Q1 2022 Douyu International Holdings Ltd Earnings Call
Good morning, and good evening, ladies and gentlemen.
Thank you and welcome to value International Holdings Limited first quarter 2022 earnings Conference call.
At this time all participants are in a listen only mode.
Obviously, the question and answer session after management's prepared remarks.
Please note today's event is being recorded.
I'll now turn the call over to the first speaker today, Mr. Kang <unk> IR director. Please go ahead ma'am.
Yeah.
Yeah.
Thank you Hello, everyone and welcome Todd.
In 2022 earnings call joining us today are Mr. Shao G HN, Chairman and Chief Executive Officer, Mr. Ming Xu Chief strategy Officer, and Nathan how widespread.
Right correct in California.
Okay look for 'twenty, one 'twenty two need to financial results on our IR website at IR <unk> com.
You can also check a replay of this call when it became available you know let's see.
On our website.
Before we start please note that this call may contain forward looking statements made pursuing twisted copper probation 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 risk uncertainties and other factors not under the <unk>.
<unk>, which may cause actual results performance or achievements of the company to be materially different from the results performance or expectations implied by these forward looking statements.
All forward looking statements that Greg quantified in trying to make a cautionary statement.
Just curious and details of the company's filings with SEC.
The company undertakes no duty to revise or update any forward looking statement first and that's even in light of circumstances. After the date of this conference call.
You will now speak on behalf of our chairman and CEO Mr. Shao.
During the fourth quarter, we continued the development of our or bigger man well adjusting our business operations.
Our selective copyright.
Procurement strategy.
Mobile I mean for the quarter was 55 1 million total net revenue.
One 8 billion.
Quarterly average paying user accounts.
Thanks for that.
Gross margin increased to 13, 6% demonstrating the effectiveness of all of us the latitude copyright procurement strategy.
In addition, our successful implementation of a series of cost control measures has increased our operating efficiency driving our adjusted net loss down to RMB $52 5 million.
During the quarter, our average <unk> decreased by six 8% year over year.
<unk> to $55 1 million.
That's our expectation.
Wait a minute yeah, yeah, two factors at work.
Right.
We strive to improve operating efficiencies by executing on our selected popular with humans J P. G. We have seen acquiring over twice content for E sports.
Which has negatively affected our anti U.
Andrew the level of the decrease was in fact that move down our expectation.
I mean, you had stable nine and state within a narrow band.
<unk> on the data analysis show that high quality content from Chile in South pretty tournaments is different games segment successfully attracted new users regardless of the absence of content from selected esports.
Second the new games that belongs to our platform in 2021 enabled us to continuously increase our can they use high.
Partially offsetting the impact of terminating comes in right for selected esports.
Despite the slow pace of the launch of new games last year, we were able to attract and retain users.
All three of them high quality gaming content.
Our collaboration with game developers and refining our customized operation for each game.
Turning to our content I think in.
In the fourth quarter, we maintained our effective execution of our strategy of building again and shakes.
Steve content platform.
It wasn't really find our content offering integrating nice screen lead new graphics and interactive community.
Esports and now esports category.
While encouraging collaboration and investment in self produced content.
Furthermore, we expanded our collaboration with game developers and distributors.
Sure I'll add one page in high quality content and gaming operations by enhancing the cut the mic and refine operation of different games secondly.
During the quarter, we increased investment in cell proteins counting and Purdue co.
<unk> hundred 60 esports tournament.
We consistently try to enhance the value of our Cal 'twenty tournament by developing a centralized production and 19, 1% and establishing our diversified to Raymond James Bank them.
Hosting L O L. <unk> five test take official cooperation with Tencent, we have discovered many new gaming talent we have.
And Brent really became professional player.
Among all the major new game launch Nazis.
Our smell pretty tournament for Norwalk up late point, what's the next piece by naive and one okay official tournament.
So U L. A wound with my two Nike theory was also incorporating into parenting official professional system.
Meanwhile.
Well, our self proteins tournaments enabled us to support and calculate Jamie.
Four winds down with antibody levels of exposure and engagement.
As we improve our recruitment and training systems with Jamie.
But not only also our streamers.
Ladies and career development opportunities our platform, but also look for our high potential streamers to professional esports team.
In addition to our one income well anyhow German weight engaged our country y T two producing customized entertainment.
So based on the features of individual game segments, and Jim Haynes Dale during holiday majoring in Britain and new game launches.
For example, we.
We self produce Oh, Scott Goldman for L. O L enlighten top streamers, and all commerce recruitment tournaments in different games segment.
Which encourage streamers and users to participate.
Our differentiated offering of transact.
I'm, the chairman and entertaining game content. So she is working fine.
Hum.
Core Gamer.
Importantly, we also maintain and grow our production of engaging and novo.
For example, with Purdue and nobody will bind T code Oh about game that in value a new game given their promotional period.
The show's content include.
Our rate of new games.
Cushion of kidney hobby things with you and other exclusive feature.
In addition, we also invited famous squamous and honoured gaming industry when they get to participate in the shelf.
Production of this type of content enhance the community experience.
As we advanced high quality content to engage our games segment and user engagement.
Moreover, we found that game developer will maybe you can cover some of the production costs of the shows as a new channel of promotion.
Have you ever plays out.
Not only build a brand new collaboration model with game developers.
Also optimized all I'm from those games sentiment.
Turning to our cooperation with game developers and distributed.
We continue to deepen our cooperation on monetization from with game developers in vitro building.
We launched a variety of promotional activities with both Tencent and Nike two bonds to user activity and encourage easy to make in game purchases by offering task base week worth of in game items.
Moreover, we are consistently devising and exploring new methods of cooperation with game developers.
Using data to as an example.
We cooperated with game developers to shatter partial gaming data anything employ this data to develop a number of critical function.
These functions include real time display of stainless performance gaming data analysis, and the multi screen what kaki you allow to streamline performance in the same game to be wheeled simultaneously.
In housing that these pay functions well annualizing. The most games strategy allowed us to provide optimized yogurt excuse me.
Looking ahead, we will further improve our operating efficiency by launching attaches at east Dubuque, all qwizdom, which directs appropriate levels of exposure to individuals Germany based on historical data.
As a game centric platform, we deliver value to our users to completion and production of high quality content and our exceptional operational capabilities.
Building on the.
One page in high quality content, and then refine operations.
<unk> increased our <unk> by reducing production costs and offering expenses.
So what are you counting.
Utilization of panels from the sourcing joint operation and more.
Going forward, we will continue to evaluate and execute on potential monetization optimization, while improving our platforms overall operating efficiency by enhancing each games O I.
Now turning to monetization.
Total number of paying users in the fourth quarter was $6 4 million without which wasn't a pool of RMB <unk> 17.
Year over year decrease in both the number of paying users and quarterly RP, one readout of our advanced operational adjustment in future updates.
In anticipation of a tightening regulatory environment.
And they continue to develop the pain between the Oh you do.
<unk> engagement with more casual and mid core gamers.
It was just tangible all key strategies and promotional campaign that no customer I E.
On the Portland Austin opinions.
Paying users.
We are able to sustain a stable pay user base and a healthy range while obsolete.
Meanwhile, wait pause 15th our exploration and development of new revenue stream.
For example, following our in depth analysis of the engagement between three months and we upgrade our membership system called Diamond.
All three numbers with more customized prevented you and additional functionality to interact with streaming.
Utilizing our self produced content with central promotional campaigns we.
<unk> able to improve the subscription rate of our membership services and Silicon game segment.
Going forward, we will continue to cultivate and expand our membership program as we now move to gain unique features in our individual studeman 15 team capped terrific.
In terms of product and technology, we are continuously developing our game centric community on the product front.
To meet our users growing demand for game team guys and walked through with these many lungs and nobody can function called seamless.
And that will change.
What makes function mccaffrey's, our big data analysis to Gavin how topics from our belief and discussion forum.
In package that the topic as a theory.
Often nutrition task force chambers.
Dan takes the task and has a core themselves I'm, assuming your question Anthony trading the game tactics as they've been.
Finally, this good 40 accounting can be added into so maybe that are available for users to view on demand.
And that was aging natural language processing technology, we are able to understand and extract relevant content from Tony Chan.
They allow us to push where maybe shelving to users who are asking similar questions.
This extremely pretty show rainy weather in July two of them are generating content and enhance user.
As engagement between trimas and use it.
Yeah.
To summarize we have.
<unk>, a robust and sustainable operating strategy, while maintaining our leading position in the traditional life changing industry.
Nah raging all outstanding content management team comprehensive like Jamie Resourcing and our extensive game on <unk>, we are able to consistently upgrade our content offering and optimize our operational innovation.
At the same time, we have deepened our cooperation with game developers and multiple dimension.
Well my music, Wisconsin.
They play integrate flight training, maybe grafting and he's asking communities.
In addition, we continued to augment our user engagement and consumption capability well exclude once they find the monetization models and improving our financial performance.
With that I will now turn the call over to I would like to Hudson of finance, Mr. Hao Cao to go through the fence. The Beach House, all pharma financial performance in the quarter.
Okay.
Yeah.
Thank you Linda and Hello, everyone.
During the first quarter, we have been focusing on improving our operating efficiency through all our Hoffman and cost controls and achieved encouraging results.
The Companys gross margin improved and adjusted net loss narrowed significantly.
Over a year basis.
Total net revenues in the first quarter of pundits wanted to decreased by 16, 6% year over year to RMB, one 8 billion.
So that's premium revenues were RMB 173 billion a.
A decrease of 13, 6% from RMB 2 billion in <unk>.
San period of 2021.
The decrease was due to the implementation of prudent operating strategies.
Such as adjustments to certain interactive features.
The related operational efforts.
Considering the tightening regulatory environment, we have been making operational adjustments.
Feature updates.
To comply with regulatory requirements for a long term development of our platform.
As a result of these adjustments.
What's your gifting directions, where are partially compelled.
These cost decreases in both the number of paying users with law up quarterly up.
Our quarterly up was RMB 270.
Five 5% decrease from RMB 286 in the same period last year.
Based on our analyses the size of our core paying users largely remained stable and we continue to stabilize the paying habit of our core users and car debate the paying witness of mid to long tail paying users.
Advertising and other revenues were RMB, six 8.4 million compared with RMB 154 1 million.
Period of 2021.
The year over year decrease was primarily attributable to the continued exploration of new commercialization models.
Using a portion of advertising traffic that could have been directly monetized.
I will ask the soft demand for advertising caused by macro challenges and regulations aimed at the gaming industry.
Cost of revenues in the first quarter of 2022 was RMB 155 billion, a decrease of 18% compared with RMB 1.89 billion in the same period 2021.
Revenue sharing fees and the content costs decreased 19, 2% to RMB, one 3 billion from RMB 166 billion in the same period of two one.
The decrease was mainly due to the decrease in revenue sharing fees, which is in line with the decreased live streaming revenues.
And the significant decrease in the cost of protesting was.
So we seized a pylon overpriced content rights for esports tournaments, and our selective copyright procurement strategy.
Other conduct costs also show a year over year decline as we continue to optimize in house content production efficiency.
Yeah.
Bandwidth costs in the first quarter of 2022 decreased by 11.8% to RMB 151, 9 million from RMB 100, and subject to <unk> 1 million in the same period of 2021.
The decrease was mainly due to the year over year reduction in peak bandwidth usage in absence of purchased esports tournament copyright.
Given our bandwidth costs are generally billed based on peak bandwidth usage.
Meanwhile, the lower per unit bandwidth costs, which benefited from our improved procurement efficiency with major suppliers.
<unk> contributed to the decrease in bandwidth costs.
Gross profit in the first quarter of 2022 was RMB 243.8 million compared with RMB 260 points of made it in the same period of 2021.
Gross margin in the first quarter of pendant I did two improved to 13, 6% from 12.1 person in the same period of 2021.
This margin improvement was primarily due to the significant decrease in the cost of broadcasting rights as a percentage of revenues.
We ceased acquiring overpriced content rights for esports tournaments.
Yeah.
Sales and marketing expenses in the first quarter of 2022 were RMB $186 4 million a decrease of 11.2% from RMB 209, part of 9 million in the same period of time and day, one which was made.
<unk> attributable to the decreased personnel related expenses and branding expenses.
Research and development expenses in the first quarter of 2022 were RMB 116, plus 3 million, representing an increase of four 5% from RMB 111.3 million in the same period of 2019.
One.
The increase was primarily attributable to additional investment in technical personnel as the company continues to invest in product upgrades to support its game centric content strategy.
General and administrative expenses in the first quarter of 2022, well RMB 19.1 meter in crazy by two 3%.
From RMB 88, 1 million in the same period of 2021.
Adjusted operating loss in the first quarter of 292, which adds back share based compensation expenses was RMB six 8 million compared with RMB 91, 8 million in the same period of 10 to 21.
Net loss in the first quarter of 2022 was RMB $86 nine.
<unk> 9 million compared with RMB 101.8 million in the same period of 2021.
Adjusted net loss in the first quarter of underfunded to which.
Absolutely.
Share based compensation expenses Shaffer loss in equity method investments and impairment loss of investments was RMB 52, 5 million compared with RMB 17, 7 million in the same period of time to 'twenty one.
Okay.
For the first quarter of 10 attended to.
Basic and diluted net loss per ads were RMB 0.27, and RMB <unk>, two seven respectively, while adjusted basic and diluted net loss per Eddie S. Well RMB point, why six and RMB <unk> six respectively.
As of March 31st patented 92, the company had cash and cash equivalents restricted cash short term and long term bank deposits of RMB 6000, 315 million compared with RMB 6600.
The 43 million as of December 31st 2021.
We would also like to provide an update on execution of our share repurchase program announced on August 30th plenty of time to watch and.
In which the company may repurchase up.
The starter walls.
At a median of shares until August 22.
Two.
As of March 31st and attended two the company had repurchased an aggregate of this dollar $33 9 million worth of 80 S. Under this program.
Going forward, we will continue to increase operating efficiency as our top priority in order to reach non-GAAP breakeven by narrowing losses through cost optimization and improvement of monetization efficiency.
Along with the continued improvement of our overall.
Yes.
We will continue in housing.
Monetization capabilities to explore sustainable at the betterment of our platform.
This concludes our prepared remarks for today operator, we are now ready to take questions.
But as you well know Jim go to question and answer session to ask a question Press Star then one on your held firm foam.
Isn't this figure firmly I've seen please forgive your handset before pressing the keys to.
Draw your question please for <unk>.
Today's first question comes from the wrong, where bank of America Merrill Lynch. Please go ahead.
Oh, well I didn't put ourself Haas as it gets all of that Oh, yeah hold on one cheek way.
Sure why don't you take thing doesn't go out one thing about women just yeah, it kind of sounds good.
Unfortunately, I can't go to you go up that's all about you see it all come out in Salt Lake English Yeah hold on a whole lot yet hold ourselves to give up some mechanical about bathroom and kitchen Yahoo.
Yeah.
I'm glad you're in Guangzhou, and Ontario teachers. Your ballpark you bought that one thing that you got to I'm sure that you've got some holiday downtime.
So I'm sure I'll deal with Muggles sit out so I'm sure that yeah. That's helpful.
And so how going to be what.
It sounded though you go of course, you're going to go with it.
Oh, Yeah, Oh, Yeah, Oh, Thanks management for taking my question. All my question there regarding all like in Rockville luxury chose well heats up in here regarding but keeping tabs on the regulatory also allows for the flip chip sensing ranching alopecia activity are so critical to how we bought no real.
The overall regulatory elements and find out in the house with the Wildcats the impact to our business.
Sue.
Okay.
Alright, that's all great strength.
There's the ongoing drag from a novel regulatory guidelines for the larger screens in country.
And encouraging and that's great, but they are too.
To properly implement mirrors and the refining operations to comply with regulatory requirements.
As of today there is no. So that's the data keeping Linda mentioned that in the recently announced a regulatory no case, despite that we have been making obligation of government and the other Dave.
This year, we are adopting a more put into operation of the boundary and it's a great car into note Vale policies to improve our glad the pharmacy community building and the tube problem problem to the long term development of our platform.
In addition in later appraisal and early May we implemented that.
Ah Maris, our platform two promoter or actually no consumption of our users.
This marijuana.
Include the safety.
T P M limiter.
It's ignore transaction on virtual games, and a pub opposite requesting a second dose confirmation for each transaction.
We have projected at the financial impacts of all the tax adjustments in our tiny country to forecast it.
And the parties regarding the live streaming industry announcement in March well leased state of mind of a previous policies.
Releases that are related to unlock this with Gam gaming content roads that are three marked mute to follow.
And the protection of all my nose rehab.
We have been adapting our operations. According accordingly, this fault Franck.
Uh huh.
Licenses are games for example, we have been gradually re directing traffic on the screen market to likely it's a game to Apple similar generalists since there are several quarter Abel finds AT&T watch.
To ensure proper traffic allocation between deeper into a game segments and to maintain stream of income levels and they are beginning to screen.
The impact of this adjustment was it reflected that in our posture quarter for performance.
Regarding appropriate greer to contend to either mine or protection, we have contended.
Contended with VLT, Tom Streamer management system, and a teenager mode or can you give me automate evolving as the industry develops.
We are carefully monitoring any regulatory changes and maintain close communication with the regulatory.
Departments.
It'll be aggregating two X are probably in the event of any changes. Thank you.
Yeah that was helpful.
What are you all of our social good telephone Thomas Chong of Jefferies. Please go ahead.
Well I'll take that one he told me they saw what it.
You bet.
Sure.
I'm trying to go to somebody who starts I'm sure, we'll monetize all our debt.
Oh Boy Goldman Sachs Hi, there.
All women does he want to make sure that we always thought he was on it.
Well the vehicle would be yes.
I'm trying to do.
Oh sure sure.
So we wouldn't have pinkeye water heater, and neither something about legal but thinking beyond.
Gotcha.
Joe do you want to do a lot of Japan with alcohol, especially San Juan do you by chance have all are going to do that's what I was hoping that you could gain from Chengdu Youll see it sure wasn't the highest that'd be on how close were you guys, saying that you could talk about that I'm sure that you wish you put them challenging youngsters home, you'll see to your blood sugar.
Yeah, I'll go to like them, but what's your name in that country, that's generally true.
Sure I'll tell you one kind of sounds like the other two months.
Well again.
And how you probably shouldn't even when Jim doesn't play sets and you'll probably be interesting Havent you know you've got you got you.
I'll tell you on the knick tend to come in a huge way triage insured.
But tell me if my according to shipping costs, which Felicia.
Sure.
We'll do it in house Vishal Hello, Mr. Ashley I'm going to have on should I take a pause on gotcha, gotcha, gotcha, and especially the cycle, that's what am I gonna attachment.
So I'll start it off.
If I go to the Shanghai into fishing I'll give you I'll go without you control your asking after the J J, if I mean does it go to call it.
Genco may have I shouldn't be Ross asked me if they don't do it.
Why was she need all the tuition should especially you sort of hold on to assign the total handle I'm talking to somebody that's actually don't hit them, where do you see a lot of book and they can't afford the whole east took a well Nick I'm wondering whether that keeps you all essentially all <unk>.
The geologists in adulthood.
Oh, Yes, I forgot your password comes well continue that you aren't shy about almost what I got chandrika chess touch a bunch and they go towards the body.
Unfortunately want me yesterday.
Comes out of a job shut out of do you need on that you could hold on to them to do a trial like English taught me that I'm sure Yeah. It does that's sure yeah, yeah yeah.
It seemed that you go back out, especially on it sounds like you wanted to add anything.
Uh huh.
I'm, telling you of course, you're switching out you wishing you all the way to cause me distinguish in homage fishes Oh, Okay I got it on the existing football I bought anything anywhere in the country.
Yes.
What's unfortunate hotter than did you say that you said that some of the needle the whole notion that you could triple Hood stripping.
Especially when they don't.
I want to end up on their own I shouldn't familiar.
I got it wrong, I mean coming out yes.
What I find challenging shouldn't buzzword digital ones I, suppose without putting things on their own without off I mean I.
I wish I did like you said you got you.
If I'm trying to change that you should you go out you would still put it there's a whole bunch of who she is transitioning to a.
The whole Oh, Gee I thought I, just you know I'm not sure if you ever watch out you should talk to that for sure Matt I wish we could put on that question. What did you do a bunch of young people from switching sides, what that trends, whether she wishes, even though I'm an engineer.
Yeah.
So how do you see what she the Jewish.
Let me go off with them.
Oh jeez inside of how you should finish answering it because I don't think all of that either.
Okay.
Okay.
Okay. Thank you.
Okay.
Okay.
Not too different.
So I'm not trying to make.
Okay.
Okay.
Alright tell him.
Yes, okay.
Anthony.
I will first translate Thomas catching on Truman's question is regarding the AR and the changes in our clubs that procurement strategy, what we own.
Uh huh.
Two they change all procurement Jackie G. In the absence of a large scale esports tournaments, how they come to me all they know our object is all patients to ensure they at one pages in content as well as in our operation. The second question is regarding.
It may only be a shift in the copyright procurement strategy.
Put a impact the upstate ability all summer Ah Ah platforms J. Most recently I was in.
Looks like just the first question for me to Oh from the kitchen.
First we adjusted our strategy to selectively purchase copyrights not only because some of the commentary is all website, but also add operational adjustments in reaction to the changes in the game live streaming industry.
Industry has already transitioned from competition game live streaming to gaming content.
Well use those face more and more viewing options, we believe depreciated content and even flying operations is a key to our past one housing and sustained vocal out.
On the accounting front, we extended our offering from life training tool they use in community integrating virus content to meet our users' diverse needs.
Although we decided not to obtain selected.
I'll reply to conquer rights, we continue to penetrate cost effective copyright for second cartilage.
For the Portuguese content, we are integrating official tournaments with our live streaming video graphics operating activities and community discussion to increase user engagement and attract new users.
For example, we have launched multiple self produced shows for the country K P. I'll tournament and we are actively exploring more collaboration with game developers to enhance the Oh I for these copyright.
Meanwhile, we increased our investment he felt pretty content.
But traditional esports game, we have been hosting tournaments for professionals and amortized and are able to ensure a consistent supply of <unk>.
High quality content, well you name it they said that they may be off our platform traffic and increasing user retention rate.
For new games on one hand, we recruit and cocky make large quantities of our new streamlined to ensure contents the pie.
I'm in hand, we enrich our content offering by producing more of that word P. D C and UGC content.
By region, our integration of live streaming video content and community interaction, we are able to attract more users with our diverse content offerings.
On the operations front, we are deepening our cooperation with game developers and distributors young content production our cooperation in crude.
Oh 15 games, each with unions to find portraying marketing strategy.
Colleen professional gang Pan football game developers and distributors.
Sounds model for in game items language and data sharing between games and our platform to improve our user.
Like Jamie experience.
And more important than pull for the upcoming game al all out each course managers why because I have to buy golf games, we actually kind of waves of game developers to promote the game pre registration and lead to a high number of pre registration before the game it's official.
They released.
Thank you Pekka for section.
Ask your second question.
Are they showing all of that.
The streamer.
Losses are.
We have further stabilized and inhouse streamer sources by signing a long term exclusive collaboration agreements with our premiums Creamers, followed a better support from game developers and distributors.
These agreements bind top streamers to our platform and prevent them from switching between different platforms, helping us to build and maintain a competitive edge second the MAA is impacted by our copyrights strategy adjustment was generating about users who many of you.
Official tournaments, although they're screamers live streaming content. Therefore, coffey generated by streamers was not significantly impacted by our selected copyright procurement strategy.
I like to emphasize that all religions shape with streamers is not limited to cooperation agreements. We also deepened our collaboration with streamers and in house operations in the fall anyways.
First of all in terms of overall operating strategies for streamers, we continued to offer high quality content and opportunities for users to interact with streamers.
I am maintaining or improving both the level of engagement and streaming is a willingness to.
Dreams.
For example, we collaborated with Tencent video to hold the league of legends data.
Invited top tier streamers towards together and interact with users.
In our self produced shows.
Thus, creating a September lay offs promotion all powerful.
As a result.
The level of engagement in the L. O L game segment was boosted significantly as evidenced by the increases in the vision of.
Of top streamers live streaming sessions and interactions.
Copies community channel.
Meanwhile, we further explore screamer commercialization opportunities for example, we recently upgraded our membership system and their phones offering users with a more customized privilege.
Additional functionalities to interact with streamers.
As a result.
Interactions between streamers and their users increased and our streamers gained more diverse source of income for us it depending they're bound to the platform.
Second we leverage big.
Data analysis to refine and in House operations. For example, we motivated mid to long tail streamers to remain active by interrupting appropriate topic today and encourage that involvement and exposure on our platform.
Engaging them self produced tournaments.
Therefore, our mid tier long tail streamers.
Our comparative income we believe those tumors are highly speaking pop platform and expect to attract more talented and high potential streamers to livestream all platform.
All in all a platform streamers and foundation of our high quality content, we have a comprehensive streamer with sources management system, which includes recruitment training management and collaborations.
Our system increases streamers witnessed to stream that.
Insurers that they receive a reasonable income. Meanwhile, as we have continued to refine our operations we have deepened.
Shapes with streamers.
Thank you.
And our next question today comes from you and boom with China Renaissance. Please go ahead.
Hey watch that whole claims her she said she learned what's been out lunch to touch enjoy yourself well give you some insight and make our prepared remarks. It should all just argue near shellfish or should they do she also holds for those signor for a whole year deals going forward could pretty chunky should always challenge yeah. They did.
Cool I would also note here that wholesale footwear courses so to speak amongst your Oh gosh. It's so much at all that you can control the sale of high touch what are you kind of see a couple of clean up your salary shoutout with southern Pennsylvania, social outlets in China.
Yeah sure. Thanks.
Thanks for taking my question. So I have two countries well tell you what.
Our remarks, and you mentioned that the 2021 you're right that this title will have successfully attracted out of a tender neutral to us.
Yeah, that'd be more adult patient fruit and also Meanwhile, I would have thought.
Okay.
Our pivotal assumption was studying Pat or operation.
And then secondly, you mentioned, but we are exploring a more diversified monetization model can you discuss more about the terrestrial exporting oh, what's the progress on our expectation for the future. Thank you.
Our enemy answer you all took that's great Firefox quite scared about the new games, it's around doing that to new games released at located last year, even with fewer blockbuster games, such as an hour came down to just keep her leading to a limit to the new.
User growth on our platform.
Given this backdrop, we created a rich content to system that integrates live streaming video content and graphics.
Graphics.
Which underpins our diversified gaming segment the other regions.
We have also a chair with a promising results by implementing a sophisticated.
Operating throughout the day and picked 40 buildings and racking gaming segments.
Let me share some of the treatment of Alpha that you get with the Doctor being a turnkey countrywide power Noncorporate I point, the locks the ink dry our user.
Demand remains robust as a regard to all of our efforts in recruiting and training neostigmine market and Oh God.
Or do you think it may take the tournaments and shows.
Total viewing time for narrow couple that point. It was ranked in the top obtain skimped on how often that problem Paul three kind of conclude too quickly.
And then as a traffic or ranking also steadily moved up on our platform.
Vault L. L mobile launched named November the upgraded the membership system Diamond price.
Packaging, our Hollywood ERP, what's that where do you feel with that and a contributor to a healthy quarter over quarter revenue increase in this.
<unk> pigment.
Looking towards 2022 we will focus on bettering already operating you pinch hitting for each game segment as part of our I will caveat.
And then they went to the R. R.
Real time basis.
Specialty products those new game segments to ensure that effecting your effective Oh I enrolment.
At the same time, we were very pleased that we see that our provost to four new games new games resumed.
We consider this to be a single that it's not the quantity of Dms and related to that is empowered dinner is a quantity.
Also that the gaming industry extreme heat in the other direction, although February diversity and quality.
We believe that this is beneficial for the gaming industry in the long run and all the costs that fall off as well.
As a game of thing to integrate to the antenna platform high quantity dams and users are the most of it in Parkinson's Docs is a four hour contains a generally safe and you are correct.
Basically all I'm going to end up in the gaming industry, we upgraded our strategy to build a gaming centric content contend to private form and then refine our operations. We also expanded our coverage, although they haven't gotten around to several more varied yoga.
Cohort at the same time by leveraging our experience of new games to immigration, we expect to generate more traffic for our platform far more mall upcoming new game releases.
And then.
For your second acquired screen about a commercialization are way.
We are always exploring.
So barring new commercialization models.
Let's take a look at some.
I'm host.
In terms of travel advertising models.
Our previously mentioned market distribution system is our innovation.
Traditional direct response advertising and display advertising.
It's really oriented Tom platform enables a game developer to release promotion no task.
While connecting screen market to chose the are preferring to metal fall promoting yes.
Oh, well pardon my.
Primary aim is to improve the effectiveness of advertising by increasing the number of downloads and the activity Activations throw this is it.
Thanks, Tom.
So the delay in new game Upper alone this project.
Is proceeding relatively slowly however.
Ever.
We expected that the almost a myopathy distribution, Tom Weyl argument to our advertising efforts by the release of licenses for new games.
We see almost.
Turning to water.
<unk>.
So did you say no to be modal generates that are there.
Revenue for our more interactions between Scream arc and the yogurt.
As part of our your African into our new commercialization channels. We are currently optimizing our membership to see how much we increase keeping revenue for this.
These programs, we have enhanced our membership to see some on the target of our yogurts to subscribe to.
Crackle to become three months time on the science.
Under this new system, you can receive a more value added that somebody is and again more opportunities to interactively the degree Mike on the Iraq gaming casinos.
So very much we'll provide exclusive in game device surveys and the reward for a dime on fast yoga.
E L L on albicans caused by our.
His keyboard and the other games segment, our Diamond Defense Maverick shade, the Soviets has already achieved without promising results.
By the end of March the number of a membership it's up it's a great shame in these segments of inquiries to buy them all of that favorite to consent from at the end of December last year.
The revenue we generated from the new membership with services and also a greater increase.
Increased significantly quarter over quarter. Thank you.
Yeah.
Mhm.
Motion today, so from Morgan Stanley . Please go ahead.
Hi, Charles Fisher College town checks I wanted to learn what the once you get some quasi Brian .
I'd say the couch them about cut dog eat see do they don't fool you always get a shot at del Nevado GH, how you've got to take a bunch of the couch on them quickly.
For calendar two way.
Yeah.
The way that it's fishy.
My question is related to our content purchasing our content our strategy change cosmetics.
That extra men explained the.
The change the impact on user scale and their behavior their engagement.
So far and then how should what should we expect for future. Thank you.
Should I go on to another question. So you answered that.
So I wouldn't say.
Uh Huh Uh huh.
So sandeep as transition 10 minutes talking about how it goes.
So now I'm going to I'm going to tackle vocal about that he has such a nice round mountain and that's one of the children are young anyway, you can ship with our troops and how that may what percentage the Sha Tsui once a handful to.
And also anything you can do it on the peninsula.
So it's just actually on the total.
So you don't have to go switching that went behind that.
You want to tell you, it's just Oh, I'm, sorry phone centric type of Brooklyn about tangible there Fortunately, it's what tricia their guns on potential rather than a question.
Or should atopic Linda I may all ships and Pat you go into a saturated with J J Kramer, who argue you've got mutual whether they don't want somebody to electric.
But when they opened on time that it was gonna go golfing alcohol downtown.
They are usually a couple I know you don't know you want a timeless mission I'm Yamaguchi Hamilton central but that's something that you know you shouldn't you shouldn't draw.
Kind of a time and Doug one kind of you'll put that at the Gwen Chicago.
But don't forget sometimes that I should a box for one thing that I need.
Excuse me.
Principally the assembly of our shop, a bunch of unless you want shop is itchy dog and cat food when they don't need to go I may also jumps at Atlanta, Chicago actually forgot how do we teach them.
Sure.
To be a traditional just rule of thumb coma.
It should not go up quite honest I'd mentioned that'd be with some people that Illinois. Just helps you have the name.
But she was a woman.
The <unk> session.
Session.
Baton overtime to email them to male female command, such a Bachelor and even though you should've mentioned that well.
You're going to have the ultra that once the.
Football journey shifted and they don't know they bought and they don't let it go.
Yeah.
Without this one.
Thank you Alex.
We mentioned previously we executed our snacking corporate procurement strategy and Steve acquiring overpriced counting like what's it in esports tournament, we anticipate with me Crazy I mean, you under the strategy and the right a theory of magic in advance.
Chance increasing investment in self produced content in order to stabilize our traffic.
Good day towns, where penalties and exactly the vaccine needs of corporations and the new well in fact better than our projection.
Oh, so we kept tracking data and analyze the impact of our strategy of seeking acquisition all most all of high country right.
Our data shows that most of the traffic we lock adults, who primarily viewed tournament on my past one.
On the on again off I'm gonna be 10 traffic was comforting.
Convertibility by users, who watch our nice streaming content in a long term continuous and stable fashion.
Large quantity of high quality users are characterized by a high retention rate longer hours and stick needs to highlight two high quality live streaming content.
Having a steady stream of resources.
Allow us to stabilize.
Waiting time and interactions on our platform on corn or corn basis, using our L. O L segment as an example, despite the absence of I hope he alcohol, you're right I mean, you'll generate heat by tens of generating content and its total total waiting hours still increased on a quarter over quarter.
On that basis.
Oh actually anthracite already you're kind of making an acquisition of olive like copyrights does not imply that we will decrease our investment in content, we actually sounds to be able to close 250 tournaments during the quarter.
So in those games segment, where we did not purchase copyright of official tournament, we continue to deliver high quality come high quality self produced and stream of content. Thank you.
So are you and our next question today comes from reaching sort of a judgment. She please go ahead.
Yes.
Yes.
Quantity time and watch how how do you see anybody give her what she wants.
The one thing we have to find your fun.
And cut out in the mountains.
Here with us.
Should put Hong yeah.
And I just forgot it doesn't show up in some pediatric melanoma.
And Oh central chunk, but not R&D dunciad she'll be doubled what do you see a shoutout nutritious Houston crazy as she shops.
Sure sounds like good news or something on a whole bunch on it but what how should I treat you bought in Changzhou China.
Let's see yourself now home and got them up and quoting and she does each one of them.
Sure sure I'll translate myself.
So can management talk about the cost declined across our.
Deadlines by wrestling and sharing content cause our sales and marketing piece about life Kang Bachelor explain what attributes adults decline and how much of the decline comes from our license content savings and how should we assess the full year trends in terms of pizza.
Thank you.
Uh huh.
The decrease in cost of revenues is mainly attributable to the 19, 2% year over year decrease in revenue sharing fees and content costs.
Revenue sharing fees decreased decreased in line with the decrease in live streaming revenues.
Our revenue sharing ratio remained stable.
Yeah.
The decrease in content costs, mainly resulted from lower copyright fees optimization of stream of payroll and production is self produced content cost.
The reduction in coffee right cost was mainly the result of.
See the acquisition of the selected less scale tournament called content rights, such as LPL in terms of stream of payroll.
We have optimized our streamer resources in certain game segments, leading to a significant year over year decrease in the first quarter.
On the self produced content front, we have utilized a variety of measures to reduce our costs such as utilization of partners resources at a joint operations.
As a result, we were able to launch more self produce tournaments, while Laurie production cost on a year over year basis.
Looking ahead, we will prudently evaluate our procurement decisions for large scale tournaments optimize our streamer payroll structure and increase our investment in self produced tournaments and the PUC content for which we will control their related production costs.
We expect a degree of decrease.
<unk> costs.
This year.
Overall, we expect our gross margin will improve at a modest pace for the year to date 22. Thank you.
Mhm, that's all the time, we have for questions I will now turn.
On the call back over to management for closing remarks.
Thank you for joining our call today, we look forward to speaking with everyone next quarter.
Mhm Wuxi, whose today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.