Q4 2022 Douyu International Holdings Ltd Earnings Call
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Speaker 1: on our IR website.
Speaker 1: Before we start, please note that this call may contain forward-looking statements made pursuant to the Safe Harbor provision for the Private Security Litigation Reform Act of 1995. These forward-looking statements are based on management, current expectations, and observations andDevAm I
Speaker 1: that involve known and unknown risks, uncertainties, and other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different from the results, performance, or expectations implied by this forward-looking statement.
Speaker 1: All forward-looking statements are expressly qualified in their entirety by the cautionary statement, risk factors, and details of the company's filing with ZDC. The company undertakes no duty to revise or update any forward-looking statement.
Speaker 1: for selecting events or circumstances at the stage of this conference call.
Speaker 1: I will now speak on behalf of our Chairman and CEO , Mr. Xiao Jiuqian.
Speaker 1: Throughout 2022, against the backdrop of a complex and volatile macro environment, we remain committed to our long-term growth strategy of fostering a vibrant game-centric content ecosystem. We end using you with a stable business performance.
Speaker 1: continue to produce premium gaming content, upgrade our content operating model, and improve the interactive features on our platform to further enhance user engagement.
Speaker 1: Our mobile MAUs grow slightly on a sequential basis to 57.4 million during the quarter with a total number of pain users of 5.6 million and our adjusted MAUs with RMB 4.3 million.
Speaker 1: Through a couple of strategic adjustments over the past few quarters, our ecosystem has been shown to be healthier, which we believe will empower us to deliver long-term sustainable growth.
Speaker 1: As we progress forward into 2023, we are continuing to enrich our content, with community interaction playing a key role in our ecosystem.
Speaker 1: We are shifting the focus of our user growth strategy from increasing scale to improving quality, without being overly concerned about the short term growth of our business.
Speaker 1: Furthermore, we will optimize our marketing strategy through strengthened partnerships with game developers, coupled with our interactive gaming content community to enhance user engagement.
Speaker 1: In addition, with the price level of copyrighted tournaments gradually retaining to a reasonable range, we believe that prudently purchasing some co-copyright tournaments will help us cement our own competitiveness in the industry.
Speaker 1: This investment will also foster the ecosystem of our game-centric community and enhance our co-users' engagement and retention rate, thereby facilitating the company's long-term development.
Speaker 1: Next, I'd like to share with you our business updates from the fourth quarter in more detail.
Speaker 1: First of all, our average mobile MAUs for the quarter were 57.4 million, a slight sequential increase despite a year-over-year decline of 8 points.
Speaker 1: The main reasons for the year-over-year and quarter-over-quarter MAU changes include, first, due to the implementation of our Selective Copyrights of Human Strategy in early 2022, we experienced a decline in OOMA use since the fourth quarter of the year.
Speaker 1: Nevertheless, in the fourth quarter, despite the negative impacts on user traffic from the absence of the LOL World Championship tournaments, our creative event campaigns and operations on existing copyright tournaments in events.
Speaker 1: effectively attracted and engaged our co-users.
Speaker 1: As a result, mobile on me use platform achieved growth for the third consecutive quarter.
Speaker 1: Second, we continue to advance our innovative membership business, extending our game-specific membership services to border game segments.
Speaker 1: By combining game features with users' needs, this initiative has gained traction among both new and existing users. Moving on to our content ecosystem.
Speaker 1: capitalizing on the widespread popularity of esports.
Speaker 1: We continue to sharpen our products and operations.
Speaker 1: including the consistent upgrades of our game content.
Speaker 1: Based on gaming features, we continuously created an even broader selection of more interactive and engaging premium content.
Speaker 1: On top of that, we built a healthy and vibrant interactive ecosystem for users through innovative services, providing them with a community-based platform and a normal membership business.
Speaker 1: This effort can not only ensure long-term retention by meeting certain gamers' needs for upgraded game content, but also increase overall user engagement and thickness on our platform.
Speaker 1: that's driving user growth in the long run.
Speaker 1: In the fourth quarter, we continue to improve our diversified self-produced tournament system and organized more than 90 East Coast tournaments.
Speaker 1: leveraging our top tier streamer resources, we focused on promoting IP content in partnership with Star Games streamers.
Speaker 1: In this effort, we created a series of premium gaming content, combined with entertainment-oriented activities in our game segment, such as League of Legends and Autumn of Kings.
Speaker 1: This content in general, coupled with the training topics, is proven to increase users' motivation to engage in interaction and the lives of our game community.
Speaker 1: appealing to both new and existing users. Self-produced tournaments have become one of our main avenues to promote A-Sports popularity across the board.
Speaker 1: For example, based on One of Kings' large gamer base, we held a Zou Yu One of Kings year cup national challenge. This competition opened enrollment to all One of Kings players and boosted easy access to reward and wider user participation.
Speaker 1: Specifically, we integrated the tournament content with our user community.
Speaker 1: users were able to enroll, participate, and advance in rank within our community channel.
Speaker 1: where other users could take part in a series of fun activities such as a quiz, a single-player competition, and an interactive reward.
Speaker 1: Combining game content with our youth, user community, captivated mind-like gamers.
Speaker 1: And at the same time, it's tighten the bonds with heavy users.
Speaker 1: As we improved our self-produced tournament system and fully enhanced its value, we launched a series of e-sports talent selection mechanisms based on this tournament.
Speaker 1: In the year COP mentioned earlier, we unveiled the e-sports DAW project.
Speaker 1: We've seen growth opportunities to discover high potential streamers and fortify users' figures, even after Soarington did, says Members.
Speaker 1: In the fourth quarter, we launched the Zou Yu Esports School Team Selection season for colleges. The competition covered three mainstream esports games and attracted more than 2,000 college teams from 11 provinces.
Speaker 1: providing more college-easeful friends with the platform to showcase their skills.
Speaker 1: It has also helped us to discover potential esports talents and enhance those appeals and brand influence among college and university.
Speaker 1: In terms of copyright determinants, we reinforce user engagement and thickness through rich content and diverse operational activities.
Speaker 1: In the own of King, Tram, Kings, Cobb, KIC, we added auxiliary functions such as home team support and working reminders to further elevate our user experience.
Speaker 1: Moreover, the team Wuhan Eastar, which we signed and invested in, maintained its excellent performance throughout the years and became the champion of the Chinese Cup. With the purchase of some co-operative content, we continue to deepen cooperation with game developers and players in the game industry.
Speaker 1: fully integrating tournament content with our platform's operational characteristics to provide differentiated, tournament-derived content and customized user services. Meanwhile, aligning with the tournament's content, we will explore more commercialization channels.
Speaker 1: to improve the ROI of tournament copyright. Moving on to our monetization strategies, our total number of paying users in the fourth quarter was 5.6 million with a quarterly average ARPU of RMB 293.
Speaker 1: We continued our paying user segmentation strategy from last quarter, which included consulting marketing activities for new paying users with low rates of return, maintaining our co-users' willingness to pay, and promoting more consumption of mid-range paying users.
Speaker 1: We also make progress in generating revenue from non-wattro gifting.
Speaker 1: Therefore, we continue to refine and promote our platform-wide membership service systems, strengthen the companionship and interaction between streamers and platform members.
Speaker 1: and consistently iterated membership features.
Speaker 1: In the fourth quarter, we launched sound effects and privilege gifts for members, leading to a sustained study increase in member renew rate compared with the fourth quarter.
Speaker 1: Don't be creating high-duty thickness among our fans.
Speaker 1: Furthermore, we extended our game-specific membership service to multiple segments.
Speaker 1: Based on the characteristics of each game, we launched customized game membership services to meet users' needs for in-game items.
Speaker 1: Going forward, we will strengthen our cooperation with game developers.
Speaker 1: they'll fit into users gaming needs and explore more commercialization channels. In terms of our product R&B and function innovation, we continue to deepen cooperation with games developers.
Speaker 1: in compliance with laws and regulations, and based on our partial game-based sharing partnership with game developers.
Speaker 1: We integrate gaming data content and function with those content and gameplay, making life-during content close to this game.
Speaker 1: For example, in One of Kings live streaming channel, users can easily team up with streamers and other users to play the game through the join with one click function.
Speaker 1: making user-streamer interactions significantly simpler than before. In the past, users had to manually add brands into the game to form teams.
Speaker 1: In addition, we displayed more game-related data and gaming strategies through partial game data sharing in games such as Battle of Golden Spatula and Peace Caper Elite.
Speaker 1: further optimizing our user experience and stimulating life journey engagement.
Speaker 1: Overall, in the challenging year of 2022, we created a healthy and vital gaming content ecosystem through various operational strategies, including adjusting revenue generating activities and increasing investments in self-produced content.
Speaker 1: thereby maintaining stability in the company's overall business and financial performance.
Speaker 1: Going forward, we will continue to execute our diversified GEN-centric content strategy and focus on maintaining the scale and quality of our code usage.
Speaker 1: By further improving game content and strengthening our connection with co-user, we enhance user thickness of our platform and add a way to build wireless as a gaming content ecosystem.
Speaker 1: Meanwhile, we will continue to explore more commercialization channels and new growth avenues to maintain our leading position in the domestic game live streaming industry.
Speaker 1: With that, I will now turn the call over to our Vice President of Finance, Mr. Hao Tao, to go through the details of our financial performance in a quarter.
Speaker 2: Thank you Lingling. Hello everyone.
Speaker 2: For the full year 2022, we focused on optimizing costs and developing revenue quality in order to improve financial performance.
Speaker 2: As we continue to invest in high-quality, self-produced content and improve our revenue structure, we enhanced operating efficiency through adjusting our live streaming business together with effective cost and expense controls.
Speaker 2: For the four year 2022, our gross margin expanded to 13.9%. Adjusting net loss narrowed significantly to RMB 7.6 million.
Speaker 2: Let's now look at our financial performance for the fourth quarter in more detail.
Speaker 2: Total net revenues in the fourth quarter of 2022 decreased by 27.8% year-over-year to RMB 1.68 billion.
Speaker 2: Live streaming revenues for RMB 1.6 billion, a decrease of 27.7% from RMB 2.21 billion in the same period of 2021.
Speaker 2: The decrease was mainly attributable to two factors, a continued implementation of prudent operating strategies and the one-off impact of a decline in streamers' activities following the end of COVID-19 restrictions.
Speaker 2: As a result, virtual gifted interactions were partially impelled, which caused a year-over-year decrease in quarterly up.
Speaker 2: Our quarterly up was RMB 293, down 4% from RMB.
Speaker 2: 305 in the same period last year. Advertising and other revenues were RMB $84.3 million compared with RMB $118.5 million in the same period of 2021. The year-over-year decrease was primarily attributable to the soft demand.
Speaker 2: for brand advertising amid challenging microeconomic environment.
Speaker 2: The decline was partially offset by the increase in other revenues contributed by game-specific membership services.
Speaker 2: Cost of revenues in the fourth quarter of 2022 was RMB 1.5 billion, a decrease of 28.2% compared with RMB 2.08 billion in the same period of 2021.
Speaker 2: Revenue sharing fees and content costs decreased by 31.2% to RMB 1.27 billion from RMB 1.85 billion in the same period of 2021.
Speaker 2: The decline was primarily driven by the following two factors. First, the decrease in revenue sharing fees was mainly in accordance with the decrease in live streaming revenues.
Speaker 2: In addition, the lower revenue sharing ratio, which was achieved through the implementation of our prudent operating strategies, led to a further reduction in revenue sharing fees.
Speaker 2: Second, the copyright costs decreased significantly as a result of a selective copyright procurement strategy, whereby we ceased acquiring overpriced content rights for e-sports tournaments.
Speaker 2: The decrease was partially offset by an increase in self-produced content costs driven by additional year-end events launched during the quarter. Annual risk costs in the fourth quarter of 2022 decreased by 17.6 percent.
Speaker 2: to RMB 138.4 million from RMB 167.9 million in the same period of 2021.
Speaker 2: The decrease was mainly due to the year-over-year reduction in peak bandwidth usage in the absence of the purchased copyright of major e-sports tournaments.
Speaker 2: Gross profit in the fourth quarter of 2022 was RMB $186.1 million compared with RMB $244.7 million in the same period of 2021.
Speaker 2: Gross margin in the fourth quarter of 2022 was 11.1%, compared with 10.5% in the same period of 2021.
Speaker 2: This margin improvement was mainly driven by the decrease in both revenue sharing fees and copyright costs as a percentage of revenues.
Speaker 2: The improvement was partially diluted by the rising percentage of revenues attributed to self-produced content costs.
Speaker 2: Sales and marketing expenses in the fourth quarter of 2022 will RMB 123.9% million, a significant decrease of $2.5 million.
Speaker 2: 45.9% from RMB, 239.2 million in the same period of 2021.
Speaker 2: This was mainly attributable to a decrease in both marketing expenses for user acquisition and branding expenses.
Speaker 2: Research and development expenses in the fourth quarter of 2022 were RMB 80.6% representing 39.2% decrease from RMB 132.6 million in the same period of 2021.
Speaker 2: This decrease was primarily due to a decrease in personnel-related expenses.
Speaker 2: General and administrative expenses in the fourth quarter of 2022 will RMB 55.2 million.
Speaker 2: a drop of 44.1% from RMB 98.8 million in the same period of 2021. The decrease was primarily due to decrease.
Speaker 2: share price compensation expenses as the vast majority of shares and our share incentive plans were fully vested as well as decreased professional service fees.
Speaker 2: Adjusting operating loss, which adds back Sherbet's compensation expenses, was RMB $56 million in the fourth quarter of 2022, compared with RMB $168.7 million in the same period of 2021.
Speaker 2: Net income in the fourth quarter of 2022 was RMB 41.8 million, compared with net loss of RMB 193.2 million in the same period of 2021.
Speaker 2: Adjusting net loss, which excludes share-based compensation expenses, shall flow.
Speaker 2: Our income in equity measure investments and impairment loss of investments was RMB $4.3 million in the fourth quarter of 2022, compared with RMB $150.7 million in the same period of 2021.
Speaker 2: For the fourth quarter of 2022, basic and diluted net income per EDS were RMB 0.14 and RMB 0.14 respectively.
Speaker 2: While adjusting basic diluting net loss for ADS or RMB
Speaker 2: RMB 0.003, respectively. As of December 31, 2022, the company had cash and cash equivalents with specific cash and short-term and long-term bank deposits of RMB.
Speaker 2: 6.81 billion compared with RMB 6.64 billion as of December 31st 2021.
Speaker 2: Moving forward, as part of our strategic focus on healthy long-term growth, our revenue may experience some immediate impact, which we believe is critical to our balanced growth. We will also strive to explore more commercialization channels and fine-tune our operations.
Speaker 2: supporting the sustainable long-term development of our platform, while also delivering greater value for our shareholders.
Speaker 2: This concludes our prepared remarks for today. Operator, we are now ready to take questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star and 1 on your telephone keypad.
Speaker 3: If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2.
Speaker 3: For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English.
Speaker 3: At this time, we will pause for a moment to assemble our roster.
Speaker 3: And our first question today will come from Lee Zhang of Bank of America Securities.
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Speaker 1: operating efficiency will have additional in-content cost. Secondly, we noted that Xpartake gained traction this year. And can you share with us its performance in live streaming? And we also know that there are more new games to be launched this year. Will those the likes of our video Smart
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Speaker 5: Mr. Chen, we'll take the first question. As a leading game live streaming platform in China, we remain committed to our long-term goal strategy of fostering a vibrant game-centric content ecosystem.
Speaker 5: We continue to establish a diversified gaming platform by streamlining our operations and creating new services.
Speaker 5: propelling a vibrant game content ecosystem. Facing the ever-changing micro environment in the past two years, we've made some adjustments to pursue long-term sustainable development.
Speaker 5: Those adjustments include actively modifying our operating strategies to optimize our revenue structure and controlling business spending through fine-tuned operations. All the measures we've taken have not only stabilized the overall company's business, but also improved our financial performance.
Speaker 4: And significantly narrowed our adjusted net loss for the full year 2022.
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Speaker 5: Looking ahead to 2023, we will continue to execute prudent operational strategies and focus on the long-term business process.
Speaker 5: We will reduce our investment in traditional business lines with low ROI and focus on exploring new growth avenues.
Speaker 5: While pursuing growth in user scale, we will target improving user quality. By delivering high quality content, upgrading our product structure, and strengthening our interactive features, we are able to enrich our platform's ecosystem.
Speaker 4: so that we can enhance our user experience and retention rate.
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Speaker 5: In terms of cost allocation, we conducted a detailed evaluation of the LI of each of our expenses and allocated company's resources rationally and dynamically, dedicating limited resources to business lines with greater potential.
Speaker 5: For example, in terms of our user acquisition strategy,
Speaker 5: When we compared it with content-driven user acquisition, we noticed that channel promotion drove user growth in the short term, but with lower retention rate and conversion rate. As users' need have becoming PlayStation 2 released.
Speaker 5: become more diversified, focusing on channel promotion is no longer a sustainable user acquisition strategy. Therefore, we have adjusted our overall marketing strategy in 2023, adhering to a content-driven approach.
Speaker 5: to growth by continuously investing in high quality content and cooperating with game developers to attract and engage users.
Speaker 5: Although investing in games in content is a more long-term process than channel promotions, we believe it is beneficial for our platform's sustainable development.
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Speaker 5: In terms of our co-copyrighted procurement, as we mentioned before, copyright tournaments are still of great value and we would repurchase some co-copyrighted tournaments if the price level will change.
Speaker 5: game-centric content, along with copyright tournament content, enable us to enrich our content ecosystem and foster our game-centric community, thereby solidifying our overall competitiveness in the industry.
Speaker 5: Meanwhile, in terms of revenue, we will focus on ensuring that our users willing to pay on our platform is on a sustainable basis.
Speaker 5: Such focus shift will have a short-term impact on our revenue. However, our offering leverage is expected to improve in the long run, which in turn supports the company's long-term profitability. At the same time, we are continuously exploring more innovative commercialization avenues.
Speaker 2: Thank you. Let me answer your second question about the HD Party. The HD Party is a casual interactive mobile game. A game is easy to operate and highly interactive better.
Speaker 2: For this game, we prepared experienced streamers in advance and adopted the objective incentive method to encourage more players to engage in the game live stream.
Speaker 2: Meanwhile leveraging the functionality of our user community, we organized the various daily clocking and teaming up activities within our community channel.
Speaker 2: We also provided plenty of in-game items as rewards to increase players' engagement and interaction.
Speaker 2: This helps us effectively promote the game's popularity and improve our users' thickness on our platform.
Speaker 2: from January to June . Every party's live streaming volume has ranked as the top of the industry. More than half of the segment users participated in activities within our community channels during the promotional event. In terms of new games that we eagerly anticipate, we have a lot of new games that we are very interested in.
Speaker 2: we will continue to create premium gaming content with greater interactive and engaging features, as well as a wide-ranging selection. We can't predict the exact schedule of the launch of this game, but according to our practice, we will continue to create premium gaming content with greater interactive and engaging features,
Speaker 2: We will cooperate with game developers to promote the new game during the pre-launch stage. We will also select experienced streamers and reach game content for players to watch and discuss, and then provide interactive content such as...
Speaker 2: game tutorials and tournament events to increase user engagement. Evaluate user experience and enhance user thickness. Thank you.
Speaker 6: Thank you.
Speaker 3: Okay, and our next question today will come from Thomas Chong of Jefferies. Please go ahead.
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Speaker 7: Thanks, Tricia. Thanks, management, for taking my questions. My first question is regarding our strategic direction. Given that the company has made a long-form strategic adjustment in the past two years, how should we think about the industry trends?
Speaker 7: Or, may I put it in this way, how should I think about the management force regarding the game life forecasting overall industry environment? And my second question is about the user scale for this year, if there's any qualitative color. Thank you.
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Speaker 5: and the competition we have faced in our industry has already transitioned from gaming live streaming to gaming content.
Speaker 5: gaming content is a much larger market with a broader user base expanding beyond hardcore gamers watching video game live streaming. This means users needs are evolving, which is both an opportunity and a challenge for us.
Speaker 5: Given the large scale of our existing user base and revenue base, the challenge is how to adjust our products and operations to acquire new users and explore new commercialization channels.
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Speaker 5: with premium game content. Specifically, we leverage high-quality game content to acquire new users and build a diversified product system to meet users' diverse needs and improve users' thickness. Attracted by wide-ranging content, high-quality users can also generate content, and provide more experience to users.
Speaker 5: through interacting and self-producing, fostering a virtual cycle on our platform of content production and user development. That we have emphasized to build a healthy and sustainable platform. It's what we've done in the past and what we'll continue to do in the future.
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Speaker 5: Furthermore, for a long time, we paid considerable attention to our revenue scale based on our last journey platform's easy monetization features.
Speaker 5: However, we think this may harm our platform's ecosystem and healthy development in the long run.
Speaker 5: Therefore, we have recently reduced our marketing activities that target revenue growth.
Speaker 5: Instead, based on our virtual gifting revenue mode, we provided diversified products to cater different users' paying habits and demands while also emphasizing our products' sustainability.
Speaker 5: In addition, we are exploring new initiatives, such as a membership business. It took time to make these changes. Therefore, we focused on refining our operations and improving our cost and expenses control. We are also exploring this way while making the above adjustments.
Speaker 5: we still managed to maintain our platform's long-term profitability.
Speaker 5: to maintain our platform's long-term profitability. Thank you.
Speaker 2: Let me answer your second question about MAO. As we have consistently communicated before, Soil is a game-centric container platform that attracts and retains users by providing high-quality game-centric content and adopting user-appreciated strategies to fit different business environments.
Speaker 2: In 2023, to navigate the volatile macro environment with agility, we prioritized long-term business impacts, reduced our investment in traditional business lines with low IOI.
Speaker 2: Focused on our user growth strategy of improving user quality, we strive to strengthen our content operations as well as explore commercialization avenues. Our total revenues are mainly contributed by our content-driven users with steady pin habits.
Speaker 2: We plan to largely cut our promotional expenses this year, which will directly affect our platform MAO in the short term. Nevertheless, since most of these low-term MAOs are short-term users on the platform, this strategy won't affect our content operations.
Speaker 2: or our monetization efficiency. In addition, with the purchase of copyrighted content, we expect to gain some tournament users.
Speaker 2: By observing the traffic on our LOL game segment, we found that the increased traffic that it brought couldn't offset the decline in user scale resulting from sustainability decreased promotional expenses.
Speaker 2: We believe that operational adjustments will enable us to increase our resource allocations in order to build a more sustainable content ecosystem. Although the return on these investments takes time, they will ultimately enhance our overall success.
Speaker 2: competitiveness and support our platform's long-term development. Thank you.
Speaker 3: Our next question today will come from Yawen Zhang of China Renaissance. Please go ahead. So we have the question from the office of the hotspots.
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Speaker 2: Thank you for your questions. As to the first question on copyright procurement, copyrighted tournaments played an important role in stabilizing a platform's traffic and improving our user engagement.
Speaker 2: In the past year, we adopted a selected copyright procurement strategy due to the overpricing of some copyright attunements.
Speaker 2: With the price level of copyrighted tournaments gradually returning to a reasonable range, we have increased our investment in purchasing core copyrights in 2023.
Speaker 2: Major copyrighted tournaments we have purchased so far include League of Legends.
Speaker 2: Major copyrighted tournaments we have purchased so far include League of Legends, Honor of Kings
Speaker 2: Peacekeeper, delete, crossfire, says go and border 2.
Speaker 2: For the tournament copyright we purchased, we will improve our return on investment through innovative operations. In terms of enhancing user engagement, we will be increasing our return on investment through innovative operations.
Speaker 2: We will continue to upgrade interactive features on platform to meet users' diversified needs by building on our accumulated experience in live streaming and operating copyrighted tournaments. For example, in LPL, we have a
Speaker 2: By leveraging our top tier streamer resources, we selected 12 streamers to do a co-streaming of the tournament events.
Speaker 2: These streamers included both official tournament commentaries and top tier streamers with massive fan base in these tournaments and on our platform.
Speaker 2: This co-streaming initiative achieved good results. The DAU on our live streaming channel is on par with that of our official channel. In addition, the number of footage heads is several times higher than that of our official channel. Furthermore, the number of videos that have been posted on our live streaming channel has been reduced to a higher level. The number of videos that have been posted on our live streaming channel has been reduced to a higher level.
Speaker 2: We featured more user-friendly access to videos and community channels on our live streaming channel, thereby gaining more exposure for our diverse gaming content and attracting more users to join.
Speaker 2: In terms of commercialization, we continue to integrate our copyrighted tournaments content with more refined operations. For example, we promote or gain specific membership services to tournament viewers.
Speaker 2: Meanwhile, we will explore more direct monetization opportunities based on copyrighted tournaments' content.
Speaker 2: In addition to discussing the copyright price with copyright owners, we will communicate more proactively with them to explore reasonable long-term cooperation.
Speaker 2: So, on the second question of cash flows, as of December 31, 2022, our overall cash balance, including cash and cash equivalents, restricted cash and deposits amounted to RMB 6.81 billion.
Speaker 2: an increase of RMB $117 million compared with RMB $6.64 billion in the same period of 2021. This is mainly due to two factors.
Speaker 2: First, the increase in our cash balance is primarily a result of reporting currency translation, as the appreciation of the US dollar increase the value of the large amounts of US dollar denominated cash assets we hold, totaling RMB $418 million.
Speaker 2: Second, in terms of cash outflow, we used a total of RMB $110 million in cash for the share we purchased. Other total cash outflow was RMB $210 million of which the operating cash outflow was RMB $77.8 million. Thank you.
Speaker 3: Our next question today will come from Raphael Chen of BOCI. Please go ahead.
Speaker 4: Let year grad and get over the T. whether WOn't aggring for UN shouldoter chanting charge. examvels were more in two years about sound up for for the way more our whole ER forging grad and they were over I want to defend. Thanks for taking my question.
Speaker 9: My question regarding the paying user trends could mainly elaborate on how the current operational strategy will impact the paying users going forward. It would be great if management could share more insight on the paying user trend, especially in the year of 2036. Thank you for your question. That at me
Speaker 2: of our current paying users with consistent paying behaviors for our services. In 2023, we plan to further reduce our marketing expenses and acquisition expenses for paying user acquisition, which will have an impact on paying user base.
Speaker 9: In 2023, we will continue to improve revenue quality and maintain our core paying users' thickness and also their willingness to pay, shifting the focus of revenue generation to the following two areas. First of all, we will continue to improve revenue quality and maintain our core paying users' thickness and also their willingness to pay, shifting the focus of revenue generation
Speaker 2: We will put more emphasis on maintaining co-paying users to ensure co-business stability. We launched various tiers of paying products.
Speaker 9: based on users' different abilities to pay in order to sustain and improve their willingness to do so. Meanwhile, we rolled out more companionship-oriented functions and activities for fans, not only maintaining the day-to-day interactions between streamers and fans.
Speaker 9: but also enhancing the fans' willingness to pay. Last year, we upgraded our user benefits and strengthened our interactive functions, substantially improving fans' thickness and steadily increasing members' renewal rates.
Speaker 9: also enhancing the fans' willingness to pay. Last year, we upgraded our user benefits and strengthened our interactive functions, substantially improving fans' thickness and steadily increasing members' renewal rates. For more information about new digital ës-
Speaker 9: We will explore more new non-virtual gifting business model based on game characteristics to improve our revenue mix. The game-specific membership service that we launched in the second half of 2022 is progressing smoothly. Despite its relatively small revenue currently, we believe this business can satisfy some gamers' demands for the games themselves.
Speaker 9: It not only attracts large number of game fans, thereby adding new users to our platform, but also appeals to existing users.
Speaker 9: So, promoting a virtuous cycle in our game content ecosystem. In short, developing our membership business will be a priority for 2023. Specifically, we will continue strengthening our platform-wide membership service while reinforcing our membership services.
Speaker 9: our close cooperation with game developers to delve deep into users' gaming needs and extend our game-specific membership service to multiple segments. Thank you.
Speaker 9: cooperation with game developers to delve deep into users' gaming needs and extend our game-specific membership service to multiple segments. Thank you.
Speaker 3: That's all the time we have for questions. I will now turn the call back over to management for closing remarks. On behalf of the management, thank you for joining our call. We look forward to speaking with everyone next quarter.
Speaker 3: The conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.