Q3 2021 Bilibili Inc Earnings Call
Good day and welcome to the <unk> 'twenty.
2021 took what those financial results and business update conference call. Today's conference is being recorded at this time I would like to turn the conference over to Juliet Yang Executive Director of Investor Relations. Please go ahead.
Thank you operator.
During this call.
As our business outlook and make forward looking statements. This comments are based on our predictions and expectations as of today and actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties.
Well just holding those mentioned in our most recent filings with the SEC and Hong Kong stock you change the non-GAAP financial measures. We provide are for comparison purpose only definitions of these measures and a reconciliation table are available in the news release, we issued earlier today as.
In Kinder This conference call is being recorded in.
In addition, an investor presentation and a webcast replay of this conference call will be available on the delivery IR website at IR, Doug really believe dot com.
Joining us today from <unk> Senior management are Mr. Wei.
As chairman of the Board and Chief Executive Officer, MS. Kelly, Lee Vice chairwoman of the board and Chief operating Officer.
Mr Something Chief Financial Officer.
And I will now turn the call over to Mr. Fan, who will read the prepared remarks on behalf of Mr. Chen.
Thank you Julien.
Thank you everyone for participating in <unk> 2021 third quarter results conference call.
I'm pleased to deliver today's opening remarks on behalf of <unk>.
Sure.
Also of course as a result was again demonstrated our ability to execute and deliver our growth strategy.
Great channel from a fever.
Added over 13 million.
So BBB community.
Our total meus <unk>.
Do you feel the maturity of 35% year over year.
Mobile <unk> also rose to $350 million and the DEA.
To me at $72 million.
Representing growth of 36% and 35% respectively.
On a year over year basis.
This solid growth makes us more confident than ever that we can reach our growth target by 2020.
'twenty three.
Importantly, our community is becoming more engaged and even steeper.
Branded video content across formats of the new real drove an increase in daily time spent on PDD.
Which reached $88 million in Q3.
The higher.
We have ever seen our operating history.
This is particularly impressive and really shows the quality of our old and new users.
Given how fast we have GUL.
Other key operating metrics also grew substantially.
Daily video views were.
47% to $2 3 billion.
Mostly interactions were up 86% from $10 billion.
Mostly video submissions were up 18% to $10 million.
Each of these metrics represent all time high and reflects the health of our communities.
As well as the strength of the engine that powers our growth.
Our efforts to grow our user base, while maintaining a strong and the tides needs community.
Also had a very positive impact on our commercialization progress.
Total revenue in Q3.
$5 2 billion of.
51% year over year.
Reaching the high end of our previous guidance.
Matching the right content for a growing number of <unk> users more traffic was converted to premium users.
<unk>.
You've reached 24 million in the third quarter.
59% year on year, and our paying ratio Roe to eight 9%.
Another factor driving our topline as our increasing appeal to business partners.
This is particularly true.
Retire.
Who are eager to get visibility with a growing number of Gen Z plus users on our platform.
To reach an even broader number of users last year, we redefined our brand proposition with the face or the video through life.
To.
But more users with some noise in the <unk> the go to destination for high quality video content.
The recent <unk> report.
DDD was ranked as the number two most valuable brand in China in terms of growth rate.
With inquiry.
<unk> name recognition for advertisers across different industry verticals.
Our AD revenue grow by 110% year on year in the first quarter.
Even with microeconomic challenges.
Looking ahead with utilization trends continue to surge.
The increase rapidly emerging as the preferred and the new norm.
Premium video platform with broad the contents of the company's appeal, we expect to see.
We would benefit from increasing visualization movement.
Calling out our solid strategy to expand our content community and commercial.
Vision, we believe we are on the right path to becoming a valuable new gateway to the Internet.
We have also strengthened our commitment to social responsibility.
Using our publishing for US we are further developing and inclusive.
Entity promoting positive.
Social or cultural.
Acting better FTE proactive.
With that overview I would now like to walk you through the details of our third quarter operations ill begin with the first half of our <unk> model our content.
The key to our user growth Ludwig.
<unk> <unk>.
At the center of our video ecosystem.
<unk> continued to flourish account.
Accounting for 93% of our video views in the first quarter.
We have carefully created as extensive platform for high quality content creators to be.
I appreciate it as a value.
We continue to improve our to Keith and the services to lower barrier operation.
<unk> our involving video editing feature.
Well as about risk greater support program.
In the third quarter.
Recent months live video submission is a milestone of $10 million.
About 80% year over year.
The number of monthly active content creators also accelerated to $2 7 million.
61% year on year.
With our continuous efforts to improve.
Quarter of half distribution mechanism.
Content creators for rich and attract more easily.
In the first quarter content creators with more than 10 sell the followers grew by 42% year over year.
We continue to optimize and accretive.
<unk> brand new for them to realize their commercial value.
These include our advertising matching platform sparkle, the LIFO accounting platform.
Bringing more commercialization opportunities to content creators at all levels.
Our ongoing cash incentive program.
And there's also motivating.
<unk> number of mid layer equator.
Encouraging their continuous content creation.
By the end of the third quarter 481000 creators has benefited from this plan.
BD is a home to sell their interest based content category and we are excited by our go map to keep building great new content.
For users.
In the third quarter.
<unk> populate <unk> categories of lifestyle yen entertainment.
Payment ACG and the knowledge continue to flourish.
And we welcome the more users across various demographics.
Emerging verticals, such as fitness food and travel.
Also gaining increasing interest.
In addition to.
Building new content categories. We are also expanding our content formats to meet to use a different need.
For example.
Remote our short form video content.
<unk> offers quick hold adult entertainment.
Designed to see review the settlement in time.
Specialty.
Our BD BD App and smart TV.
Perfect solution for users seeking a high quality high resolution immersive video experience larger suite.
We are encouraged by the strong momentum in user growth.
And the engagement and believe there.
Covered a lot of drilling to growth ahead.
Paul OTV Department, our OTV content reinforces our leading <unk> verticals and introduces new was to broaden our reach and our committed to Colorado.
Leveraging both our profitable and production capabilities.
<unk> are helping drive created in China content.
For example, <unk>.
Chinese enemy can breathe new life into traffic tails.
Helping Chinese culture resonate with young generation.
In the second half of this year.
We leased multiple BD.
<unk> produced and with titles, including the second season of Mega Heath cover.
We bought <unk>.
Got it all in 100 monster by Apple.
As well as the daily lives of Immortal King Yolanda Antosh oval of weak what immediately revealed by SME lever.
<unk>, our documentary and variety shows occurring within areas of young Chinese interests.
These have achieved great success in promoting the BD BD brand and building influence within these content verticals.
Our self produced matchmaking hit 19 Clinton.
Joining from vehicle the <unk>.
Good example that deeply recently with our <unk> plus users and has given lack to discussions beyond the PDP the commodity.
Trending our social media platform for weeks.
We also released our music variety show the next band.
Tearfully water in the 18 months in Q3.
The shoe supplements, our newer build a content creation and appeals to music lover yellow community.
In addition, we launched a series of self produced widely welcomed the fusin documentaries.
Most of that come.
Including the upcoming soup season of the story of TARP ratio neutral site.
Which reflects the growing interest in Chinese cuisine, as well as the lifestyle category.
Turning to our community.
Our <unk> community his shows.
With the of our user growth in.
In the third quarter daily video views increased by 77% year over year to $2 3 billion.
The monthly interactions were up 86%, reaching over $10 billion.
Both matrix grow much faster.
<unk> and our user.
The call is increasing engagement across our community.
These interactions are the essential elements that make BD beauty experience so unique.
At the same time, we are excited to see more casual users converging to official members by taking our unique community interest.
It showed that.
By the end of the third quarter. We grew the number of official members by 38% year on year to $133 6 million.
For this code user cohort the 12 months retention rates remained above 80% in the third quarter.
So again, showing the strength of our community.
Now, let's look at our commercialization progress our diverse revenue streams have become more and more balanced.
While revenue from each of our segments grow in the third quarter.
<unk> revenues has become our largest growth.
What followed.
Paulo by our vast and e-commerce offerings.
Let's look at this in more detail within our commercial litigation settlements starting with our guests.
We see again.
Advanced format of entertainment and the representation of.
And for power.
Believing the positive power of <unk>. Our goal is to bring users more high quality games, both domestically and internationally with a heightened focus on internal development.
Leveraging our deep understanding of user preference.
Color rich game operating experience, we are devoted to building our development capabilities for the new generation of player.
At the same time, we are adamant from promoting exciting Chinese culture to lodge camping World looking specifically at our third quarter <unk> perfect.
And our.
Revenue from our mobile game increased by 9% year over year to RMB. One 4 billion. We added screen you with heico's domestically to our roaster of exclusive license again.
It has been well received idea forward.
We also celebrated the fifth year.
<unk> the rate of our legacy Tyco Fgo in September.
Ali with example, and jointly published more premium games, including Tencent League of legend and the nineties Harry Potter.
Continuing to expand the game offering in high growth <unk> and.
And forward momentum.
And with line nine yen acquired approval and are ready for domestic relief in the coming quarter.
In the meantime, we are willing or the more time, you can martha piece to global market.
Following our success of re final deal full contingency we.
<unk> continued to build our distribution capabilities with the successful launch are figured story tell initial downtime in South Korea in September.
Again become an instant hit and we plan to replicate this success with more games overseas by leveraging our deep.
We cant Andy of ACG levers.
Our game selection Knowhow and our strong distribution power, we are committed to operating responsibly to promote healthy behaviors and protecting Asia from gaming edition.
As early as 2019 with launches.
And definitely addition measures 14 players and have continued to strengthen central mechanism.
By the end of August <unk> operating again fully compelled with the latest regulation hour restriction minor game play time in China.
We.
Also like to note that revenue from players and <unk> accounted for less than 1% of GAAP revenues in September of 2021.
Turning to our Vas business.
Our vast and this is the perfect illustration of our business.
We love humor B to C model it.
It represents our users trust in our brand and the willingness to pay for PDD content and services.
In the first quarter, our Vas business continues to be our largest owner, reaching RMB, one 9 billion up 19, 5% year over.
Unlike any other LIBOR accounting platform.
<unk> LIBOR cutting as being uniquely integrated with our content ecosystem from day one.
As a natural extension of video content.
Amplifies, our leading content verticals as well as the influence of our content creator.
We continue to enrich our LIFO accounting contest.
During the period.
Providing more tooth.
<unk>, our virtual host growth.
We're excited to see the increasing influence of various game content.
Content for our community.
The league of legends.
The year on off King and the <unk> impact.
For example, we saw record breaking level of availability for this year's league of Legends was championship as 11 ability.
On the final game night, the peak concurrent viewers increased by over 160.
And compared with <unk> 10.
And we achieved the highest this year you ever operated.
Operating history.
We are also diversifying within more entertainment related offerings.
Essentially for virtual app loader or be up.
Sure.
Related content.
For Q3 with.
We had triple digit whole year over year growth in both number of active re up a number of viewers in this category.
We will continue to add and expand and strengthen our position as the worlds, leading virtual LIBOR cutting community.
Thanks to our.
Integral to of high quality OTV as the users tendency to pay for content. Our premium member growth through 2018 2 million by the end of third quarter, an increase of 42% year over year for.
<unk> lowered our comic and audio drama content.
Growing to attract more paying users.
Again, showing the high willingness of our users to pay for content, they want and the vast potential that offer us and we add exciting new content.
As Paul of tightening services.
Over time represents our business 2 billion.
Continues to be to be model.
Also sorry.
Despite macro economic factors.
Our advertising revenue continued to be robust in the first quarter, which in total advertising revenues of RMB, one 2 billion in <unk>.
<unk> of 110% year over year.
He has great influence and a growing number of quality user function.
As the building growth of September growth.
As our integrated marketing campaign called us more industry customers, the creativity and the commercial value of our Korean creditors is gaining wider recognition.
Okay.
More native.
Videos when sale in Q3.
Making PDD the most sought after platform in China for advertisers.
We continue to promote our integrated marketing campaign and introduce more as part of total inventory.
In Asia, helping our content creators monetize their talent.
During the third quarter, our top five advertising verticals, what mobile game skincare and cosmetics.
Comer digital products and the food and derivatives.
Yes.
As we move forward, we will continue to evolve.
Our growth strategy and create value for our stakeholders.
At the same time, we are committed to show during our social responsibility to make the world a better place.
Including supporting <unk>.
Well <unk> disaster relief.
Reducing our Cabo.
<unk> footprint and furthering green initiatives.
Moreover, as a proud Chinese corporates, you see the dividend with increasing reach with dream that one day using a form such as games enemy and <unk> will be able to thread Chinese culture across.
The work.
This concludes Mr. Chen's remarks.
I'll now provide a brief overview of our financial results for third quarter of 2021, and the outlook for the fourth quarter.
Total net revenues for third quarter were RMB five 2 billion.
51% from the same period.
Their rate of 2020.
We continue to see a more balanced revenue mix driven by our diversified commercialization channel.
Our total net revenues breakdown, our revenue stream was approximately 27% and mobile game.
87% at that 93% of a title.
And the 13% e-commerce and other opinions.
Cost of revenues increased by 70% year over year to RMB four 2 billion.
Revenue sharing cost a key component of cost of revenues were RMB two 2 billion.
Representing 83% increase.
From the same period in 2020.
Gross profit increased by 34% year over year to RMB 1 billion.
And our gross margin was 19, 6% in the third quarter.
Total operating expenses was RMB two 9 billion.
Up.
57% from the same period in 2020.
Selling and marketing expenses was RMB, one 6 billion.
Presenting a 37% increase year over year.
The increase was primarily attributable to increased channel and marketing expenses to promote our app and breadth.
As well as promotional expenses for our mobile games and increase in our headcount.
In sales and marketing personnel.
Q3 is our peak season in brand marketing and user acquisition efforts.
We strategically located in more resources and are pleased with the strong momentum.
The OEM, both user growth base growth as well as the quality of our users in terms of engagement level.
G&A expenses was RMB $474 9 million.
Presenting an 87% increase year over year.
The increase was primarily due to.
Increased headcount in general and administrative personnel increased share based compensation expenses and higher rental expenses.
Yes.
R&D expenses were RMB, $788 3 million, representing a 97% increase year over year.
The increase.
Increases were primarily due to increased headcount in research and development personnel and increased share based compensation expenses.
Net loss was RMB 269 billion for the third quarter of 2021, compared with RMB, One 1 billion in the same period of 2020.
Ah.
Adjusted net loss, which are non-GAAP measure that excludes share based compensation expenses amortization expenses related to intangible assets acquired through business acquisitions income taxes related to intangible assets acquired through business acquisition.
And the loss of fair value change in public trade.
The company was RMB 162 billion compared with RMB zero 97 billion in the same period of 2020.
Basic and diluted net loss per share what each RMB 690 adjust.
Adjusted basic and diluted net loss per share were each on before.
One six.
As of September 30.
2021, we had cash cash equivalents time deposits as well as short term investments of RMB 24, 4 billion compared with RMB 12, 8 billion as of December 31, 2020.
Our sufficient cash reserves gives us great confidence in our ability to execute our growth strategy.
Which we believe will yield considerable return in the loan growth.
With that in mind, we are currently projecting net revenues for the fourth quarter of 2021 to be between RMB five seven.
7 billion and RMB five 8 billion.
Thank you for your attention we will like now to open the call to your questions.
Operator, Please go ahead.
To ask a question you will need to press star one on your kind of fun to.
There'll be draw your question. Please press the pound or hash key.
All participants on today's call. If you wish to ask a question to management in Chinese.
Please immediately repeat your question in English PCB your question to one at a time.
To have follow up questions. Please rejoin the queue. Please standby lobby comparator, Ken Ergo step.
Our first question comes from the line of Alex Poon from Morgan Stanley. Please go ahead.
So all of the tier one Oh, well you know what we want.
Quentin you don't put some jobs that sounds it all women.
Don't be too, Ken Xie and sort of gung Ho about the audience.
I didn't think I E.
How far can you talk about your thoughts often zones Alicia sorry go.
<unk> got that Gt's guidance, either woman, so I'll, let so much switching to that I would say the circuit Chelsea downhole.
Wholesale and what do you see a woman with Cuba and.
<unk> got the sidewalk just yet.
My first question is regarding user.
The user growth in Q3 has exceeded our previous guidance of $260 million and also the record.
Time spent has reached a record high of 88 minutes per user per day.
So I wonder if management can explain what have we done in Q3 to achieve these results and in Q.
Growth and next year, what are our expectation. Thank you very much.
Okay.
So some ammonia unless you are local employees or somebody else beyond the one liter Congo will remember Tien Honda Commvault sales on the mainland Shanghai the.
Foreign bolted on the nasal.
Sort of on that.
For our this year's principal for the mobility to grow our user has remained the same which is driven by very healthy content ecosystem and those content ecosystem will continuously.
Hi.
The content to attract users.
Yeah, and that's the ammonia.
<unk> Nikko <unk> Havas Chanel women turn on the institution.
Later, you go quarter over quarter, our team will continue the turnaround yet to launch.
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Quarter, the whole <unk>, Inc.
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Every year, we will have evolved emphasized area for example last year. It was all about.
Thank you Shane and content category and for this year. Besides the expansion of content category will also help to achieve expansion.
Consumption scenario B.
Building, a multi scenario marked high content video community is our goal.
No.
There are certain opportunities.
Putting these uncertainties. So you should assume that Todd asked do think although you go deeper.
So we like that.
Quarter, yes, well I shouldn't emerging let's sit down per ton that Hugo.
To negotiate more quickly and we're shifting that towards.
<unk>.
So I have always thought that videos main battlefield as beyond just mobile phones, although nowadays mobile phone as the main consumption scenario. However, I think as that technology evolves and such as the <unk> adoption and.
The overall hardware involvement in the future more and more screen carried the purpose of running a video for example on a larger screen.
Well it seems a little on the Mou and.
Yeah, and I think she's a bunch of women it seems that <unk>. They are the survey.
Okay.
One way to answer the Ohio team with them naturally.
So right now our OTT.
OTT Smart Tvs Miu has surpassed RMA use on the PC side, becoming our number to you.
User component and I still think there's plenty.
<unk> room for us to.
And in those areas.
Two of them that this is done potentially overshoot on me, but those are women therapies with the potential. This is how you should how does one glenda.
So not only that we have more users on the smart TV side actually the time spend on smart TV.
He is also much longer than the rest of the <unk>.
Rest of the terminals.
P J.
Okay.
Okay, daughter, you go <unk>.
Sure Nick.
Sure that answered around kind of thing.
<unk>.
Probably half dozen.
The most number of video status and foreign K and that is also the reason why deliberately content is most suitable for pure.
If your screen they thought it was.
Oh, yeah, yeah sounds shallow women to the story the more touches a suitable but the arbitral piously that one was how much.
Total folks in the soft tissue tumors are going to start shipping.
So you are essentially one quarter away tires, its element of sometimes turns out what either English hungry.
Another example would be our story mode of within the story mode. Our content creator can upload video stats in horizontal mode.
Which was also well loved by our users and within that scenario.
User can enjoy those quake all nickel entertainment content.
Okay to those Assortments, Virginia energy the MPV attempt counting those eager to go.
Hi, John.
200, <unk> the potential for the future.
Well it really <unk>.
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Cold shoulder to.
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The conditional shares how should that what are the T cell clones should Ohio woman, who don't shoot.
That put on the T cells.
Here I wanted to point out that in the third quarter.
Not only has a fast growing number of user base. The quality of those users are also very very good for example, the time spent 88 minutes is the highest we've seen in our operation history.
History and also the user engagement engagement number also experienced a very fast growth all of those indicate that we have grow with quality, that's very important to them to the agenda.
Good on the shoes.
You bet.
Our monthly user interactions average monthly user interaction in Q3 has reached 10 billion milestone Marcelo.
Marcelo fully own kudos on your face on the Genco women the fully on course with Avalon that hits the bylaw.
Obviously, a woman who it is.
Quantity, which is totally actually teach them to ensure that all of that in your body engine.
And also on the paying conversion in Q3, our paying user reached a $24 million and our paying ratio continues to rise reaching eight 9% in the third quarter, which you know are they each union as a whole.
So that's what you'll use her board designs legal team.
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We will send the hydrothermal <unk>.
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So that should.
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Back in 2017, I predicted that believed at least paying ratio could reach double digit and I still believe that even though our users growing.
Yes.
Extremely fast the quality of the user is also extremely high those user love our content and are very willing to pay for the content. We believe in the end of the day, our revenue generated from our users will be faster than that.
The increase of our users number.
Hi, This is Andrew.
These are major league, which we sell.
What are your sort of closer to the Yieldco showdown inertia.
So what Julian was on back to the top.
You don't even kill that we all hope so you mean in Ohio, you made a woman circassia totally you got tissue.
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You can pull down the mobile market with a woman plenty of holding that off.
So either hydro MEO and will play and logical and we'll be able to either Chantal Chantal will Michelle season, just a woman.
Finance for you that you can work out.
So as for Q4's outlook.
Similar with our traditional seasonality, we expect Q4's Easter space to be.
Stable or a flight.
Slight increase.
As for our.
User target for 2020, two we raised our three year target.
Get a 400 million to survive.
And for next year.
We'll continue to execute on that strategy and to.
Step by step achieving that target and we're still very very confident to be able to achieve that user goal by 2023.
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One thing I would like to add a step out.
Our smart TV users and originally we thought this.
T V user versus our App user would have relatively higher overtime as a matter of fact the overlap.
It's only about 20% and a lot of the smart TV users are users coming from third and fourth tier cities. So this difference says give us great confidence in terms of further penetrating our target.
Cohort and we believe with the Liberal as fast.
Vast content library, and evolving scenario, we should be able to achieve.
Our user target.
Okay.
Thank you.
Our next question comes.
From Denny Chang from Jpmorgan. Please go ahead.
Oh, Oh Oh.
There's a lot of wind.
Yeah.
He is a great workout.
Thank you dawn.
Okay.
So what are your thoughts.
As you can.
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Joseph.
<unk> trends are quite a bit.
Some few corn caliber tissue I would try to make myself.
My question is related to advertising. So we have seen such a strong.
Growth in the third quarter of triple digit year over year growth so with our.
Our expectations into the fourth quarter of this year and also 2020.
Also are we seeing.
Impact from.
Like a weak macro environment and also.
Beihai security policies are we seeing those simplification through the our advertising revenue. Thank you.
I'm curious I don't know how long the social it's usually about a seeding key Tony Jones on how go back east.
Our niche is generally issue shouldn't see those how you see the Jones Act.
In Q3, our AD revenue reached 1.1.
$1 7 billion up one over 110% year on year. This is the 10th executive quarter of accelerating.
Oh of beating expectation level of growth.
Joe you are <unk> based on the Junkier Guan godfather loyalty, the deep carcinoma <unk> tissue so that forces.
<unk>, Oh I'm sorry.
Sergio because that home fallout.
I'll just say, it's nice to say the CUSIP woman Curry franchise history will judge how does seem to be on how it goes there's always Hong Kong.
We have repeatedly discussed the theory of deliveries and business logic and our effort.
In beauty, our infrastructures as well as strategies in.
In the past few quarters, which I will not go any further details at this time, however, I will share some of the data and new changes we've seen so far in the fourth quarter and also in the third quarter.
So all of our member Guangzhou show me, the large T shone through our high share.
So you have my shingle shifts either marching higher churn teach in on Tommy equal to inure to the forefront of our doughnut junk essentially the Ctr T cell tower by this as well that does a whole it's a QC Columbia sell it sounds like higher dose the woman Sheila Jordan.
So first of all we.
We see continuous improvement in our AD efficiency, thanks to our deep learning models involvement as well as the further adoption of more innovative app scenarios the click through rate of our feed ads improved by 30% and we expect this will further.
Our fourth quarter and next year AD revenue growth.
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Don't hide the shipping the things hunting, while wholesale partially going through the jungle woman.
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Yes.
Second as we further integrate at multiple as scenarios as Reece mentioned.
Storage from our mobile App on our mobile phones to Ipass Smart T V. MPC, we continue to add new AD inventory, including AD products like inline stories and moments and as our user continue to expand our AD.
Sure Paula.
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Well it sounds like <unk> should be dumping.
So you go beyond that.
The third point is.
Uh huh.
Sparkle App platform, we have over one.
150000 content creators joined this is up 25% year on year and we also have repeated repair.
Sure.
Customers over 75% and visibility crunching breeder produce more and more highly creative native AD content and is becoming the new beacon in China at market and we will continue to build on that success and further too.
Petr greater our one stop solution of native App brand ads feed out, including our projects take off which all have been widely acknowledged in the added add industry.
This shouldn't be until you finish out the association's young woman does it somehow.
In general Bylaw <unk>.
Your son, so that show more so due to travel a lot of our other larger lifestyle issues that translated a D. C D and E. Chomping locking her go to allow your quota on her shoulder and selfish and he hasnt Chi that.
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And the fourth point is during this year's Singles' day, our daily at GMP over RMB $25 million ranking number five in terms of.
Budget market share and the overall comverse.
Conversion ROI ranked number one in this space. This further prove the high quality of our user and their potential consumption power. We expect next year in the overall are consuming advertising.
Consumers have added industry.
Industry will continue to raise our performances and achieve greater success.
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<unk> six point is first of all on our AD clients. Besides our traditional strong vertical like gaming food and beverage three deep sea skincare and cosmetics, we see emerging verticals such as automotive.
Handbags.
Pat.
Apparel are also growing rapidly.
Last but not least is R&R, we see new format.
Video base at is also driving the improvements of our AD efficiency and forming one stop solution of availability. Our Q3 number show staff video base.
It's at its two times more efficient than the traditional picture and tax base that and we expect the Cts will have the potential to further grow by 100%.
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Last week on whether there's going to be impact of the recent data security regulators.
<unk>, we do.
I think there will be any visible impact to our our AD business and we still have confidence to deliver healthy and fast growth in our AST segment in Q4 and in next year.
Thank you. The next question comes from the line of Brian Gong from Citi. Please go ahead.
Good morning Chase.
Sure.
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Ecosystem powered gaming video streaming.
Actually we already have a virtual community. It is seems to be amongst those key platforms in China.
The explorer might awards opportunity.
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<unk> BD to seize this opportunity thank you.
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As I mentioned in our Investor Conference earlier this year.
Net adverse as a concept it's not a product.
For this context in March.
Many of the elements associated with members already existed whether as.
The reality T.
Hi, social.
Community, our assistant social social system or or self reinforcing ecosystem.
It's already existed and there are a lot of company is already there.
<unk> product.
Virtual call SAP for example, Facebook and Tencent.
And actually below the latest one of them.
Clearly they'll have.
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Tim do you think you can still do.
Danielle it's that simple.
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They put sometimes you don't have to push it.
She can give you a sense.
So you don't yet tuna, mango and Petro hub.
So that's why I think that if someone here's the concept.
Some diverse and decided to get into this business probably would be a little bit too late that is because those elements such as social system.
Self reinforcing ecosystem, all of which cannot be done in a couple.
A month or even years.
Well do it.
China and EMEA.
Based on some of the other ownership.
There was a partial solution.
Sometimes it's.
It's always a guy named top.
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Hopefully the suggest for that.
I think the timing do you see demand issues they ordered.
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And I believe.
There are some very very important elements.
And none.
Net of our concept which is the.
South, bringing porting content ecosystem, when we talk about met averse with bank.
This is not something can be done by a single work.
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Need to have massive content production.
Our ability to produce another road. So that's why we believe it requires someone deeply connected into this system and to creating content.
They will have achieve benefit hence bonding tighter even tighter within the system itself.
Thanks Hamzah.
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A very large base of content.
Yeah, sorry are creating content and delivery system and they are benefiting from this creation process that makes their ability.
The ideal platform to further explore and this net adverse concept actually this is something visibility has always.
King practicing and believed in.
And we have many examples.
Linked to this concept for example, virtual uploader.
Our content creator can leverage technology like motion capture virtual reality argument to reality training them.
Being off into another character in another road and creating content such as fan dancing talking jokes all of that a toxin users and make use their fall in love with them and itself. It is a perfect example of implementing.
The creation system into this.
This met our first concept through a tender you are you good vanguards or Canyon argue you all shortly.
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Transalta.
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When we're talking about met averse.
Independent separate universe that attracting hundreds of millions of users who.