Q4 2021 HUYA Inc Earnings Call
Hello, Ladies and gentlemen, thank you for standing by for the fourth quarter and fiscal year 2021 earnings Conference call focal Yacht Inc. At this time all participants are in a listen only mode. Today's conference call is being recorded now turn the call over to MS had you Lil <unk>.
Any investor Relations. Please go ahead.
Hello, everyone and welcome to <unk> fourth quarter and fiscal year 'twenty to 'twenty, One earnings conference call. The company's financial and operational results were issued earlier today and are posted online you can also view the earnings press release by visiting the IR website at IR.
<unk> Dot com a replay of the call will be available on the IR website, a few hours.
It depends on today's call will be Mr. Jia Dong, Chief Executive Officer, and Ms Ashleigh.
As president of finance measurements will begin with prepared remarks, and so the call will conclude with a Q&A session.
Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Forward looking statements involve inherent risks and uncertainties as such the company's results may be materially different from the views expressed today further information regarding this and other risks and uncertainties is included in the company's prospectus and other public filings.
As filed with the U S Securities and Exchange Commission.
The company does not assume any obligation to update any forward looking statements, except as required under applicable law.
Please also know that.
Earnings Press release, and this conference call include discussions of our audited GAAP financial information as well as other non-GAAP financial measures <unk> press release contains a reconciliation of the unaudited non-GAAP measures to the audited most directly.
<unk> GAAP measures.
Now I'll turn the call it over to our CEO Mr. Jia Dong. Please go ahead.
Hello, everyone.
Thank you all for joining our conference call today.
2021 was a solid year for <unk> as of June <unk>.
Fortify our leadership position in China's game live streaming market and.
Yeah.
Macro headwinds related to that so the siding pandemic.
Fix and evolving.
Lottery landscape.
Finished the fourth quarter with a record high mobile user base and then net revenues.
Two eight.
Clear.
For full year 2020, what we've performed.
Steadily overall.
And the rating 11 pulling the full build out.
Total net revenues and 450.
<unk>.
4 million non-GAAP net income.
So relative to the year.
Spend data.
Investments in life license esports tournaments.
Helpful.
Produced content and content creators.
Because our platform.
And continue to advance technology and product development.
<unk> in the video impacted features.
To further enhance user experience and boost the user engagement.
<unk> also broadened.
Oh Wow.
Commitment to corporate.
Social responsibility fostering deeper bonds with a community of users and broadcasters.
As we promoted our positive social values.
Nation wide.
First let's look at our user growth.
Thing esports events, and then new game launches in Q4, our user base.
Paying the healthy growth.
<unk> 10.
We are like mobile and <unk> each of the 8-K filed with the $4 million during the quarter.
Seven.
So year over year.
Annual basis.
<unk> mobile <unk> <unk>.
To 9 million in 2010 compared to $17 6 million in 2010 P. M.
We remained focused on ramping up content.
<unk> and they're rolling off.
Product.
Beijing.
We maintained our <unk> life Apus.
Next month.
Retention rate about San Jose.
<unk> average.
In 2010.
Next I would like to provide some updates.
Our recent efforts to otherwise technology and product development.
Let's begin with our open platform for third party application.
They're all at.
What she is growing rapidly and gaining popularity with users broader cost us and developers alike.
By the end of December 2021, more than 310.
Many tourists are being created and offer them.
They were on a path.
Through six open platform extensively.
Diversifying and in Lear team.
The last streaming into X gene.
With new formats.
Furthermore, in the fourth quarter of 2010 and tell you what the average number.
Using the new tools a day in crude in cruise.
Approximately 150% year over year.
And the sales close engaged.
More than 5 million daily active users the Orleans a quarter.
Over.
240.
Percent year over year when no towards the external sample is battle all Lewis.
Recently at the minute.
We need to.
Rising.
Incremental and features to help streamers increase he owes us loyalty tools that love, Colorado Costa flown by.
By enticing.
We were told it was Wednesday visit.
Also to go down.
First of all lunch our salaries are intact.
Chas, including gift drop us and one click to giant below the cost of gameplay.
In 2010, we introduced.
You know retail features.
In the first quarters.
Further enhancing game live streaming is further assess.
For instance in December we joined forces with Peacekeeper elite to low althaus. So these day campaign, featuring our live streaming sale full in game virtual items in writing I feel popular two months.
To promote in games skiing.
And as a virtual items.
<unk> life broadcaster sensing.
Notably that campaign generated a record gross billing for our live streaming sale.
Our platform was.
Users viewing.
Game title.
The Orleans, a week of their campaign growing by 15% sequentially.
<unk>.
Our general live streaming e-commerce function.
Which allow us to place orders territory Darling streaming finishing.
Peacekeeper elite event included.
In then to feature enabling users to receive virtual in game.
But purchases immediately in their game accounts by connecting <unk> with that.
We arent count.
Great rate benefiting their claims operations events like six also support new live streaming content creation and the inquiries seamless engagement in the game value chain.
Seth potentially diversifying their income sources.
Our initial success in <unk> in Asia.
And as Shay two also demonstrated.
Saverio.
Hence the cooperation with Tencent ecosystems game studios.
In concert.
Effort to propel growth.
Delivering a better experience too.
Our users and broadcasters.
Also.
We're working to.
Combine that we're managing.
Mentioned, we arent many flows and the impact to features to enhance mutual benefits.
Has any new clothes connect connect us with application developers and impacting features in cars with skin care.
Companies, we can leverage those.
Synergies two in Integra rate X.
X gene and the downstream partners.
Raising our platforms.
<unk> as an industry leader.
For corporate.
Social responsibility.
We have leased about an hour.
Our efforts.
Our grading our risk control and.
Compliance sits in his pending our we are volunteer team and encouraging a lot below cost us two quieter more content in pursuit.
All positive social impact.
In 2021 over now.
<unk> thousand 600 broadcasters.
Our platform.
Our campaign to promote.
Has there and then more positive social environment and they performed a probe Cassini, Missouri.
<unk> 3000 hours a related live streaming.
Covering a wider range of topics.
Such as and Florida educating.
Volunteer social activities and cultural heritage.
We also made encouraging progress with our business.
What's the expectation in that initial meetings in the past year, providing gang videos appealing to a wider range.
Audience Democrat.
Demographics.
Furthermore, our.
National product.
Nemo TV, Nicole theater for the user expansion and significance to.
Revenue growth driven by Nemo solid.
Performance International business is emerging as a growth driven for our company has today.
Elaborate.
Six two tuck.
In just a moment.
Last but not least although.
Growth slowed in the first quarter, primarily due to a softer macro environment.
Sustained.
Our strategic efforts in content investment to expand our offering and driving continued user growth.
We believe is a key to our sustainable business development.
However caused higher costs and lower margins for the first quarter overall.
Hello.
All of our accomplishments.
In 2021, and they are ready to embrace the challenges and the opportunities. So new year is likely to bring as we enter 2022 macro.
Economic uncertainties and.
Lego regulatory.
Changes continue to pose for Asia for Us.
We are expanding.
Lansing, our softer start.
Comparable with previous yes.
Nevertheless.
We remain confident in our business fundamentals and operational capabilities, given our leadership position in the games, Jamie in tax rate and our strong value.
<unk> positioning in the massive game and the esports market.
As a market events.
Out end user sentiment returns to more favorable levels.
We expect to see a recovery in our financials with our investments paying off.
Looking ahead.
That to deliver long term value to our stakeholders.
So we are with strategic great folks in reaching some quality and diversity of our content cultivating.
Content creators and advancing technology and product.
Innovations as well as further improving operational efficiency and exploring new business opportunities as we strive to support a better half.
Community.
Given that E sports titles are now included in the official Mendel programs.
Asia.
Games, we see tremendous opportunities to leverage our strengths in.
In esports content to enhance.
Brand image.
And then promote overall in territory where payment.
Well Seth.
I will now turn the call over to our VP of financial hedge a rule.
To share more details.
Our operating metrics and financial assessments Ashley. Please go ahead.
Thank you Mr <unk>.
Hello, everyone.
Mr <unk> remarks.
On.
Our content enrichment.
The expectation.
Professional esports content.
The model on our platform.
During the fourth quarter.
125.
Esports tournament.
Generating total relationship.
In Italy.
<unk> and <unk>.
Notably too.
2021 season.
What championship.
2021.
Record high real estate on our platform.
And peak concurrent.
Okay.
Compared with the addition.
Awesome.
Thank you.
Former Theocrat International 2021.
Simple.
Also.
I'll, let users.
Furthermore, we have some exciting news to share about esports forecasting right.
Following our agreement with TK.
Yeah.
Richard.
2021 through 2024.
Testing in China for LPL.
And LPL.
We are securing quite quick.
Right right.
Esports tournament.
Tony Malkin here.
Only ship with Oppenheimer.
Right.
In November .
Exclusive training agreement with <unk>.
Yeah.
In 2022 and 2023.
Yes.
You too.
<unk> mobile ecosystem.
Well.
Yes.
Yes.
True.
Collaboration will help us.
The license coverage for those things tournament.
High quality international.
Content through our platform.
On the content front, we surpassed 64 esports tournaments.
Entertainment PTC shows in the fourth quarter.
Well, which total relationship which one.
In the fourth quarter.
40%, yes.
Yes.
Yeah.
Final season.
Okay.
Thanks.
Yeah.
Fortunately for honour of Kings.
Johnson <unk> Johnson.
Oh Wow.
Our top performing sales people.
Going forward we plan.
Perhaps through proactively generate more branded programs.
Further increase the proportion of self produced content.
Our content portfolio.
It sounds like Youre offering.
How do you differentiate it.
You saw traction.
Return on investment.
Reaching our reach.
That's two main content the surface.
During this process.
Our existence.
And establishing new cooperation with video content creators.
Continue to enrich radio content offering on our principal.
A majority of the teeth broke catch it.
Awesome.
I D.
And radio content creation.
Excellent.
And number three.
And we do really well.
Sequential growth in the fourth quarter.
We believe our efforts.
Energy, reaching our video content and live.
Streaming content.
Oh Wow.
Growth in content consumption as well as in Hawaii.
Most of those come with auto station opportunity.
In terms of our international business.
No T refurbish and au increased to more than 13.
In the fourth quarter.
Highlighting strong user growth in Indonesia.
Particularly by cooperating with <unk> and podcasting local esports tournaments.
We solidify our position in that region.
We've seen Nemo TV, we continue to entertainment to their chest like shell and.
I watch it.
More comprehensive content ecosystem.
Which also helps to enhance monetization capability.
Our overseas revenues.
Over 110% year over year in the fourth quarter.
Constantly with our cooperation with <unk>.
<unk> talent agencies.
Most of the things.
And healthy revenue growth.
Yes, let me walk through our Q4 financial results.
Unless otherwise that's it.
So closely.
Oh.
Yes.
Yes.
For the fourth quarter of 2021.
Our total net revenues.
Of course, it may three.
Two eight.
Equally from site.
1% year over year.
Our live streaming revenues.
$2 6 billion for.
For Q4.
Compared with Q3.
<unk> from RMB, two 8 billion for the same period.
Yes.
Due to the lower number of paying users.
English.
All right.
Partially offset by schools.
Licensing revenue.
My close.
Two for me.
Perfect.
Great.
We saw a decrease of 10.
Oh, yeah life from fixed.
Q4 last year.
251.
This quarter.
That's right.
Uh huh.
Advertising and other revenues.
Chris.
That was one 6%.
Yes.
196 million for Q4.
Primarily chips inside.
From content licensing.
To provide more color on content licensing contribution.
Our content licensing revenues.
Native to the licensing of esports tournament.
Right.
I recognize according to schedule.
Awesome.
Frustration in this category the June quarters.
Cost of revenue increased by 17 one.
To RMB, two 8 million for Q4.
Due to the increase in revenue sharing fee and <unk>.
Content costs.
That's fair.
Yeah.
Revenue sharing fees and content costs.
Alright.
5% to close to <unk>.
Two points.
For Q4.
Primarily due to the increase in spending on esports.
Clinton and the increase in revenue sharing fee.
In relation to assist them.
Incentive programs.
But just your 90.
In past some content cost in relation to <unk>.
'twenty one.
What's going to hit that pretty risky.
Mainly because it's slashed.
In Q4.
You bet.
One single quarter.
Whereas in the past usually two quarters Q3 Q4.
<unk>.
Bandwidth costs.
But my 0.6% to RMB 183 million for Q4.
Primarily due to an increase in bandwidth usage at.
Some of our higher quite according to surveys.
Launch esports events in the quarter.
Gross profit was.
$1 1 million.
And gross margin.
Italy CLO for Q4.
Excluding share based compensation expenses.
non-GAAP gross profit was.
$16 2 million.
This book market.
non-GAAP gross margin was.
It was up one 6% for Q4.
Research and development expenses.
Slide six.
6% to RMB 206 million for Q4.
Primarily due to decreased personnel related expenses.
Sales and marketing expenses.
Slide 13, 1% to RMB $280 million for Q4.
Suddenly due to increased marketing expenses to promote our content cause that.
And Brendan.
Particularly in promotional activities for E sports events.
Actually our fault.
I.
Personnel related expenses.
General and administrative expenses decreased by five 8% to RMB.
For Q4.
Hi, Mauricio.
<unk> professional services team.
Other income was RMB 50.
This is a 56 million for Q4.
Compared with RMB 90.
<unk> 5 million for the same period.
Of 2020.
Primarily attributable to lower tax refund and Gulf of Mississippi.
As a result operating loss was RMB 457 million.
Fearful.
Compared with operating income.
One.
On April seven.
The same period.
2020.
Excluding share based compensation expenses.
non-GAAP operating loss was RMB 386 million.
And non-GAAP operating margin was negative.
One 8% for Q4.
Net loss attributable to <unk>.
With the recent yet.
For Q4.
Compared with net income attributable to <unk>, Inc.
Oh sure.
250 feet.
For the same period of 2020.
non-GAAP net loss attributable to <unk>.
With 242 million for Q4.
Compared with non-GAAP net income.
Suitable to Inc.
$306 million for the same period of 2020.
non-GAAP net loss margin was eight 6% for Q4.
Okay.
Or what.
And B 131 for Q4.
non-GAAP diluted net loss per ads was RMB one.
No one's fault careful.
As of December 31, 2020, we had cash and cash equivalents Justin.
And short term investments Oh Wow.
Ellen.
Compared with that.
One one.
September .
2021.
Moving onto our full year 2021, so itself.
Total net revenue for 2021 increased by 4% to RMB, one 4 billion.
So I N E 10 nicely again for the prior.
Yeah.
Last streaming revenues were $10 2 billion for 2021.
Compared with RMB 10, 4 million for the pilot.
And we're testing and other revenues increased by 19, 3% to RMB, one 2 billion for 2021.
I N V 600 in Sweden.
Yes.
Notably advertising accounted.
Accounting for approximately 10% of our total revenue for 2021.
Some five 5% from 2020.
non-GAAP gross profit was.
Once that one Ian.
Yeah.
non-GAAP gross margin was 14 four.
For 2000, plus a one.
non-GAAP operating income was.
200 and.
$60 million and non-GAAP operating margin was too closely.
For 2021.
non-GAAP net income attributable to <unk>.
With a full.
<unk> hundred 54 million.
And non-GAAP net margin was 4%.
2021.
non-GAAP diluted net income per ATM.
M E 188 for 2021.
To be mindful of the length of our earnings call for the.
Other full year 2021 financial results I will encourage listeners to refer to our earnings press release.
Can you tell us.
With that I would now like to open the call to our through your questions.
Thank you ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question. Please press star one on your telephone number for your name to be announced if you wish to accounts of your request. Please press the pound or housekeeping.
For the benefit of all participants in today's call. If you wish to ask a question to management in Chinese. Please immediately repeat your question in English once again Thats Star one quick questions first.
First question comes from the line of Thomas Chong from Jefferies. Please ask your question.
Somehow ctrip on each home largely it's all over the U S.
Well sure quandary of woman.
One of them.
Wanted to talk.
<unk> got to keep it on the hydro.
So that trend.
Okay.
Summer.
Thanks management for taking my questions. My question is about the trend in 'twenty two outlook, Okay management, Australia about the overall strategic direction as well as the trend for us in revenue. Thank you.
Oh, well I apologize.
<unk>.
So yeah with their closings.
So she the Qingdao agenda, how is it going to the city.
Yes.
How long, arguing in China, who then than they do.
Good answer.
<unk> thought about channel by Sichuan.
<unk> generates.
Oh man, we honest she won't continue booties and say <unk> versus <unk>.
Tissue can move in January to deal with so I too quiet way packaging in downtown Detroit.
Yeah, well these are tangible sushi teaser.
Tien tsin.
Thank you for that question this is from.
Mr Dong CEO of the company, we always believed that yours.
<unk>.
<unk> of our business grows and we will continue to have a user driven carrabba's for our long term development strategy for the year 2021, our user increased by six 4% with Q4 and the year reached 85 4 million further cementing our leading.
Mission and game live streaming.
In 2022, who Yao will continue to increase our market share in game live streaming and the cement our leading position of course, who we are we'll continue to explore the dovish.
Diversification of our business and to enhance our monetization ability.
Yeah.
Although including agenda tagging and.
Generally the Netherlands hunting 10 minutes is eating teen total I forgot it Georgetown toyoda attending censored at homes in Georgetown to Danilo.
Season to date on it.
Ideally.
<unk> <unk> during the funding tells me he says Gee Visitant promises Shuang bingo players, who can do the wenzhou, how addressable shooting things hitting the U.
In order to hit our ear, so grubbs targets <unk> in 2022, we'll continue to invest effectively on the content and product try to cover the midstream tournaments and esport events and also to enhance our ability to make itself produced tournament.
<unk> and content and increase the proportion of self produced content on.
On top of that well will continue to acquire streamers to adjust our incentive schemes. According to the market dynamic and also keep an eye on overseas live streaming and video businesses.
So anyway.
So Sheila you want a hunting season, Georgetown she needs to book Hydro <unk> Angola Chisholm included here.
<unk> also initiated a union annuity.
So they will figure out how 18th which hasn't been congener corridor condom pencil.
Tianjin save quite a bit into the singers I'm listening.
<unk> tagging environment.
Touch on Pink, Idaho, raising shuang, and Gorgon harvesting timber and J P. M. Suzanne Yeah, where there you could see the pattern.
On top of that we will continue to it because it's a strategy it's a technique.
Knowledge and product trying to have a virtual streamers to optimize our audio and video technology to improve the users' viewing experience and to promote interactive features on live streaming as well as mini programs.
Also we'll try to step up our effort and partner partnering with Tencent and explore new operating models and commercialization models for esports as a whole.
In terms of the operation well, what try to enhance and continue to be compliant in our platform trying to adapt to regulatory changes and to realize.
Realized long term business development.
Okay.
For sure the winter weather.
Nah funding earn young woman.
With a more balance sheet Shuang, you don't burn that you're not going to shoot up actually jumped out.
Great question, John what I mentioned before from 14 had a needle.
Yeah actually Nashville.
Michelle through either share it you would assume.
<unk> safety to Jamie pushed without your passion search at <unk>.
Can you sort of thinking.
MS Ashleigh VP of finance as to the trend of user growth and revenue outlook for the year 2022, our target is to keep the mobile user number increase for the year.
By enriching our content and our platforms and also to enhance interactions with all year says it is worth noticing that the numbers has a seasonality changes pretty much depending on the scheduling of the big events as well as holidays and other seasonal.
Issues.
Our official word from you know well know quite how 'bout too buoyant with a pool.
Full face in ways that are union.
So don't know when considering careful mandate.
You'll hear more international from one thing to your question I think it does.
You shouldn't think of there.
Women are near somebody in there. So look it's issue I'm sure. This is Andy.
So the actual cash.
You would have or don't come Bush issue about what needs to go.
So you'd actually.
So you shouldn't see that pushes ship gotcha.
In terms of revenue, we noticed that the paying behavior of all users in.
In Q4 of 2021 somehow was affected by the macro economy the negative impact.
And because these are you know regulatory changes and macro economy impact is still continuing we expect that for the first half of 2022, our revenue probably will continue to be under some pressure, but generally speaking the fluctuations in our revenue mainly due to external.
As a company will continue to work on and have the right confidence that our business will enjoy a sustainable grounds for the long term.
So we're not sure tusa Youll horsewoman year old fashioned equal once you know what.
And then Tom coordinated on total tissue don't deal with it sounds about right.
Yeah sure. Thanks, Shashank planting Holton Michel Who'll go through the whole place what comes out of attrition.
Generally speaking the users are the key to our business development and will continue to have content driven user growth and we believe that when the market situation turns better our business will return to a you know upgrowing.
Business growths.
Okay. Next question. Please thank you thank.
Thank you. Our next question comes from Lee Chung from Bank of America Merrill Lynch. Please ask your question.
Oh, Hi, Glen is that why somehow.
Well the one key Groucho guangxi narrow and told you that youll see a woman that in Europe . I mean, I told you, we all kind of women's with BMO listed without onshore than offshore, but I think they'll do so yet.
Oh pardon me until later told her that.
Thank God guanine pension settlement, the narrow format <unk>.
Oh, so you're fine Thanks management for taking my question. My question is mainly regarding your contact strategy, particularly on the esports tournaments at all consider all your competitors are judgment calls talking about our recently Oh sure yourself here, yes. Thank you.
Yeah.
All of that.
When the judge allocate other genes.
When it comes to the tissue the way women.
If you are seeing in women's a king.
But so <unk> yields.
Zero.
So demand for pulpwood bunch entertained and he says he published since the disaster could you see the move to Paul <unk>.
Tender.
Biogen size, if I'm in women.
Appreciate you want to.
So they couldn't do it at a time.
Now to Luna is negotiating man.
You can run them and quite honestly the.
Corner Ya.
Please answer.
Can you see an ocs in Hep C. P C.
Thanks Sheila.
It's looking time Alonzo <unk> excuse me. So again, it's really on the same key coordinated.
Coordinated zeal inside the Eagle Ford and.
And are seeing early Amanda to gain for them. So they.
<unk> to the <unk>.
How big a quant funds there.
Oh the hits.
The woman came in at $2 <unk> yesterday, all of that and as I talked to her scope and size to dial down into the other big adventure.
Yeah totally.
Women's that Youll see from in man.
So you could sort of gung Ho and bushings and going down one data and say the tongue at the Tianjin <unk> Needham <unk> <unk>, sorry, all Union Pearson we are.
Paula you buy also broadband churn this answer so I'm going to quote a little down in Reeves County.
Yeah.
Thank you for your question. This is from CEO , Mr. Dong in order to enhance our competitiveness and continue to provide attractive content for our users. We will continue to purchase and establish a high quality content, including IP tournament's self produced events as well as PTC programs and.
Streaming content to be more specific in terms of the IP tournaments will continue to provide popular.
Tournaments and events in the mainstream out games for instance, in a league of legends China.
We have the LPL in China as well as the only platform that provides a L. C. K L. L C L.
You'll see us as all S. P C S.
In terms of honour of Kings and PS keep our elite we are also covering the men.
And tournament as well as the professional league.
League in China in terms of our new Marlborough New games for instance, L. O L. Mobile we had established the live streaming all far its professional league R. W. R. L Y Twisted League and I also mentioned that last year in November we have established two year.
Our exclusive IP agreement with E. S. L far taught ought to see US go and this actually help us to make up for it the shortcomings, we had in the past in a portfolio of games and make it a more complete our platform that provides professional live streaming content all Florida.
Again and to be more specific as of year 2021 Q4.
We live streamed 124, IP games, and with a viewership of 600 and slot and 5 million in total.
<unk> <unk> Hudson with sushi.
You'll do.
The punch in a sense as to in total.
Again, one <unk> women interested we can do it.
<unk> is essentially just some sense of existing therapy.
So we when we can.
Hedging gains if I may John Sanchez.
Now that doesn't mean I'm bummed minutes without necessarily this is shuang.
Niggard PD.
Sheldon will pay off.
Thanks to the whole team while IPD the juices.
We also gained insights Peter so my mandate powerful base, putting be totally valid thoughts for this engine called the line then yes.
She does so we generally things such.
<unk> taken in Cushing.
All in all Union Nekoosa, So as Dan says the PUC, Jim with your bank covenants or redeem Hussein.
Linda Sullivan.
Okay.
So you mentioned much of our inquiry.
Until that time to the <unk> timber.
CODI.
We will continue to invest effectively on high quality IP events, and while also considering the cost efficiency, while we are purchasing them.
Even though some IP events or top events. They are quite expensive, but we believe these are very important for us to keep traffic of yourselves and provide better services for our existing yourselves in terms of the self produced content. The strategy is to increase the proportion of cells.
Produced content by making better use of.
Our program IP metrics I smell, our self produced a tournament.
For instance, right now we have of who you are content that covers mobile gaming arena.
Show your dancing Desai as well so all stock comp more than they are raw cop Cockle Bay and forging top and we also have made many seasons also got line entertainment programs as well and gradually with forum, a very good and solid user base for these events and.
In Q4 of 2021, the total viewership for our self produced content and <unk> content.
Reached to $153 million within year on year growth of over 40% generally speaking self produced contents can give us a better ROI and for the longer term help us to balance the cost for making all the content.
Thank you.
So blending realtime in solar will mean tissue tickets will turn over to Tony was I mean with me.
This is a tangible she needs will go she needs to book.
Also in the knee she wanted to know how the consumers become subordinated thomasville a monopoly.
Seafood is your table.
<unk> and good attention to the tongue.
Turning to the generic so it's some collateral tackle a machine that yields the sciences, Jim He gets vornado.
There's existing maintenance I mean changing geared towards that.
And this one in routine pool from roofing Pioneerof singtel.
Sinton slipping me alone puts a blended all in sustaining these haytham.
In terms of live streaming on top of our.
Keeping investing in the <unk>.
<unk> split to sell less contracting them. We will also explore virtual streamers as well as virtual studio technology is trying to create more innovative and more cost efficient live streaming content. We would also trying to launch more interaction technology, so as to create a more fun and have more in.
Our actions and engage the users.
So by combining the existing tournaments programs and live streaming content. We have what we would also trying to explore video content in order to enrich our content on our platform and to create some synergies between the live streaming and video content.
Next please thank you.
Thank you. Our next question comes from Brian Gong from Citigroup. Please ask your question.
Okay.
That's my favorite for taking my questions. This is Nelson again on behalf of Bryan.
I have a question on margin and cost can management share your view on content cost and extremely cost outlook in 2022 and how about.
The margin trend outlook going forward.
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Thank you said that question actually.
VP for finance in order to increase our attraction to our streamers since Q3 last year, while maintaining the split policy are stable. We had tried to provide more incentives for streamers. According to the market dynamic and due to the year end event.
In Q4 last year, the split ratio was slightly higher so that was a seasonal impact.
Based on our overall operation of the platform and monetization ability I believe that our split policy for the streamers on now quite attractive and for now we expect that total split at a ratio for the year 2022 will be at the same level, we had acquired.
The year 2021.
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Forward continue our investment in content and also to carry forward our split policy. It seems that the second half of 2021, we believe that the content cost as a percentage to our revenue for the year 2022 would be slightly higher than that.
In 2021, and therefore, the whole year gross margin rate will somehow be affected a little bit in terms of operating expenses well try to continue optimize our expense.
Operating efficiency, but due to a slightly lower gross margin level, our operating margin will be lower than the year of 2021.
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Given the major challenges for the whole industry and macro economy, we believe that it is necessary for us to continue to invest in content because it would help us to increase our competitiveness and increase the market share of course, and we'll try to be more optimized in.
<unk> sells for operating efficiency for instance to be more specific in analyzing the content all lie and to allocate our resources to make more without and efficient for instance, we would probably also trying to optimize our bandwidth technology make it more efficient and.
Also to optimize on our operating expenses such as marketing expenses.
Our content investment strategy enjoys a certain level of flexibility, which can be adjusted to market situation.
And for a long time, who here has always been very healthy in our cash flow and our financial performances at which I laid out a very good foundation for further investment in content.
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So it was on time travel shutdown, what does one thing that you're seeing now.
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We are a T shirt with a figure that was for me I thought was injured tissue.
And yet you say you're going on holiday because suddenly you find especially shocking.
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Shoulder that jumped out chinalco wastewater.
Right now the revenue situation is somehow subject it to the external impact as we mentioned before we have a good foundation for our user growth our year since our royal to our platform. The second months, our retention rate for our users on the on the application is 70.
Per cent and we have very nice commercialization capability. So when the market situation turns better we believe that our revenue will continue to rebound and grow.
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Not only are union feature bushel with S&P should show growth I think you should.
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Some students who don't need somebody can go to zero I think everything from Neil I'll add a sickle cell patient in June to sugar.
Central Jumbo, but you tend to jump into total she crazy good culture.
The way how you.
Definitely people showed that chancellor.
We actually at least she couldn't neither trumpet.
On top of the gifting.
We would also actively explore other models for revenue and businesses for instance to have up overseas live streaming or video was the advertisement income we could also make money out of IP yourself.
No no streaming revenue in the year of 2021 accounted for over 10% of our total revenue and we believe that for the mid and longer term. Our now streaming revenue as a percentage, we'll keep we'll keep growing in terms of the profitability and margin and we'll continue to optimize our cost and operating.
Efficiency and to make our resources more effective and well also have a better evaluation of content ROI and what's the competition landscape it becomes stabilizes.
Be able to address our split all cost as well as our other cost for our content producing and our loss rates in overseas business will continue to narrow down so for the longer term I believe that we are able to drive a profit.
Thank you our last question please.
Thank you last question comes from E Chung from China Renaissance. Please go ahead.
Hey.
So it's it all it sure what's available however today.
Governments are preparing market.
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Total official confirmation question, especially on itself how are they when they got into the hotel a snake to Hawaii senior notes in March due to the markdown rate.
Thank you for taking my question.
A quick Australia County over destinies congratulate short update on <unk> opinion on our target for 'twenty two.
Yeah.
How do you think of when people are quite nice.
Okay, you cannot Arlene our union well, yeah, we should should I take the GT, that's inkjet and biogen's houses how cola FEMSA in one chunk out Alisha Cingal shoulder, yeah, Tobi issue that homepage, how go up I'm sure you bet, usually got some time.
Our Union Trunnion shuttle tankers to the shoulder passengers.
In Q4 of 2021, our overseas business achieved a very nice positive progress on Wednesday may you over 30 million with a new record high and our revenue also registered and year on year 110 percentage growth the overseas business.
Give us about 4% of that revenue a four hour of our company in a year or 2021.
I'm Young woman Youll Hot season that prevents you from Oh My God. This is Joe.
Julian the teacher, so you'll watch Humber Natasha Yeah T shirt.
Way more than that.
You don't find me in surety Couldnt take or choose your shuttle tanker, you're finding though you'll see her social need them July well, mainly it's in South Africa touched on Asia Fang is absolutely that neighborhood.
I'll come on to leak in Iraq, Shanghai ear tubes, you showed a pinch in the negotiation.
In the year 2021, we allocated resources to southeast Asia in those key areas, while optimizing our cost will increase our user base in terms of our Nemo content, while providing a popular games and tournaments, which are popular in region in the original level we had.
Also increased pen entertainment content on our platform to make our ecosystem, where a complete and it is also favorable for us too.
And Tonight on our content.
See our union that you're getting in on.
<unk> Wonder how are.
Yeah, John tissue as she shops or they go to the balance.
Our surety book or her T shirt 14, now say showroom format C. Ron Nichols should I go.
So quite a bit because sometimes pension settlement negotiation that you're watchful, but some decreases.
Based on our experience in 2021, we will continue this strategy for our overseas business in 2022 with a goal to further consolidate and increase user base and increase our revenue and also at the same time trying to optimize and reduce loss.
Okay, great finish to the author.
Right. Thank you so now I'd like to turn the call back to the company for closing remarks.
Yeah. Thank you once again for joining US today. If you have further questions. Please feel free to contact <unk> Investor relations through the contact information provided on our website or TPG Investor relations. Thank you.
Thank you. This concludes this conference call you May now disconnect. Your line. Thank you.
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