HUYA Inc. Q1 2023 Earnings Call

May 16, 2023

Hello, Ladies and gentlemen, thank you for standing by for the first quarter 2023 earnings Conference call.

At this time all participants are in a listen only mode.

Today's conference call is being recorded.

I'll now turn the call over to at least 100, New company Investor Relations. Please go ahead.

Hello, everyone and welcome to who he asks first quarter 2023 earnings conference call, the company's financial and operational results.

We are today and are posted online you can also view the earnings press release, it seems the IR website at IR.

Com a replay of the call will be available on the IR website in a few hours.

Participants on today's call will be Mr. Roger Dow Chief Executive Officer.

And at least actually Luke Larson President of Finance management will begin with prepared remarks, and the call will conclude with a Q&A session. Before we continue. Please note that today's discussion will contain forward looking statements made under the safe Harbor provisions.

U S Private Securities Litigation Reform Act.

95.

Forward looking statements involve inherent risks and also some ts as such the company's results may be materially different from the views expressed today further information regarding these and other risks and uncertainties is included in the company's protector and other public filings as filed with the U S.

Our Securities and Exchange Commission the company does not assume any obligation to update any forward looking statements except as required under applicable law. Please also note that we have.

Our earnings press release, and this conference call include discussions of Oh.

Does it get financial information as well as Oh, they did not get financial measures <unk> press release contains a reconciliation of their own.

non-GAAP measures to the audited most directly comparable GAAP measures.

Ill now turn the call over to our VP of finance.

Well read today's prepared remarks on behalf of Mr. Dong. Please go ahead.

Hello, everyone. Thank you for joining our conference call today.

I'm pleased to deliver.

On behalf of Mr. Carroll.

In the first quarter.

23.

Yourself.

And even though.

We achieved that is maintaining.

Maintaining a stable user scale.

Year over year and deliberate.

Revenue of I M.

195 billion and non-GAAP net income of I M.

85 5 million.

Yeah.

Uh huh.

Continued improvement in our content offering.

And technology in preparation for a more favorable market environment.

I'm glad you said it right.

Yeah right.

<unk> reached 81 1 million in the first quarter.

Slightly.

With this thing.

Yeah.

The first quarter.

Sure.

Streaming accurately.

The Chinese new year holiday.

So do.

You're seeing Chinese trying not to be opened my early in their first quarter. This year.

Eustis.

It maybe take more time.

Entertainment activities.

With this in mind.

We continue to expand on.

Promotional and marketing channels.

Do you see a 37% year over year decline in sales and marketing expenses in the first quarter.

We believe our appearing E sports and entertainment program offering.

Well, our continued effort to enhance our risk.

Rich.

This feature.

Uh huh.

User engagement you are going to appeal it.

We have been carefully monitoring changes.

In the dynamic market environment.

Thank you quickly and statutory refine our conscience and operational strategy.

Tommy.

Pete.

Next let me share with you.

Our recent technology development.

In March we held for Yahoo.

Our annual gala event.

Uh huh.

You bet.

So more than a year.

We have one night.

Recognizes and rewards our.

Sure.

Haven't agency and Larry This is Tom.

Yes.

And ctrip waves of policy, but now they are in.

Our most popular streamers.

Yet we also introduced a virtual stage.

That's nice book.

For the first time.

Representing an upgrade from the virtual esports venue, we launched yet.

With this virtual stage Oh can I do it so.

They were all in and.

Unless it's like atmosphere.

We also at the greatest interaction speeches.

It really skewed is even more fun and exciting.

For example.

I think that what you're seeing.

We were able to join lights up almost 10.

Shooing for food.

Got you.

And decoration.

And therefore.

Yeah.

What's your do it well.

Two hour, what's your it's not the teachers.

Sure Josh at this.

And simultaneously this weekend.

The late stage.

Okay, albeit you enjoyed it.

Okay.

The number of total all night.

And their popularity.

You bet.

Our crystal.

The Red Cross.

Jealous.

We believe.

Each of these chips.

To promote the integration of <unk>.

Right.

Oklahoma.

And that's it enable co creation and interaction with Houston.

Do you think Wanda.

She even.

French you bring these features.

And you said.

Yeah.

In the future.

This century.

Games category on our platform.

These gains more traction.

Interactive ski along with just directly engage with customers.

And outcomes in.

Real time.

Creating a highly interactive and engaging experience.

In response to the chair.

We have introduced.

<unk> interactive games.

I'll walk through that meets your open platform.

In April .

Yes.

Sure.

European gas Jamie fixture.

Currently our most popular interactive game.

Oh sure.

Crushes.

That's true.

Sure.

And in Europe .

Relationship.

While.

User participation and competition for gifting and fully checks.

Last question.

First real time interaction between no question.

From Q2.

Oh yeah.

And I need development stage.

Sure.

Games category is gradually calculating it.

Yes.

We will continue to be upgraded.

Our existing Shirley and welcome additional good quality.

Key.

To our customers.

Richard Greenwood.

Asian opportunities.

Olive oil patches.

We are also focusing on building English education element.

And integrating interactive concert into live streaming fixtures well mark.

Island Wheeling and.

Interaction.

Thereby increasing real work.

Engagement.

Ethanol game titles.

Received approval in China in recent months.

We also plan to establish our operational activities.

Deepen our cooperation with game.

Do you see the opportunities the new game launches.

For example through our gifts draw feature.

And we live in.

If we exclude this gain shoes.

And other Freaky, Hawaii by game studios for years.

In Newquay Fisher I'm, Joe I'm not sure.

And.

Sorry Bill.

We are also organizing principle face competition.

Okay.

I think popular they'll catch it you participate.

Now, we're reaching our strong ability to monetize new games and our proven success in game promotion.

We are confident we can identify and offer attractive new game content and enhance nuc game's popularity.

That's very good.

Our leading position in games like Jimmy market.

And increasing our Kristen is that game value chain.

Well, we're still facing some uncertainty in the near term.

We remain positive about the overall market recovery.

Our efforts across content enrichment.

Okay.

Watson and exploration of commercial opportunity.

As well as our cost of interest with it.

Operational efficiency.

It seems this page for all along.

Element.

Also.

It has been recently.

Yes sure.

We look forward to it.

Our collaboration with Tencent.

And enjoy the synergies we can say.

Yes.

We will continue to seek those opportunities.

This is in line with them.

With an eye to creating.

Creating sustainable value for our Houston real passion and either faithful.

Yeah.

It's kind of cool.

Good luck.

Now I will continue with some updates on our content enrichment and diversification Alicia keys.

During the first quarter of 2023.

We broke patchy around 55 third party professional esports tournament.

And shifting a real issue.

Cool.

Yeah.

While we experienced a gradual uptick in the number of professionals.

Starting from the beginning of this year.

The overall quantity of economy in the first quarter was lower than that of Q.

Q1 last year.

Primarily due to our strict content policies.

Policies.

Scheduling disruption immediately following China's opening.

Our most popular events.

It was in the quarter.

L P L J.

J P F.

N C F P M S.

As well as our exclusive.

L C.

Spring and C. S E.

Alex This is 17.

And I E M.

Hi, Tobey.

We also saw Kashi around 15, South Vulcanite esports tournaments and entertainment P. G. C shows in the first quarter.

Generating two two.

Approximately 77 needed.

To stand out this quarter, well, yeah attrition comp so peacekeeper elite.

And Jacob.

Crossfire Hawthorne.

I will come to ship, let's see F M.

In April our viewers to Ukraine.

Oh yeah.

Sure.

While watching JD matches.

She really chasing our cross promotional capabilities.

Also SBC.

To enrich our content I'm sure of it.

We launched four yeah.

No cuts you.

Capturing the attention of thin across our platform.

Always.

We will dramatically adjust our offering.

Produced generous and programs.

I think to your just inches SB.

SBC to complement their rights to professional content.

Our pretzel.

In addition.

During our annual cannot cure it in much weaker.

We hosted an esports.

Men, who Yahoo site in.

Whiting popular jewelry.

So that beauty and <unk>.

For Ya.

Julie competition amongst a game titles, including league of legend of.

King.

Hi.

How in Macau.

Each lash esports events, not only engage a wide audience.

All night.

Right.

It also helps promote esports.

Change among youth group in.

The Guangdong Hong Kong Macau.

Wait till they area.

Nick Let me provide some color on.

Our operational optimization efforts.

In the first quarter, our country licensing cool decreased significantly year over year and quarter over quarter.

Primarily due to the pricing.

And Monday.

Demand for L O L. Much it in January .

Well, it's all a reduced procurement and production.

And so often match closer.

We also continue to be in I.

Uh huh.

And bandwidth usage.

Oh, I arrested and efficient.

Okay technical resources.

F N b.

We achieved a nine.

The bulk market.

He is reaching the first quarter of 2022 level, despite lower total revenues this quarter.

We also saw it but our efficiency.

Our total operating expenses in the first quarter.

Right.

How do you fix that.

And then year over year, and 7% compared with a few each quarter.

Therefore, we narrowed our operating loss and achieved a positive mix of it.

Quarter.

I also would like to point out that.

While we expect content costs.

This year compared to 2022.

Hollywood content costs.

You wait more.

In the second half of the year.

This is another key event schedule.

This may create some ongoing fluctuations.

Our comfort level.

Next moving on to our Q1 financial detail.

Our total net revenues were I N E.

One on 95 billion for Q1.

I think from I M B coupon 46 billion.

Here at last year.

Like streaming revenues were I N B 186 billion for Q1.

Compared with RMB 216 billion for this thing she agree last year.

The decrease was primarily.

Sure.

Number of paying users.

All right.

If the macro and regulatory environment continued through the woods a fleet of back pain.

And we're sizing and other revenue.

Yeah.

Okay.

It would be 300 and searching neither.

Here at last year.

This was primarily due to us at this point.

Decrease in content licensing revenues.

As well.

Demand for advertising services.

From the challenging micro environment.

SB mentioned furiously.

Our amended licensing agreement for our own how much it in January .

Reading the real got older licensing rights for LPL metrics.

And the truth bathroom chassis free through 2025 theory.

Lockers, the licensing of both LPL metrics, what's the.

The primary contribution.

Our content licensing revenues in 2022.

Cost of revenues decreased by 21% year over year to RMB 169, Idiot So Q1.

Probably due to decreased revenue sharing fees and content costs as.

As well as bandwidth costs.

Revenue sharing fees and content costs.

Great site.

18% year over year.

It would be one.

For Q1.

Primarily due to the decrease in revenue sharing fees associated with the decline in ice streaming revenues.

And lower costs related to the esports content.

Well as content for ages.

Bandwidth costs decreased by 44% year over year to 94 million for Q1.

This was primarily due to improved bandwidth cost management.

Continued technology enhancement efforts.

And so at less bandwidth usage.

B cell all strategic.

But in our overseas business to remain focused on key markets.

One O.

N V 250.

For Q1.

Primarily due to lower revenues.

Gross margin was 15, 2% for Q1.

Excluding share based compensation expenses.

non-GAAP loss.

I N V 265 median.

And non-GAAP gross margin was flat.

But then stopped kilowatts.

It's fish and development expenses decreased by 22% year over year through I M D.

152 million for Q1.

Primarily due to decreased personnel related expenses and share based compensation expenses.

Yeah.

Sales and marketing expenses decreased by 37.

Year over year.

I N E 91 million for Q1.

Primarily due to decreased marketing.

<unk>.

Well now.

Now with 80 expenses.

General and administrative expenses.

Decreased by six 2% year over year to I M D.

<unk> 8 million for Q1.

Primarily due to decreased personnel related expenses and share based compensation expenses.

Other income was RMB 4 million school tier one.

Compound with I M B E.

8 million for the things you're right.

'twenty two.

Primary due to illness.

And then specifically.

As a result operating loss was 51 million for Q1.

Compared with I N B 50 million.

The same period of 2022.

Inches and shocked and investment income.

I N B 96 million for Q1.

Compared with RMB 59 million so to speak.

2022.

Primarily due to increased interest rates.

Net income attributable truthfully I E.

It would be 45 million for Q1.

Compared with a net loss.

Yeah.

I am be $3 million.

Eight.

2022.

non-GAAP net income.

It could go to.

I M B, a T 6 million Q1.

Compared with RMB 47 million so to say.

Oh 2022.

non-GAAP net income margin.

One 4% for Q1.

Net income for atheists with empty.

Eight Q4 Q1.

non-GAAP net income for atheists.

I N b.

135 for Q1.

As of March 31st 2020 feet.

The company had cash and cash equivalence.

Because it.

Sure.

And long term sources of.

It would be helpful.

<unk> beat it.

Compared with RMB 10 7 billion.

Period as of December 31st 2022.

With that I would.

Now I'd like to open the call to your questions.

Thank you we will now begin the question and answer session to ask a question on the phone. Please press star one one and wait for a name to be announced.

If you'd like to cancel request. Please press star one one.

For the benefit of all participants on today's call. If you wish to ask questions to management in Chinese. Please immediately repeat your question in English.

One moment for the first question.

First question comes from the line of Richardson from HSBC. Please go ahead.

When it comes to watch a house you can't have a guess on what the tier one.

Joe you charge I should say some golf on Chi Tung Chee Chew whole softwood.

That comes out.

Hi, Howard who we are.

I don't see a way hi, I was hoping to see it seems like kind of dog or somebody in China.

Thank you Paul matched with what's taking my question I was trying to say.

It myself. So also we opening and we've seen more offline.

Men activities coming back so how does the impact on our platform.

Platform <unk> platform cycle, yeah in terms of that user behavior as well as the consumption. Thank you.

Oh.

Hey, guys you need to do on their own.

But anyway. So we are so to.

So there is some.

Sure.

Sanjay do channel compounds both of them.

So both high voltage zombie.

She'd asked John D J.

Suzanne Donohoe.

Sometimes susanne brought up on time.

Hey, Youssef.

Yeah, Julian it's Sanjay also.

N D G and Angela well, so gutless, so teams with data so.

So for the cable.

Be well.

Let's see the phone control.

Well immensely.

Cool.

Fluids housing.

Yes.

She needs <unk> cable.

The OTC data.

Tell me if this is Tom.

You didn't say Lasalle.

<unk>.

Yes.

In the first quarter of this year the behavior of juices and streamers on our platform with mainly affected by the following aspects generally speaking the Chinese new year period, I used to be the off season for live broadcast activities and your frequency also streamers are usually reduced with less.

And our corresponding that's where all of us are less corresponding events. So the viewing was affected in addition, the Chinese new year. This year was alia done previous yes, coupled with huge infections numbers. After three months. Therefore, it affected the behaviors of youth sessions to invest.

With the optimization of prevention and control measures across the country, we noticed that some users consumers shifted to offline entertainment activities and accompany surgery manner, which affected the last three months as well as the users viewing in the short term, especially to viewing frequency and duration.

The long tail users that's affected the users' consumption on the platform to a certain extent.

Well, Mr. Ashley law.

You guys. It sounds to the same thing I saw.

So you got to wait to get it down.

Davidson.

Oh yeah.

Sure.

Got it.

It's Tim.

And you're absolutely right.

Yeah.

Oh I see.

These lenses.

So anyway, thank Siobhan xiaomi.

Hello, Don.

We believe that these impacts are relatively temporary and also on the whole. We expect that all you just say, we will gradually recover and became more stable in the second quarter of this year. There are some short vacations and these vacations and had increased to traveling and other.

Entertainment activities, taking place to our users and causing some fluctuations do they viewing times on all platforms. So in the future. We'll continue to monitor the uses consumers' behaviors and to provide appropriate content and operational activities for them.

Two months into the.

Asia, well men's sushi.

So time being the top malls in the leads and jogging husseini to inks.

<unk>.

She's also.

Well, thank you for your thoughts.

What does that mean.

You too.

Hi, Tony.

Nevada.

I mean does that sound is <unk>.

<unk>.

Yeah.

It was India.

Joe Who's in the Sydney it overtime.

Well I don't want.

Yes.

And we will send you a material.

So just haven't gone there.

Thanks, Tien tsin.

And the other babies.

This is Ian Shan Shan Shan Shan the name on their own.

Well, Matt do you want <unk>.

Hello, John .

She needs it but you said that you know John .

Yeah.

And then how long do you Couldnt, daughter, Splitters Hanjin so she's.

City living so Cheetah Walnut Hill.

So well see.

This is Dan Suzanne everyone's healthy.

Despite these external influences, we continue to fine tune, our content and products in order to strive to increase the user participation and so that will be able to maintain a steady growth of our user scale and the first quarter on a.

Our year over year basis maintained a prudent spending on promotion in channels. For example, we have upgraded the virtual E sports venue launched last year ran much bring a.

Last March bringing in more interactive virtual stage two the annual grant Gallo who yeah. The total number of online interactions does activity also exceeded the wreckage of previous August . This function is also conducive to better integration of online and offline content.

In the context of any increased offline activity.

We also plan to further expand these application of technologies in Osborn dysfunction to more live broadcasting scenarios. The video content and community functions provided on all platforms are also conducive to use this time to use this consumption of content during the.

Non live broadcast period.

The speaker of the streamer.

Thank you let's have the last question. Please thank you for the questions one moment for the next question.

Next up we have to live trough.

Chung from China Renaissance. Please go ahead.

Okay.

That's helpful.

I want to pick up the equivalent shock Oh man you got somebody all kind of implementing a.

Total repurchase amount to pay a bulk leg that support them based upon a couple of months high summer. So thanks for taking my question. So my question.

Revenue trend.

That's cost.

Details, including at both of them.

I'd now like to turn new revenue. Thank you.

How does it work do you have I apologize.

Well the question that Peter but you'll hopefully.

We'll see.

He is somebody that will show that it can be a rash of timber joshi old vehicles.

She actually Boston I think nishu.

Or was it pretty even.

Okay.

Oh, not be easy to watch a bushel I should have that done, though I should say.

Sure.

That sounds good.

Okay.

So that shows that.

Fujian seatbelt for luxury.

Yeah of course, you thought you look quarter to quarter, but it cannot play bridge, what you should see a good.

Very good.

Well my sandwich tissue defensive some of it yourself.

We communicated this in the last quarters earnings call. The live broadcast revenue in the first half asked us yet and still relatively weak up on a year on year basis, mainly because of the macroeconomic factors and the year on year impact of last years live broadcast.

On the revenue.

Although the live broadcast revenue in the first quarter I still declined.

Our operational efforts the decline it was narrowing down than the previous quarter and as I mentioned earlier, we noticed that the recent increase in offline entertainment activities May also have some short term influences over the revenue of our live streaming activities. So we will continue to.

<unk> and monetize its impact.

Well, Linda chunky do their financing their facilities you really like is that folks look when right.

Yeah.

Each of Bush's from do it yourself.

So we don't really see who the Jabil, who don't get you don't seem to Michigan propulsion.

As young woman.

Additionally, bankruptcy, a bushel that whole should get.

Lisa.

We're still really optimistic about the recovery of the overall economic environment and also we remain positive about the future launch of more again titles.

We also hope that by consolidating our position in the Lifescan market and by seizing the opportunity of new games will be able to promote new forms of live broadcasting such as live interactive games and also improve our monetization capability and overseas from live broadcasting.

So that will be able to gradually recover the revenue any subsequent quarters.

But don't golf, what you'd actually come in.

L L C.

You betcha.

And I think that's well said.

And so if you don't want kosher yoga health and wellness.

They therapy.

Oh sure sure.

Sure.

You'll see she circumstance.

Yeah.

Yeah, so that equates to four places.

Okay.

Shifting NATO Fisher.

What do you think that you'll see someone at blue chip.

T shirt issue.

Our shoulders in different currencies.

Sure.

In terms of advertising and other revenue.

If we exclude the impact of the significant decline in copyright revenue caused by the recession.

The amendment of L O L copyright agreement.

<unk> revenue in the first quarter was also relatively you know due to seasonal and macroeconomic environment.

We expect that advertising business will benefit from the recovery of the market environment and increase the demand for again advertising brought by the new launch of games. So its revenue will have an opportunity to gradually recover at the same time, we'll continue to optimize the video.

<unk> and Gam community so as to laid a good foundation for future and subsequent increases of advertisement and monetization on <unk> and continue to explore new revenue growth possibilities.

Thank you next question. Please thank you one moment for the next question.

Yeah.

Next question comes from the line of Lei Zhang from Bank of America. Please go ahead.

Okay.

Oh, Hi, Al why don't you talk about what you want Oh do you go through sometimes that women senior and they go you control. The thing what was your phones, yeah, because they'll do what my son keeps people yeah, well you'll know some holiday. So that's also peak I'm not gonna see doctor. Thank guns home shouldn't Dr. Dunkin Donuts and call matches up with the times Oh, Thanks management for taking my question.

My first question is mainly regarding the impact from new games supply a two hour live streaming business. This year and secondly can you give us some updates on the cooperation or the Tencent Oh. Thank you.

Well, yes, that's the way you will see some other things.

Obviously, the Hong Yeah, Jean Michel is something you'll see one Java deal do you see as a living time Manzullo, when John sorry, Yoshi Chin LG <unk>.

Oh, yes.

Chengdu Guangzhou finally, the future.

Hershey times on actual Avon to seniors and table hold arguing for the economy bunzl.

Yes.

Okay.

So.

Joseph.

Couldn't go there.

Gulfport is empty.

Sure.

<unk> Sheng Wei.

Uh huh.

So those are the two please.

As a large platform for again.

As closely related.

Related to the gaming it put the game industry. So from the perspective of our game players the platform can provide.

<unk> for the players to understand and discover new games and confirmed the relevance content after playing the game and required the.

The companies, we are able to help them promote and expand their reference for existing game users to return and to retire and to help the old users to return well.

The normalization of game title of profile, New game titles will become available in the market and we believe that this will all help us to bring more opportunities for user expansion and promotion cooperation opportunities with the <unk> companies.

Everything else Syngenta.

Uh huh.

She knows she did she.

My name is Jong you'll need anytime you.

You bet.

Shenzhen.

Well yeah.

The new bulk.

Local TV cable one continent, Xiaomi Shibam team.

And then lastly in Yahoo.

And then one condensate.

I'm going to tell challenging year few times on the call.

Sure.

Samsung Guangdong tasteful.

Oh Gee are you bundling season.

Turning to.

Jimmy Choo woman that yoshi, tying in some of the children.

Because the new games will bring increased the supply of loss content and if this content and new games become popular that it would be very conducive to increase their users and to promote their activities on all platforms. We would also like to attract users and improve their viewing life.

Oh, it's so diversified activities, including providing a long term view in incentives housing platform events and we can also strengthen our cooperation with began companies such as George launch of interactive play methods and farm specifics again.

So that we can help the users increased their participation and to strengthen our role in the game industry.

Okay.

Sure.

Les this is Peter mobile so F Ter.

Hum.

Yeah.

Are you seeing there going forward, David should not losing.

He received Doj is CEO , Joe Chang who is <unk>.

Well, yes.

When Congress E G.

How's it going.

As usual.

Zombies.

My name is here with me.

<unk>.

So they're doing well.

So bush.

Got it.

Talk to you later.

Jim goods online than prevailing homeless shelters.

Well I don't I couldn't do and that's what we'll.

Two quick.

Some pad was a competitor scans if there's just no bad or S. P. S. Well. These probably you would have better lives viewing experiences for the users and would be very conducive to accumulating new users, but for other types of scams, especially those that are.

I really attractive to users we would also allocate our resources accordingly, according to the launch and viewing data to better meet the demands of our users and the impact of our new game titles would have an.

Any impact on our revenue as well, even though it's a little bit slower because they take some time for the lifeboat questions to accumulate their core users and transform them into paying users and of course, we would provide some opportunities.

Dan the two cooperates and interact with one another through our operational activities on the platforms.

Well now go to understand.

Thank you <unk>.

Jim.

I mean as I thought.

And James you don't you don't.

So the bulk of Johnson.

Johnson Lau Youll see some holiday.

Randall.

That way you don't call it that.

Yeah, George Jones, how to use it again.

Endorsing your song Shan the babies.

Wait till that time can mean, so cheap.

Yeah.

Right. So you don't see a CTG.

So Wayne that's Hindu James.

James I understand that evening, Jason cooking done bundle then you'll receive.

Jonathan that's what I'm, saying that which it did.

Well I mean, those are it's easy to Jamie.

Yes.

As for our Corporation with Tencent, we have always been the recalls.

With that Tencent on the business level, especially in the games and events and so cool Yeah featured live interactive function in a number of Tencent on Gan, we have dependent links between Democrats and former cats, we helped enhance the activity of the gamut, while bringing users too.

A better life viewing experiences and with more again, all coming online. All we could also promote those are the popularity of dose new dams and their relative and their relevance live content.

And our for example, our recently does some on dawn and national spot as well as up all our rents that will soon be launched we are actively cooperating with tencent on the scans.

D G fast as well, maybe the daus founder and senior issue decisively Daniela.

Teva hung healing Shannon as fast as the visit issue.

They didn't even know who don't when they bumped who's getting canceled.

Okay.

And you're saying, you'll see Guangdong so tenants.

Jean <unk>.

Nagel.

When listening to you at that time, so it just seemed that they'll do it.

Sure Thomas.

Congo means that you can see team.

Book.

Yes, you nailed it.

Chile and go again.

Jonathan.

Being the.

On the Saudi.

In terms of the esports events, we have established a strategic cooperation relationship with a number on for 10 cents game events together with our industry, leading live broadcast technologies and activities, we are able to touch.

Reach a wider range all right year says and also at the same time, we held a number also officially licensed events in tournament. So as to enrich our self organized events events is content and we are also exploring new ways of cooperation by utilizing our technologies in.

Audio and video streamers in game content, and et cetera, So as to how steeper Corporation and gender race batch of synergy with Tencent.

Thank you next question please.

One moment for the next question.

Yeah.

Next question will come from the line of Chesapeake Wang from Credit Suisse. Please proceed.

Oh, Thank you Juanita tangential, what if you have hard you sure are going to have that easy to that timber sale JV and Shawn Mendes change I'll take I'll see I'm sure nobody can.

So I just thought I thought I think I've seen gosh, yeah, now opinion and he will do that she's you should something like that.

Thanks management for taking my question I'll, Please talk to cost control in the <unk>, how should we think about our cost saving in terms of C. O T F and O paths for the rest of the year.

So what is the profitability kind of this year. Thank you.

Uh huh.

The iPhone se to watch them, but yoga junket you shouldn't see jump I think we'll just hit some b E.

What does that do to do at what should a fortune cookie dough deducting from BD.

Well tell me it takes report up into the local Florida.

That does sound bunker Atlas because it would help getting laid up what's your store base I need to tell Joe.

Okay.

Sure they can't say the tissues.

Good evening Sneaker culture.

You can do about two <unk>.

Hmm.

Hello, ladies equal she does her she should go in there and to go with it.

Yeah, what made us pull <expletive> shoot lunches and young patient that goes down the age.

What's the reason for the culture.

In terms of Uh huh.

The overall market competition environment has not changed much from the previous periods and so we maintained a similar sharing a ratio in the first quarter.

Presence, we had also made some fine tuning of the.

Are you sharing policy.

And enables us to provide different levels of first gyrase. According to the performance and demand in different categories in terms of signing season, we continue to conduct a more strict analysis and control of the cost of the signing fees. So the cost.

The first quarter it was reduced and at present, we expect that the future market trends will remain relatively stable and will continue to pay attention to the trend of our competitors and make flexible adjustments to the streamer incentive policy.

Goodbye chat session for assisted living.

Yes.

If you do get together.

Yeah.

You tell me, you'll really see I should say Oh, let's.

Just like it would come down to getting good efficient, but there surely out there so to get those ships when they get there. It's just that the tissue O P output.

So D G.

Okay. That's helpful.

You mentioned in the first ship, which is illegal for them, but that would be are there we'll.

We'll get through that that would be.

There are situations, where he showed up.

Pedigree.

No.

Yes.

He was asking the spaceship for fourth of it tweak it if we wait till trumpet.

Water.

In terms of the cost.

We had also achieved very effective savings in the first quarter are on one hand, the number of events with reduced to due to more strict screening of procurement and production at the same time the prices of some of them for that especially the L. P O L. P O.

<unk> enjoys better terms for the amendment of the copyright agreements. So we're expecting that the cost of offence and self organized all contents in a whole year it will be significantly lower than that in the year of 2022 and of course, the cost of the fence will be affected by the scheduling of the bank.

So there would be more of a large scale events and activities in the second quarter and then the second half I'll say, yeah, compared with first quarter. So this will probably bring some fluctuations to the total cost of our copyright events and content.

Oh don't collateral woman, who can do that but you'll watch it.

Jean Jacques the wash.

Those that do not carry the do it yourself onesie <unk> Central D E Shaw.

So I thought what do you think she had told me to sit here that's something inch in you and I can tell.

Maybe some day, we only earn.

And yet we get a soft tissue.

Oh for speaking, our we made very good progress in cost optimization in the first quarter, even though with a decrease in the revenue our gross profit margin in the first quarter had significantly improved.

From a quarter over quarter basis, and reached a level similar to the same periods last year and from the perspective of the whole yet we believe that the gross margin will improve compared with 2022.

Okay.

For me it all my T E C O Palm Beach, Deepak and Josh.

Well he doesn't do 500 feet, so charity that sounds simple, but those aren't so sure Eli if you just look at Eagle Ford shale.

I wish it shut down.

So you can feel kind of approach.

I'll leave it there yet.

Foreseeing that they sell a T shirt.

Yeah.

So that should mean that you say you're still early are you sure that youll claw.

And in terms of the operating costs.

Tier one and total operating expenses decreased by 26% yea over year, and a 7% quarter over quarter.

Since the strength of the dollar cost cutting and efficiency improvement measures in the second half of it in the second quarter also at last year. Our Q1 total operating expenses decreased by double digits.

Before car secretive Cortez.

So we are hoping to further consolidate.

Achievements that we had got so far and efficiency improvement and to look forward to have an even better optimization of operating cost for the whole yet.

Women's I think I need to do the other thing you are looking.

I think well keep it deliberately Oakland on you'll research a chunk of it.

The fact that we have with them so.

So I'm sure they'll do all the hedges.

Equal sugar inclusive infusion you hit on me.

We've made a net profit in the first quarter of this year and even though the profit rates probably with the subject.

Subject to a subsequent fluctuations due to the seasonality in later quarters we.

We will add to further narrow the losses and improve the profitability.

<unk> from the perspective of the whole yet.

Okay. Thank you next question please.

Certainly one moment for the next question next up we have to lie from Thomas Chong from Jefferies. Please proceed.

Sometimes you go out in conjunction with the key or how long. She wanted you're supplying your woman Guy who will come down.

So supporting them off once you have it.

Yeah.

So a chunk of myself. Thanks management for taking my question My question is.

How should we think of the cargo Bachelor Hum.

You bought a bunch of electro me and machine.

Thanks.

Yeah.

Doing them with Kimberly I'll get junky.

Oh hunting for chicken because people like it.

Yeah.

So you can kind of narrow or Yahoo seem way uhm.

For me the young so it just should be failure in Gaza well, that's a bit of hung yet. She shows I think one of them went through extensive John so the mood at Sherwood alcoholic Lisa yet.

So it's just a project.

That's helpful detail.

Sure sure taking passion that needle that's something what you keep out sure you saw the show her speech it now to work on but that's how quickly we should see his homework tissue.

Sure glad to teach them team had absolutely no worries.

As far as we understand the oval live broadcast regulatory environment has not changed much compared with previous quarters.

All of the requirements for the content for the behavior, especially medicine, you says and the protection of minors have always been relatively syngenta from the government. So our industry continues to come under regulatory attention I believe that the purpose of doing so as to better regulate the industry and to <unk>.

Well, it's healthy and sustainable development as a whole so under current environment.

Oh, Yeah, we'll continue to strengthen our position and maintain an effective monetary mechanism for the content on our platform and to guide the three mezz and the guilds to strengthen their compliance awareness and improve our platform's compliance capability through technical advice.

And operation.

Okay.

Danielle.

So topical.

So G T shirts, and similar trend to the couch Oh.

Oh shoot you go shoulder twisted it hit bottom.

Okay.

Each bushel Tony jump.

Just asking you to do.

Oh, Yeah sure.

It really is about two months, but she's also went.

Went through somebody else will.

Accordingly, and co tenancy that don't take Hilton.

She goes off doing something else with it.

Yes.

And as you know that in May last year, there was a new set of Hum stream.

Streaming related policies from the government and we made our adjustment accordingly on our products and operations on time in order to make sure.

We meet the policy requirements and therefore close to some fluctuations in the live broadcast revenue in subsequent quarters.

We expect that the impact of such policy changes in our revenue will gradually be reduced after the second quarter of this year and at the same time, we will keep in Cotai.

On the policy changes by communicating regularly with our authority some pay close attention to relevant requirements and better adapt our products and operations.

To make sure that we can meet the policy requirements.

Okay. Thank you.

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