Q4 2021 Bilibili Inc Earnings Call
Okay.
Good day and welcome to the.
Fourth quarter and full year.
Actual results and business update 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.
Operator.
During this call, we'll discuss our business outlook and make forward looking statements.
These comments are based on our predictions and expectations as of today.
Events or results could differ materially from those mentioned in today's news release and in.
In this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with the SEC and Hong Kong stock you change.
The non-GAAP financial measures, we provide our full comparison purpose only definitions of these measures and a reconciliation table are available in today's news release, we issued earlier today.
As a reminder, this conference is being recorded in addition, an industrial presentation and a webcast replay of this conference call will be available on the deliberately IR website.
<unk> Dot com.
Joining us today from Billy Billy Senior management are Mr. Wei Chen Chairman of the Board and Chief Executive Officer, MS. Cali, Lee Vice chairwoman of the board and Chief operating Officer, and that's true Sam fan Chief Financial Officer.
And I'll now turn the call over to Mr Fan, who will read the prepared remarks on behalf of Mr. Chen.
Thank you Juliet and thank you everyone for participating.
First quarter results conference call.
I'm pleased to deliver today's opening remarks on behalf of Mr. Chen.
Growth remained the key word for BD beauty throughout the year of 2021.
In the fourth quarter, our Mou rose to 272 million and mobile <unk> grew to 252 million. This represents 35% increase year over year.
Making us one of the hottest growth companies in China in the last week.
At the same time.
Average daily time spent our platform rose to $82 million with da you, reaching $72 million in Q4.
34% more than the same PRA in 2020.
In fact, we have more than doubled our MA in the past three years.
Far outpacing the industry growth rate.
This is no small feat.
Importantly, our expanding user scale translated into top line expansion with consistent quarterly growth in 2021 for.
For the fourth quarter. Our total revenues reached another record high of RMB, five 8 billion up 51% year over year and our full year revenues grew by 62% to RMB $19 4 billion.
In Q4 grow to $24 5 million up 37% year over year.
And our premium ratio expanded to 9%.
Above all as we.
We get more users.
More advertising dollars are being directed to our platform.
Our full year of a tightened revenue reached two $4 5 billion up a 145% year over year.
We're having our topline growth.
We firmly believe the value of our community tied closely with the scale of our users at the level of trust the off platform.
There is no doubt that our <unk> plus users are the most valuable group in the market.
Our society backbone and the mainstream consumers in all kinds of economics.
Our engaging community connect and totally ball those users to our platform.
Creating a valuable relationship built on trust.
Which leads to multiple avenues for commercialization.
Looking at our plan for 2022 and more detail quality growth will remain our top priority.
We will continue to build our multi category content ecosystem, reaching users video demand across various consumption scenarios.
We remain committed to achieve our user target of 400 million <unk> by the end of 'twenty three.
While we grow our user base, we will continue to improve our commercialization capabilities.
Specifically, we plan to increase our revenue per Mou by developing more value added services to meet our users involving needs.
As well as increasing our AD revenue by optimizing our AD products and improve the efficiency.
Our revenue per Mou because at times it was increased by 30% year over year as we expect this trend to continue.
More importantly, we plan to optimize our capital allocation and effectively control our spending across our business.
In 'twenty to 'twenty two.
We will strengthen our execution.
And our commercialization capability at the M to narrow our loss margin.
Meanwhile, we hold RMB 30 billion in cash reserves as of the end of 2021.
This gives our ample liquidity to support our long term growth strategy.
And provides a strong cushion in the evolving industry landscape.
With that overview I'd.
To go through the details of our fourth quarter operations, the religious about content community and commercialization.
<unk> continue to be our most prevalent feature.
Counting for nearly 94% of our video views in the fourth quarter.
As the bedrock of our ecosystem, we are actively expanding our pure duty content category unnecessarily areas to grow and the tests Our committee together.
Our top categories in the fourth quarter, while lifestyle again at the attainment enemy and knowledge.
Our active user instyle, our Quaker and vice versa.
Creating a respect of KOL community environment that fuels, our virtuous cycle.
In the fourth quarter over 3 million monthly active crater submitting nearly $11 million with your equation.
And that 58% more Quaker at 83% more submission compared with the same period last year.
Outpacing our user growth.
Content creators with more than 10000 followers increased by 41% in the fourth quarter.
Showing that our community connection what titles that ever.
We have continued to refine our algorithm and liquidity avenues to adult content creator commercial value.
Sure the ISC recognized and well rewarded.
In January .
We all know hardwood hundred content creators.
And Youll PDP the power project 91 hour separately.
Notably in 2021 over $1 3 million content creators with the monetary rewards through railroads channels umbrella beauty.
Covering 90% of content creators with over 10000 followers.
Primarily Cleveland channels include our cash incentive program LIBOR casting the sparkle AD platform and the direct tipping from user.
By the end of 2021 over 550000 content creators.
Our cash incentive program.
On top of native AD, our funko platform, we plan to launch more accessible and the scale, both at <unk> and functions within or around the video to.
To help better monetize content creator a private domain traffic.
As part of our user growth strategy.
We are upgrading our content ecosystem with a few different ways.
The first is expanding our CASM category, all reach to appeal to a different gender occupation and age groups.
These groups bring us more avenues for grow our user base. For example, we are advancing our position in the student community added more female oriented content and expanding our patent knowledge library appeal to mature users.
Secondly, we are broadening our video format address users' needs and different access scenario.
Typically we are optimizing our short form video store Remodels to 13 to use those products mentioned Todd.
The initial feedback from our community is encouraging.
It's not OLED certified content need for users on the go and the boosted engagement levels, but also help the user to cover even more <unk> in our live broadcasting content across our video universe.
Additionally, our smart TV.
Two living room is meeting our users' need for immersive video experience are not screen.
This is an initiative and escalating cynic without Gwen proposition.
<unk> reduced you lock it in.
With any time.
Paul OTV Department.
Pending our RGB category, and helping us attract new users convert users to premium members and quake valuable IP assets.
Two main areas of focus will be Chinese enemy and the documentary.
In November we announced a <unk> 51, Chinese anime titles at our fourth made by BD BD Chinese anime prep comfort.
As I imagine nature of up four we believe that Chinese anime Ted translates prior rate of gender.
And the language.
With our increasing global appeal, we also officially upgraded our Chinese anime proposition to make by Billy BD may for global.
We are delighted to see our Chinese enemy being highlighted voyce originality, non tail Ips our value and our successful globalization initiatives.
Over the past two years, we have established partnership with Netflix at Sony.
<unk> 2004 titles in overseas market.
In 2021, our top rated anime titles, whether the daily life of motto team Cedar.
And the link click.
It should not only won the hearts of Chinese beds, but also reach over 100 countries in EMEA market.
We also host our first documentary press event in December and announced his plan to produce 21, new titles in the coming year.
Our flagship content category documentary represent our useful content.
Yes addition to commercial value. It's also bring great cultural value and represents our commitment to social responsibility.
Some of our dock Crs has already turned into important IP.
In January .
The return of our reading documentary and yet the book at the police station reality show that God, Yes, Osteo policy, while both met with great enthusiasm.
Turning to our community.
Communities around in the graph our ecosystem. Our users are the kind of equate to form high vol, and the interactions equates tough a strong sense of belonging inspiration and irritation value.
We actively Q2 beat it a fun informative and friendly environment, where users can express themselves.
<unk> community.
For the fourth quarter, we had remarkably high engagement and interaction level showing that both new and experienced members are finding connection.
Great.
As mentioned previously in Q4, the average daily time spent ability be reached to meet the highest fourth quarter usage time operating history and the daily video views saw two $2 2 billion up 80% year over year.
Monthly to action in the first quarter more than double that for the same period in 2020.
Jumping into $10 1 billion.
We exit the year with 145 million official members.
42% year over year, and thus cloud 12 month retention rate of 80.
84%.
Now, let's look at our commercialization progress.
In the fourth quarter, our total revenues reached RMB, five 8 billion up 51% year over year.
Our full year revenue grew by 62% to RMB $19 4 billion.
Revenue per Mou, while RMB 77, 6% in 2021 up 30% year over year.
Having gathered half while the China agenda, plus population our platform and understood their needs. We believe we can consistently improve our commercialization capabilities and the continued to increase our revenue per head.
Beginning with our mobile game business.
And then the current GAAP industrial environment, our goal for 'twenty to 'twenty two is clear we will.
Hence our current assortment get more accretion.
We continue to focus on actively developing gaming health and overseas getting distributions.
As for our pipeline. We currently have five titles are cool automated relief and the 13 titled slated for international relief coming quarter.
For the fourth quarter, our mobile game revenues were RMB, one 3 billion.
Up 15% from the same period last year.
We released four new titles domestically and screen new titles in overseas market during the quarter.
Meanwhile, many of our oldest gap was still showing long lifecycle.
Revenues were still on the rise for certain of our exclusive license game such as lunar law.
As a game operator.
We continue to protect young player from Chem edition and promote healthy can behavior. Following the additional measures we launched early.
For two major players.
In 2021, our revenue from player in the <unk> account for less than 1%.
<unk> of our cash revenue.
Looking at our best business.
Our Vas business remained strong with revenues of RMB, one 9 billion in the fourth quarter up to 52% year over year.
<unk> revenue per Mou will RMB 27, eight in 2020 , one up 34% year over year.
As we develop more products and services, our users' entertainment needs. We believe that has great growth potential beyond live broadcasting and the premium membership.
We will actively explore innovative avenues within our community to increase revenue per Mou.
LIBOR Kathy as the organic component of our video content ecosystem has formed a multiple self reinforcing population within our community.
For example, with equate synergies between content creators of live broadcasting host.
As well as the commercialization opportunities.
In 2021, almost 70% of our content creators with one meaningful earth when LIBOR cutting hole.
Over 600000 content creators generated income through LIBOR cutting during the year.
In 2022.
We will continue to explore innovative ways to incorporate LIFO accounting with our video community and enhance user's overall experience.
Turning to our premium membership business by the end of the fourth quarter. The number of premium membership reached an exciting milestone October meeting, representing an increase of 39% year over year, notably 80% of equipment members signed up for and new continuous monthly plan.
Demonstrating the love and trust in our platform.
As for advertising our advertising business is a great demonstration of how our value for our users as strong trust between them and the community.
We hit another homerun with advertising services in the fourth quarter.
As revenue in Q4 reached RMB, one 6 billion up 120% year over year full year added revenue coming at the $4 5 billion of 145% year over year at the revenue per <unk> in 2021 was RMB 18, one.
3% year over year.
With nearly half of our China, JV plus users our platform really be to have become a must for advertisers looking to reach this golden consumer group.
Video plays integrated marketing campaigns has emerged as a key solution.
In 2020 , one more of our native AD went viral alerting even more of a Tyler cloud powerful content and its influence among users in.
In 2022, we plan to further integrate our cycle AD platform with more scalable ad product.
This will enable native app to get more exposure, but realizing more.
And the more sales conversions on <unk>.
Achieving the effort of brand and performance AD in one shot.
Additionally, we plan and reach our as displayed scenarios with story mode in the smart TV.
Greatly increasing our AD inventory and offering more place for advertisers to reach their desired customer.
We're glad to see our integrated marketing campaign is being welcomed by more and more new industries, Inc.
In 2021, we welcomed a well known consumer brands and the equipment automotive group and our key sponsor of the new year's Eve Gala.
In the fourth quarter, our top five advertising verticals with mobile game E Commerce, <unk> and the digital products food and privilege and automated.
As we move through 2022, we spell visualization to continue paving the way for <unk> industrial opportunities for work.
We will continue expanding our user base as we believe we are still in the initial stages of ramping our Monday commercialization efforts.
In terms of the 22, we will work to generate.
More revenue per Mou by introducing more value added services to our users as a valuable product to our partner at <unk>.
Same time, we will focus on expense control and overall operating efficiency improvement.
This concludes Mr. Chen's remarks, I will now provide a brief overview of our financial results for the fourth quarter. After the Tiger one and the outlook for the first quarter of 2032.
Total net revenue for the fourth quarter was RMB five 8 billion up 51% from the same period of 2020, we continue to see a more balanced revenue mix driven by our diversified commercialization channel.
Our total net revenues breakdown by revenue screen was a push them into late 'twenty, 2% mobile game, 33% that.
Within advertising and the third 17% e-commerce and other business.
Cost of revenues increased by 62% year over year, So Bob before stellar billing revenue sharing cost a key component of cost of revenues were RMB, two 4 billion, representing 91% increase from the same period in 2020.
Gross profit increased by 16% year over year to RMB, one 1 billion and our gross margin was 19% in the fourth quarter.
Total operating expenses was RMB 341 bidding up 68% upon the <unk> already in 2020.
Sales and marketing expenses was RMB, one 8 billion, representing a 73% increase year over year.
The increase was primarily attributable to increased channel and marketing expenses to promote our app as breadth as well as promotional expenses for our mobile game.
Moving into 2022, we aim to actively manage and control our marketing spending and to improve our overall operating efficiency.
G&A expenses was RMB $538 1 million, representing a 57% increase year over year.
The increase was primarily due to increased headcount in G&A personnel share based compensation expenses allowed us for doubtful account rental expenses and other G&A expenses.
R&D expenses was RMB $797 6 million represented 65% increase year over year.
The increase was primarily due to increased headcount in research and development team and the share based compensation expenses.
Net loss was RMB two one bidding for the fourth quarter of targeted 91, compared with RMB 843, 7 million in the same period of 2020.
Adjusted net loss, which had non-GAAP measure that excludes share based compensation expenses amortization expense related to intangible assets acquired through business acquisitions in compacted into the.
Plasma business acquisition and the loss on fair value change in public traded companies was RMB, one 7 billion.
<unk>.
Zero point of sale of billing in the same period of 2020.
Basic and diluted net loss per share what each RMB 534.
Adjusted basic and diluted net loss per share was <unk> two two for the full year of 291, our total net revenues increased by 62% to RMB $19 4 billion, notably non-GAAP revenue of 191 grew 19, 9% year on year accounting for 74% of.
The total revenue.
Gross profit for the 2021 full year increased 42% to RMB 4 billion.
Net loss for 2021 was RMB six 8 billion compared with RMB three 1 billion in 2020.
Just in the last quarter at 801 was RMB five 5 billion compared with RMB, two 6 billion in 2020 basic and diluted net loss per ship was tied to.
101 was RMB 17, one seven.
Seven as compared with RMB <unk> 71 in 2020.
Basic and diluted net loss per share was RMB 14, four two compared with RMB seven four in 2020.
As of December 31, 2021.
Cash cash equivalents.
And short term investments of RMB 13, 2 billion compared with RMB 12, 8 billion as of December 31 <unk>.
Driving long term value for all of our stakeholders remains our broader objective we.
We are pleased to announce an up to USD 500 million share repurchase program in next 24 months here.
In addition, our chairman and CEO Ray also express intention to use his personal funds to purchase the company outstanding.
For up to USD $10 million in the next 24.
Performance here with that in mind, we are currently projecting net revenues for the first quarter of 2022 to be between RMB, five 3 billion and RMB five 5 billion.
Thank you for your attention we will like now to open the call to your questions.
Operator, Please go ahead.
Thank you.
To ask a question you will need to press star one on your telephone.
A question press the pound key.
For the benefit of all participants on today's call.
Wish to ask your question to management in Chinese. Please immediately repeat your question in English. Please limit your questions to one at a time.
Wish to have follow up questions. Please rejoin the queue.
Please stand by what we can help Q&A roster.
Our first question is from <unk>, Zhang with Bank of America Merrill Lynch. Your line is open.
Hi, Bonnie is that lifestyle.
Now I'll vehicle lines, you don't get that leased up at all so I'm glad that Tom Yes, no I would say so.
Yes James.
The X system.
Hi, Glenn.
Glenda dissipate with Goldman Sachs.
I'll put that down.
The real question is yes.
All.
If I take all manner of things on that one might say thank you.
Sure.
Hi.
Thanks management for taking my question first a high level question your strategic full course in 'twenty to 'twenty two and thank you.
Our outlook for 2022, and how should the way I would shape out what youre their target.
Related to that any color on the fourth quarter with you there.
Okay.
Thank you.
On RDR again trying to be the highest clear without the thumbs up through bulk oil goes undone.
Loosens up RJ.
Rich.
Tim Conder, you've got some that <unk> got texture.
So our key word for 2022 will still be focused some growth.
On the user side and revenue side and most importantly, we wanted to remain the growth quality, we're going to keep it a high quality growth.
Okay.
And the Q3 because of a woman actually about sure Yugo, Tim come to pulse with us on that.
Other CRE pumping essentially.
Archie as I'll hop Federal foods available.
How does it Tim condos or figure out how to be rethought.
Just a woman.
So the.
Neither do we report solid.
Followed by sharp and don't see the thesis.
Thesis on the Q3 call switches.
For example in Q4, we maintain a very high quality user growth made our MAA you reached 272 million up 35% year over year and most importantly, the healthiness of that MAA U S. Very strong for example.
At least daily time spent per week.
Reached 82 minutes.
And that is the highest IP <unk> time spent with fee in the fourth quarter operating history.
Through all of them are kind of accrued on those shortly.
<unk>.
Sure it won't be dumbed down passenger you bet you.
<unk> EBIT.
I apologize this won't be ultra.
Sure Linda.
Florida, Charlotte It sounds really does either.
Charlotte It sounds really on the dual tranche team with his departure.
The deposit growth.
And the community engagement site, our monthly interactions.
Over 100.
16% year over year, reaching $10 billion.
And on the retention side, the 12 month retention rate of our <unk>.
As you'll remember as further increased to 84%.
What are the some of them down market you kind of woman.
We will play the Eagle sedan.
Through close will go hot.
Cool.
So with that understanding.
It just <unk>.
That's also the RSA as well Matt.
Our Union tenure.
Ladies as how all of that merger.
Vermillion sort of maintenance until that GSO auditing in surfactants.
Easily answered that.
Okay.
Thats.
When we open.
Yes, I think on hardware.
Yes.
Sure.
So.
And on top of that.
Engagement known various we notice that all of you.
These areas that come into our community has effectively comforting to our paying users in the fourth quarter.
<unk> increased 37% year on year outpacing the Mou growth rate and our annual paying ratio reached 9%.
Our improved from 8% from last 2020 and six plus.
Plus firsthand compared to 2019 and elevate.
This is a very important over the period of growth, we are able to deliver against quality set of numbers to show that we really we really have delivered a high quality.
Both brands.
Tom Wheeler at Ohio, Missouri, Angiotensin, two for Datong, <unk> Keytruda RDR Tanya.
MAA automobile.
The non core to the <unk> in the U S already arent in a year.
Maybe also coppola.
Artist the heartworm, a down quarter. In addition, which is counter Coppola, Georgia Brinjal, just wanted to call out.
Obviously, you've got both Tim come from Dallas Chicago.
As we look ahead, we still are very very confident to achieve our $400 million.
Is there a target by end of 2023 and looking at our January number our overall Ma yu.
Yes.
Reached over 300 million milestone and more importantly, the daily daily.
Daily time spent in part D. AE has reached over 90 minutes.
The momentum growth momentum remain very very strong and we're confident to continue to deliver this.
High quality high growth rate numbers.
<unk> will go through <unk>.
<unk> dongle.
Yeah.
Liquidity will come down because of a woman Tony So Daniela.
So with that.
<unk>.
Go through its incumbent either from that or does it seem that season two of <unk>.
Sometimes you don't know Hugo comes out in the morning.
So you got some Donald.
Hi.
Okay.
As we look at in the past, we think <unk> is a very unique product across the global Internet landscape.
We have maintained a SaaS and healthy growth weak for the past 13 years.
That contributes to our powerful content ecosystem driven business model and based on this business model. We are still very confident at this momentum can continue.
Well that's really helpful.
So rule of thumb that she's a solo downtown that of course should the woman.
He says about how kind of opinion important young alter ego Igor Gonzales, we're looking at kind of of course it down yet.
The higher quality, the so each of that Gulf of those.
Youll see sort of woman the toboggan coverages on entering into.
Can you just talk about the Dubai.
Yes.
<unk> taken another look at our growth on the revenue side for the past two years, we see revenue growth as important as our user growth, especially within our bass and advertising segment and they having keeping roughly about 100%.
Karen.
<unk> already arent, yet so don't doubt around.
Fortunately with the <unk>.
<unk> Rd is a hearty assortment of particularly on the contrary.
A question on just sort of woman that youll put them down there so.
So it will come down to us yet women simply <unk> Susanne.
Terrific.
So as long as essential.
And the legal.
<unk> W Hollywood, which ultimately catch up.
Hey, <unk>.
But nonetheless, you also don't know how converting solar power.
Sure.
Yes.
Controlling alter ego.
As we look into our path.
Past work priority or a resource allocation in the past two years.
For energy, we pack and revenue growth growth versus <unk>.
User growth has split 2327 main shelf and for that this year, we will adjust our base source our location.
Our energy and resource equally into both.
Revenue growth and user growth.
In another words revenue growth will play a much more important well across.
I'll work priority.
To see the room, okay, so that should hopefully be torn down.
Tom.
Or was that all that kind of report on that thanks, Let me why don't I sort of particularly in terms of kind of your plans.
Sheila Javier the nature.
But I won't for digital.
Sure.
Sure.
Should have a total of social.
At least one with a total water.
So Nathan.
Does a 10 year runway Nathan to hopefully to adopt that as well.
Right.
Sure Jonathan Themself.
Bob will go positive.
Commercial paper and the Saudi ketoconazole.
Sure.
And on the other hand, we noticed.
Dana fluctuation in the capital markets.
Our policy duration.
Stock price as well and from another perspective, this is actually helping the overall industry.
To reduce the back Bay.
For example, on the sales and marketing side and compete for talent side. There has been a very.
Yes.
Very happy intense rat race at cost across the sector and we believe that situation will elevate alleviate this year and will pay more attention to control our expenses and reduce our cost and improve our overall efficiency putting.
Every dollar we spend into more units.
The diesel we're teed up with that.
That day.
Got it.
Answers.
Our next question comes from Alex Yao with Jpmorgan. Your line is open.
Uh-huh shoot you showed in Q1.
We grew quarterly views.
Preliminary mode, we shoot you Kama.
Built on the mainframe Shan Shan Shan.
Jacob.
Transaction Tobey.
I'm going to I'm, sorry more than <unk>.
Yes.
<unk> sure.
I mean, she may be on the edge.
Okay.
Sure.
Good evening management.
I'd like to.
No questions.
Sure.
Relatively new story mode.
Can you share with us some of the ladies.
That's around <unk>.
The product penetration rates.
And then what.
What kind of ROE you want.
In our content ecosystem over the medium to longer term lastly, how do you guys think about.
<unk> potential and the revenue model for this product. Thank you.
Third store in model.
Attempting data processing was sure.
Shinhan thumbs hanging onto your device.
Sure.
At Goldcorp, Wichita, storeroom or does it turn.
They include TMA.
The female perhaps you tahira.
Tahira Toyota shipping.
Yes.
Patricia <unk> <unk> blended <unk>.
Gotcha.
The product story mode actually has already been online last year. However, our users really they.
Can't tell they don't know the product name, it's called Star amount because it's integrated in our overall user interface.
Naturally embedded in our recommendation feeds to satisfy users' needs for it there's certain product.
Cheerful story mode.
Sure.
To reward them again.
Its a placebo control, partially EBIT don't initially slightly though.
Peter on the shelf is counting how you're doing both hunting talking to a couple of thing increasing.
You have been putting in January .
Dave.
Hum.
Moshe.
Portfolio yields.
Hi, <unk>.
So you had a high dose.
So remote assistance.
Tnt's wood.
Both hunting booking model.
Sure.
The reason why we started that's targeting low interest because from my personal perspective, I think deliberately shed two it should be seen in community surround with people.
And that means may involve multiple scenarios and multiple screen, whether its mid two months' perform whether it's in the heart rate downhole format.
And does the content can be shorter and they can also be the vertical format. It can also be a live broadcasting and addressing this.
<unk> or.
Our understanding to user sneak launched the stellar at knowledge to supplement our application scenarios.
Needless, which sounds like it will have others.
We achieve a woman does acre option bladder cancers in blood.
As a young yet.
And Brian Casualty industrial woman, Sean cooking things against Arteaga story mode at Caesars reward Michelle seems healthy across even help myself with UBS.
In the last earnings report call.
Calls, we mentioned our initiatives our smart TV side.
And the.
Those initiatives are adapt to this multi scenario strategy, which we are putting our content to people, leaving ground and for the adoption of story mode, We hope to satisfy users.
Let go into payment needs and their fragmented time.
When you're young worthy the fees under particular store Remodels It was amazing.
If I can to a top.
Tim is on Kashi good fruit in the Eagle Ford.
So I'm going to in <unk>.
So again, we should either.
Yes tushar.
Sure.
Store model within the <unk> syndrome, either shifting just a little bit of a store in motive power deals what you've been doing that for November and Youll, Jonathan Archie I apologize.
So to answer them personally is upheld for time Warner.
Yes.
If you have used to story mode into a notice even though the user interface.
Vertical format, my look like Dell in a.
Product however, the actual experience will be full daily daily featured experience.
For example.
Our story mode, there's content bank from one minute to minute three minutes.
And the quality is similar to <unk> and there will be fully taxed by the screen.
<unk> layered.
Later on lithium later on occasion with automotive is assume the Puget based on kind of the igo.
The historic model typical booking the <unk> powder, Transalta Tylko Orlando Qt Veda.
We all hope so to acquire the partnership has how long it assortment the transalta. Meanwhile function touches upon book flipping the coin.
And just at the end of <unk>.
Yes.
On the content category, we can see starring mode asset very natural extension to our <unk> TV ecosystem.
Massive number of.
<unk> video has been produced by our <unk> content creators in another way those content creator leveraging this new outlet and new tools to create content.
A woman.
Yeah.
Diabolic financial need to see which ones in the <unk>.
Hi, Joseph.
The story of a woman and you could see into the depleting payer should continue on for the three total Toyota and Honda.
Is it slower and more to the general term book.
<unk> said that automotive <unk> Central Asia region.
Eugene travel.
<unk> art here.
I'll leave it to another tier San Diego Pvs petrodollar.
<unk> talked a lot about recession seems to be there for me.
Sure.
These are the take a storied model.
So the potential synergistic.
Yes.
On our product offer fee, it's always has been.
Rounded.
Surrounded by users.
And the product progress fall amongst our users need towards video content.
From several data points, we noticed that the adoption of startup mode has been widely accepted by our users on a <unk> level the penetration is over 20% and over 30%.
News will be will.
We will be subject to the sums up.
Which means are reduced errors are accepting.
And loving this new product.
It's really cool.
Zero separation.
So definitely a total or partial floor tile Shen for Ito sensor.
In the quarter for Eagle shipping label.
2061.
Coupled with that with <unk> on the hydrogen wrong quarter. So obviously the other couple of examples.
Paper PCC survival.
<unk> hundred six.
Sure sure.
So to the assembly.
Hi, This is Nathan what really does or will it storing more tightening.
Let's turn to Rudolf <unk> Associate Undrawn.
Patterson told you is that what kind of weight in terms of total total revenue.
Got you.
Youll see one kind of show you data nail.
Tushar.
How many quarters it has us looking at hydro one team.
In summary, we think.
Sure.
The client user chooses content largely based on the content category and the overall community spare and not buy the land.
For example.
Coke lover.
Karen.
Okay.
And I can or in a bottle of.
So to all of our we didn't carry.
<unk> black and.
Why.
And.
All in all.
The category is declining category and the community environment.
Helping users to decide which product they fall and in my view I think star in mode is a product can be fully integrated in March and our content category as well as our community.
In the not so distant future the penetration.
<unk>.
Could potentially reach to 50% or even above because after all.
What attracts users it's about the content category itself not the lens of the content or whether it's in the vertical format or in a horizontal format.
So is there something else.
Given store mode. So it's either you could certainly answer relative to the San Antonio Carlos Ral. Furthermore, pulpwood, what Gulf Inviolable Pall Corp debt on the types of avoiding the wassa.
How many sensors onto your hiring medium ddos, how much water soluble powders.
Sure.
Of course from the years, just how does the timing of Pasha.
Colin.
So again these are big deal.
Kathy.
Today, the Saudi hygiene Mangala.
And lastly on the commercialization potential because story mode. It's a product based on mobile devices.
Dan.
Vertical format.
On actually on <unk>.
This industry the commercialization of this product has been pretty mature.
Whether it's on the distribution of advertisement for it.
Traffic entrants for by broadcasting services.
Just about.
Our implementation on the execution of our commercialization strategy and based on our initial testing and initial data we have noticed that it has very.
Good.
Patient distribution efficiency, two commercial AD as well as <unk>.
Our live broadcasting services.
Yes.
That would be.
Our next question comes from Alex <unk> with Morgan Stanley . Your line is open.
Okay. So all of the tier one although once you see quite a new woman.
You can quite painful.
And quantum two.
Wednesday <unk> will then we would do that too soon.
Tom will take you to Dr. <unk>.
So you've got somewhat the chooser.
Woman tissue, maybe opine and Youll see by other people want to shop.
You've got Kroger by inquired about you didn't quite so ECA somewhat quiet bulk of Bongo.
Sure.
Jacob I'm going through the same time.
I didn't quite PMT and gigabit agenda routine course egencia.
That's for sure.
Thanks management for taking my question My question is related to.
Our losses controller in 2022.
Including how will our gross margin trend from Q1 to Q4. This year, assuming we don't get any game license approval.
And also that by segment.
Gross margin trend for including advertising and live streaming how would that change this year and our head count expansion plan and and also the timetable for breakeven and profitability. Thank you very much.
Thank you Alex let me take a discussion.
We agreed that profitability is a key objective.
For all of the company.
Our company, we believe in long term debt, we strive to find the balance between achieving breakeven point.
The investing for long term opportunities.
Rather than just Youll know pursuing certain short term financial matrix.
We believe by doing so as well.
Maximize the interest of our shareholders.
As mentioned by our CEO , we are confident that one maintaining a healthy user and revenue growth non-GAAP operating loss ratio could be narrowed.
Year over year basis, starting from 'twenty to 'twenty two.
By improving the monetization efficiency, increasing the revenue per Mou and the control of the operating expenses.
<unk> to achieve the breakeven point on non-GAAP basis by <unk> 24.
Let's look into the detail footfall, we aimed to proactively manage our operating expense <unk>.
Marketing spend for example is measurable and the <unk>.
<unk>.
For example, the user acquisition cost is a big component of our sales and marketing expenses only increased by 50%. While total revenue increased by 76, 1% year over year in 2021.
There is still room to further optimize the marketing spending while we reach 400 million EMEA with target. We expect the total marketing expenses as a percentage of revenue will decline starting from 2022.
And R&D expenses, mainly include the personnel cost.
Costs associated with developing the new again, enhancing the data capabilities and optimizing the new product features.
Which are critical to increase our productivity and our monetization capability.
Understood the importance of attracting talent in 'twenty to 'twenty, two we will continue to invest in R&D, but we will closely monitor.
For all of our R&D projects, we expect that R&D expenses as a percentage of total revenue will start to show significant leverage from 'twenty to 'twenty three outward.
Secondly desk.
There are still ample room for improvement in user monetization efficiency.
We are still very early stage of commercialization our revenue per Mou increased by 20% last year. The increase was mainly driven by 34% increase in vas revenue per Mou and 83% increase in AD revenue per <unk>.
Looking forward.
Those trends will continue and we expect both VAT and added revenue per Mou, what have potential to double the current levels in three years.
Last but not least as you asked the gross profit margin, while again business in the Gulf that transition period.
We are happy to see revenue contribution from advertising has arisen from 13% in 2020% to 23% in 2021 and they expect it to further increase in 2022 and this year. In addition, we expect to introduce more advanced services and further improve the vast gross margin.
As a result with the improvement of our commercialization capabilities.
The overall.
10092 gross margin you expect to be.
Slightly lower in Q1, this year, but well gradually improve during the pendency during this year and the industry. Yet overall gross profit margin will be improve that Ralph 30% in three years.
That will be all.
And for that head count our campaign for.
Mr <unk> remarks.
No one thing.
<unk>.
So we should keep our share count.
Single women Donegal mutual funds are available, but they are purchasing from Piper <unk>.
And most of it comes out based on those yet.
Even with <unk>.
Some good news of HIFU cohort.
Well things on April <unk>.
Yep.
Nicole will Michelle.
Got it.
She had a boom in multiple ways.
Actually in the past few years the growth rates have slowed for the number of our staff.
And as for 2022, <unk> limited head count increase.
My request for our HR. This year is laser focused on the business areas that require that we wanted to have decent growth and for those area. We can sure aster in head count and the rest of the business control.
Okay.
Our next question on Felix Liu with UBS. Your line is open.
So she said all of the tooling you can show up till forget CEO tissue.
What's that why is that just you're playing on what men kill us.
Easy to Ohio.
How are you able to kind of I'll call. It all taking shape, how do you take a whole lot higher youll see about how does the Danielle.
While holding the line and I'll follow up just.
Sure.
Shanghai.
That are the hard push on that.
Great.
Thank you management for taking my question.
Congratulations on the fall keyworth out, especially on the scale and performance.
I would like to ask a question on the outlook for 2022 as well as on the first quarter, especially in the light of recent macro weakness as well as the temporary suspension and new game license.
And also could you elaborate on your key commercialization initiatives for advertisement.
For 2022, thank you.
We will cover the key way to show you guys or if he's on the call.
It turns out that you could only system, even move the needle can cause that.
<unk> bulk water is something that people were eager to start application.
Yes.
Oh, okay.
Software and apply to the.
<unk> <unk>.
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Sales of the <unk>, which is the sort of empty utilized one until July one.
Linda you want could add on that portion of the woman.
<unk> got tangled up in his salary.
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Our $2 is a woman Diego.
Which of the senior debt.
<unk> <unk> from the.
If I understand it.
We all hope.
Punctured, Ohio, one Linda.
<unk> got four comprehension that Shelley.
Women already our EMEA to remain Emma.
The agenda you go you got to repeat tenure down does that mean about that.
Firstly, though.
Yeah.
<unk> consolidated gold equivalent ounces.
I would like to take this opportunity to issue to share with you the real driver behind database advertisement business.
In the past few quarters, our advertisement revenue has been growing over 100% and has been very strong and also heard suspensions from the market that scalability user experiences. So good how can you drive your advertising.
Revenue without compromising user experience. So the number one way as that we have experienced a very strong user growth at the same time our D. R.
Our AD efficiency per user has also been increasing pretty nicely.
In the fourth quarter, or <unk>, 34% year over year and on a full year level in 2021.
Revenue per <unk> increase.
<unk>.
83% and for those two factors combined together that gets used up over 100% AD revenue growth.
Beyond the $2 <unk> legal will.
Agenda.
Due to the <unk> hydro <unk>.
Sure Nicole.
Yes.
Sure.
Okay kind of Cartagena womens.
So you want to put out there from that.
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Quarter.
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<unk>.
When looking at kind of places either put China, you've of course realize the daughter companies.
Which auto enrollment.
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Solar senior housing it we hope so.
Cisco with.
Flipping from a woman.
Neither Nathan.
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It's Tim.
Without a doubt.
How are you.
Fortunately the quarter, yes.
This is Glenn.
And the second growth driver would be the value.
Easter has been increasing.
At the same time to influence our platform has been well recognized by the market. If we look in the past few years.
A rabbit downturn perspective, our unit air has been growing pretty nicely and in a vertical view, we actually has constantly breaking our breaking up our own circle and may allowing more user at more different groups of user occupation Jen.
<unk>.
Thank you Sir.
And back to Nate.
And that leads to more attention from different advertising.
For example in the past few years.
Meeting very close would be gains.
<unk> digital products and this.
Slowly extend to skincare and cosmetics.
Beverage and for this year.
We are looking to extend into verticals like automotive as a matter of fact.
Fourth quarter of last year automotive has become our top five advertising industry particles designed with only water and waste stripping the eagles future.
It really is.
So certainly the function of ataxia sleep country.
That's hanging up at 19 to reward will cover at least the top deal Jamba, even water <unk> shifting.
Sure.
Story realize particular, neither tedwomen does it temper it sounds like you've got pretty tight pellet 14 that shifting the bulk of the emotion.
Certain local competitors.
Well, assuming what sue them and take the Knickerbocker sometime in December alone.
And the third growth driver would be the visualization.
Advertisement.
More and more advertisement and will be presented in a format of video ads.
That's why we are adopting this trend launching product like top U C.
Different advertising format based on our different video formats, including made a bad.
Starring mode and the launch of story.
We will also be adapting to.
Current industry.
Advertising.
Advertisement.
Hum.
Format and all of this will help us to drive our advertising growth.
And the next few years without.
Relative to the <unk>.
You talk to.
Thank you.
All those things so again somewhat.
The center shooting up until through Florida, and a whole ton of fleet.
Swine Rudolph oncology.
What is the shipping to China.
The Eagle Congo, Ghana, while enabling us to serve attaching way.
With us on that long ago.
Okay.
RDR Union Civil maintains in key countries about sticking with you at some point.
Yeah like with Vodafone.
So we're gonna pop ups in high Tech.
Arguing NPV neutral of some heightened haggadah for telecom backup foothold.
Sure.
Archie.
No the opposite yes, it seemed to pop up <unk> <unk> compared to the Guangdong the whole woman that already are union Eugenio already I'll run the arbitral tool of option.
It won't go to Qdoba.
And in the fourth growth driver it would be our own unique advertising format.
Our native ads.
Native ads largely were produced by our content creators, they're actually combining their creativity to cost of Mei customized.
Advertising within its own CDL, it's known as our powerful native App, we're delighted to see more and more.
Advertiser has been adopting and recognize this.
Innovative format of advertisement.
In 2021 in the fourth quarter of 2021 over 40000 advertisers has been impacted and our sparkle App platform.
Repeated purchase rate has reached 75% on the other hand, more and more content creator has signed up for our smart home platform in 2021 and two.
22000 content creator has signed up.
And our Sparkle class one to two open themselves to this native ads opportunity to easily configure hasn't gone well controlled political cycle.
Veeco state Humphrey's I'm totally out of that you've got your should we assume that.
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Yes.
No woman to <unk>.
Thanks Tahira.
Okay.
Oklahoma shale.
It seems as if that form the heart, that's only corridor to Cleveland.
Kind of going forward.
We think the native App is a very very important and format advertisement <unk>.
It's like a reservoir for us to keep the advertisers the native ads the content creator is helping us to attack those advertisers, they're staying with US we're going to do next is to further integrate the native ads with more of our standardized.
Scalable advertising formats to <unk>.
Our native ads to help us to drive the sell of our other standard advertisement product, we don't need to sort of work.
To repeat under.
Both hunting boot camp water fleet on closing the whole <unk>.
Goodbye.
Sandy.
Lastly, with the lost gross driver.
Multi scenario more tight screen strategy, we believe by further integrate those scenarios and devices.
Can help us to open more AD inventories and improve our overall ad.
<unk>.
<unk>.
Well, mostly handled or portfolios on azure.
<unk> planned on the <unk>.
We're quite.
<unk> was only down a portion of it will be.
<unk> quarter would either stripping more historic.
Yes, good leaders that close with them.
Sure.
Orders hunting.
Shifting narrow clique caviar Bongo.
From a data perspective, and our <unk> continue to expand that to be the new new territory, which is the smart devices Smart Tvs and star ml, which is helping us open up more scenarios more devices.
And more video content and leverage for our commercial advertisement opportunities.
Sure I won't quote here, which is home to our telephone Thomas.
So your children with them you would see hope.
So a short window in some room for the institutions in our heart of impact.
Either.
On the negotiating syndrome.
In summary.
<unk> always believed that increased our average <unk> Neil.
It does not conflict with.
User experience.
And other way actually it actually share the same goal because we believe they factor that advertisement.
The margin depends on the platforms endpoint among users mindset and a good platform can really put that influence to its users. Hence the goal is connected.
So <unk> already Oregon as well.
Hi.
It is our <unk> HIFU.
Archie Aloha, because it should reflect losses from industrial followed by the pension the <unk> comfort.
Ultimate down the road.
What are the way to assist with that challenge the topline in shack women do you already are in yet.
Well go year with the Kingwood Tien <unk>.
It seems in the <unk> since.
Yes.
Condensate in the Eagle Ford.
As for the outlook for 2022.
Despite the macro environment headwinds and slowdown of digital advertisement because of dose groups five growth driver I mentioned earlier, we are confident on there in this environment.
To deliver a healthy stable AD revenue growth at least above industry average.
Is it.
That would be up.
Yes.
Okay.
And that concludes the question and answer session I would like to turn the conference back over to management for any additional or closing comments.
Thank you once again for joining us today. If you have further questions. Please contact me Julia Young exec.
Executive IR director or TPG Investor Relations, our contact information for IR in both China and the U S can be found on today's press release.
Good day, Thank you bye bye.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Yes.
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