumps haunting the poverty in diet.

One final <unk>.

To highlight this hub will wind down tissue youll have some usage all the time.

So lithium 40, Hong Kong Hadar.

So the LTE in concert.

With that I'll highlight on page three of horses.

Hey, Joe how are you, what's how do you finance income due to currency.

Oh man and woman way.

Janssen tweet on Cortina.

Yeah.

Tissues that are going to.

Some things are neither inking, some kind of CFO susanne tons, you're the criticisms.

In summary, we are pleased to see the leeches global business continued to experience strong growth in the second quarter of this year laying a solid foundation for our long term growth going forward, we will remain steadfast.

Our commitment to globalization strategy further promoting the development of our domestic business and unleashing the commercialization potential through effective operating strategies. We will further advance our forecast business development and then you explore diverse audio applicable usage scenarios.

<unk> innovative small cafe trenches to a broader user base in overseas market. We will continue optimizing our audio social products, providing even Bachelor of social networking express to all users. Meanwhile, we will progressively explore various overseas market and create more possibilities for the long.

Bringing as much of our global business. Furthermore, we are committed to building a more competitive audio ecosystem to achieve sustainable long term growth as we continue to advance all wound half core technology capabilities.

So there's other segments enrolment CLO.

21 children without yourselves.

Within the JD finance income.

Thanks to everyone with that I will now turn the call over to our CFO, Mr. Shlomi, who will discuss our business development in more detail.

Startup.

I found out in the fleet.

Great.

Due to the macro sort it out.

<unk> shown that are challenging that Keith and Doug.

Good Charlotte childhood, <unk>, where it doesn't.

So if you're able to treat yourself.

J T.

Yes.

Hello, everyone and thank you for joining us today.

As Mark will discuss in the second quarter, we maintained a strong growth momentum with a solid set of financial and operating results I am happy to share with you a bit more operating achievements.

So sure sorry.

<unk>, yes.

So you.

Thank God yoga in King County in Changzhou countries under SEC filings and then you'll show the eastern Europe with yet.

Jabil Torching Yahoo, yes. So.

So Sheila anything there in terms of.

Sorry.

Oh, Yes, who don't just look at all.

Possibly.

You're already in.

My name they deemed them they also true.

Okay Jos IDT.

The other Indian Youll have done.

Women don't go yourself.

Really no in terms of the child, even Gila down the changzhou solar team without scale.

Franco Sarto.

So we're in good shape.

It enables the dollar index.

Yes.

Sorry, Charlie GDP trends are in Gila, Daniel Hussain told you that Houston, Sony Aladdin are familiar with the jackpot.

Well no.

The Yahoo, working with Dr.

Though the lumping led to low call. It 19, Gung Ho Chi Tsang Chi Tung.

And the entire partner leak out a living in Europe and leg.

<unk> is a good chance that they do.

Hey, Brandon.

So the Yahoo.

So the T cell <unk>.

Are they all kind of enrollments are in Gayla Thunder sorry of annually.

First in terms of our audio community only chat our consistent efforts in optimizing audio entertainment product and audio creation tools improve the overall user expenses increased a user active minutes and has stimulated and user engagement.

In terms of content creation.

During the second quarter users must be average total interactions on the cap ons reached three 4 billion as of June 30th cumulative Peters of audio content uploaded to our platform reached the 293 million in the audio entertainment divisions, we conduct in the various.

Our generational can pass to encourage content creators to participate in audio entertainment.

<unk>.

Which in turn attracted more users to try and real time audio interactions. These have further unleash the our auto entertainment business commercialization potential reflected a by outgrowing module.

So can I view, the penetration rates, which drive the paying user conversion on the other hand based on our effective user positioning we continue to develop market leading content categories, capturing to the younger generation to strengthen our content ecosystem and contact operation strategy towards higher.

And then commercialization potential such as the ACG centric interplay session and emotion accompany programs, we have effectively increased our user willingness to pay and further enhance our commercialization capabilities audio Entertainment Division.

Sorry change, Ohio Vermeer.

So anyway.

And the same set up in guidance.

Yeah.

Gee I hope well don't you work I mean, its entire human too young for the Doi on Wassa dosage of <unk>.

Thank you Natalia for women in.

In total at Chamberlain.

Due to the Macondo.

Macondo.

Yeah.

G Samsung.

Thank you Jason.

Our goal is to see who Don Julio.

Sure, Yes, so sheila.

Good season.

Well no.

I'm sorry.

Don't Guardians in dual agenda, so you'll see what I'm sorry.

Zero so.

We crushed.

Understood.

The duty will mesh into la Yaqui.

I'm Gonna interchangeable.

Yourself.

Mark Congrats on the English teacher.

So shouldn't I mean, you'll probably know Cherokee seller, you don't yet know what I'm trying to say.

If he got.

Do you want to buy it all kind of Hollywood.

Houston is the annuity.

Hello.

Joe.

So treatments are either.

So well keep.

Turning to the insurance Johan target chunky certain insured value of the product and then go element that I can start ups and downs.

In terms of our global business.

Audio social platform targeting younger generation Chiao keeps focused on optimizing product features to meet various social needs of users based on younger generation's interest in the harvest in March 2021, we launched the kiosks group functions, which helps.

This is a common interest be connected enjoy real time audio interruptions and become friends while cap on.

The number of active groups on the Papillon has significantly increased in addition, we introduced a minute guidance such as Luna and sweet crush into live chat rooms, and lost again sharing function.

User adoption with the theme of gaming aimed at promoting effective communication and interaction among users and need more user demand.

I'll continue to Apple product optimization, you talked to improve the user experience and the user engagement and we have Daniel growing number of new users from.

You can chime in Europe <unk> mutations from friends on key items as of June 30, the number of key Facebook user friendship connections increased by 120% from this March looking ahead, we will remain committed to executing our globalization strategy as we believe that the divestment of audio.

Sponsored social networking business is able to bring more growth potential for the overall business.

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Mentally tango vulgar things of that nature on transponder.

Total AUM and tie of other contenders.

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So good to see some write offs it up within the Indians are both Apple and Google.

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Tango.

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The bahar broker attrition.

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What does the bulk of the Diamond Eagle Ebola cookies, Enzo since I've known Tom who don't.

Warner is so good cookie towards Ibuka, it's volatile.

Well many often that's also assuming jobbing without cookies looking to achieve.

In terms of the development of our podcast business, we are committed to differentiating our competitive advantages through innovation of features and forecast content, including.

Sovereigns or flat premium forecast programs to increase user active minutes and interaction.

For example in June in collaboration with the RIS Theater Festival, we launched the migratory birds like radio project, which feature of the 300 of our nonstop audio live streaming for the first time in China.

Dr. Stephen My audio industry build or a mix of bloodstream dialogues voice recording and outbound styling interactions. These pioneering luxury fashion comprehensively showcase the documentation and theater creation activities of 300 theater lovers and practitioners.

You.

So while that is our horizon broadening you chose to merge live streaming feature into forecast.

Additionally, we elaborate at this prestigious session to create highlighted edition and inclusive podcast fashion available on all capital during the second quarter. We also hosted.

The voices of technology and applying it to meet all that forward China's first the luxury and forecast for one thing the one science and technology. This event featured a number of known speakers discussing a variety of trending topics like screening forecast.

<unk> stimulating interactions among <unk>.

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Thompson.

And they took our accounting you die per ton that you'll mark champions intact.

Due to eat them done survey that showed that most of it.

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Samsung woman or so the Indian company, you don't gone hunting.

Beatrice from them.

Dr. Gordon onboard I need the income shop.

John Booker Tiger.

Couldn't go out in front of him and wishing him capable with downtown Volcker I don't hear that.

In addition to all the innovation in podcast content.

GAAP features we have also formed a more strategic collaboration to increase the popularity.

Our ability to forecast do multiple chairman I was recently.

Recently in cooperation with one leading automakers and the internet of vehicle platforms, including tablet and mobile me auto Hanson Ms scenario and partial ILB Papillon, we've looked at to make me to forecast accessible even more vehicles, providing a diverse audio experience to a broader user base.

At the same time, we continuously optimize our product features to ensure a bathroom and Carlos any experience. We introduced the combo on comm mode for mobile apps nothing users to enjoy personal lines of podcast content supported by AI powered content recommendation distribution mechanism.

The only one click we believe that all wound car audio solutions and mobile apps can build synergies income has seen podcast content across multiple devices spanning a variety of abusive just narrow to bring podcast the offerings to a wider range of users and further enhance the influence of forecasting in the industry.

So all we are.

Our major new them in their sweeny, Ponca Osage fashion E G through a junket huh.

Especially if they don't when they want the product.

Generally do not always lean agenda of change of our banking partners.

Going forward, we remain committed to our mission and to driving the development of our worldwide business to build the leaching into a leading global audio platform through our continuous efforts on audio innovation and the technology advancements.

Sure Doug.

So I mentioned a woman the dirty careful Lutheran findings that women's yourself.

Got it.

Thanks to everyone with that ill now turn the call over to al.

Apple Samsung, who will discuss financial results in more detail.

Thank you.

Hello, everyone.

Why.

Second quarter.

Wow.

As we move forward.

Our strategy.

Operational and financial performance for the second culture continue to demonstrate our strong growth trajectory and strengthen our commercialization.

Commercialization capabilities well.

Also pleased to see gross margin, especially all 400 basis points year over year, alongside our strong top line growth during the quarter.

Looking ahead well.

Main focus on our globalization strategy and improving our operational and technological capabilities to bolster our global auto ecosystem and deliver long term sustainable growth.

In the second quarter, our total net revenue were RMB, five counter and $62.0 million, representing an increase of 59% from RMB $359.0 million in the second quarter of 2020, mainly attributable to our growing user base and increase in the average spending of paying users in our.

Audio entertainment products and.

And our cost of revenue was RMB $405.0 million in the second call to opt into 'twenty, one representing an increase of 51% to RMB $267.0 million in the second quarter opportunity.

The year over year increase was mainly due to our increase in revenue sharing fees to our content creators payment hadn't caught and bandwidth costs, which are generally in line with also finished girls.

Our gross profit was RMB $166.0 million in the second quarter, often 21, representing an increase of 85% from RMB $92.0 million in the second culture opportunity in 'twenty.

Non-GAAP gross profit was RMB 161, 9 million in the second quarter of 2021 representing an increase of 17, 9% year over year.

And our gross margin for the second quarter opportunity to be one increased to 28% from 24% in the second quarter after into 'twenty.

Non-GAAP gross margin for the second quarter of 2021 grew to 29% from 26% in second quarter opt into 'twenty.

Operating expenses increased by 72% year over year to RMB $114.0 million in the second quarter of 2021.

Research and development expenses were RMB 60 points of liability in the second quarter up to 21, representing a year over year increase of 11% primarily due to increased salary and benefit expenses related to an increase in the number of our research and development staff.

Selling and marketing expenses were RMB 100 at this point 3 million in the second call jumped into 'twenty, one representing a year over year increase of 241% primarily due to our increased investment in branding and marketing for our products and brand name <unk>.

General and administrative expenses were RMB $24.0 million in the second call job 2021, representing a year over year decrease of 7%.

The decrease was mainly due to the decrease in other professional service fees, partially offset by the higher salary and benefit expenses.

Operating loss was RMB $37.0 million in the second quarter up 2021 up by 26% from RMB 25 million in the second quarter of 2020.

And non-GAAP operating loss was RMB 21, 7 million in the second quarter of 2021 compared to $13.0 million in the second quarter of 2020.

Net loss was RMB 20 laminate in the second call job 2021 up by 32% from RMB 22 million in the second quarter up 2020.

And non-GAAP net loss was RMB $21.0 million compared to RMB eight 2 million in the second quarter up 10 to 20.

Basic and diluted net loss per ads were RMB. Their reports five eight in the second quarter of 2021 compared to <unk> four eight in the second quarter of 2020.

Non-GAAP basic and diluted net loss per avs and is there a plus three eight in the second quarter of 2021 compared to and be their point to why HBO in the second quarter of 2020.

As George said, he's 2021 we had cash and cash equivalents restricted cash as well as children investment of RMB 411, four 7 million.

Now this concludes our prepared remarks today, we'll now open the call to questions. Operator. Please go ahead.

Thank you, ladies and gentlemen, we're navigating.

Question and answer session. Just again, if you need to ask a question. Please press star one on your telephone.

And for the benefit of all participants on today's call. If you wish to ask a question to management in Chinese.

Please immediately repeat your question in English and for the sake of clarity in order.

Ask one question at a time.

I will respond and then feel free to follow up with you and your next question.

We have a question on the queue Sir.

Vincent Yu from Needham <unk> Company. Please ask your question Vincent.

Thank you.

Thanks for taking my question and congrats for the strong quarter reserve.

Three questions. The first question is.

One.

In terms of like on the recreation side. So heavy we've been communicating with regulators on the Rollouts with regulation overall streaming industry.

Management give us a sense of company Spectation and impact on leeches operational Michelle on the second question is on the.

Apps themselves, so can management share with us how big is the user base, who used to lead you or do you need your podcasts.

The car and the overall size podcast app.

The third question is does the company see any material change in user behavior with T. A L.

Hum.

You've got economies that continue to be open and.

It's like the streaming hours.

Have been changed or decreased or increased or maintained.

Can we get any sense.

So I will translate for myself into a man doing so.

C. J D talked with you and no wheels, I'm going to cheat a hold yourself quite a switch that you can get.

Just to confirm what's English and went up to close to people who are doing what you go to tenet your goods in which you can then take with you and watch what she thinks equal Goldman No woman Continental Europe.

It happens that she wont did you do in the EG equities.

The other ones you should continue to claims in the home and things like that just Egypt.

For you, who each buchu, Peter we more Egypt, Egypt, ETP doesn't keep LIBOR, depending what you said is just real mystery to him that should help with them.

The cause of what you can sell them.

Nothing will conduct utopia.

If he does you know pushing way you'll know about it since its agenda.

Now you're talking a surgeon sickle Kendall Jenner, Shawn how should which will get oxygen.

Yeah.

A few are good.

Tim one on Wednesday, when I put it.

Uh huh.

The windows to enrollment.

Sure.

Since an equity though.

Do you go into your stores Chengguan women treated.

A G SIB so.

And then once you go though is that those would be outsourced.

Hello, Javier the upwards zippo hung or is it similar.

So tien tsin, what they need to have a chunk of what they're going to make a teacher said if it goes through the year, where do you think the unions.

It sounds like you're on mute.

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And what do you chalk mango.

<unk> Airport you will find some what are you.

So it's unclear how many of those hung chico tissue for that Oh Dear.

I always have laid for Michael So Michael will answer the first across Europe, and always feel old Mr. Baloney, We I'll answer the other two questions. So muscles, Andrew is that like a fall in recent years the regulatory Arthur Arthur It also again have always the tactical edge and <unk>.

<unk> to regulating the online entertainment industry, including the live streaming industry tightened regulation may have some impacts and put pressures on some companies business in the short term, but we do believe that sounder regulatory policies can standardize relative fitness.

Creation, which is good for the long term sustainable development of the entire industry.

So your job search and the income going to flu I mean, you don't have those.

So you have the whole equation.

The dog and Jim Once you go back to the Chi deal. We showed a good home Tusche Buffalo attendant as Hugo I meant to say yeah quite by what they say they do it well.

If you wouldn't feel that you're you're fine.

Well, maybe it's easier the.

Teaching you say this is how the choices.

We weren't able to cope with switches and trend.

Oh man I Triple well, whether you will find out and so forth.

And the San Juan Basin.

Well my audio.

We have always try our tightest regulatory compliance and have been proactively and its' activity communicating with regulators to have an accurate understanding of the relevant guidelines and requirements.

The last few quarters. We also have reported some information and we have come out with some AR solutions regarding to the regulator I mean, our policies. Meanwhile, we are conducting.

Conducting yourself examinations of our internal compliance and data security measures to ensure that our business operations comply with the regulation.

Dude.

You can see how near you use a fifth Antonia and its union, which haven't woman.

She will it sounds room on Sunday.

Two months so it is a general.

Turning to our income sorry, so you'd be hung yeah, Hi, C. O film thought of I got to tell me well many of its easier to do you can you with the weather being Jim condo project.

Based on our years of experience in the industry.

I think we have already have a relatively sound mechanism to meet the regulatory requirements in the long term. The my audio industry still has tremendous growth potential and E. G is committed to promoting stable and healthy development.

Yes.

Style for.

For Lifeway dogs out there go into Europe is ongoing.

Sorry cause or anything that could you comment on SASSA.

Neither 10 consortium agenda, it's Hershey to hold true.

So is that generally the bulk of the term sorry, some bond street, you're looking toward the cheaper than the two that didn't.

<unk> been doing on the younger chunky.

Alright, so that onto the hurdles are met on the send side. The things are I suppose as I mentioned to the needs of the broker Dart didn't daughter told me she's going to tell you you can see the luxury fashion agenda.

You have to treat drinking cheap.

This is all right so that on a go so that she can use this is John.

So let's again.

So that's all that here.

Well monitor that he thinks I'm being told go truly unlocking Paris Amsterdam pencil. Audi then so do you keep them.

I'll translate for Mr ammonia for the.

Second and third questions. So for the second question in terms of our in car audio strategy are we are actually working to expand collaborations with a wider range of leading companies to make our in car audio products accessible even more vehicles and to reach a broader user base we.

We have made a significant progress recently in all cooperations with auto companies and how can Egypt podcast launched though more in car audio.

Training systems as of now we have established collaborations with a total of 14 automakers.

Besides those companies we have mentioned earlier Oh in cardio product has also been launched the armband and all these income operating.

Operating systems through the Iot platform.

This is bill cuddy being charged and Pandora.

Alright, gotcha gotcha to have mature them.

Home and Boca Chongqing do so we'll go to Jackie I'm with them familiar with other T cell or Yehuda you. Most of the time, so I cannot guarantee to make yoga James the answer Tom Joe stronger Tito T cell, yes, it depends on who you see as something of a woman does getting to show them.

Some of them, who they can partake in young children.

Need your podcast has been operating for over a half a year and now have performed well sure.

Sure I'll forecast innovations like live streaming podcast and exclusive podcast episodes, we have effectively improved the debt early.

Page user time spent on need your podcast in the second quarter of 2021. The average daily time spent per user only to park has increased by around 10 minutes compared with the previous quarter.

We should also shows the effectiveness of our operational strategies and they improve the user stickiness.

Well I when Mcdonald's associated children people book, a costar anything here with the product congruence, there who can do it she says I'm done 19th when he spoke of in shortly.

If I'm in a familiar face our challenges the bulk of the new French on the product.

We're gonna die young or if you're going to see the needle.

I'm Gonna trunk Zynga poker for nine months and we go into the future.

South Eastern Europe on Yankee.

In the future, we will continue to boost to the divestment of in each of podcast and our in car audio business and increase the popularity of needs. Your podcast by integrating into more in car systems. We will also continue to enrich need your podcast content offerings.

To get even more interesting content meets users' demand with innovation Park has features and improve user stickiness.

But shouldn't that all cigarettes in Kings Hill.

He leads the bulk of the Europe windmill tied woman plenty young boom was on Sunday Hypogastrium.

Oh, My God I garbled per year without even some be grandmothers to hold on to our pillow treated us with you but.

At this moment the user base for the in car audio scenario and of the need to podcasting is relatively small compared to our overall user base, we will share more data when the business grows to a certain scale.

Oh, sorry, Eaton she's in charge of that and also therefore don't lose shoot way photon pack.

Oh man comes out eating through them in some world class talent pool.

Sundar you share guidance yet.

Sure.

Sure.

So they can do what you want.

People, who can do so.

Yeah, sorry, Yeah. If you go then joked bouchillon holiday goods in stock prices.

The third question is about the user behavior for the Ti App.

Although most of social activities are gradually returning to normalcy, but we are still seeing a lot of lasting changes in people's lifestyle brought by the COVID-19, pandemic like Downhaul, Alright entertainment and online social networking afghani widespread popularity and chia mantashe.

Strong growth momentum in the second quarter.

So no woman thing, so I'm going to end up with audio path here.

Do you start to see that Houston.

He sends are going off on their slow down it ends up.

Oh Gosh, you Linda so like he's done.

No that's the answer on the sounds.

So I'm gonna sound that you do you'll be there how big is Houston.

As we continue to optimize kiosk product features she has user active minutes continuing to increase reflected by an increase in the number of active chat rooms, and the number of user friendship connections.

Also the user time spent on T. I also improved compared to the previous quarter.

Turning to our income.

I'm really sorry, so it doesn't get somewhere close.

So the docs you sleep well.

Mcdonald engaged.

So John Stankey, Susana so sometimes in the dark blue Guadalajara, Tijuana cause all kinds of other suggestions.

Modular can do you know who the dwell has adult furniture.

Well my job so she yoga Yoghurts Huntington's chorea.

No I'm, saying that you can go to them.

From a long term perspective, we believe don't like those were now looking at becoming a trend in the way people socialize the integration for audio into social networking activities provides users a differentiated form of social networking from an innovative perspective.

And satisfying more off their social networking needs.

Going forward, we will continue to optimize T. S product features connecting more users to Washington.

This concludes the answers for needham's questions.

Thank you Internet yet.

Aren't you next question comes from the line of Vicky Wei from Citi. Sir Please ask your question Vickie.

Claims themselves our hall sensors disorder to learn of course, I think I'll hop here.

Well the one thing I'm. So glad you heard from Florida French on beat me when we had kind of been you'll hold them all in order to be able to ship it.

Sure.

I'll quote unquote swinging thing cause okay sounds.

That definitely.

I mean, you can validate keeping people, sometimes you can either choose to fix it.

So good morning management, Thanks for taking my questions and congrats on the solid quarter.

So with management share some color about revenue shattered they show these holes.

And does your peers continue to investing or their life's journey. Thank you.

Uh huh.

I shall we can know what she also his insights and girlfriends home PD that Shimon I kind of woman to it a little towards was the dawn of Titans into southern natural hazards Jaco, you'll follow along the way because you wouldn't put on the back.

What I'll call them.

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Your child. She had told you something that's the shackle attached to the bathroom guest facing elements in commodities. They pieces, you're not you don't shut the T cell.

All told when I don't buy that you called out how long has it shuang and go through all the little towards with the T. He got you a phone with a push to the Baltimore to Vornado and so what's happened within the hospital faucet that Kimco woman, who will talk show called <unk> and it really is a general question that follows from yet all women how should we think that puts the new element that troubled us. This is just sitting there.

Charlotte City Center, not high walnuts Homeboy actually full and you said they would switch and then put it a bounce well tells us that we can have a central Hudson and negotiate how much of a working relationship is that sequential used to lie to you. So we'll let that the troubles of its own course sleep 91, I'll tell you what formula Mahesh equate tissue Citi Visa and held me you'll put up with bulk.

Switching and fulfill your over the top part D. G gelo them and Youll put up for sale that you sell them, it's any though you're still shaping well my sense is that the team had any associate in parts of the niche on the social equivalents to hold up well. It can that somebody owns homes with the publicly it's one month that patent uncle could or couldn't be willing to sort of like you said also on the synthetic Oh, yeah, Europe, So sure you'll what eagle content too.

Two of them and schedule, the only wild well with me at that tissue kind of I guess, you know you watch the bulk of that until probably late patchwork chip, how you're changing the hips was tough when we asked you wanted to go to a boy do we wait I yielded since your father I'm Puzzled me music industry to use doesn't that goes for the outcome of a culture.

Not just I know you won't even since you finished up.

I'll take the question from Vicky's are actually we have diverse revenue sharing policies are for content creators across different business durations at different stages in.

In our second caught up this year, we achieved strong revenue drove swell, but also progressively adjusting our revenue sharing structure.

In this culture, our overall revenue sharing for content creators on our platform our content around 65% of total revenue representing a decline of about four percentage points year over year, all of which also effectively improved our gross margin.

And looking ahead, we will implement a comprehensive set of measures to calculate our content creators and keep a balance between the income drops of content creators.

And improvement of our profit margin and driving the top line growth.

For the content creators, we got off to a very our operational strategies, including traffic and creation support our attractive incentive policies and AI driven content recommendation in my eyes.

But to enable content creators to attract more followers and wider popularity and increase the success of our platform.

A user side Oliver continue to focus on improving user engagement promoting paying user conversion and interest users' willingness to pay to increase our overall revenue.

I believe with our platform remains a good growth momentum and our creators with experienced a corresponding increase in income and subsequently this will allow us to further refine our revenue share restructure.

Thank you.

There are no further questions now so I'd like to turn the call back over to the company for closing remarks.

Thank you once again for joining us today.

If you have further questions. Please feel free to contact me just investor relations through the content contact information provided on our website at IR Don D. G. Don F M or the Piacente group Investor Relations. Thank you.

Ladies and gentlemen that does conclude today's call.

Thank you again for participating you may now disconnect.

Sure.