Q2 2022 Bilibili Inc Earnings Call
Yes.
Good day, and welcome to Billy Billy <unk> second quarter, 2022 financial results and business update conference call.
Today's conference is being recorded.
At this time I'd like to turn the conference over to Juliet Yang Executive Director of Investor Relations. Thank you. Please go ahead.
Thank you operator during this call well discuss our business outlook and make forward looking statements. These comments are based on our predictions and expectations as well.
Actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with the FTC at Hong Kong stock exchange.
non-GAAP financial measure we provide are for comparison purposes only designation of this measures and a reconciliation table are available in the news release, we issued earlier today as.
As a reminder, this conference is being recorded.
In addition, an investor presentation and webcast replay of this conference call will be available on visibility IR website at IR <unk> com.
Joining us today from Billy Billy Senior management are Mr. Ray Chen Chairman of the Board and Chief Executive Officer, Nathan Cali, Lee Vice chairwoman of the board and Chief operating Officer and.
And Mr. Sam fan Chief Financial Officer.
I'll now turn the call over to Mr Fan, who will read the prepared remarks on behalf of Mr. Chen.
Thank you Juliet and thank you everyone for participating in <unk> second quarter results Conference call.
I'm pleased to deliver today's opening remarks on behalf of Mr. Chen.
We kept on Kid in both had wave in the second quarter.
During the period, we started our company, but when your users improve the products expanding our content and implementing further cost control measures.
With locked out of Shanghai lifted in June we believed the worthy pad.
Yes.
Importantly, we expect it to recover our operating margin in the second half of the year, while continuing to grow our users and narrowing our net loss.
Our total MTA used reached a new record of $306 million in the second quarter.
After the 9% year over year.
Presenting another exciting milestone.
While we remain committed to our target.
We're putting additional forecast on the quality of users.
Looking at matrix, such as da use and engagement levels.
Q2, our <unk> grow by 33% year over year to 84 million.
Outpacing the growth rate of our youth.
This brought our <unk> ratio to 27, 3%.
<unk> thousand six 4% in the same period last year.
The daily average time spent was $89 million.
$9 million increase compared with the same period last year.
Longer user time spend and the high user activity increase our total user traffic.
<unk> grew by 48% year over year.
We believe our growing matrix of products.
Expanding content library, and a quality driven growth strategy, we are strategically positioned to continue our growth momentum.
Impacted by the challenging microenvironment, our total net revenues were RMB four liability.
<unk> percent year over year in the second quarter.
<unk> increased by 32% year over year to $27 5 million and our payout ratio was 9%.
Followed by a slower April and May.
Our advertising business rebounded nicely when the lockdown was lifted in June .
With increasingly popular advertising products, such as App install and Mod, we grew our revenue by 10% year over year.
<unk> had to continue gaining market share in the second half of the year.
During the second quarter, we also put further cost control initiative into effect.
Specifically, we cut sales and marketing expenses by 16% year over year.
Sales and marketing expenses as a total percentage of revenue decreased to 24% positive 1% in the same period last year.
Silver and bratwurst cost per video views also declined by 37% year over year.
The adjustment, we made to improve our organization low efficiency <unk>.
We did have cancer and underperforming projects and reallocate resources to cope in there.
We expect positive impact to our P&L will start to show in the second half of the year.
In July we also made appropriate adjustments to our organization.
Our goal was to be more congruent to our long term sustainable growth.
We have integrated the operations of LIBOR casting with our video platform.
And they made organizational changes that integrate our commercialization efforts across our content ecosystem.
Great synergy and improve efficiency.
With that overview I'd like to go through some details of our second quarter operations across our content community and commercialization.
We have seen many iterations of the online video space.
Or is the one that hasnt remand expensive and the trade uncertainty.
The introduction of our different format, such as Dorian Mod.
The lateral Kathy as my TV significantly boost our signal off all the video to life anytime anywhere.
Looking at the story Mod and the accelerated sample.
The story mode is one of our newest verticals covering users undergo entertainment needs.
It is more efficient you can get your beauty video in shorter lengths of time.
Why video views from <unk> TV growth, 53% year over year video views for star reward increased by almost 400%, yeah well year.
Britney incremental traffic to our platform.
Indicate an ongoing trend that we are seeing throughout the second half of the year. Moreover.
Moreover, storyboard presents a parallel commercial prospect at the gateway to different monetization opportunities.
Our tightly and our LIBOR Kathy.
And May you penetration LIBOR coffee continues to grow across our user base in July we began to fully integrate our LIBOR cutting it a pure GP ecosystems. All the time, we expected the combination of these two ecosystems to result in more efficient traffic execution at our location.
And inspire more content creators to become LIBOR cutting halt.
During the second quarter, our users, primarily gravitated to lifestyle and entertainment ACG and knowledge categories.
We continue to accumulate a massive amount of content through a growing pool of talented equators.
In the second quarter, we had $13 2 million total monthly average context Michelle.
56% year over year.
Our growth stands for our $3 6 million monthly active content creators.
Increase of 50% year over year.
In the second quarter, the number of Quetta us with 10000 followers grow by 46% year over year and equate to us with over 1 million for us grow even faster.
At 58% year over year notable.
Notably over 60% of the kind of equator organic 1 million followers. During Q2 was benefited from the fast growing installed in more traffic.
We continue to expand avenues to a leash colliquative monetization potential in the second quarter over $1 1 million quite Earth received a monetary reward so LIBOR casting of a tightening program our cash incentive program.
Up 19, 7% for same period last year.
Turning to our community we continue to feature robust content directly with our users along with a well coming community environment.
We saw this across our user matrix in the second quarter with impressive year over year gap.
Daily video views grew by 83% to $3 1 billion and the monthly interactions grew by 73% to $12 5 billion.
As I previously mentioned the average daily time spent also increased by nine minutes year over year to 18 nine minutes.
Now, let's take a look at our commercialization efforts.
Advancing our commercial pulse stack is one of our leading growth this year.
In the second quarter, we continue to convert to paying users and improved our advertising efficiency to gain more market share maximizing our high quality user base.
Looking first at vast and is now revenues for Vas was RMB two 1 billion.
An increase of 29% year over year.
We converted more traffic to paying users in the second quarter, driven primarily by an eyeball coffee, while we hold unique advantages given the natural extension of our video universe.
Despite the challenges of streak of regulations, our LIBOR cutting conversion rate remains strong in the second quarter.
By integrating our Puget ecosystem with LIBOR casting we have created a win win solution.
The number of active LIBOR cost tariff increased by 107% year over year in the second quarter.
Our LIBOR cutting and may use penetration rate continue to grow and then pay us for lack of ekati increased by nearly 70% year over year.
At the same time, we improve the LIBOR curve teens gross margin by optimizing revenue sharing plans.
Premium membership for the second quarter reached $21 million up 19% year over year.
The majority of our users called here to be a new auto renewal real subscribers.
Looking at our advertising services.
Revenues from this segment reached RMB 151 6 billion.
An increase of 10% year over year.
Despite of Michael how wave our top five verticals in the second quarter will again digital entry fee products skincare, and cosmetics e-commerce, and the food and privilege.
Optimizing our product offering and the conversion efficiency remains our statutory fall AD business in.
In the second quarter, we continued to dedicate our resources to expand our advertising seigneur rails with diverse products and improved conversion module.
We also executed our integrated marketing campaigns, our selling strategy to realize more cost selling opportunities.
The story mode. As we launched Apple have also been welcomed by our device Tyler.
Lastly on gas it's been there.
Net revenues was RMB $1.05 billion in the second quarter.
The lack of supply for new game content in the domestic market was the man trial late in the first half of the year.
The domestic game approval process returned to normal we look forward to seeing the approval for imported titles.
Nevertheless, our Gan strategy remains focused on the in house development, and bringing exciting high quality games to both domestic and international markets.
In the second quarter, our self development Gam revenues contributed around 5% of total game revenue.
Mainly thanks to our tech support launch of accurate Gail in many countries and regions.
And fall pub fly domestically, we are actively applying for game licenses and have four titles a pud for relief.
X games in our pipeline, including two south Elmont titles, our ready to heat OLED if market in the second half of the year.
At a 13 year old company, our user numbers and the revenues are still seeing robust growth.
We foresee a long runway of growth in the future.
Our attention and our resources are focused on improving both our topline and bottom line with this in mind, we plan to further enhance our operational efficiency tightened spending and the strength of our execution.
We are committed to improving our gross margin and narrowing our operating loss in the second half of the year.
This concludes Mr. Chen's remarks were now to provide a brief overview of our financial results for second quarter. After literally two and the outlook for the first quarter of 2022.
Total net revenues for the second quarter was RMB four 9 billion up 9% from the same period of 2021.
Our total net revenue breakdown by revenue stream was approximately 31% mobile games, 43% Vas, 4% advertising and that taught us in e-commerce and other vendors.
Cost of revenues increased by 19% year over year to RMB four 2 billion.
Revenue sharing cost a key component of cost of revenues was RMB, two 1 billion, representing an 18% increase from the same period in 2021.
Silver and bandwidth cost as part of our relatively fixed cost component decreased 9% quarter over quarter.
So Brian bandwidth cost per video views.
37% year over year, demonstrating the impact of ongoing efforts and the progress in cost savings.
Our gross profit in the second quarter was RMB 700, so to emulate and our gross profit margin was 15%.
We are actively tighten our cost control measures and improving our operating efficiency.
We expect our cost of the margin will start to recover beginning this quarter.
Total operating expenses was RMB two 9 billion.
Up 17% from the same period in 2021.
Sales and marketing expenses was RMB, one 2 billion.
Representing a 16% decrease year over year.
Sales and marketing expenses as a percentage of total revenue or 24%.
So the 1% in the same period last year.
The year over year decrease was primarily attributed to decreased promotional expenses for our mobile games as well as lower user acquisition cost.
Yes.
G&A expenses was RMB $626 million.
Representing a 44% increase year over year.
The increase was primarily due to increased head count in G&A personnel higher rental expenses and nonrecurring expenses related to optimizing our organizational structure.
R&D expenses were RMB, one 1 billion.
Representing a 68% increase year over year. The increase was primarily due to increased headcount in research and development increased the share based compensation expenses.
Non recurring expenses related to adjustment of certain <unk> projects.
Net loss and adjusted net loss was RMB 2.0 billion and RMB 196 billion for the second quarter of 2022, respectively.
Turning to our capital allocation and the liability measurement in aggregate, we repurchased a total of $2 6 million for a total cost of U S. Dollar $53 6 million at the end of June 32022.
In addition, we repurchased a total of $275 million 'twenty six notes for a total cost of U S dollar $198 million with total future cash saving of U S. Dollar formulae at at the end of June 32022.
And as of June 32010, and two we had cash or cash equivalent.
Time deposits and short term investments of RMB $24 9 billion compared with RMB 13, 2 billion as of December 31, 2021.
As Paul we intend to convert to a do primary listing on the men board of Hong Kong stock exchange with respect to the proposed conversion, we successfully of 10 or debt as a ratio of holders approval at all our company's annual General meeting, which was heard on June 30 of 2022.
The Hong Kong change has also acknowledged our application set in October 3rd 2022 at the proposed effective date.
Our endeavor well expand our access to a wider investor base and we expect to concurrently maintain our listing status on Nasdaq.
With that in mind, we are currently projecting that revenues for the third quarter of 2022 to <unk> $5 6 billion and RMB five 8 billion.
Thank you for your attention we would now like to open the call to your questions. Operator. Please go ahead.
Thank you.
We will now begin the question and answer session.
To ask a question. Please press star one one on your telephone keypad.
For the benefit of all participants in today's call.
You wish to ask your question to management in Chinese. Please immediately repeat your question in English. Please.
Please limit your questions to one at a time.
If you wish to have follow up questions. Please rejoin the queue.
Once again, if you wish to ask a question. Please press star one one on your telephone keypad.
Our first question comes from the line of Lei Zhang from Bank of America Merrill Lynch. Please ask your question Lee.
Oh, Hi, Al Hi, Archie.
I can say this all at.
What's the Alex.
My God trombone say younger Martin from you know when he is still kind of all been yellow Manchester hyperbolic it sounds like things are that you'd call out.
Sure. So I'll say I'll do farm incomes it happens what stockpile pallets on Sao Jose on scholarship, we'll send it out.
Okay. So on the Columbia, Ohio, with mangrove I'll call them I don't see the Mali.
Well what did I hear that you said it yourself the bank.
Thanks management for taking my question. My question is mainly on.
Margin profile are we noticed that so we have to take some cost comes from marathon births.
Brett hopping back when they all south no marketing staff, so do I see any wrongdoing, either all cost items in the house and we see our gross margin and net profit margin.
In second half thank you.
Okay.
Oh.
So is that just because a woman 30.
Unique to attendance I'll tell there you go.
To her what really don't lend themselves.
Yeah.
Imports in September what are they constantly all the hits himself personally that themselves.
Matt.
How they differ.
Controlling the hot here hold on parts aren't going to sell it.
Let me share some of my thoughts about cost control and efficiency improvement.
We believe this program is not just about cost hotel.
Not about Martin.
But damned arm.
Money more wisely spend money on the right places.
So you mentioned that Glenn that the offer and Zynga poker.
So we're going to take her to.
To her cost of amending the wildfire plans include Utah timber sorry, the Hollywood of course, the neighborhood Tobey its hallandale to deal to her kids doughnuts are for book.
So it's the only all of this are you all going.
By setting for Centaur ruble, please call us in those numbers.
Cool.
Under the current extraordinary challenging microenvironment, and the cobalt and packaged coffee business.
Pardon me environment.
And I happy Halloween.
Employees are.
Under this environment needs to be more focused chromecast my.
Establishment.
Best resource to our corvid.
To be exceedingly good at.
Core.
No.
Put less effort and focus on what matters the most.
There are some of the beat on the close in Laguna.
Uh huh.
To her Thunder Thunder Hawk Hawk, North would come down.
Sure.
What's our core video and growth and the growth is not just about each of our brands, but also our topline growth.
So you don't have this oh, well somebody you know that these Hangzhou Guangzhou Bob.
Yeah, what's your thought closet surgical because you're not going to talk to her bulk or shipping bulk ore will come down Paul Corp.
So in the first half of this year.
Have been allocating all of our resource, including our capital.
The areas that are core that is our video business used aircrafts in areas that can help us to a flat top line.
I just had some girl why is there the top lending please on the.
Industrial War, you haven't got that.
In April .
Yeah.
Thumbs up.
Peter Please go to other countries.
Even though a challenging environment microenvironment, but I'm still.
Aside from the importance.
Robot company.
Well, we believe.
Important.
Priority.
Our community.
So you will see some P&C.
Nah Hunan want team has seen lettings.
All right. So you know more sugar took out until surpassed toilet attached with that.
Visibility around a very typical internet platform business.
Value of our platform really comes from the filing of our users woman.
So I'm filling in for that local Thermodox Honda.
That's at the heart with somebody here.
John .
He's on yogurt in the off the shelf.
Well now it's your R&D.
And of course at the time, but.
We value the user growth.
So were emphasizing.
Moving the user growth efficiency and lowering our user growth cost.
Are you kind of just for women.
These are the Signor Cortes, Honduras should that put us out down there.
Well, then PRT deal that should hopefully on the 20th South Alabama Nashville.
Okay, so would it be idiots.
I'm, just asking you sat down at all about the doctors so English so you got to.
So all of the convertible.
As you can see all they have achieved.
New user acquisition cost continued to decrease.
Seltzer marketing expense decreased by 16% year over year in the second quarter.
In South America.
How much revenue came down from 31% last.
Last year, 24%.
Water are telling them what are you kind of that particular horses home, but south Dallas horseshoe or are they going to put a loser.
Well that's.
That's awesome.
And also at the same time as our costs go down our user engagement or user retention has continued to improve to the Hugo boss and the Saudis She's a hudson it sends that to her warm and.
He's with us shortly.
All parties would surrender patriot to her but.
Seafood TJ founder he's here.
She got Samsung, but two tiers.
And improving the efficiency also comes with the technology.
Technology side.
This quarter, we have optimized the allocation of our technical resources.
Unified investment in technology infrastructure, and Kaufmann, who they are.
Resource on solving key problems.
Okay.
Let's see what lever to fare well, okay, you're kind of on the car. The Dia you won't be from Joshua Patrik.
Your home the Li <unk> Fung Gotcha, and your boss is that okay that that's at all or if these are sitting that since you do you feel like they are gone.
Tony you're getting wash out when Mckool youll parties women don't leave either their grandchildren. She says.
Alrighty.
For example.
And the second quarter, our <unk> grew 33%.
Our video views grew 83% Tomorrow, we are asking you may aware the resolution of our videos have become more and acquire premier.
We are using everything we can on the technology side.
Improving the area.
We felt it and by doing.
Even at the cost came down by 33.
37% year over year to reward that you didn't get a closer 13 yen peer you offer it sounds uncomfortable Monaco higher that sounds around the pressure will continue on that at all.
Either they.
On.
Jesus automobile so it's not that kind of what's if I may that he was telling me the people who are instrumental to US you said, you're a woman that.
It's useful for you watch one, but Suzanne Tillman from telling you believe.
I am expecting for this year as the Asia growth significantly and our clients and also grow simultaneously.
Our total investment.
Service cost the old box as well.
Not exceed.
Exceeding loss, what we spent last year. This is a perfect example of how we use technology to improve efficiency.
So you don't have them all either one here so you're all familiar with that.
Okay, Oh I'll take the question about the gross profit trend. We believe our Q2 result has already referred to the impact of the Covid Lockdown and we estimate our revenue were again sequential growth and momentum in the second half of this year and Q on Q4 so.
Gross margin will gradually improve too.
Two around let's say, 20% in Q4.
And we will continue to adopt strict expense control measures as measured by.
Chairman Chen.
At the same time, so we expect our non-GAAP net loss ratio. We're also narrow down from around like 40% in Q2 to around 30% in Q4.
Great. Thank you.
Our next question comes from the line of Daniel Chen from J P. Morgan Danielle. Please ask your question.
Ccs Ccs.
Since that point in time.
What keeps you absolutely got it.
Yeah. Good question.
Just take a bigger T rewards is a constant piece.
Got it thank you.
Oh, well conduct argued to the 10 Peter.
Paul.
Thompson.
So I think I agree with water inflows to tell us how well, you're a Florida, alright sounds like payroll to treat all the answers on that alright.
Alright, I hope well make them what kind of give me a shot by year end.
Thank god for that.
Did that come down.
I will try to take myself.
So my question is on the user side.
And then you had some setbacks.
Almost 300 bps this quarter.
So I noticed that in the second quarter.
The DTA you actually outgrowth Mou and the average time spent per user also grow quite nicely. So I was wondering what's the driver behind and also what is management's expectation for the Mou.
And then you matrix for the second half and also in <unk>.
Thank you.
Hum.
What are your thoughts on Sunday and make a deed in Ohio.
Tell me is that to.
B then you'll hold on Jamba team at MIT.
I'll go through the in Yeah, sorry, I thought your daughter her why do the funding never to BMO pensioner sit here, Steve agenda keep a man maybe we're still targeting for the English.
I'll share three points as you may all aware there has been a significant change of macro environments.
Globally.
We think the fundamentals that remain.
Remain unchanged here are three points that acquiring our growth there.
The loss in acre what are they sitting what prestige unchanged over the long haul. It's just all have what she's done yet what can I tell you Dan.
Peace and that somehow we're putting a tenure which meaningfully.
We do like Asian car start.
Global phenomena, and we think that visualization movement will continue for three years at least.
And this will also support billings really scrubbed now for just one year two year three year is this will continue to support us they.
They are not through what really itchy you guys just feel food with harmony Papa you don't they don't.
Oh, well meal, depending of course for the Italian.
To her wisdom, some ammonia in children dose it can be done assuming I'm sure you guys feel from Canada.
The second thing as beyond generation needs, there or cultural and entertainment content.
Half of our users are below 25 years out why theyre using deliberately because we are providing their own culture.
Our content product.
Is that no one really to herself recently so it seems that so for example, you got started here our neighbors south eastern shelf since you're the filling out of the U S.
Cause at least should that India, and China chemical Yankee, partly the chancellery without use of white itself isn't.
Third point.
The consumption upgrade is still the largest private employers whether that consumption sector and the content consumption will be a major part of that.
The generation of the Blue cross generation or more.
<unk> spend their money.
<unk>, an kao toe product cultural.
Okay.
Or to the Pizza hut. She says you go high single phone, causing there you go with the suite.
Clearly the hydrophobic cause it to go through a woman does it turns out that took a team of men.
I believe on the <unk>.
<unk>.
That's why.
The point is supporting our continued sustainable growth in the future.
So Quentin with all woman, that's eager to go Diego does either.
Was it a tug of war M aorta tears cigarettes, either or something that you do them in the <unk>.
It sounds to me.
Are you a woman.
<unk> phase two.
Sometimes the Trudeau dropdowns, how what he thought was eager to tell me.
Paul Hudson, the Saudi Tigger, She said, yes.
Maybe thats easier.
As he mentioned indeed for the past two quarters <unk> gross growth rate has outpaced the Mou growth rate, that's because we have keep emphasizing.
That was more focused on the quality of the growth, which means with D. A.
<unk> Apple timeframe.
But to answer you the tons was hug orla M. A R T and they'll have different woman.
The Hoyas just hung shisha naval market kind of highest throughput of deep zone, RTL, what kind of woman the gene pool.
Onshore cool, who don't take out somehow.
Since this is home with you you're clearly the hardest to see the content counter Hugo morning, Nigel said <expletive>, who don't hold all of it is how good idea yoda, you'll talk with them.
And not only <unk> has surpassed.
Growth rate our daily user time spend has also improved sequential yes.
Year over year for many quarters and our daily video views grow.
80% and our user engagement multi user engagement.
Bruce.
Also grow significantly.
He is a very healthy model that.
Video views and engagement our pace.
And the data itself outpace that Ami.
This community has become more sticky on page.
Then I'll go through the calendar you've got you don't see them come down are morphing into la Concha Y Toro days, if a woman comes answer.
When you go to for.
You got a hot hand that would sit on sort of what what really.
There were many that either being high sure woman sometimes.
Sometimes you don't want to go morphing tablet central So you can see in Canada, you've got some down.
On top of spending our money more wisely.
Believe that our business model, which is the content ecosystem.
This model is more healthy.
The woman.
It goes on air until later.
Doughface Honda tanker cars or when the court shoes to fill but I don't.
If they can't see either the hips.
Bulk water Shutoff Amish Shah Yeah to hip Hitler toured hundreds on the Jos.
Yeah, Thanks, Honda quite spoke with Genco Punisher, they'll hydrophilic window seem to helix has a put on the quarter.
A J on the hydro through non go to tender to door single hardest Hungary yeah.
But then this was in the huddle sorting citizens endorsing how do those look beautiful sunny ago, arguing that you guys have patios Roma.
Sometime ago, we are seeing healthy that's broken the belief.
Yeah.
Who are our content categories has been very healthy across different verticals.
<unk> traditionally strong anime music.
It's growing very healthily and we are on.
Also witnessing modest new category expansion.
Because we have such healthy ecosystem.
Continuously discover new content creator very high quality content and we have many many new titles when firearms for example.
The phenomenal second alcohol P&G.
Has been a perfect.
Example of how did it come.
And continue to see Craig.
High quality content discovery.
Allocate content creator on our company.
Gotcha.
Or would you only have one then of course the aegis homebuilder.
Thoughts haunting drops in labor it sounds that you can find out what are your thoughts you see it sort of way it's equal.
Sure she'd I'll, let you go make a meager.
Rather you go through your children, you cannot defer neither to reward machines that are pure D V. A woman the ballroom at the old TV bulk of the story.
It also is that neither a hypothetical.
Tickets you see it sure.
So that Chintung young who can do the seniors housing.
And secondly, as our multi scenario marquee content category approach.
So helping us.
Healthy.
As you may see from our platform for P. J V live broadcasting OTV and even restaurant newly emerged star them out. They are all growing very nicely and we are actively supplementing that with Nielsen.
Video scenarios, that's helping our user become more engaged.
Cleveland, Ohio. It all has a very good Q1 and I'm sure you'll soon see neither neither Todd all of them what are your thoughts or the R&R Sanya C. I meet with them will be other archaeological momentum to them will be able to foster being booker telco it yet.
How does he kind of element of Diego the transition to <unk> a woman.
Well then does either.
We're going to continue Sir.
Sure about Tien Congress attendees up that says yeah format that you put on that.
Here on why Las Vegas, Nevada rate every year.
First is our target to achieve 400 million by end of next year.
We won't be achieving this number just for the sake of achieving a number are we will be more focused on the quality of the user growth as you can see we're putting more emphasize on the <unk> growth, we wanted to achieve a healthy sustainable growth going forward. Thank you.
Yes.
Thank you next question comes from Brian Gong from Citi. Please ask your question Brian .
What how should your quality selling just so that you would want tissue quality story mode, Japan switching the Ginger Oh, EMEA should conduct a remote or will shake some normalcy.
Sean challenging Shang.
A quantity based or remote or.
And beyond the each even with Genco from Endo Twitching beaucoup.
I'm showing your partner UBS.
I will translate myself good evening, Thanks management for taking my question.
My question is regarding the progress on our story mode.
Ship has.
Strong gross measurement give more colors or the positioning and the strategy of the story mode and how is the progress on the floor.
Our remote its ecosystem and our commercialization.
Thank you.
So quite honestly, Glenn historic Motorola antibody and of course, it Alex either or patent that the torpedo Glenn who spend more than you might have.
I think that comes out there you go neither sure liana yet.
Thanks, Alex I'll take the front of us.
The chances are you have a wellness store and motor her without youll.
The hydro consolette cutting as I'm sure that.
That's enough format ruble consultant either you go sort of qualified third parties is done with chunky Thunder.
Qinhuangdao path towards all either hinder some topic because I'm not sure if a woman.
Levi chunky that wont be done Josh Patrick.
Patterns about it at that.
Oh yeah.
The Pew Davita levy that can be done about that.
Oh, So you know how does some of the other neighborhood hopefully you got story model, though you got we really got on the table.
So even before we went out.
Not that we just feel that it does.
You had husky.
Yes.
I figured how counsellor.
She's on the chunky that I think will be with the tundra yeah timna.
For the past few quarters, we've seen a BARDA.
Attention.
Placed on the starring Molly.
Indeed, we have Kevin.
Larry.
The result of how.
<unk> expanding its topic and the reason why behind that.
Partially because this is a problem zero, we're growing this prompt zero. However, I want to emphasize here is that Oh.
Over all our overall traffic is also growing very significantly and starring knowledge is that incremental capex add onto our total Capex. For example, if you look at the total BVA, we've grown by 83% year over year and the Q T V.
<unk> also grow over 50% year over year, our story mode, Ralph what 400% from a very low base, but.
Just wanted to emphasize.
Indeed, a very nice incremental traffic growth to our ecosystem, but don't forget our overall capex.
Also growing very nicely.
The two store in motor Hustle woman to her.
Coffee is a town delta.
Thought housing topping later, you've got liquidity that is yet.
This is piece and the shrinking passing eagle one some of them there are some that partially in <unk>.
We all hope will Linda.
The ball for Monday.
Sorry, Paul.
Canada is challenging.
How does a woman.
Sneak up huge you either neither Olson tighter you Gotta go against it.
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How much of it.
Thank you John of course in the challenging Yamanaka, Sir yes.
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Tier.
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Always talked about strategy of county, Multis scenario, I'll tie content category, and sorry modest a representation of that strategy.
And <unk> video ecosystem is a comprehensive full body well rounded content ecosystem that centers around PMT.
And along with my Brock housing story, and our smart TV application all of that is a natural extension of our original PB ecosystem, whether it's adding a new <unk>.
Scenario for users recommended cry or allowing the original content creator to become fibrotic Hollister.
Thus comps from the operational GB.
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Tons, although you got totally out of your portfolio now.
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I meant the real Sydney Harbour Sudan.
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Even going up and going to take us I think a sedan penciled in Davao yourself tell the future. That's what gets you down the Navy's housing that you can't even colonial.
Just look what's accidents ego-syntonic what are the historic gotcha mantle that ticket is calculated.
Sure.
As part of the story mode was already there.
Very important supplement to our original content ecosystem. This product satisfy users on the go entertainment needs for their fragmented time and satisfy users kill tie.
One or two Manhattan retail probably.
10 times of that needs will come up during the day and combined together.
Certain longer period of time.
Akshay the hot tub Youll see that the woman.
The reality hit equilibrium.
Tushar Shitala yugo.
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Xander shipping particular childhood.
<unk> <unk> Nagel agenda shipping Tayo ECH English Hyndman, Colorado.
Your story models, you know if I answered the hydro tango.
I shared with all of them. That's out there you go you know what sometimes happens although you got to hit it.
The lost buoyancy lot lock them into India doesn't mean, you can go for you.
And more importantly, we believe this far in mode has.
It has been very beneficial for us to improve engagement level of those to you Sir.
That unlocks access some of them I think.
Some of the video capabilities to all or.
More difficult to comprehend.
Launch of startup mode.
Helping them to quickly adapt to the pillar daily.
To help them understand who can't get them a quick start to blend into our community.
I'll put in New York, who we're talking to a woman does either ticker symbol UE to go deeper average overtime pay and I'm going to start you got not only Vittorio Concord funeral, then the arbitral Schindler arbuckle with pilots onto and hydrogen a chick.
Could you just repeat our tablet order shipping Translarna touchwood, all it sounds like it all to the tablet.
Sure.
No go to five shipyards simulator.
To hear something this often.
Bundle with how that has developed a sort.
Typically the arbitrage, where tushar you got some Taliban typically different obviously, it's harder.
Additionally, in startup mode has been very beneficiary to the newly joined content creator or the content creator with fewer followers.
In the past for them to grow their followers they have to spend a lot of time to create a.
High quality longer period as P.
<unk> now we are providing there are new auction to create a lighter or shorter.
Creation.
This smaller creation constitute out there will help them to grow their powers more quickly okay.
Okay.
Italian higher weight daughter.
Samsung to Hangzhou.
Bookings stripping the particular arbitral Kayla.
You could see with Caelum, Okay, you cannot just a woman who are.
So the syndrome that runs in the opposite because it's so easy store remodel vigorous thermomotive arbitrage Seeger Samsung the looting colclough.
We are also noticing that this launch of story mode is helping those content creator who originally aren't good at creating short form videos are providing them additional opportunity to grow and expand our influence.
In the second quarter with notice that the number of content creator, who achieved 1 million followers, 60% of them benefit from the traffic growth sorry about that.
Oh, Hi, Shang the other there's a there's a storm water jenglish kashiwazaki lately.
Top selling yet to hit a woman telling me a kind of a type C. Yet to cancel certain fees and sort of thoughts around the recipient womens is basically later on some kind of Google play is it particular store in modeling and the startup downloads you come away with a huge visa I think each of the women's Honda on their.
And I'm sure they'll changzhou Yehuda jumped that quick.
Lastly, I want to emphasize that even though it's Tom.
<unk> vertical video, but if you browse through the content and you can tell immediately this is Tim.
Billy featured high quality P deal.
The algorithm that recommendation system behind the story mode is identical to the <unk>.
Algorithm.
<unk>.
We put same amount of weight and emphasize.
On the content quality and users positive feedback towards the content.
Okay going to the other store in motive power centers as the centerpiece.
Sure Pete touched on them with either PD alcohol cigarettes, you said, you're assuming luxury store in modeling and the shipping to procure them sure.
Or would you only though hydrous or neither <expletive> whaler, they'll hydrous or you didn't talk.
John Bezzant, Fuchs, and the ballpark EG to be.
Yes, and yes, it does it will store and most of the artists.
Additionally, New York Jamba, Nico allele appears in central and South eastern down the meager afterwards.
So if anybody got presenters ego shooting shooting the second.
Could you it sounds the opposite way like we realized though.
And Additionally, our users are very inclined to engage with them is starting out from the data the data shows that.
Sure.
Cast light.
Startup mode.
Patrick has been significantly higher than that.
Total percentage of proxies that means that our users are.
Hi, Thanks.
The quality of the videos.
Leave in the future they will be definitely very typical.
And.
Very popular.
Starring mode video Board and went viral in the in the space and there will also be a regional barely been story.
Video content are emerging and we are already noticing that for example, the content creator named Shanghai, South Asia will be a perfect example for this story in March to pace that typical.
High quality content increase.
Yeah.
Primary question. Please. Thank you next question comes from shares Jin Jiang from C. ICC. Please ask your questions Jessy.
Earnings per individual user or whether I'm glad you got the no everything out there.
Oh I see.
Yeah.
Oh My God.
The consensus among downhole Gwen.
I mean, one thing that you should get things.
Things are going on one time orders that congestion.
Yeah, Eli Shanghai.
Furthermore, with the pilot.
I will translate myself.
Thanks management for taking my question. My question is answered too I think.
Michael I'm, sorry, I forgot.
What measure will it take to.
The other type of girl and her Doug Arthur.
Arthur Chin.
I think the second half.
Also ask one last question mode.
When you have larger tightened on merchandise amortization.
So could you tell us.
Thank you.
Church's chancel from granting to you bill.
John .
Oh God.
So you're going to go home.
It turns out.
She she should Hudson shouldn't draw them on Pandora.
Sure Nigel.
Okay.
Sure.
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Yes.
So she is yeah, yeah. She said it does appear that the farther out you want to go on now so she had shifted those shortly.
Oh the question Jon So it took us a hold off Oh, sorry, Carla Youll courtyard, Chicago, the easy job hotshot recalled it.
Sure.
So what I guess, how can you have to be all in all your audience.
We're going to see a nice.
Our combination of global macroeconomic challenges and repeated call that outbreaks in China are not only coffee significant impact on our advertising industry in the short term, but also will be helpful.
Lasting impact in the next one to two years.
Is that the budgeting is shrinking advertisers are become more cautious when I'm.
Thinking about investing in brand advertising and in margin industry are also struggling. So all of these factors are actually to see that data is crop at the same time. We've also noticed that the platform with high user value and high conversion efficiency.
Well stand out.
However, it will still be tougher to do business, especially in the AD business.
If we're comparing to 2021 or prior years.
Yeah.
So the first question is from Shanghai, Guangzhou Q2 beat on the Guaco solutions she told.
Tony Jones.
I'll show you should have shown what he does south shore side won't go solar city, and Toby Jones outlet horse, Yes, yes, Susanna Luke junk.
Within this.
The challenging macro environment, our buildings to add business in the second quarter, we grow our business, 10% a year.
Here. We are we are one of very few names that achieved year on year growth the advertising sector and also achieved a market share gain.
No what my own quite I mean, you can do it.
Oh Wow, it's usually go Guangzhou Chongqing your wage either showed you where you'll be.
Sure So very little you can do it.
Farquhar.
Well the neighborhoods that kill sense useful life and then of course, you can find it.
Jones outlet Chongqing, Joseph <unk>, Shanghai, Shanghai functional G suite about showing you close.
Well, Okay sure Shankar tea dollar younger age.
Well, we will do to cope with this change we believe in every crisis life, great opportunity and cope with the current challenges and opportunities we raised our strategy for the next three years, which as gross centered.
<unk> prioritized and content ecosystem cloth commercialization dual engine powered.
This is the first time, we're putting in commercialization and community ecosystem.
Equally important position.
Trying to just add a little problem about the embargo.
Sure.
Oh wait of Shin <unk> Wow, so quadrant.
Oh gosh until doghouse.
He had a poster at <unk>.
Are we about to the Shanghai Guangzhou Shanghai.
So I'll try to see Jason with people that battle, So Doug I don't know what do you do shift Shire Qi Jenny yeah, good job doing that.
Got it.
We have completely integrated with the live broadcasting and video community on the all the foundational structure level and achieved by broadcasting plus video all in one structure. This helped us to create a closed through app.
And mark heightened areas at the same time.
Theyre integrate our commercialization system with our content ecosystem, namely we created a two middle <unk> class two.
Center structure.
Joe You got you got you should consider.
Shanghai.
Joe Hi, Todd it won't be all of a subsidiary of <unk> will be a quite a sharp shooter Guangzhou, yeah, well the tissue.
Oh sure Yeah quite way naval Dogger yet.
Sure Yeah, what you're asking for now Julien.
I know she'll go through them.
Legal options shown let's call it easy for Josh <unk>, absolutely right.
Yeah, Yeah yeah.
Yeah.
So she's a possible.
Oh, yes, sure she the short way to that.
Thank you so much.
Gentlemen, I'll show you why this is.
Sure Don.
So attrition correct.
Consolidated Joshing, China, you got a chill shield, one, especially in Shanghai and of course her old shoes.
Hi, She was heightened Jones on the line.
Yeah.
I'll go with it.
The two middle class ones to business Center, one as of March needle platform, serving all commercialization efforts.
The goal of improving topic.
Monetization efficiency this will be the infrastructure of our AD business now we're also empower many inc.
Income business segment.
Another one is a smaller metal platform. Its main purpose is to serve and help our content creator to increase our earnings power and improve their overall, earning experience and the two products will be.
Investors familiar sparkle at top line.
The live video E Commerce.
Right.
And above mention adjustment will help our team bond together on our strategic thinking and execution level to crane.
Area of free suffering for thing and a positive cycle that stimulates our content ecosystem user growth and business growth.
Yeah no problem.
Thank you for that.
So Tito what my journey beyond us.
So danielle.
John it's useful gesture jamba with tissue Cha-cha sure sure.
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Yeah Young woman doesn't go.
Duncan how the T cells shortly.
Oh sure Yeah quite as I showed you just so that's useful shock generally go you can sell crusher, Shanghai, let's see what it does well and we'll be able to idioglossia chip will be able at the audience.
Yeah, you know its easy choice, you're quite vocal Yoshi Shang quite sure Chitra.
When we all shouldn't auctioned or Shanghai Jia.
Joel song on Cajun <unk> balance.
Yeah.
Our advertising methods will be further integrate that in the second half of this year, but the two following things will remain unchanged. One S focused on the infrastructure strengths and the construction of our algorithm and data power Optum.
<unk> optimized the realization of different scenarios and how improved efficiency of our products.
We'll also look to be in a scientific marketing system that based on data construction.
The second thing remain unchanged as to provide a well rounded one stop solutions for industry verticals, such as games E. Commerce F. M. C. G in automotive industry, and et cetera, so that the key accounts and industry different industry budgets.
We can fully absorb.
Changeover and sort of a joke what kinds of the tissue bank. So he kills angle you want golf shot show.
Do you think Gee, the Portland, not Boston Buffalo, Michelle shelf filing that you that you're going to illustrate know Susan told me Joe jobs like the Austin Chalk Oh Judge Oh, Gee I Dunno shutdown you end up here.
One thing Joe that maturity.
Specialized where you're going with Hyatt Oh, that's the story I'll call a woman the Shanghai <unk> Chongqing.
Yeah quite dialogue eating the Jonah well, what's not working.
For the quarter seemed a lot value something.
To see the trend.
The second half.
Revenue per tax rates.
Do expect that the overall app grossing will grow about 20% year over year in the third quarter. Thanks to the AD efficiency improvement and iteration of our integrated marketing solutions and for the second half of this year.
Due notice that the budget from brand advertisers remained largely uncertain due to the macro environment. However, our multi scenario at approaches including the story mode add transaction based that will help us to gain new market share.
Please Arno Kwacha Qi Jong Soo Kim.
Okay, you'll you seem to think that in terms of what might be done as Shanghai.
So it's a whole bunch of people that distinguish into high vol shouldn't that zynga and how 'bout jumbo about watching the Olympics.
Sean how are you.
Sure sure.
So do you see the cost shift so it'd be the Sean since you guys Shouldnt go out golf object.
So she she's going to timeshare, a mushy changing Joey Wat Joe.
Well I don't Wanna won't meet with Gigi Ghansham.
Paul you do some sulfate dumping tiger.
Ghansham portals help me on the Shanghai School Zorba, Joe So the house.
She's well known creek's, yes, farquhar storage fee don't Honey bunches, Yes, Samsung I'll show you that gentleman Jack personal she is a woman who can join us.
G, which tissue Tisha b.
Shanghai the Sarnia friendly.
So your answer on the show entirely yet.
Neil shelf.
Shelly.
Yes.
Oh, well now how should we be changing changzhou is healthy.
Bonkers offshore she's employee mature yet.
Yes.
In Q3, we are looking to further open ecosystem, we are with our industry partners. We have already established initial partnerships with E Commerce platform like Taobao, Tmall Kingdom, pingo door and won't make active trial in models like <unk>.
South recommendation in our native ads and contacts transaction execution.
Going forward, we will also conduct various collaboration with brand advertisers.
And consumer goods players in a short term we can we believe we can achieve revenue growth driven by products like sparkles story and <unk> takeoff.
And the mid to longer term the above mentioned collaboration will help us to establish a commercial environment and build user consumption behavior. We believe we wanted to this can help us to create our ever growing commercialization environment.
Within our ever growing content ecosystem.
This is a short yes on kind of what she's happy that Tucson, GST issue pouch that you'll see us as usual.
No my only Jonathan.
Well, we have kind of shown bunions and she said she Joel show you all teach Hiroshima yes.
Yeah. She says she got way too true the show you'll Tony Jones I'll go buttons Bhatia, Joe She showed 20 Jones on your tower by something you buy each year.
From industry perspective.
We will remain our ACH and leading Verde costs.
Such as game, <unk> and digital product for that beverage skincare and cosmetics.
Among which we believe we have standout and.
Mobile gaming automotive and digital products.
<unk> seen that in the first half of this year.
<unk> proppant AR AD revenue from mobile game sector grow near 90% year over year, and our multimodal AD revenue from automotive industry grow over 110% year over year.
Yeah.
Oh go ahead, Keith all the stories for you on partially the syndrome quite a chunky posted good.
Okay.
So don't want golf Sema show eat well Chicago E C. P M <unk> yeah.
That'd be Chicago Collation, they'll go out and call you should hear me alcohol, especially you'll watch Hong Kong, Yeah, Tom Olinger Sanya. The all in all it should be done in the Guangzhou showed all the change that you could share what.
You said, it well I shouldn't say I should.
Oh I see.
Oh sure. So hi, Joe how are you going to go quite a chunk of in cell phone that conoco Ashish.
The you mentioned about the startup mode. Indeed, it's our new app scenario and its incremental traffic growth.
Our our company and our work also witness that the ECP F. R store mode. App is also much higher compared to the traditional text and picture base. This will help us to grow our advertising advertising revenue in the short term, but if we look at a longer period of time.
I'm from 'twenty, two 'twenty three to 'twenty four 'twenty five.
Our business growth will largely depend on our ability to build a well rounded ecosystem.
That that ecosystem based industrial life index.
Great marketing solution.
Somebody like J&J quantifying how should fishing.
Oh, how does she won't be on the Guam golf show will carry Joseph.
The woman that sure John Yeah. So in college.
And then he or she can go on that cohort.
Sure sure sure, Yeah, and Georgetown, it's either going to.
Yes.
Under the current current challenging macro environment, we still hope and believe our app revenue growth can be as healthy as and as sustainable as our user and our community growth. We are also confident to deliver and achieve one win situation with our business Park.
Thank you.
Alright, Thank you and that concludes the question and answer session I would now like to turn the conference back to management for any additional or closing comments.
Thank you once again for joining US today. If you have further questions. Please contact me Julie young visibility executive IR director or TPG Investor Relations, our contact information for IR bus in China, and the U S can be found in today's press release have a great day. Thank you.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Yeah.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Yes.
Okay.
[music].
Yes.