Q2 2022 HUYA Inc Earnings Call
Yeah.
Hello, Ladies and gentlemen, thank you for standing by for the second 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.
I'll turn the call over to MS. <unk> Company Investor Relations. Please go ahead.
Hello, everyone and welcome to <unk>.
Uh-huh cadre of trying to 'twenty two.
Earnings Conference call.
The company's financial and operational result, what you showed earlier today.
You can also view the earnings press release.
IR website.
Dot com a replay of the call will be available on the IR website.
I think it depends.
Call will be Mr. Rosenthal, Chief Executive Officer.
And Mitch.
That's president Finance management will begin with prepared remarks, and the call will conclude with a Q&A.
In this session.
Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements involve inherent.
Risks and uncertainties as such the company's results may be materially different from the views expressed today.
Further information regarding these and other risks and also countries.
As in the company's prospectus and other public filings as filed with the U S.
<unk> Securities and Exchange Commission.
The company does not assume any obligation to update any forward looking statements except as weird.
On the applicable law.
Please also know that we have earnings press release and this conference call include discussions of all this is GAAP financial information as well as Oh. This is no GAAP financial measures.
<unk> press release contains a reconciliation of the non-GAAP measures.
Sure there are others.
As most of the direct to comparable GAAP measures I will now turn the call over to our CEO . Mr. Roth Capital. Please go ahead.
Hello, and thank you all for joining our conference call today.
2000.
Turning to second quarter was largely condition.
The two buildings in the macro and regulatory.
Brendan.
We mentioned in our previous.
<unk> earnings.
It's a new domestic.
Live streaming regulations, which were introduced in may mainly folks tipping behavior and the protesting for mirrors.
Accordingly, we are just to the south.
So associated products and operations a lot of platform.
And then we will continue to close at a federal policy.
Updates and make timely.
It's meant to ensure compliance.
So prudent adjustments, we undertook in Q2, okay, right fairly immediate impact to certain assets.
That business.
Together with our macro had that ways.
Q2 domestic live streaming revenue.
Pleased by midyear.
Single digits.
Quarter over quarter basis.
So in fact, we still managed to grow our user base.
Well achieve a broker in Missouri.
B tool Ponta.
3 billion in revenues and approximately <unk> 6 million in non-GAAP net income in the second quarter of our 2010 pay tool.
I'll walk to mitigate.
In fact.
All of our business.
Dynamically adjusting oh I'm on monetization, so that T j's across a breadth of Williams operations, essentially a strong foundation in the business and the Mentos, whereas so little said long term we.
We are confident we have leverage in our business as we scale further in the game live streaming industry, so little consistent investments in quality content and.
You know they tailoring products.
Well continuing to provide attractive here.
E Sports and entertainment.
Content, Santa satisfies so call it needs all of our users.
Our business is that's it yeah.
And that's the lens with which we expect to rebound and for us proscar and market conditions.
Step by step in life.
With that in mind, we remain focused on future opportunities in spite of all of the external factors. Our Q2 results My my Kid.
And there's a quarter all yours that expansion.
We sustained growth in.
Mobile and Laos and.
<unk> instituted a format to Nash us across all our product.
And that game in that in that value chain in <unk>.
Now let me walk you through some of our key metric has stopped.
Starting with user growth.
Our lives mobile e-mail nishu the.
<unk> $3.6 million in the second quarter.
And team.
Lodging gross hours seven pounds or 7% from the year over year.
This growth was mainly fueled tool.
Enrichment, our quality content as well as a product.
And optimization.
Oh yeah.
Our platforms. He goes out to you at this generally it further highlights both then necessitate and efficiency of our content investment is Terry T J and that product improvements.
Oh that stickiness also improved with total user time spent on our platform in the quarter growing by about <unk>.
12% year over year.
We are live at Paris.
Next month he owes.
Retention rates remained above 17% in addition to our growing active user base.
With respect to product.
Great.
We have.
Found a positive start.
Inside of that into it.
<unk> product innovations for our users.
Our newest Wuxi 10 pounds of zero.
I Love, Florida in tanker rates community, he chess and enhances user intent in taxing experience more spec Super safe secondly, washing tampon to Sara.
Yes.
As a social community called Tiger Chit chat.
Rich feature is broader based content ranging from videos images and text.
Okay Joanne day.
So our T js and events.
Community also serves as our discussion board between users and this added flavor at a boiler contests promoting better in tax gene the gene broadcasters and this adverse total cultivate deep bonds.
Selling them screaming all knows us.
Engage the community in tax genes and the activities he owes us more motivated to produce high quality <unk> video.
Political right through our Helga listen driving yeah Vik.
Recommendations and the operations. Furthermore.
Segments for a different game titles and the tournaments have also being created and the official accounts to operated by game Studios can join.
<unk> will provide us the latest game information and as Jay charity Js.
In addition, based on that.
In fact, you want to look at two adjoining below cost as gameplay.
Sure, which he is available in our live streaming channels, we launched a competition function caused the community contests.
Enabling users to participate in a game competition with Paas.
Initiating battles in the matching set him with just one click.
Yeah, he owes us can win prizes offered.
By the platform and also has the chance to compete with us.
Cerro Verde and broadcasters.
This new feature is another test to men.
Testament to our ability to recognize and fulfill user user.
Sure.
As a side note I'd like to managing that how our community features.
Not created at random.
Foundation, our committed Camilo knit taxation, if you play in bad debt.
All our platform. So yes, all the way up I meant <unk>.
So teach us as we institute.
In our understanding of community.
Preferences, and then most all upgrades.
Born out of a tread dictated by our users' tastes.
Two months in product upgrades, and Theyre very little churn Integra racing activity.
Heavily otherwise as toward Oh, I'm wishing all of the timing.
Then stop nonstop destination for comprehensive family related services as.
We will cut the collaborated.
With all our partners to capture more opportunities across our industry value chain.
Along with a more comprehensive offering we have.
And that will unlock more monetization opportunities going forward.
In addition by leveraging all of our long term in nature Shea tails in game operations, we deepened our collaboration with game titles in recent months is.
<unk> Hello.
Oh Wow that lift as an example.
We will team up.
With their scans across claw back some machine they were payment and their game and the community operations. Excitingly. We are has contributed towards the content and the impact to teach us a lot of the lift lift in game streaming.
Finishing.
Leroy who asked community is linked to the tool and seeing things, whereas that fishing, though.
Hello Allison.
Companion App for popular Wilder lifter related videos and the posts.
On the tournament's correct.
I was a man that first two steam so wow theyre lift lift Lisa.
I L.
Yes in general.
General professional leader in China. We also produced our salaries are self branded tournaments for these titles such as Samsung.
Which has a they can they're wishing how's the official why are there better sure neither.
These type of link us help in Peru, he owes us knowing his found rounds and the brain we are first mover.
Vantage you Wow the lifts.
Mobile esports tournaments citizen.
While strengthening.
<unk>, leading position in E sports game.
In promoting the newly launched L O L E sports manager game.
Dishing to Al Walker General operational activities, such as recruiting broadcast broadcasters and providing streaming in Santos.
By working with this game studio we also in tech weighted some games EHS in the broadcasting <unk> O L. L. As major events, Hello, Elvira Zika and L O L. A champion career.
<unk> sent out we are designated virtual items to use us participating in so seeing tacked hail activity as well.
We are glad to see the game quickly gaining share X gene.
For during the summer tournament season last three I would like to point out set top all our continuous efforts in growing our user base and the gaming tax rate in tank car racing.
At the corporate level, we have being focused.
Improving operational efficiency and adopting more stringent budget.
<unk> measures.
We see <unk> as an accessory to help us navigate macro had that wings.
As a as tunnel uncertain pace.
We are already seeing some early encouraging results from our operation team monetization FFS.
Which yesterday will cover in greater detail in just a moment going for what we aim to further strengthen our monetization paper Paradise.
Optimize our costs and then Spence stretcher and fortify our business fundamentals to achieve sustainable business development over the long term.
What does that tell they deal I will now turn the call over to our VP of financial Finance Ashley will share more details on our operating metrics and financials equity. Please go ahead.
Thank you, Mr Don and Hello, everyone.
So it's a mixture.
Yes.
Ill now provide some update on our content enrichment and diversification initiatives.
On the professional esports content fronts.
Welcome to around 90.
E sports tournaments in the second quarter.
For context too.
Let's start total real issue of Nisource tournaments, we can.
680 million.
During the quarter.
Uh huh.
Our current economy.
So that's the fleet to ensure our high quality content offerings.
I work closely with our close.
In particular.
That does seem kind of mess for Chad.
L P L.
In vacation now.
King politic maintained leading positions in real issue.
Thanks to our strengthened cooperation with game.
Game.
The cross file colleague spring continuing through a chat.
Okay sure.
I'd like to highlight that.
Sure Jonathan.
You too.
It became one of hostile top level partners.
Our coal operation now spans the game really excuse me.
E sports content and Blue shield coverage.
We expect our breakout alliance with cost vial.
Now for a good expense.
I can't reach in their first crushers should take game changer.
You may ask.
Competitive advantage.
In addition to license content.
The first has to 18 south east.
E sports tournaments.
Entertainment teachers these shows.
During the second quarter.
Generating total dealership.
Person, Mr Li $100 million.
Each listener, particularly remarkable achievement given the pandemic related Lockdowns and then fill.
Major factors in tier two.
Well I was just your project selection process.
During the quarter.
Our standing self organized tournaments.
Could it on that off came from desktop.
Yeah, Joe Shan Cup.
Reactivation of Kim for Apache and championships.
Mr Owens for Yamal Vulcan Arena.
It's worth noting that the Thunder theory.
A phenomenal Oh yeah.
<unk>.
Created for honour of Kings.
Integrated online and offline gaming sessions.
Promoting the interests of popular broadcasters on our platform.
Such as first assisting where yeah.
In building its proprietary comprehensive Tang and Mr. Cheng around honour of Kings.
Which will help sustain the stable and healthy development of esports.
Esports ecosystem on our platform.
Beyond adapting a more selective approach and allocating our resources.
In fact its content.
Mr. Joe mentioned earlier.
We remain diligent in improving our operational efficiency and optimizing our business expenses in a meaningful way.
A recent effort in.
Our overseas business.
Fine tuning marketing channel.
<unk> internal processes.
A reduction of our Q2 total operating expenses by 17% quarter also Cortez.
Tons at one 6% year over year.
Yes.
Moving on to our Q2 financial details.
And then otherwise.
The percentage changes out there in Brazil in <unk>.
On a year.
Oh for it yet.
Our total net revenues were RMB two.
<unk> 8 million for Q2.
Powell with N B 296 billion.
Here at last year.
Streaming revenues were RMB two five.
5 billion for Q2.
Compared with I M B.
On 58 billion for the same period last year.
The decline was mainly due to recent Michael.
Terry environments.
He started I want every spending herpes zoster encore life on a year over year basis.
After my close softness continue to other western fleet effect paying user sentiment.
The number of paying users for your life.
$5 6 million.
That can handle this testing period last year.
And we're testing and other revenues.
I N B 200, and Tony Free median filter too.
Compare with I M P.
$383 million for testing <unk>.
Yeah.
Hi, Marie their children content licensing revenues.
Now I'll feel affection for licensing according to the licensing event schedule.
But be mindful advertising.
It was also soft due to.
The ongoing challenging micro environment.
Cost of revenues decreased by 14, 6% to a and B.
Sure.
Yeah, So Q2.
Alright.
Revenue sharing fees and content costs as well.
That is cost.
Revenue sharing fees and content costs decreased by 13, 3% sure Neely N E 177 million for Q2.
Primarily due to the decrease in revenue sharing fees associated with the life.
Streaming revenue.
Costs decreased by nine 9% to RMB 154 million for Q2.
Hi, Marie do to improve that.
This cost management and continued technology enhancement efforts.
Gross profit was one.
It was RMB 219 million for Q2.
Compared with M D.
581 million for those things.
2021.
Hi Marie.
Revenues.
Gross margin was.
Nine 6% for Q2.
Excluding share based compensation expenses.
non-GAAP gross profit was.
And B 223 million.
Julien.
non-GAAP gross margin was nine 8% for Q2.
Research and development expenses.
Kris.
10% sure I M B 168 million for Q2.
Hi, I'm already.
Please.
Share based compensation expenses.
Sales and marketing expenses.
Great.
Sure I M B 100 million for Q2.
Primarily due to decreased marketing and promotion.
As well as personnel.
<unk> expenses.
General and administrative expenses.
Great.
One 5% to 82 million for Q2.
Hi Marie.
Increase in professional services.
And personnel.
Sensors.
Other income was.
The 50 million for Q2.
Powell with RMB 48 million.
For the same period.
2021.
That's the resell.
Operating loss was RMB.
81 million for Q2.
Compared with operating income of <unk>.
M B $182 million for the same period.
<unk> thousand tons or one.
Excluding share based compensation expenses.
non-GAAP operating loss was.
And the $56 million.
non-GAAP operating margin was negative two 5% for Q2.
Interest and short term investments income or I N P 66 million for Q2.
Compared with I N b.
58 million for the same period of 2000.
Sometimes you're wrong.
Income tax expenses were RMB 1 million for Q2.
Compared with the 58 million for the same period of two Dolphins Hunter one.
Primarily due to lower taxable income.
Net loss attributable to four yeah.
I N B E.
19 million folks here to come.
Countless net income attributable to each of I M. B 186 million for the same period of 2021.
non-GAAP net income attributable to <unk>, Inc.
I N E 6 million folks Ya Chu.
With I N V 215 million for the same period of.
2000 tons of one.
non-GAAP net margin was three.
3% for Q2.
Net loss for a T S.
N B for Q2.
non-GAAP diluted net income per avs.
I M B saw Q2.
As of June 32022.
Company had cash and cash equivalents Shelton get policies and short term investments.
I N B 10 on 72 billion.
Palace I N E.
Pinpoint 47 billion.
Oh much 31st 2022.
With that I will.
Now I'd like to open the call to your questions.
Okay.
Thank you ladies and gentlemen, we will now begin the question and answer session to ask questions on the phone. Please press star one one and wait for a name to be handouts for that patent.
First of all participants on today's call. If you wish to ask questions to management to Chinese police immediately repeat your question in English.
Okay.
The first question now comes from the line of <unk> Chung from China Renaissance. Please go ahead.
So I'll have Corning.
Well you calculate it's on Monday.
With our prepared remarks.
Can you tell us how many mako.
I want to ask a question Manav.
I bet.
Kathy.
That's helpful Scott.
Colin Langan.
Let's see.
The corner you were not sure yet.
So somebody who sits.
Hello.
So thanks for taking my question My question.
Regarding del Tim Community publishing your way.
Yeah.
So you're right to say that but more rational at the height of pet health care skin community and then what kind of powertrain targeted provider.
Twice with our guys about what that next thank you.
The Jimmy.
Thank you Amanda.
So you're seeing the abandon man to go tasteful.
At associated Banc Corp.
And then on <unk>. So you don't go Crazy if I see it already.
And then goes although zucker youll see the when Doug says densities in England.
Thank you for this question recently, we have officially launched the Tiger Kitkat humanity, and who we ask applications version 10.0, which covers video and graphic communications, yes, there's kind of initiated discussions on damn Q&A strategy tips as all those tournaments.
And et cetera.
If I'm in the way you're going to put <unk> awards into won't even tell you the good times.
Clifford.
Yes.
And to this service.
<unk> seen color two world class seats as bullish as Don <unk> Don.
You can include visitor to defense.
Anyway, if I'm in Congress.
<unk> session. So here faster than <unk> did you see some jargon includes Heineken <unk> <unk> and.
<unk> Johansson Neyland tighten soon.
Only one hand, it provides a place for our communication between users and live streamers.
This can also discuss interesting content with their peers.
Live streamers can better interact with their first steering now streaming hours, which is also conducive to consolidating their fans base and on the other harmed their recommendations and operating screening you can stimulate a figure what they gave them up they use it to produce video UGC and increased the size of the user.
Ah patients and help to improve the high quality content okay.
<unk> platform.
So why do women do you said so we are you'll see what was that.
<unk> <unk>, that's a whole another thing too.
<unk> comes out things and <unk> Shang Guang Yoshida, pushing closer I'm glad you're assuming.
Neil.
It's I can't pencil Youll see that answer and then go up and so you'll see Samsung Youll clogging, Michelle now to zone square yard can use your time zones as Amitiza hurdle.
In addition, we also set up zones for some major again tied all of a sudden tournaments and adviser to the official operating accounts of the games to settle in so as took applies more accurate consultation and a related video and live content off the corresponding game titles at the same time.
It can also help the game studios to optimize their all their operation for about a fact and enhance their cooperation relations with <unk>.
It's as if I'm engaging being business I E.
Sure.
And then Susan <unk>, daughter, Hajime <unk> easy today, so, let's assume it's hunting magazines, Xi'an and Golar <unk> <unk> and <unk>.
And then he tends to them months or.
So if we have one kind of <unk> Suisse.
So you see that those on this issue.
And they don't want you then manzullo under Yoshi channel in Lgs.
<unk>, Yeah, and Sundar Nate on their shelf AIDS in game, one job one seeder issue. So she went on and what that Youll see a tiny tiny lanzone five we couldnt dowda Julia <unk> tool support Sony for a while and golf.
In Chicago <unk> quick.
This version update comes as a natural upgrade a function of community <unk> community has been gradually bear with over the past several years and therefore, it is necessary to upgrade the product to make and organic combination of live streaming video plus community.
And in a one stop manner meet the use this area fees for watching the game life sharing and communicating and joining the dam at any time.
The content of matrix <unk> meets the needs of our players to understand and discover that began at the for the clay costume did they arrived content. After the game and also precipitate the needs of our players.
We hope to generate greater value in the game industry can explore other monetization opportunities. In addition to life refunding income advertising and games.
Thank you the next question.
For the question our next question.
Our next question comes from the line of Richie Sun from HSBC. Please go ahead.
Well in Shanghai.
I don't know I S T hungry and you might guess.
Q1.
When do you guys Guangxi.
Okay.
Thanks Scott.
Ranking.
Okay. He says.
Hi, Sean made by Sogou.
Yeah.
Yeah.
Oh, Oh Oh.
Got it.
Yeah.
Q2.
Sure.
So thank.
Thank you management.
Question.
Regarding the reclamation tight coming towards shifting ranked in some cases may could you. Please quantify the revenue <unk>.
<unk> does that impact on our platform.
The alternative solutions for us to recoup the lost revenue.
Due to regulation. Thank you.
Okay.
How does it when do you guys know a.
Yes sure.
Oh, Great final answer that Sean.
Lewis from here because you can't.
Or are you just showing up in country.
Oh sure.
Route sequencing niccolo.
Not just with us.
The trial showed sequential which only a handful of hu.
<unk> done that yet.
From a.
So, let's I want to ensure that Teekay was our Asia, how Chuck E cheese, referring here to get into calling them afterwards.
So I think.
That's something that you tell Joe.
Well it means that you can take it sounds like a harder place on <unk>.
<unk>.
Does the regulatory authorities issue that your opinion is on standardizing the online live broadcast free word and minus protection in May we have implemented their requirements on schedule. After policy change Accordingly, and this policy mainly focuses on minor protection.
And strengthening the managements during the peak hours such as the adjustment of PK, playing sessions and key functions such as the T. P. Ranking modification. We believe that this policy change will help us to better regulate the industry and promote a long term development.
Thank you Roman yet you don't do it in cash elimination chanting how you.
So that is a consolidated Telekom Austria.
Oh sure Yeah agenda water usage, when they're gone I seen wait until that comes out of younger Gwatney now.
At weekends on gross R&D systems for the Khamsin is <expletive>, one shirts hunting hurting you more shifts.
And Congress pass in Lea County.
T.
In addition, recently we have taken some initiatives to make more compliance adjustment to some products and operations on the platform and Meanwhile, we have also made some more stringent management on the live content and behaviors instead of live streamers.
We will also closely monitor the policy updates and timely improves the product and operation practices and create a more healthy platform atmosphere and content supply.
Hum.
Well, then silver tissue culture do you push a little thing he seems chine puts all Chinese citizens.
As you look at Q2, the inbounds reality drones, and they'll get Niagara teach yourself with Keytruda.
Sam.
Well, maybe it's eight ships <unk> got a whole shifted comp.
Our prisons. These adjustment happened casting some impact on live broadcast revenue that we have in a certain period of time amongst which the impact in Q2 is mainly in June and it is expected that the Q3 will reflect its impact.
On the whole quarter. We are also continuously assessing the subsequent impact of these adjustments on financial and operational indicators.
Yes.
Junkie land shortage at Johns Hopkins.
Hopefully I can touch on the FERC young with issues in South Shields standup well man.
Welcome aboard he Guangzhou Chita, you'll see but it hasn't it doesn't they're gone.
For one our senior.
Oh sure yeah. So it doesn't kind of touch on what the Union pension fund it.
Go flat, but again. Thank you ladies you tend to like how does she said yeah with a fashion.
Nevertheless on the whole we believe that these adjustment in Tianjin has limited impact on the demand of the core users, who yeah, well still serve the core yourselves by providing high quality against videos as well as other entertainment contents and at the same time or better optimize our strat.
<unk> in operation and monetization for our balanced development of all product and the subscription businesses.
Hum shoot well make it hurts tissue counting hydro thanks, Tony that tissue chanson count Pogo.
Total women's 18, Sean Sundar, how unusual time lag of ashes <expletive> selling cycle.
Since its launch and then Theyre gone since I saw something here on the E&P Trump washes finishes shipping b.
<unk> got Pico, we either subordinate Russia currently.
In Shanghai.
I hope what you told us unique Julien, we actually had a turnkey project.
At the same time, we'll continue to strengthen the compliance capability of who you are and invest in a corresponding technologies.
For example, here theorists this AI real time sound silencing system, which is the industry's first tranche recently this can help us to realize real time shouting V of audio transmission or potentially risky content and effectively improve our review ability of live content.
The establishment of a better platform compliance system is conducive to help us in the longer term growth into yeah.
Thank you next question please.
Thank you next question comes from the line of published Chong of Jefferies. Please go ahead.
Okay.
Okay.
Yes.
Okay.
And since that's the online Thomas.
Sure.
How about we'll move to next.
Chen please thank you.
No problem certainly.
And Thomas if you would like to repeat your question just press Star One again, we will now move to our next question from the line of Katrina <unk> of Citi. Please go ahead.
The condenser wanted T one Japan Hotsy-totsy Trina.
Thank you.
One on timeshare.
Hi, all.
What are you gonna toss downhole woman guide so that she can shop online.
Thank you Greg Fisher.
Thanks management for taking my question can management share with us the measures we have taken for cost optimization and how we should expect the margin outlook.
Second half of 'twenty tier.
You.
How does it all with you on that point.
So on one hand, I can T go closer to I think a UAE, Saudi Patriot Dianne go they just try and Congress for sure. She can jump on sale deal pass you on the east and game console.
EUR <unk>, Zhang who will go through.
As Howard tissue, just a year, where the county Christian if I can.
At present to improve the company's operational efficiency take more stringent budget control measures and optimized cost and expenses are an important job of ours.
Which will help us to better consolidates, the company's businesses and financial foundations under the current environment and support the long term sustainable development.
Sure <unk>.
With a towel John sure Jumpy Youll.
<unk> sure.
Core bank to Sandy.
Replacement various jumpy.
You can imagine Jack.
First of all our recent adjustment of overseas businesses as a measure of overall cost optimization, which can help us to reduce the margin drag of overseas business loss on the whole.
Yeah, Keith with his comfort from in <unk>, Kentucky and <unk>.
Thank you Tim good question on salaries on mens Juniors, so youll class.
So you went from yes. Thank you.
Quick one from me on conducting sure. It does sound like there is in April I was from data shortly.
So in one chunk, let's say you got a culture.
England showed up in detail shortly.
Safra.
Soldiers on T cells.
Are you seeing the chunky.
<unk> you can see on the Saudi Chinas top sheet shutdowns by some shashi.
So it would be easy to sit down with my friends you should see.
In terms of the cost in the second quarter. In addition to a more stringent screening procedures for our copyrighted and self made content that has been optimized in terms of the live streamer, signing and bandwidth utilization efficiency.
In terms of our operating expenses were more cautious in channel and promotional expenses and we also strengthened the internal processes for that matter. We also have made more control.
Control over the personnel related costs and expenses.
Despite the decline in net profit margin due to the decline in revenue in this quarter, we still make some achievements in improving the operational efficiency. The total operating expenses in the second quarter decreased by 21, 6% year over year and 17% quarter on quarter.
Okay.
Well, thank god for each.
Sure sure sure Youll truly jump on Fei onto your platform, especially <unk> when they leave our new SAP on yes, we showed our session comfort gel cash designing pay for tier one tissue that you savings yet.
We believe that these measures will continue to optimize the cost and expenses. However, due to seasonal factors our profit margin level will be affected by the increase of event costs and a corresponding promotion expenses in the second half of the year.
Telecom <unk> Tom.
<unk> gotten Tompkins Sydney tissue your question Jose on vehicles, the Osha conducting home does session so should narrow.
Question, but.
<unk> found is what month do you even need a T cell <unk> <expletive> Youll see thing.
For a longer term perspective by enhancing monetization capability of ours, we continuously optimize the cost and expense structure, such as a more balanced the tournament and self produced content and stream their costs as well as continuous improvement of operational efficiency.
Confidence in improving the margin and maintaining a positive profit.
Okay, let's have the next question.
Totally.
We will take the next question is from Thomas Chong from Jefferies again, please repeat your question.
Sure.
Yes.
Thomas Please go ahead.
Thanks Bonnie.
I wanted to you and what is that when you saw a woman.
Hi, Oh shoot.
In the Eagle.
Sam.
Thanks management for taking my question Mike.
My question is about our content strategy can management comment about.
How we should think about the outlook in second half.
In the future. Thank you.
Uh huh.
Not woman Changyou will keep will hot issue you will shortly hear with Eagle Ford.
We're seeing shifts you don't work with it some Joshua can see you got from Cheetah further genuine insert the El Janeiro Dot total once you dose you fish hump yards.
It was just a shift for how long.
We can't control.
We added <unk>.
Is it onshore mania dollar Tasha <unk>.
But Susan you don't hold our concern yourself with Allegro downtown.
Thank you for a question as we mentioned before that users are the core of our businesses and it is the company's long term development strategy to continuously drive user growth and therefore for our quality content investment it is still necessary because they help us to continuously serve our users and <unk>.
<unk> the competitive position that we have at the same time, we will also adopt a more cautious investment strategy and concentrate our resources on more effective content.
Bank, Shanghai, Suzhou narrow format.
Hi, My question since you're on it on the hour I T's internal generating the FMC legacy products and cool.
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In terms of our IP and self made content, where carryout more targeted analysis and meticulous evaluation on the ally of various planned purchase that we have in content production and make timely adjustment according to the market conditions.
This year, we have more to our strict choices in IP tournaments, and self made content projects. So the total number may not be as many as before but the overall quality is improved. This is also reflected in the size of things, Iowa ships watching these contents and the growth of the <unk>.
<unk> on our platform, let me give you an example in the second quarter.
Total of about 100 million people watched 18 self produced the tournament's M. P. G. C programs that we have the year on year growth of mobile and they use in Q1 and Q2.
It was at a high single digit level.
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Yeah, I would also like to mention that our presence will continue to invest in some top tier events with higher prices relatively in a second half of the year will broadcast a top level professional leagues of various mainstream Gan titles, including <unk> 12.
They consider not only the short term direct cost of revenue, but also the impact on user value brand, our reputation and platform cooperation and so on at the same time, we also hope to negotiate for better commercial terms in the future and realized long term benefits.
So that's one area from yet.
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In terms of life's framework content will also dynamically adjust the intuitive signing and tipping sharing that we have with the lab swimmers third the upgrading of technology, we can help and encourage the users and live streamers of the platform to create videos and more interactive.
<unk> content to form a more complete metrics of content offering.
Thank you let's have the next question please.
Thank you for the question.
Your next question comes from the line of Lee Chang from Bank of America. Please go ahead.
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My question is mainly about our long term growth what are the growth driver in mid to long term bucket that you can share with us. Thank you.
Yeah.
Although what I apologize if.
Thanks again.
So it gives us further.
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I'll tell you something there too.
When you start to hit in <unk> and then further on the phones here.
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Present, our monetization result is mainly conditioned by the external environment <unk> has a continuously growing user base and good user loyalty and commercial operation ability without commercialization model be further explored and optimized and the market situation improves we.
Expect that our live broadcast revenue will gradually return to a growing trajectory and we believe that starting from here. We have a few meet two long term development directions.
Okay.
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First as mentioned before who yeah as a key parts to the game industry Chan provides a lot of value for our game users and studios for the category of a long tow game titles wire services can be provided from the operation and to help the game uptake.
And retain users and expand the influence of the games at present, our direct income is mainly coming from the user side, while from the game Studios. Aside we also hope to achieve win win cooperation through deeper cooperation with them and more services.
<unk> provided such as joint operation.
In the mid to long term I think this is a place with the potential for our business and revenue growth.
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Second point, we hope to better link the video businesses with a live streaming businesses. They need community functions that we have now integrated into the video content and we have also set up a vertical short form video module.
And if they're upgrading these products about 30% of our daily users watch videos currently with this data being further improved in the future we hope to realize more monetization from the video such as advertising revenue.
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So there's a lot of other niches, which aims to say so.
During that time, so <unk> <unk> each.
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Thanks.
In addition, we believe that interactive games in our lives Australian room, as well as the forms of our virtual remote or virtual life for them are gaining popularity. So we have explored and tied these forums and achieved some preliminary results and it is expected that these forums. We're also.
Present, some opportunities to create more value in the future.
Okay. Thank you.
There are no further questions now I would like to turn the call back over to the company for closing remarks.
Thank you once again for joining us today, if you have further questions. Please feel free to contact.
Investor relations through their contact information provided on our website or the TPG Investor Relations.
This concludes today's conference call you may now disconnect your lines. Thank you.
Thank you.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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Okay.
Yes.
Okay.
[music].
Thanks.
Okay.
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