Q1 2022 HUYA Inc Earnings Call
Hello, Ladies and gentlemen, thank you for standing by for the third quarter 2022 earnings Conference call for <unk>, Inc. At this time all participants are in a listen only mode. Today's conference call is being recorded I would now turn the call over to MS Hall Oslo.
Company Investor Relations. Please go ahead.
Hello, everyone and welcome to who we asked first quarter 2022 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> Com a replay.
Of the call will be available on the IR website in a few hours participants on today's call will be Mr. Roger <unk>, Chief Executive Officer of <unk> and Ms Ashleigh.
Best precedent of finance management will begin with prepared remarks, and 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.
<unk> 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.
Information regarding these 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.
On the applicable law.
Please also note that <unk> 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 non-GAAP measures to the audited most directly comparable GAAP measures.
I will now turn the call over to our CEO . Mr. <unk> Dong. Please go ahead.
Hello, everyone.
<unk> for joining our conference call today.
Despite the macro challenges.
Continue to impose near term pressure on us.
In industrial and.
We deliver healthy user growth and steady financial performance in the first quarter of 2010 pay tool.
Total net revenues.
<unk> fall into four 6 billion RMB and non-GAAP net income lucida apparel because in Missouri.
$47 million.
For the first quarter.
In line with expected pacings against.
That job involving marketer.
Environment.
First let me give you some color.
User metrics.
Our user base sustained expansion trend.
Look we our lives mobile EMEA loss, increasing by eight points.
Year over year to <unk>.
I'm planning to $9 million in the first quarter the growth was mainly driven by the strong performance.
Thoughts tournaments.
Quarter.
As well as enhance the cooperation with game studios.
Meanwhile.
User engagement level.
So improved.
As we remained diligent.
Efforts to provide a quality content and optimize user experience through product innovation.
Pacifically.
In the first quarter users' time spent.
Platform liquidity.
Both DIGIPASS.
Both yes.
And quarter over quarter basis.
In addition.
<unk> laughed at US next month.
Tianjin late remained stable at about 17%.
Now I would like to provide more details about our cooperation.
Cooperating with gaming studios.
Lisa.
Vance months in product innovation.
Our interactive feature gift to draw pass so Virgin Diablo has emerged as a worthy.
A popular way to connect again streaming via loss.
Pos directly with their game plans.
By participating in six task type of activity. He owes us can claim virtual awards from both game studios and our platform once say complete us Pacifica.
<unk> our task.
Such as viewing game streaming for a certain period of time.
And the ascending certain pilot tests.
<unk> introduced a feature.
A live broadcast.
Peacekeeper elite.
Last year and have now added there.
Two over 10 game titles, such as Kim <unk>.
Wow.
Lift.
Call of duty mobile and changing impact.
As we continue to deepen our relationship.
With that well.
<unk> our game studios.
Exercising more than 10 million users on our.
Our platform engaged with this impact feature.
During the first quarter.
In addition to improving user into exiting mature class.
Our platform.
Our operating team.
Hello, Ted.
<unk> is a feature.
Encouraging.
Sean the press to return two games.
Turing user.
<unk> life.
In another effort.
<unk>.
In depth cooperation with game titles.
We joined forces with Crossfire mobile games due to design and launch.
Event membership during the tournament.
Our self produced who we are.
PFM.
Companionship lung lung.
Long term capex.
Whereas CFM Glen General income day by connecting SaaS. The ethane came IV with App, we are content.
Hum.
The <unk> membership.
Which allowed them to complete their gameplay and fundamentally related tax cuts.
Locke.
<unk>.
Our leverage is.
So game operators and <unk> platforms.
And that shut to help her to increase exposure.
Exposure within the gaming community and also promoted.
Activity level.
In addition long.
Mitch as well.
Live broadcast here.
We ask platform.
And that will also made available on the CFM in game tournament streaming channel.
Increasing.
Self produced events.
Popularity and Frac team.
Our continuous efforts to connect.
Live streaming content, whether that Tencent ecosystem.
Building on these events success, we will forge ahead with additional endeavors in Ccs area going forward.
We are we are also looking beyond the award of gaming to innovate more intact.
Live streaming features.
For example at all.
Generate annual gala event.
We are boom Nite, we debate tilda.
Extraordinary music movement favour.
<unk> and <unk>.
All night long time impact to music.
Musical game play feature designed to make because the events for other cost the tinder team and captivating.
This new feature leverage.
Our in house developer to audio and.
Peter detention technologies to in growth.
Thus in the musical experience with a fun thing Paul game.
Bubbles.
Scream along with music.
Two of them.
He owes us last quarter based on data accuracy, allowing them to compete with other BLS, while watching how it has lagged.
<unk> screamed stage performance.
Margin live musical performances and in interactive activities since new feature created a truly immersive viewing experience.
The remaining <unk>.
Feeding our live performance to users finger tip us and broadening.
Boundary between reality and two.
<unk>.
Before I conclude I.
I'd like to provide some updates on our recent strategic initiatives.
In our overseas business.
Given the accelerated changing.
Business environment, both domestically and in <unk>.
<unk>.
We have strategically in men.
<unk>.
Some other adjustments.
Adjustments in the refined months with respect to Nemo Tvs operations.
<unk>, how are you sort of assess future key geographic regions.
Whereas these other just.
Quarter, resulting short term.
X genes in overseas user fasching, and the revenue growth as we downsize that.
Overseas.
In certain areas.
We expect to improve the overall.
Fishing say.
Sure.
National business by directing resources to regional markets with greater potential for profitable business growth.
ROE cost.
We believe this more focused approach will benefit our overseas operations in the long term.
In summary.
Perfect timing.
Macro economic and regular Rytary.
Headwinds.
Along with the impact on that.
Hum.
Going <unk> 19 resurgence in China, because theres still create some challenges as we move ahead there.
Nevertheless.
We are confident in.
Strategy and we'll continue to focus on.
Harnessing the strength.
Our business fundamentals to further improve.
Operational efficiency as we embrace <unk>.
Rate changes.
We will continue to work closely with our solid base in <unk>.
Italy comply with the government.
And the loss by leveraging our operational and technology.
Expertise.
<unk> Aps in the game live streaming market.
We also believe sets us with Terex gene will not impact the core needs.
Our users and.
We are capable of continually innovating come plant.
Products and the VITAS to offer users more choices and better experiences in the world.
Broadcasting.
As our high quality content portfolio, and the technology and the product.
And the last months.
Defy our leadership in the game live streaming market.
We'll remain committed to serving our growing user base and creating more value for our broadcasters business partners and.
All other stakeholders.
With that over to.
<unk>.
I will now turn the call over to our VP of financial entity.
Who will share more details.
Our operating metrics and the financial assessment.
Please go ahead.
Thank you, Mr Don and Hello, everyone.
To expand on Mr. Dong Suezmax I'll now, Hawaii, some updates on our content enrichment and diversification initiative.
On the professional esports content fronts.
Forecasting around 83rd Party E sports tournaments in the first quarter.
This year.
<unk> being more selective in Panama and procurement.
Ensure high quality content offering.
And improve.
Im not sure.
We were glad to see that building the first quarter totaled.
License esports tournaments.
More than $700 million.
Exceeding the peer risk quarters relationship.
Brian .
Due to seasonality.
First quarter of the year is typically.
Clearly for esports events.
In particular.
PL spring seasons relationship.
A record high this quarter.
Martin doubling compared to 2021 spring season.
LPL spring TPS spring.
Thank you screen.
Yes al.
This team will also tough performance tournaments.
In the period.
Our comprehensive esports content.
Sales at the key drivers.
Our user traffic.
A superior experience.
All of our users.
In addition to license esports content.
Okay.
<unk> six okay.
These four tournaments.
Entertainment TTC Shelly.
During the first quarter.
Generating approximately $86 million total relationship.
During the Chinese new year holiday.
We have a long haul yet.
Event.
Which feature popular stimulus some different categories as participants in several on my team.
Offering our users increasing content.
<unk>.
Entertaining searcher will experience.
Therefore, we at CF and championship downtown Cup.
Which Mr. Joe mentioned earlier.
Yes Super League tournament for PC, and so low teens.
Also like where you're at.
Esports events in the first quarter.
Additionally.
Our commentary show for LPL.
Game.
Oh, Yeah, Glenn said, China has become a major channel 14, no first to enjoy professional game play and then that's it.
Building the L. P M season.
Please.
Thank you Kali adjusting our investment in self produced events this quarter.
Because we have abundant offering.
License events during the period.
But then related Lockdowns in our film major cities.
In post some delay.
Our in house Verity shell production.
Nevertheless.
Those events, we broadcast in the first quarter of cheese satisfying resell.
Furthermore.
We have been continuously improving our video production and really experience for users.
On the product.
We at integrating video content with our newly.
Just a question for them.
As Jim mentioned.
We've been asbestos gain of 10, a month for them.
Users can rebuild of gameplay autonomous highlights to share watch and discuss listed here.
Helping to create a dynamic content ecosystem on our platform.
Encouragingly in the first quarter the number of deals uploaded on our platform.
12% quarter over quarter.
And we feel really ship it.
Nearly 50% sequential growth.
<unk>.
Next.
Let me walk you through our Q1 financial results.
Unless otherwise specified.
Hi.
Firstly I will be reviewing.
On a year over year basis.
Our total net revenues were RMB 246 billion for Q1.
Decreasing by 514% year over year.
Streaming revenues were.
215 billion for tier one.
Compared with nearly RMB, two 5 billion for the same period last year.
The decline was mainly due to lower average spending per paying user.
Right.
S micro softness continue.
Absolutely.
Paying user sentiment.
The number of paying users.
Life.
$5 9 million.
Relatively flat compared to the same period last year.
And with Stenting, a net addition.
I don't know $3 million compared to Q4 last year.
We believe the increased user engagement level and time spent in tier one countries.
Crenshaw increase in paying users.
Yes.
Advertising and other revenues.
Increased by 47, 2% year over year to RMB.
313 million for Q1.
Primarily driven by the increase in content licensing than linear.
In big tier one.
April to recognize most of licensing revenue.
According to the licensing event schedule.
Cost of revenue increased by one 9% to RMB.
$2 1 billion for Q1.
Primarily due to the increase in revenue sharing fee and content cost.
Revenue sharing fees and content costs.
Increased by three 4% to <unk>, one 8 billion for Q1.
Primarily due to the increase in spending on esports content.
And the increase in revenue sharing fees.
In relation to certain broadcaster incentive program.
This cost increase decrease.
Decreased by seven 3% to RMB 168 million for Q1.
Primarily due to improved cost management and continued technology enhancement efforts.
Gross profit was RMB 334 million for Q1.
Compared with RMB $514 million for the same period of 2021.
Primarily due to lower revenue and increased cost of revenues.
Primary choosing by higher revenue sharing fees and content costs.
Gross margin.
13, 5% for Q1.
Excluding share based compensation expenses.
non-GAAP gross profit was RMB $347 million.
And non-GAAP gross margin was 14, 1% for Q1.
Research and development expenses.
<unk> by one 4% to RMB 196 million for Q1.
Primarily due to the decrease in share.
Share based compensation expenses.
Sales and marketing expenses increased by one 3%.
To RMB 145 million for Q1.
General and administrative expenses.
Please by three 9% to RMB 81 million for Q1.
Primarily due to the decrease in share based compensation expenses.
Other income was RMB 28 million for Q1.
<unk> was <unk> 70.
$76 million for the same period of 2021.
Primary attributable to realize damages receipts in the first quarter of 2021 from a favorable outcome in a broadcaster related losses.
And so risk down.
Operating loss was RMB 68 million for Q1.
Compared with operating income.
$162 million for the same period of 2021.
Excluding share based compensation expenses.
non-GAAP operating loss was <unk> 3 million.
And non-GAAP operating.
Margin was negative one.
1% tier one.
Interest and shut in investment income well I N.
<unk> 9 million for Q1.
Compared with RMB 65 million for the same period of 2021.
Primarily due to decreased interest rates.
Income tax expenses were.
<unk> 9 million for Q1.
Pat with I N b $39 million for the same period of 2021.
Primarily due to lower taxable income.
<unk>.
Net loss attributable to <unk>.
Well I N B 3 million for Q1.
Compared with net income attributable to react.
And be 100 and.
86 million for the same period of 2021.
non-GAAP net income.
Beautiful.
Which excludes share based compensation expenses and gain on fair value change of investments net of income taxes.
N b.
47 million for Q1 comp.
Compared with RMB $266 million.
The same period of 2021.
non-GAAP net margin was one 9% for Q1.
I look at net loss per avs.
And several.
0.0 to one one for Q1.
non-GAAP diluted net income per ads was RMB <unk>.
<unk> 19 for Q1.
S.
As of March 31, 2022.
We had cash and cash equivalent and short term deposits and short term investments.
And B Pinpoints 47 billion.
Compared with RMB 10 point.
My T 6 billion as of December such a warm.
2021.
Primary due to the increase in investments and prepayments to content providers.
With that I will.
Now I'd like to open the call to your questions.
Thank you if you do wish to ask a question you will need to press star one on your telephone to withdraw your question. Please press the business case for the <unk>.
All participants on today's call. If you do wish to ask a question to management in Chinese piece immediately repeat your question. Please.
Please standby, while we compile the Q&A roster.
Okay.
Your first question comes from the line of Thomas Chong from Jefferies. Please ask your question.
Oh Glenn.
What's your nail Yogi woman goes how are you.
Just on Wednesday women go to Hawaii of intelligence.
Sure.
And.
So I'll, let you have one myself.
My question is about our overseas business just wondering what was.
What will be the reason behind the adjustment and what will be the impact on our business. Thanks.
Operator.
There's some physical utilization.
And then one of the system. This is Tom <unk>.
<unk>.
Taking the Nemo digging into the details.
Thank you Vanessa.
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<unk>.
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How are you so I will and then goes although consolidated phones here.
Given the rapidly changing business environment, both domestically and internationally, we have strategically implemented some adjustments and refinements with respect to Nemo Tvs operations concentrating our resources on future our key geographic regions.
These adjustments will result in short term contractions and overseas user expansion and revenue growth as we downsize our overseas presence in certain areas and might have some non reoccurring expenses, but we expect to improve the overall efficiency of our international business by directing resources to it.
Regional markets with greater potential for profitable business grows at a lower cost. We believe that this more focused approach will benefit our overseas operations in the longer term.
Okay. That's helpful.
Next question.
Thank you. Your next question comes from <unk>, Zhang from China Renaissance. Please ask your question.
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Tim licensed some training in April and also.
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Thank you for your question for the longer term the resumption of licensing of games is positive.
Development for the gaming industry as a downstream player of the game industry, who we are we believe that this will be helping us to enrich our content for live streaming also does some time Korea has the best operating capacity in terms of new games. So we stand in a more advantages.
Physician when gaining traffic from those new games and it would be positive for our long term user expansion and.
In addition, the resumption of licensing games, there won't be a motivating the advertisers on the games, which is a positive on our advertisement business and our platform.
In the short term I think people will be looking more at the business side, whether or not the new games being released are suitable for our live streaming and whether or not the new games are well received in the users and we are also keeping an eye on the pulse of the market and.
And given the fact that the resumption of licensing games only began in April the impact of such an hour business.
Specialty advertisement business is pretty much limited for now.
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<unk> you can call us on the telephone.
The future of <unk>.
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<unk> two job really going to help us on the call.
As for the impact of Covid in terms of the traffic because some cities. They implemented this lockdown measures or stay at home measures well there are some positive impact for our traffic as well as the gamma knifes framing, but because.
Does.
Policies somehow normalizing so compared with the beginning of 2020 the positive impacts on our traffic is relatively smaller versus that time in 2020.
In terms of revenue.
For the consuming behaviors for our online users as well as the demand for our first Heisman from our advertisement merchants there will be some pressures because of the COVID-19 and therefore in the short term we expect to have some impact on the revenues in this regard.
We will continue to keep a close eye on the impact of Covid on our business and we will also ensure that we can provide very good debt guarantee.
Could that provides the protections and great support to our colleagues who are under the impact of lockdown measures.
Okay. That's it.
Can I have the next question.
Thank you. Your next question comes from the line of Bryan Goldberg from Citi. Please ask your question.
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<unk> seen trade show that shows up the way.
Hey, Janet we Tony and about who that so go ahead Jim.
And at that time.
Hello PK.
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Yeah.
Thank you.
Thanks management for taking my question. This is Katrina children Cts King on behalf of Bryan can management help address the impact of the new regulation.
And our protection rolled out in May.
Especially the restriction on banking and PK those features and also what's our expectation for further detailed policy on that area.
Thank you.
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Thank you I'll take your question our industry has been under scrutinizing of the regulators over the past period and recently the regulators have received relief opinions on regulating keeping behaviors on live streaming and better protections for minors and we believe.
<unk> thought this.
Changes are part are up to better regulate the industry. So as to make sure that it's a long term and sustainable growth in a more healthy way.
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What you can do this you should see that Oh, I'm, sorry, I'm not sure Ian corrosion.
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No. Yeah for example, kind of couch the union pension.
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We have been keeping a very close eye on the latest changes in terms of regulations and guidance for this latest opinions on protecting the miners we would make sure that we strictly abide by all the relevant regulations and guidance and earnestly implementing them.
After more operating details become available we will make have to make some adjustment in.
In terms of our product and operations and what we're trying to do with that as soon as possible.
This might mean, some changes to our financial and operational matrix and we are now evaluating the scale of the impact we think that this.
Possible changes and adjustment may have a very limited impact on our core on the demand of the core yourselves on our platform and we would of course dynamically adjusting our operation and monetization policies, so as to minimize the impact from such regulation changes.
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Shouldn't these hunting bought Trucost that's in Germany.
At the same time.
To enhance our capacity in complying with the regulations and make relevant investments in our technology, so as to be more adjustable to the regulation changes.
Time will continue to invest in good quality content upgrading our product and keep our competitiveness in the market.
Okay. Thank you let's have the next question please.
Thank you. Your next question comes from the line of Lee sang from Bank of America. Please ask your question.
Why don't you tell us how does this all.
Although engie Brasil, Guangdong synergy before swap EMEA Peco moment Joseph <unk>.
The second thing I want my guys, who do sound move towards that goal.
I think the initiatives.
Thank you for that because I think that in Guam.
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They also mark.
What are you.
All with the bank. So thanks management for taking my question. My question is mainly regarding our cooperation with Tencent.
Any update in terms of the new initiatives.
Changing regulatory enrollment thank you.
Yes.
We are not with us so we are going to in general.
The change in the generating Honda Suzanne women Contenting says, you'll see a sense of I mean.
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CFM long term Bay de women's yoga, and CFM Youll see a change in <unk>.
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<unk>.
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<unk>.
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Yes.
<unk>.
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Thank you for your question the cooperation between Korea, and Tencent are progressing very well first of all we keep.
Very close synergy relationship with <unk>.
Pension income with Tencent in terms of our games and tournaments for instance, in the first quarter and our self produced CFM long term Cup. We have worked together with the CFM games for a joint membership users can participate in our activities and we will be able to enjoy the privileges and balance.
That's both on who you are and the gamma on one hand, it increases the exposures of our platform and the users and also at the same time, there would be become active more active in both the gamba and livestream platform and this feature become a very popular amongst our users and the result have been recognized.
Despite a game studio.
We'll miss you unless the hurdle hosting and good to see the table, but it couldn't go there you'll see some in.
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I mean, it's always equally.
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We are the internal initial so most of the time when deemed alopecia. So why youre in Columbus, Ohio Tennis Association, we absence of the Townsend <unk> interesting.
Reality.
We hope to expand such cooperation two more two more again and we could have more synergetic activities in terms of L. O L. Mobile in terms of our product operation as well as communities. So that we'll be able to in <unk>.
HD user experience for our users on top of the live streaming.
Content and right now we are having a leading market share in terms of our live streaming for L. O L mobile and at the same time, we had held to John Shen Cop four now which is a self produce a tournament license officially by.
L O L mobile.
Okay.
We are currently.
So those are gone and the results of <unk> do you think.
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That is some time, we have had some various social interactive features for instance, gift shopping or live streaming e-commerce that have been applied to video.
It applies to games and Tencent for.
For instance, where the gift dropping it has been applied to more than 20 games in Q1 with over 10 million active users and where honour of kings peacekeeping Elyse as well as the ODM they've got very nice results, so far and we plan to apply those interactive features.
Two more games and more categories.
That's all it does is it uses of CIT.
Mainland China.
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Yossi Yossi, Samsung Xi'an, and let's say U S is Hainan event should Arkansas Trillium.
Yes.
As a company that produce content by.
That produced a technology driven content.
Since 2021, we have been making some very nice progress in having this interactive features and also to generate some interactive content.
Our content metrics are able to cater for their needs for the year. So it's both before and after the game play and that is positive for the promotion of games as well as retention of our players and users.
We'll continue to do it by giving more interactions on our live streaming and having some more active community features so as to retain our users and to have better connections of all yourself live streamers as well as game studios and players so as to play a bigger role in the entire industry of game.
Yes.
Okay. Thank you.
The next question please.
Thank you. Your next question comes from the line of Ritchie from HSBC. Please ask your question.
Charles Bonnie.
Just what the key one.
So what you see.
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Why did you say your thoughts there.
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Is it somebody else.
You management for taking my questions. So first of all is.
As we noted some of the competitors are changing the content strategy itself, even exit the business. So how should we think about the long term adjusted net margin profile on that is.
New competitive landscape and secondly, how should we think about the cash.
Then also budget allocation plan across R&D sales and marketing and G&A expenses for this year. Thank you.
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That kind of a higher demand Susan Anderson and inside sales.
<unk> intelligence.
So when I kind of in the home and incentives willingly.
We have been seen.
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And women 20 languages.
The Tianjin.
So there are some <unk> channel frankly.
Thank you for your question, we noticed a strategic change by our competitor and from <unk> point of view, we think that as a positive trend for us as the swell alleviates the competition landscape.
How does it have a champion.
I mean, the one thing you know when I realized that.
Not even more tendency class G U D equals to the Egyptian pound.
Now most of it is home brownfield withdraw cutaia Godetia culture.
Johan <unk> sounded.
MP national closer to your General course hunting, a total that shouldn't be all that you may take a short leash.
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I don't think I'm doing.
Given where we are right now in Korea, Inc. Will continue to have more stringent control over our cost and expenses and optimize our operating efficiencies.
Before speaking it is necessary to continue to invest in high quality content and product because that is positive to make sure that we will continue to serve all yours as well and to consolidate our leading position in our competition.
Central boyfriend transform it seems.
<unk> met with Paypal.
No I don't have a woman pineda you convince them when they're Greenway hotel, which would equal attention shifted tell youll see Jim Needham interconnect routine and she was senior base isn't canceled it.
In terms of revenue sharing fees with a live streamers recently the market layout does not trend a lot so given our operation and monetization capabilities on who yet we think that the current regime for revenue sharing is competitive and therefore it will kill.
That the way entrenched.
It's a bunch of audition everyone from you or Mark we're very close on their own.
It is an interesting.
That's in total without contango, so good the needles on yet.
<unk> wishes to persist how much in quantity you should see some counter.
Sure Joey.
Women say pension close ish luncheon.
Censorship enabled I mean, the total Egyptian you'll contango good assertion.
In terms of licensed product and self produced product.
We'll have more <unk>.
Detailed analysis as to the Rois of different kind of content and we will allocate our resources to more effective content and make adjustment. According to the market dynamic for instance in Q1 that we have made.
Our selective approach in.
Investing in licensed tournaments and self produced content.
Oh shoot woman, she's downtown Brooklyn tissue that Youll see.
Patients their corner, she or foundry.
Beautiful.
Frequent from frequent fisherman, there's anything you can say.
So you're quite right.
One is from Michael if.
If we throw a contango in good conscious.
At the same time, we'll continue to optimize our technology on the bandwidth and make it more efficient.
We would also make more optimizations in terms of our sales and marketing and other operating expenses and to have more stringent control in terms of labor costs and other expenses.
So one woman J T.
You can see how a year, where they see a culture, yeah sure youll see them teach them you sound tissue.
We had also mentioned that we are making some strategic adjustments to our overseas business, which in a way constitute as the methods to control our cost.
Leave any film you, sometimes see like 10, you'll even see through the year well formulated tell John could not quite <unk>.
Sure Phil.
You don't even need water.
So question in a total Hershey will be a lot of Tricia woman Morten <unk>.
Early on in their go shopping.
Sure.
In Kenya, we do so it shouldn't go in search and in the Maldives, If we should how you think the ESL.
<unk> returned either you sell you never need somehow our union.
So it can be.
I Dunno woman salvage tissue Youll watch on but what he showed me sounded well.
We were like Orlando, you will find that useful.
In terms of the margin for the short term because of our business adjustment for the quarter, there might be some nonrecurring expenses and costs for the quarter and that would.
Turbulences to our margin level. However, if you look at the entire trajectory for the whole year in terms of investment and revenue, we expect that the content cost as a percentage to revenue in 2022 will be slightly higher than 2021, and therefore the overall.
Gross margin rate for the whole year, it might be some might be affected.
Due to that we believe that operating margin in 2022 versus 2021 will be slightly lower but of course, we will continue our effort in optimizing our cost and operation efficiency. So as to lay down a good foundation for us.
Our long term development.
Okay. That's it.
Thank you no further questions now I'd like to turn the call back over to the company for closing remarks.
Well. Thank you once again for joining us today.
If you have further questions. Please feel free to contact who asked Investor relations.
Through the contact information provided on our website or the TPG Investor relations. Thank you.
This concludes this conference call you may now disconnect your lines. Thank you.
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