Q4 2021 Douyu International Holdings Ltd Earnings Call
Good morning, and good evening, ladies and gentlemen, thank.
Thank you and welcome to adult <unk> International Holdings limited.
Fourth quarter and full year 2021 earnings conference call.
At this time, all participants are in listen only mode.
We will be holding a question and answer session. After management's prepared remarks.
I would now like to turn the call over to your first speaker today MS language Kang IR director at all you. Please go ahead ma'am.
Thank you operator, and Hello, everyone welcome to our fourth quarter and full year 2021 earnings call. Joining us today are Mr. Shao Ta Chen Chairman and Chief Executive Officer, Mr. Mimi.
<unk> Chief strategy Officer at me through how Tao Vice President of Finance.
You can refer to our financial results.
Our web site at IR Dot, though your dot Com you can also check a replay of this call when it becomes available in a few hours.
IR website.
Before we start please note that this call may contain forward looking statements made pursuant to the safe Harbor provision for the private Securities Litigation Reform Act of 1995. These forward looking statements are based on management's current expectations and observations that involve known and unknown risks uncertainties and other factors.
It's not under the company's control, which may cause actual performance.
Without performance out human help the company to be materially different from the results performance or expectations implied by these forward looking statements.
All forward looking statements are expressly qualified in their entirety by the cautionary statements risk factors and details of the company's filings with the FCC the.
Company undertakes no duty to revise or update any forward looking statement for selected England. So circumstances. After the date of this conference call.
I will now speak on behalf of our chairman and CEO , Mr. Shao DHL.
In the fourth quarter when they were they had way I'm ethic to explore new growth driver for you their traffic and the revenue my revenue generation as we maintained a stable development of alcohol bidding it says.
Total net revenue was two point swiftly billion RMB and average paying yoga couch reached seven point swing Mellon and the fourth quarter.
Mobile and they use for the fourth quarter increased by seven 2% year over year to $62 4 million.
And now your growth was mainly driven by two factors.
First during the traditional esport tournaments season, we produced quite a range of high quality content to capitalize on the alleyway did any serious surrounding tour them and in that way.
Also real out a series of promotional events in cooperation with game developers to drive our mail growth.
Second the mobile version release of the blockbuster game L. O L well dressed helped drive additional traffic to our platform.
Leveraging our industry, leading al oil streamers extensive operational experience and comprehensive content library.
Able to successfully develop and launch a range of exclusive content and promotional campaigns in collaboration with the game developers.
By connecting our path for them streamers developers and distributors, we were able to develop a comprehensive content ecosystem to secure leading traffic inflow for L. O L Wild west.
Finally, we leveraged the advantages of our integrated content platform to further drive growth through our part I was sitting in promotion of high quality shop meetings.
Turning to our content update soon.
During the quarter, we continued to refine our content offerings for both esports and naive E sports categories.
As the continued development of our integrated content ecosystem, combining live streaming video graphics and in past few communities. We also refined customized operations for each game to highlight its unique features.
Even as we continued to offer traditional live streaming content and services, but also experimented with innovative content format and operating methodologies to further improve our game centric content system.
Meanwhile, we continue to collaborate closely with game developers to enrich why reis content formats improved user engagement and enhance the viewing experience by providing high quality large scale esports content and fostering interact team communities.
This collaboration efforts enabled us to enhance match engagement and attract new users by establishing an integrated ecosystem.
Combining official tournament life streaming content on demand, we do payback info graphics and real time community discussion.
What is the continuing development of the gaming industry, we are seeing increasing prices on content right for large scale esports Herman.
Meanwhile, the growth in traffic and revenue from these events have lacked Bobby hand, the associated corporate cost increases.
Following a series of data analyze it and simulation studies with funds that although esport tournaments continue to be important the value. They bring has been declining and the rapid rise in copyright costs have become a burden flower platform operation.
Therefore, we decided to adopt a selective copyright procurement strategy starting in 2022 .
Each tournament.
Life and evaluate our ROI based on expected traffic contribution revenue contribution and related costs to determine our pulp grade copper IP price. So we can ensure the best allocation of our resources.
As a game centric platform will deliver value to our users see what kind of system production of high quality content and our exceptional operational capabilities.
Two years of accumulated experience, we have established a industry, leading gaming content management team and a stream of population face to them.
Furthermore, we have amassed and matched dream of resources and the game operation expertise with.
I think key to maintaining and growing our platform traffic.
Regardless of.
Of our acquisition of broadcasting rights for certain tournaments, where they continue to deepen our collaboration with game developers and distributors, while increasing investment in our self produced content to further increase our competitive advantage in the industry.
During the fourth quarter, we boosted our investment in proprietary content production.
<unk> producing over 110 esports tournament.
Notably we hosted the adult E. L O L World must legend series, a nationwide Herman <unk> supported by the games developer illustrating our ability to support it with high level tournament's in house.
We continue to recruit and quality way, a large number of potential professional gamers by hosting self produced tournament.
Our tournaments are highly regarded by both game developers and E sports teams.
And I expect it to be part of the official professional tournament system.
We also continue to make innovative development with our video content for instance, we produce a number of P. G C related offerings.
It's actually ask well why do shows Ctrip payer preparations for the K P. L tournament as a warm up for the K P. L finals.
In addition, we invited all Toyota choose top tier streamers to participate in our self radios out outdoor show go fishing held in conjunction with the international Dota Two championships.
The shell proved to be very popular and boosted community engagement.
Have you seen this game segment.
Meanwhile, we produced exclusive content for megahit games, such as in Iraq, I play point.
Or they're improving user engagement and stickiness.
We invited game producers gaming media editors and streamers to participate online talk show.
Which further boosted user participation and enhance the community experience.
Along with the continued improvement of our game centric content ecosystem will also depend on our cooperation with game developers, especially for newly launched games.
For example, we worked closely with Dan developers after blockbuster mobile game L O L. L derisked.
Our participation in the game's launch including the initial stream by the official sport person and the rarest task based incentive yoga campaigns raise the profile of both of the game and our path for them.
In addition to official collaborations with also offered virus feature content.
I tried sky teaching streamers, how to host the game related Kiwi sessions to create a supportive and engaging gaming environment for the community.
As a result of this effort our platforms L. O L will drift of rerouting traffic has maintained a leading position in the industry.
Going forward, we will continue to deliver and integrate or wildly off game content and enhance operations to create a game R&D community.
To provide a better user experience and to maintain our industry leading position.
Furthermore, we will analyze they all ROI for each game segment in <unk>.
Aid optimization opportunities and improve our platforms are all putting efficiency by enhancing our eye for each game.
Yeah.
Now turning to monetization total.
Total number of paying users in the fourth quarter was seven point swing Mellon Where's the outrage quoted a pool of 305 arm b well.
We continue to enhance engagement and consumption levels from our core users through sustainable operating strategies and promotional campaigns.
Enabling us to sustain a housekeeping for all of our pool.
While maintaining the stability of revenue from what's your gifting, we will continuously endeavor tweaks for new revenue streams.
In terms of products and technology as we build our game centric comprehensive content ecosystem. We added additional innovative features to existing functions and continue to upgrade our streaming platforms product.
For example, what why tea and intact team any of the lifeblood child commentary are highly valued by our users.
However, our inherent limitation of lifeblood church is the difficulty in retaining the content that they generate.
To resolve this we launched the live streaming how chat channel.
This feature is either manually analytes or use AI to process training discussion topics generate he do a game stream from resources included including lifeboat, each half commentary and non real time content within the community.
Trending topics as an aggregated and deliver to users through this channel there.
Thereby increasing time spent are willing video content and community engagement.
Full rollout of this features what enhanced user experience and by search the sense of community our path for them.
To summarize we have being ever more in a way it has on both the content and operations front.
Even as we add few the our strategy upgrades that has maintained our leading position in the traditional life do you and the industry.
As it reads out of our multi dimensional collaboration with every more game developers. We have developed customized features for different games segment.
And providing users with content that integrates life dreaming leidy graphics and interactive communities.
We have continued to explore commercialization initiatives leveraging our competitive strengths in user engagement and paying behavior.
Going forward, we will continue to execute our product streamer and content strategy to further explore and strengthen our monetization capabilities and optimize our financial performance.
Okay.
With that I will now turn the call over to our Vice President of Finance, Mr. The House, how to go through the details of our financial performance in the quarter.
Okay.
Thank you Li Hello, everyone.
Total net revenues in the fourth quarter of 2021 increased by two 6% to RMB two <unk> billion.
Less streaming revenues were RMB 221 billion, an increase of six 7% from RMB 2.07 pillars to the same period of <unk>.
While the size of how core paying users largely remained stable.
The operational strategy has helped to improve.
Monetization efficiency.
Resulting.
<unk>, 7% increase.
To RMB 205.
Fourth quarter from RMB 273 in the same period last year.
Advertising and other revenues were RMB 118, 5 million comparatively is RMB 198 point plus made it in the same period of <unk> 'twenty.
The year over year decrease was primarily attributable to the continued exploration of new commercialization models by using a portion of that types of traffic that could have been directly monetized.
Simultaneously, we were also partially impacted by soft demand for advertising cost by a challenging macro environment and regulations relating to the gaming industry.
Yeah.
Cost of revenues in the first quarter of 2021 was RMB two 8 billion.
<unk> remaining relatively flat compared with RMB 2.0 mind peer to.
And as Andy.
Revenue sharing fees and content costs were RMB 1.85 billion unchanged from RMB 1.85 billion in the same period of 290.
More specifically there was an increase in revenue sharing fees, which is in accordance with increased live streaming revenues.
This increase was offset by the decrease in the cost of broadcast he writes.
Arthur Conan costs remained stable.
Phases.
We continue to optimize in house production efficiency.
Bandwidth costs in the first quarter of 2021 decreased by one 6%.
167.9 meter from RMB 170.7 million in the same period of time of N T.
This decrease was mainly due to lower her unique.
And with cost.
<unk> benefited from improved procurement efficiency was the major suppliers.
Yeah.
Gross profit in the fourth quarter of 2021 was RMB 245.7 million.
Increase of 34, 3% from RMB 182 point to leave it in the same period of uncertainty.
Gross margin in the first quarter of 2021 was 10, 5% comparatively 8% in same.
Peer threat hunting.
This increase was primarily due to higher revenues generated during the quarter, while our cost of revenues remained flat.
Sales and marketing expenses in the fourth quarter of 2021 were RMB 210 to $29 2 million.
Increase of 34 points, 3% from RMB 170.7 meter U S N period of time the country.
This increase was mainly attributable to the increased cost from utilizing additional promotional channels for user acquisition.
Research and development expenses in the fourth quarter of 291 were RMB 132, 6 million, representing an increase of 11, 5% for RMB 118 9 million in the same period of time.
It does.
This increase was primarily due to increased technical staff costs as we continue to invest in product upgrades to support our game centric content strategy.
General and by the Missouri as expenses in the first quarter of 210 to one while RMB 98.8 million decreased by 16, 1% from RMB 117, 7 million in the same period of 2020.
Primarily due to decreased professional service fees.
Adjusted operating loss in the first quarter of 291, which expect share based compensation expenses was RMB 168, 7 million compared with RMB $199. One later in the same period of uncertainty.
Net loss in the fourth quarter of 91 was RMB 193 point to admit it.
With RMB 228, 7 million in the same period of 2020.
Adjusted net loss in the fourth quarter of two one which excludes share based compensation expenses share income in equity method investments impairment loss of investments and settlement of class action lawsuit was RMB 100.
<unk> million compared with RMB 176, 9 million in the same period of uncertainty.
For the fourth quarter of 2021 basic and diluted net loss per ads will be 0.53, and RMB five three respectively y.
Adjusted basic and diluted net loss per ads were RMB, two nine and RMB two nine respectively.
As of December 31st 2021, the company had cash cash equivalents restricted cash and short and long term bank deposits of <unk>.
<unk> 6000, 643 million compared with RMB 7000 622 million.
Of December 31st.
We would also like to provide an update on the execution of our shelf repurchase program announced on August 32021.
Which the company may repurchase up to U S dollar, while having a minute after the chest until August 22.
As of December 31st two one the company had repurchased an aggregate of the startup 16 7 million worth of <unk>.
Under this program.
Going forward, we will continue it housing all monetization capability, while further improving our monetization efficiency.
Additionally, as we continue to grow we will focus on further utilizing our operating leverage to support the sustainable development of our platform.
Operator.
We're now ready to take questions.
Thank you and we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star and then two.
And our first question today will come from Lei Zhang from Bank of America Securities. Please go ahead.
Oh, Hi, Glen do you feel like somehow occupancy.
One can you go on.
Sure.
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Jackie I'm glad.
You got that.
Yeah.
Yeah, Yeah yeah.
Oh sure.
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Oh Crazy Guangxi pension.
Yeah.
They hold a dialogue with you all with the fact that Oh management for taking my question two questions airports Oh, Okay sure Oh, some updates on our regulatory change and play and the impact to our business.
Secondly, I noticed that but we have adjusted our content investment in esports licensing content and kind of use the airways as the logic behind it. Thank you.
Let me answer your first congrats Fred.
There have been continued in the Bronx in regulatory guidelines for the larger screen that's free.
And just to probably improve.
And the refining operations to comply with regulatory requirements no new roads that were introduced at the rest of it.
We have made internal operational adjustments fair to update of Davita. The a mall poured into operational strengths and implemented the streets stricter internal review to improve as a platform company to come into the building and to promote the long term care I put into all of our.
Our platform.
For example.
On the license of the games, we havent been gradually re directing traffic and streamers to license their games.
So you mean or juniors dinner rolls since theyre celebrate all trying to you're trying to work to ensure proper traffic allocation between different in the game segments.
It tends to be more income levels and the D are really neat to stream.
The initial impact of these adjustments or what's at risk are reflected in our first quarter performance. We will also pay close attention to any regulatory changes and.
Adjusted our operation those surrenders.
In a timely manner. Thank you.
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Well don't forget your Barclays Yeah, sure substantial challenges due to the.
China unusual who need them.
Yeah.
Yeah.
Okay, I will translate Mr. Chen's answer.
So as we previously mentioned in the prepared our prepared remarks, we have conducted extensive.
Analysis in cancellations in the context of the increasing tarman content license fees.
We concluded that the traffic are the.
Close in game traffic or revenue generated by this large tournaments.
<unk> has been outpaced significantly by the growth in copper at cost our analysis of user behavior data found that a majority of our users primarily watch games live streamed by individual streamers.
So raising comparison the propulsion of users who May watch the tournament is relatively low.
Meanwhile, with the return rate of E. Active users two tournaments content has been declining.
So in addition to historical data always shows that large scale esports tournaments do not drive revenue go out.
They can either they are they can't even have inactive impacts our platforms revenue. This is due to the different user experience delivered by this two content segment.
While watching tournament is a complete immersive experience what she'll gifting revenues is generated by interactions between users and streamers.
During the tournament users I immersed in watching the game and therefore tend to spend less time interacting with streamers, which negatively impacts everybody needs to pay.
So based on this we have adopted a selective copyright procurement strategy, we come dotcom comprehensive valuation on the deliverable value of each tournament, both in terms of traffic and monetization to determine a pathway copyright be priced.
We will continue I'm going.
Boeing dialogue with copyright owners regarding copper prices and explore more rational and the long term models for corporation.
For those purchased accounting license Oh, we aim to improve the retailing and best meant through innovative operational methods.
So we would like to emphasize that our selective.
Purchase of Paramount caught right, that's not means that we will reduce our investment in content.
Based on our in depth understanding of the gaming industry, Yes, all operational experience.
We will deepen our cooperation with game developers and increase our investment in original content operations and community building in order to keep our competitive advantage in the premium content and game operation. Thank you.
Yeah.
I'll tell you another thing.
Thank you.
Our next question today will come from Hugh Wynne Zhang of China Renaissance. Please go ahead.
Hey, Shlomo.
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Our prepared remarks.
He was here with us.
June Dr. Nielsen type tenants. So I hope you could comment on your soul Panthers.
My personal care pharma.
Thanks management for taking my question so great question.
However, you measure it so much as our license content procurement.
Gentlemen, Hello discussion so on a true partner with 15 large chimney competition, that's no on the second.
Secondly, there was some upstream will report it.
The final participation and there are many MAU paying more protected.
So just wondering if this has any impact at all.
While the new shown in policy and then lastly, we.
We know that.
We have about 10 content centric strategy. So the implication of Cola market strategy and also expenses. Thank you.
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Just the Citrix analytics game. Thank you.
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Yeah.
Okay.
Oh as I mentioned earlier, we adjust our corporate procurement strategy, because we believe the value delivered to us by copyright if not in line with their increasing costs.
Another factor behind this strategic adjustment if they involving environment after the life streaming industry.
As previously mentioned the growth rate of new user acquisitions through game live streaming is decreasing take large scale esports tournaments as an example.
They delivered a substantial amount of new traffic early stages of game life, draining, especially high quality users in the esports a settlement with the department of gaming live streaming high quality users have become regular users of live streaming platform.
So this deal does have certain provinces for the platforms regular streaming content.
So that theyre really in hours and stickiness to the platform are relatively stable.
Therefore, it is very difficult.
To drive additional traffic growth, but only broadcasting esports tournaments.
However, we have seen that the continued expansion of short video platforms have attracted more divorce user groups to consume gaming content.
While in lodging they potential user base for the entire game gaming content industry.
So that is to say our industry has already transitioned from a competition in gaming live streaming to gaming content.
At the same time, our user acquisition strategy has also transitioned from a stage of capturing hardcore gamers to stabilizing our hardcore gamer base, while attracting new casual and mid core gamers.
Our platform primarily consists of hardcore gamers.
Whose life streaming service penetration rate is high they have high expectations for the quality of our content and our streamers.
They see users our core users and exhibit high level of stickiness.
When contracting streamers cannot frequently switch between different path forms.
Or or competitive environment is relatively stable.
The other group is very stable and provide a steadier traffic flower pass one.
The last drilling penetration rate.
Phil Campbell hadn't me core users is relatively low and they have more diversified needs for game generalists and the game content.
Believe that show video graphics, and other comprehensive game content and our community centric features can attract Carol and me call. You gamers. This is the reason why we expand our content offerings and build our company only.
So as we were in options are we or things options for you they're consistent they grow way believe that differentiated content refining operations and improved profitability are the keys to stable and healthy growth for the platform.
Therefore, starting last year, we have been implementing platform study upgrades to continuously refine our live streaming video and graphic content. So as to we can enlarge our user base to more casual and mid core gamers. Thank you.
Yeah.
Regarding your second question about taxation.
First of all we have strictly and continuously adhering to all relevant laws and regulations regarding taxation.
As a result, he was indications into tax irregularities of individually streamers did not negatively impact our platform.
For streamers, who are directly contracted with us.
We withhold their income taxes issuer to tax obligations are fulfilled.
Separately, there are a large number of streamers, who signed the contracts with third parties.
The obligation to pay income taxes lies with these sort of parties with strongly advised those partners to comply with taxation laws.
But prudent.
Streamer engagement models have not changed.
I just mentioned because we consistently upheld the street tax compliance requirements.
He was efficacious into tax irregularities of individuals streamers have a non negatively impacted our platform. Therefore, we will not adjust our revenue share fee structure as a result.
The recent investigations into tax evasion.
About the last question.
Sales and marketing strategy as I mentioned previously our high quality traffic generation has been slowed down by pure scaling live streaming competition within the industry has switched from gaming live streaming to gaming content.
Our user acquisition strategy has also changed from hardcore gamers to stabilizing hardcore gamers, why accepting new casual and mid core gamers.
Hardcore gamers.
Our core user group.
For a long time. This is a group has preferred specific.
The terrorists and live streaming with higher stickiness to our platform.
Based on our long term operating experience and accumulated user behavior data.
We will maintain a stable stream of resources issue, a continuous supply of high quality content.
With that also produce more exclusive self produced content.
Additional marketing campaigns.
User activities and build a healthy game centric community.
Casual and mid core gamers user groups that we are increasingly impacting.
This group is relatively large and it has more diverse needs in terms of gaming content and categories.
By targeting tissue user group, we house, our cooperation with game developers.
<unk> new users.
Innovative approaches and the traffic acquisitions means.
Meanwhile, we leverage our high quality content to produce short videos to promote our platform and acquire users.
While improving users' deaconess utilizing active community.
Both approaches delivered encouraging results and.
It must trading our platform's competitive advantages.
Rich content library, and a vibrant than century community. Thank you.
Okay.
Our next question today will come from Thomas Chong of Jefferies. Please go ahead.
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Are there certain P C O.
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Thanks C J.
Based management of buckets in my questions.
My first question is about the human approval.
Things on me and giving our people our operations and my second question is about our share repurchase plan ultra regimen or comments I'll and and.
Glass that we should anticipate in coming quarters. Thank you.
Yeah.
Let me answer your first two questions.
We haven't noticed any significant impact on our existing users from with the throw down upper was the fall new games, our businesses based on the conversion of gamers into viewers to our game centric content. There are a lot of non baccarat play.
Hours of many high quality games, why our existing or potential users. Following successful conversion of gamers into viewers of our car games Hinchingbrooke contento operational metrics such as to use. Our speaking is time spent per user and the user engagement have.
Remainder very stable.
The primary impact from the slowdown in approval for new games has there been a.
New user growth, which is reflected in our recent momentum.
Horrible, although new games, if not all hold rather the throw down has been culture by stricter and stricter standards for a new games.
We shall we believe we will be at the Barclays yards.
For the gaming industry in the long run.
Full game centric content platform such as the <unk>, we will also benefit the pharmacies the stricter standards since high quality games and their users either most of our import and the result is a full hour content generation and user growth.
And today the quality of the games launched on our platform has been very hard through the integration of a live streaming video content to a graphic contenter culminated discussion on our customer buys the operations for each game segment.
Being able to have success successfully promoted this premium games and attracting new users. This has further demonstrated the effectiveness of our operational strategy, although probably reaching a diversified game sintering of content community.
I'll answer the second question.
Okay.
About the second question.
By the end of August .
August we had announced share repurchase program for a total amount of your style of water meter.
Of December 31st 2021, we had repurchased an aggregate of U S. Dollar 16 7 million worth of <unk> due.
Due to the impacts of certain SEC rules and restrictions a large portion of the repurchase of pumps has been set aside for Florida repurchase, but it has not been settled yet thank you.
Our next question today will come from Alex Poon of Morgan Stanley . Please go ahead.
Hello, Cannito townhouse institutional are fueling with Eagle once he felt when you shop.
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Shoot you guys yet.
That's for sure.
I have two questions. My first question is related to Oh or the performance.
Myself, our after all strategic change.
Is there any tough one months data that we can share.
And secondly, my second question is related to four new games launched a what is our operating Ah Ah Ah Ah policy for new games launch and is there any data.
Data that you can share with us at this stage. Thank you very much.
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Yeah.
So during the past year, we have upgraded our content and product offerings center around our game centric content platform on the content side, we expanded our content, including video and community segments, well integrating live streaming video and quasi content community.
These and other content for them.
We have also cooperate with game developers to Carryout multifaceted, our promotions and content offerings to meet their diversified needs of our users.
On the product side, we made multiple upgrades to our mobile interface on one hand, we highlighted our radio content graphic hunton upcoming two functions.
The other hand, we refined our customized operations to highlight each game features.
We were able to increase community in the activity and the user engagement through our customized content layout and promotional activities for different games segment.
For our marketing leading traditional esports, we continue to foster our close relationship with game developers to jointly Haas tournaments and launched self help promotional activities.
Furthermore, we are refining our content offerings and operations to improve retention rate user activity and the user's thickness.
Building on our advantages in the traditional esports games, we expanded our gaming courage.
Into Nike Sports games that you spoke games additions and then they came from newly released games too.
<unk>, we have applied our upgraded content system and games segment faced operating strategy.
We have achieved permitting phase outs and device operating mechanism that is both effective and efficient.
We have achieved encouraging reads out for new games launched in 'twenty, 'twenty, one, including Iraq at Black point L O L mobile and with the recently launched power fantasy by successfully executing.
Our upgraded operating strategy.
As a content platform the evolution of our content ecosystem and the changing user perception of our platform are both kill 90 airports as it were.
We are confident that well continue to implement our operating strategy. The beam time for non traditional gaming content will increase as a proportion of all waiting time, our platform content will become more diversified and we'll cover more user group.
Thank you.
Let me answer your second question.
Following our yard will implement implementing our Gibson drink operations, we have a producer of mattresses from whether it's ablation procedures for new gamma segments under their respective operating strategies.
But when you get right.
Trying to top streamers to scream and to promote the game during the launch stage. We also recruited and cultivate a lot of Nam our newest three months to ensure continuous supply.
In terms of all the videos on the graphic because we collaborate with game developers on three March two property was a content such as our Maracaibo P. G C videos and the graphic of century guys to activity problem with the games.
So all of this means we can increase that youre their viewing time and enhanced user engagement.
And for our gaming communities, we invited Influencers such as T O L. Two are greater.
Hot topics and Borsa interaction between screamers game developers and our users.
After the initial stages of our games at lunch.
Establish a integrated the gaming segment that combines larva screaming promotion events and the gaming strategy discussions to provide a comprehensive game content to other yogurts.
Our newly released a canvas U K mowers, you already have many credit screens, we summarize that and analyze this question, Chris Fraser and assign solution on the content creation, a touch cause it to screamers by doing this we gradually from a gaming centric habitable.
And a friendly discussion based environment.
Take a tower on fantasy.
Paul.
Each day over 50% of his players on our platform not only to be able to live streams. They also participate in our gaming activities and the game related discussions.
During our games growth state, we collaborate intensely with their games developers take of our automobile.
Because I'm home, we encourage users to complete a.
13 touch because of the fall offering virtual reverse such as in game items.
Both user growth and the viewing time of inquiries.
Our impressive assembly.
Meanwhile, we probably do it through a variety of a gaming centric a P. D C content such as chip based threats talk shows that it wasn't a tailor made for a narrow copper out of pocket.
So effectively if past user engagement on the.
Coming to the experience.
In addition.
Each games features we improved our production and marketing of in-house tournaments.
Why would the Raptor Master theory mentioned.
You mentioned in the prepared remarks is a great example.
Among the new gamut that released or in trying to you're trying to why not or a car black point towards the longer they're in drive July our mobile was launched in November on the tower. All the fantasy was launched in December the performance or they offer these three games in the marketplace our private format.
Cylinder operating run rate.
Both live streaming and volume kind of user activity during the month after each game to launch at least doubled.
Operating data shows that solid momentum and the ranking for these games on our platform steadily increasing.
Total viewing time phone are narrow topic that point, what's the drag so busy in the top 10 games on our platform for two quarters.
Total viewing time for mobile also ranked in the top 10 during the quarter all of its launch.
We are leading the market in terms of the proportion.
Self cultivator does streamer live streaming volume on the yogurt and getting them into these new games overall, we see pleasing results Paul about full lifecycle operation for new games.
Have attracted additional users to our platform demonstrating that we are on the right track with implement our diversified game content ecosystem for the mall the symptomatic.
At this time I'd say its tabulation of all gaming segments has enabled us to build a slide foundation for improving our operating efficiency.
It's tough.
Thank you that's all.
Yeah.
Our next question today will come from Ritchie fun of HSBC. Please go ahead.
Why don't I somehow got kidney magistral when the T. One Oh go what do you find yourself with what kind of Suzhou Central thing young chunk will be dumped that's so low.
<unk> told you don't.
I thought where you thought you'd learned something about P. Jacek golf for coach.
So I'd say, it's not impossible slides.
But no not hold we'll that's about call when I get you to.
So quite a chooser Fisher.
I would translate myself, so I noticed that.
The seltzer marketing expenses squirrelfish fossette much faster top line growth can management comment on why is that and how do we assess the effective desktop traffic acquisition and how would you assess that marketing expense trend at a few court next few quarters. Thank you.
Okay.
Sales and marketing expenses mainly consisted of.
Starting cost.
China promotion costs expenses for online and offline events and sponsorships fees for esports teams.
The year over year growth was mainly due to increased promotions for new product features and increased cost from utilizing additional profit promotional channels for user acquisition.
Along with the upgrade of our content offerings.
As previously mentioned discussion regarding our platform strategy, we need to expand our promotional efforts to increase our coverage and influenced attract more casual and mid core gamers.
We were carefully select appropriate marketing channels based on continued data and <unk>.
Latex to increase our marketing efficiency.
Dynamics evaluation phases.
We will continue to increase spending on our channels delivering high quality users and cut back or stop spending of those channels, whose acquisition efficiency user quality does not meet our standards. Thank you.
Yes.
Okay.
Okay.
Great. Thank you.
Okay, and ladies and gentlemen, this will conclude our question and answer session. At this time I'd like to turn the conference back over to management for any closing remarks.
Yes.
Thank you for joining our call. We look forward to speaking with everyone of you next quarter Bye.
Ladies and gentlemen, the conference has now concluded and we thank you for attending today's presentation and you may now disconnect your line.