Q3 2023 Tencent Music Entertainment Group Earnings Call
Q&A session and please be advised that today's women now is being recorded with that I'm very pleased to turn over the call to your question Executive Chairman of the company discussion.
Thank you Melissa Hello, everyone and thank you for joining our call today.
We are pleased to report another quarter of strong growth in our <unk>.
Online music services, despite the top line headwinds from the social entertainment business, while adjusting certain industry Wild live streaming interactive features were presented some challenges for the quarter. It ultimately place of us an even stronger footing for our long term sustainable.
Development.
If a case in point, our <unk> businesses have become more resilient.
Illustrated by group wide margin expansion and strong cash flows for the quarter.
What's particularly worth mentioning is our online music subscriptions. This business has registered accelerated year over year revenue growth.
Growth momentum carried into the third quarter with expansion in both of our subscriber base and <unk>.
Our paying user base grew further to $103 million, a strong testament to the board a field and high value of our music products and services.
Our impressive content offerings compelling subscribers prefectures and interactive product features together with strong execution enabled us to attract new subscribers, while retaining existing ones. We are also pleased to see that monthly arpus expanded too.
10th Street Renminbi.
Thanks to disciplined promotions effective member acquisitions, and our highest subscriber retention rates.
These achievements will result from the solid execution of our dual engine content and platform strategy.
A further unlock the value of music and paved the way for our long term success I'd like to share a few highlights.
First we cultivate deeper.
Mutually beneficial partnerships with record labels and artists.
Our insight across content and users as well as our holistic approach to growing the industry support of our strengthened cooperation with music partners for instance.
We strengthened our collaboration with TF voice on their 30 day headstart with each of their 10 year anniversary single see you tomorrow as well as the sale of their themed album 10 years two.
To amplify user engagement and strengthened up one with Atlas, we launched several online so I'm guessing contest and music based interactive features for the single.
We expanded our partnership with <unk> entertainment into ticketing.
Where we opened a dedicated channel for users to purchase black things concert tickets further expanding subscriber purposes.
In addition, we formed a new partnership with Coop Entertainment.
<unk> in a prominent.
Brands and groups, such as BTB, Pentagon G idle and lifestyle.
This collaboration not only enriched our used our music catalog, but also plan to us the three pages of 30 day head back period on new song releases.
Each of these examples strengthens our virtuous cycle and create win win situations.
Our <unk> relationships with octave enables fortify our music ecosystem, bringing more in June.
Privileges to our users while also creating prosperity for all stakeholders, along the industry value chain.
Second leveraging <unk> integrated resources and expertise.
We expanded our industry influenced by assisting artist at different stages with their career growth.
With respect to top tier artist in August we host and online offline concept for Towson celebrating the nine year anniversary of Australia.
Delighted by sales also after <unk> and social media Buzz of nearly $2 billion event views in just three weeks. This event generated great excitement in the claim among users.
As for our strategic partnership.
This quarter, we assisted <unk> with her appearance at the mid Autumn festival organized by CCTV and Hunan satellite TV.
So listen the increasing her influence nationwide.
Among our emerging musicians.
One law, our indie musicians performance showcases tons on the variety show the treasures of voice.
<unk> exposure and social media, we how team attract more users to explore his original songs on our platform in.
In quarter three this year, we also had over 20 up and coming musicians farming at line Music Festival.
Many rising decisions from our Tencent musician program showcase that debt balance at the Coca Cola sponsor that 'twenty two 'twenty three summer limited refreshing music festival such activities, we have high quality brands also encourage us to further explore sponsorship advertising opportunities.
Third we enhanced our technology capabilities and content creation promotion and distribution. Some of this content also recorded initial success overseas.
In the third quarter vendors introduce his future.
My apology music production tool.
Featuring fast and convenient generation of a uses AI voice to produce musical works.
Cool go music vocal producer also upgraded it functions to allow AI generated newsy content in multiple languages.
Through our beef training section he can effectively and efficiently produce songs in Mandarin Cantonese English Korean and Japanese.
Both tools sustainable solely substantially boosted creators creativity.
<unk> financial position for promotion and distribution Toolkits, such as the <unk> music cloud and cool goes to more music platform.
Advancement in helping record labels creators and musicians efficiently promoter musical work.
Our deep industry insights and assist data analytics enable us to successfully promote Chinese songs overseas. For example, we helped Angela Jones.
And young Jinan Sommer loved chart on various popular music in Singapore during the quarter.
Moving on to our continued efforts on ESG in.
In the third quarter, we joined hands with <unk>, SSP and launched our 'twenty to 'twenty three you've music Tech X program.
Inviting high school students to explore our technology in supply the new section.
Working side by side with the student we commissioned at a theme song the most beautiful songs in the world to champion to campaign the puppet here and support the hearing is failing in various senior citizens. In addition, we organized a special music Education project.
Music Garden space to have children from SA minorities and remote areas appreciate the beauty and the power of music.
This initiative demonstrates the value and positive influence he can bring to a wide range of coming.
In summary, our holistic and strategic approach is strengthening and expanding our capabilities.
<unk>, our platform and ecosystem increasingly robust.
Continue to grow our music subscriptions and strengthened our partnership with label and active and reaching our content and perpetuate our virtuous cycle. We are also fostering new talent and leveraging our advisor technology to support our efficient schools this powerful combination and evil.
<unk>, who drive our company's sustainable development in the long run and support the broader industry advancement.
Now I would like to turn the call over to Ross for more color on our platform development.
Please go ahead.
Hello, everyone.
The other is the heart and soul of <unk>.
I would like to begin by commenting that accused quarter three results highlighted the efficiency gains across our platforms.
Cyclically or ecosystems are strong biopharma skill and AI important technology.
Unable us to transition into our into our increasingly robust music potthoff.
From an operational level one key highlights is our effort to expand the application of AI technologies across our products and our services based on our upgraded music era.
This quarter we're in.
Related our <unk>.
Integration platform.
Allowing third party models to be better integrated with an attitude towards a music vertical.
Lisa Paul of AI when you.
Hence the music discovery and consumption efficiency.
Creating a more engaging user experience.
First.
Both head count and the connection and discovery.
This quarter, we continued to upgrade our accommodation middle platform I know he has personal lives with recommendations on each of our music apps.
As a result.
A new record in the share of streams from recommendations as well as an increase in the number of source <unk> users personnel salaries.
We also have significant underlying lauder barriers to music discovery.
For example, Kilkeel music into Delta is quick Lisa model, which allows users to listen to our songs.
Growth in the zone quickly locate the full song.
Another example is Google music revived Washington, fishing faster discovery of multiple songs sung <unk> as well as AI Randy that was played by different installments.
Second.
Better said at steady state in music consumption through more yield.
He also cases and a tremendous scenarios.
In the in car yields tests were extended our mobile and offerings.
Such as our seamless user interface.
Email sound quality and the Taylor in a play list.
<unk> in English in cabin music consumption.
To increase our courage.
Well listen the latest on additional car models.
Including Mercedes Benz Tomorrow, and a more peer to peer IV models.
Partnering with our hydro L manufacturers.
<unk> is the industry by leveraging qualcomm's latest AI computer capabilities to enhance users' music listening experience.
The greater details in a moment about sensations.
In terms of broadening entertainment content consumption.
Customize the or music services, including content production promotion.
Data analysis.
Crossing the IRS of a film and valuation gaming and animation.
Through tailored music works.
Great.
<unk> touch points for original Ips unlocking their wireless.
For example, they call produce the pasta same and under crowd based songs for the blockbuster normal Beth <unk>.
We also produced original soundtracks from mobile games, including Peacekeeper elite.
File.
Dungeon <unk> fighter of wage.
Our resale wildfire.
Our claim.
Yes.
Third for our immersive user connections, where hydro create creative styling community, where youll millwork flowers combined IR teammate that may delay, making their experience on our platform more enjoyable and long lasting.
For example, Kilkeel music launch the or certainly.
Interactive song Guising context.
<unk> artists such as digital.
Towson black ink in the teens in terms.
This evens quickly one of the viral across social media platforms and or in upcoming community in the fund fund called growth.
Amplifying <unk> influence.
To sum up this has three dimensions of connections inspire us to further unlock music's violence.
AI powered technology is supporting us to provide a better user experience and making the platform increased increasing efficiency efficient.
Our online music business has become.
Diversifying and the Caruso growth growth pillar.
So those are in the 10 minutes services remain adaptive as part of our holistic music offerings.
For 2000 and plentiful and in.
And our years of hydro <unk>.
We will stay laser focused on providing in light lighting user experiences.
Driving operational.
Efficiencies across our platform.
With that I will turn the call over to Shirley our CFO for a deeper dive into our financials.
Thank you.
Hello, everyone next I'll discuss our results from financial perspective.
In the third quarter of 2023 revenues from <unk> increased by 33% to RMB four six beginning on the year over year basis guidance <unk> growth in online music subscription and advertising business.
Our total revenues were RMB, six 6 billion down by 11% year over year due to declining revenues from a sofa and Tam that facility and other silicon.
<unk> revenues in Q3 reached <unk>.
<unk> pointed to a building at 542% year over year and 10% sequentially.
Further by further expansion of both online music paying user space and the monthly App.
Basically today.
Online music paying users grew to 103 million up five 1% year over year, representing net adds of safe Harbor, six meaning looser sequentially.
Marketing App was.
10 point the stream App.
17% year over year and 6% sequentially.
Mark its sixth consecutive quarter of growth and another record high of months.
This one readout from our products more appealing than the claim rate case.
In the App to report back to futures attractive music content and.
Promotion and the member acquisition data case.
They are at the highest subscriber retention rates.
Additionally, revenues from advertising achieved strong growth on a year over year.
Outpacing.
Our diversified product portfolio and innovating a deep formats, including <unk> support model and as sponsorship advertising are highly attractive to pass up.
Our campus music contest kick through mid 2023, young music contest change and as competition and Coca Cola FEMSA to planting 23, some NIM heated with rational music effectual, but two good examples of how our portfolio of music actually attracted virus branded.
And there was high for us.
Social Entertainment services and other revenues.
Yes.
<unk> been down by 49% year over year. The decrease was mainly caused by our customers to certain labs screening acting functionally.
And the most shrinking companies prostate test actively implementing several service who has an inch and a great cultural measures.
This is in line with our expectation about <unk> faster.
Faster progressing we believe merits, a lesser rate and beneficial for our use that basically a hub paved the way for the long term sustainable development of our business.
Gross margin in Q3 was 35, 7% up three one percentage points.
Again, primarily due to the following factors.
First our mill sub question revenues had a significant growth this quarter specifically <unk>.
Expansion in paying user base and improvement month with access to you both had a favorable impact on our gross margin.
Yes.
And with having revenues also had a sit down growth, which also benefit our gross margin third isolate gradually ramp up our own content. It has positively impacted our margin as youll see here shifting to win win relationships with labor and accurate and increased infrastructure.
Absolutely.
Although the process Mras has a number of asset Peru to our payments margin model and more than offset the impact from decline in live streaming revenues.
Now moving on to updating debating how operator, Bethany procure say RMB, one concept, meaning 19.
<unk> 19, <unk> percent as a percentage of total revenue.
Ambac eurobond, 2% from 19, 5% of total revenues in <unk> last year.
Selling and marketing expenses were RMB.
$219 million.
And by 11% year over yea isolate closely monitor that.
Each promotion channel and included the Effectivity of promotion.
General and other integration expenses.
One thing and.
And by 2% year over year.
This decrease was primarily due to reduced employee related expenses as a result of include head count and expenses related to the Hong Kong second already incurred.
<unk> in the same period of 2022.
Our effective tax rate for Q3.
<unk>.
Tailored to the debt <unk>.
<unk>, our net profit and net profit attributable to equity holders company.
<unk>, one <unk> billion and RMB, one 2 billion, respectively now for as net profit and non <unk> net profit attributable to avocados tough the company, while on the $1 five bidding and RMB, one 4 billion respectively.
Diluted earnings per ads were RMB.
They were applying the same four up 12% on a year over year basis, Nowadays that launched.
Per ads was RMB <unk> 89, as a percentage on a year over.
Basis.
As of September 32023, our combined balances of cash cash equivalents and term deposits.
RMB slip.
31, <unk> as compared with RMB 30, quantified bidding as of June 32000, Twenty's name.
Such combined balance was also impacted by the change in exchange rate has been progressing.
A different balance sheet dates.
In March 2000, and Tennessee allows for a share repurchase program at U S dollar $500 million.
As of September 30, <unk>, we had repurchased.
15.8, meaning ats bump over the market with cash for a total consideration of approximately U S.
Dollar one content and the same meaning.
In conclusion, our mix of pricing pain, <unk> has demonstrated a strong growth trajectory per pad back quarterly growth in both <unk> and paying users.
And we expect such trends to continue basically focused obviously management and improved operating cost and promotion channels. They expect it to continue challenging our overall profitability.
Last but not least we will keep left neocortex and SMIC high quality content as well as new technologies through organic development and M&A to solidify the foundation for our long term growth.
This concludes our prepared remarks, we are waiting to open the call for questions. Thank.
Thank you Kelley and Hello, everyone with ACI family. Please.
Please.
Ask that question.
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Thank you, Steve Smith of Great Panther.
All participants on today's call. Please limit yourself to one question if you have additional ones.
Into the queue.
If you ask your questions in Chinese.
We ask you to repeat in Ingalls.
And then the first question comes along from Edison.
Please go ahead.
Hi, Thank you good evening management, Thanks for taking my questions. Congrats on the solid reached out I'm going to ask a question.
Anthony.
So what's that why the churn from Janney capital.
Uh huh.
Yes.
So somebody that Shaw the EG.
<unk>, Oh, sure where that five.
So glad you also on a blanket.
So I <unk> sure Okay, So let's say that.
Oh Wow.
Great.
Sure.
Okay.
Sandy.
I'm going to translate myself, so I wonder if management can share your preliminary deal on your expectation for like online revenue in <unk>.
And how you expect to be.
Oh.
Our competitive advantage to evolve in the next three years.
<unk> I was wondering if management could share how you think the Maxwell and <unk>.
And that might affect the growth of.
And also for the next two years. Thank you.
Thank you for your questions are this year.
And I think 2023 is a critical year for us we have been transitioning and expanding our music ecosystem.
Our business mix and much more resilient and this is actually the fact that in a number of aspects.
First we responded quickly to the challenges facing the <unk>.
Live streaming industry, taking proactive actions to adjust our social entertainment business and making it more sustainable.
Secondly, we continue to drive the prosperity of our loser ecosystem, while diversifying our revenue streams and thirdly, our core business light on our music subscriptions and advertising.
Our record of robust Guo amid an evolving macro environment. So you can see this in our second and third quarter financial results.
For 2022, I think that assuming we are going to have a stable external environment and we see the opportunity to drive our overall top line growth and margin expansion compared to plenty of industry <unk>.
Especially we will continue to drive solid growth of our online music business. The subscription revenue driven by the subscription base Globe and also <unk> expansion as well.
Outside of the subscription revenue, we expect that the revenues from advertising and new initiatives such as August merchandise to continue to grow healthily.
For the social Entertainment services, we will continue to execute our current operational strategy with the backdrop of the macro factors and competition.
For 2024, our primary target is to stabilize the business and better serve our core users as part of our holistic music ecosystem, we expect our social entertainment business, we continued generating a healthy cash flow for us.
For 2024 earnings we aimed to build a point our strong results so far in <unk> and continue to drive both gross and net margin expansion.
For the three year outlook, I think <unk> core businesses, especially our online music services still have lots of room to grow over the next three years, we are excited to see the growth opportunities in existing areas, including the subscription <unk> advertising and multiple potential on the long form audio.
As well in addition to the online music services as well, we have been extended our reach and expanding capabilities along the entire music value chain. We have successfully developed our new monetization models to increase our target addressable market, which is diversifying revenue streams and <unk>.
These include the live performances like concerts and music festivals August merchandise and more.
All of these initiatives still in their early stage. We believe that we have built a strong foundation to tap into a more areas for the long term growth.
So in a nutshell I think there'll be a crack that our core businesses like the online music service showed great resilience amid the current macro environment and we are confident that our content and platform dual engine strategy, we will continue to capture more opportunities for future healthy growth.
Thank you. Your question. The next question comes from the line of Alex Poon from Morgan Stanley.
Congrats congratulations management for a very strong.
Quarterly results, especially the subscription business.
My question is related to our output growth. So third quarter, we have achieved record high absolute number and also on a year over year and sequential growth basis.
Going forward.
Because our blended ARPA is still even lower than our double 11 promotion price.
And a lot of it.
Users are paying the fifth.
Auto renewal price of 15 RMB.
So how should we think about the trajectory how much visibility do we have for.
Continuing this very strong <unk> growth in the next two or three years.
Because there is also a macro issue deflationary environment.
Also competition with net east, which is still charging at a lower price than than us.
Thank you very much.
Got it.
Well then let me go ahead now.
For the us.
Typically it's been down a little bit Ebola doesn't actually remains quite that number.
So actually all implemented.
Hello Vanessa.
Although I have no clue.
And then can toward cleaner change anything on the <unk> pilot.
Chocolate and today say, Canada.
Thank you very much thanks for the question well regarding the IRA actually we maintained a reference for fixed conducted Qualcomm and for this quarter I think on average $10, let's say R&D and also continued to downsize our promotional event and also make the membership benefits more attractive and also adjusted the price.
Particles.
It's the one that's at issue.
Excuse me the Yoplait the children, well maintained yoplait and somewhat closer to what <unk> been talking about Charlotte and he clearly don't forget with alcohol, even though it's flat. So you don't want me to ask which is our debt to EBITDA.
Sure.
But at the same time, you can see it accurately actually make some concessions regarding that if currencies remain fully consecutively for subscription business, but can we answer proactively adapting the effective operational strategy. Therefore, we will be able to retain our users better banking our outlet inclusive of Acs after the show of hands.
Okay.
Do you want to do them and they like to think about it I think of a social worker.
So that is that's an asset because you are changing so in that vein and I compliment agenda as well as initiated the opportunity you guys have chosen <unk>.
Tissue take like also.
Now about that.
That is a very light I think standout and you may now one thing you said I think our point in the chart that I got that somewhat now orange really isn't that going to take a hiatus <unk> policy to ensure.
Our balance sheet.
Particular to Docomo contaminate the kitchen, that's just as a woman Youll column she took on holiday.
<unk> that youre getting to go after.
After that.
But at the same time and we are still very confident regarding our future subscription business revenue growth.
Asking about the Q4 performance and we're also very happy and the consequent welcoming to put out the number in the second part of the question you ask about the outlook for the next three to five years.
Action actually rfps around 60, RMB and whatnot.
Keep an eye on the industrial application.
Pension us and also affecting the Adam. Thank you mentioned for example, like in patients.
And to further optimize our proposals.
Okay.
Okay.
Next question comes from the line of John lifelong benefit America Merrill Lynch.
Right.
Hi, Glenn it's all lines, how hard is it just all of that.
<unk> why.
Why are you on that.
And with that what do you expect Keytruda treatment is going I will now turn now killed Don After all you said that and I'll, let you go.
Oh God, yes.
Yeah, I'm going to call it social social entertainment.
How do you do that you could choose a high element of Moscow God, Keith Why don't you ask me today got you obviously came out even today, you've got T phone calls in batches.
Thanks management for taking my question noticed that so our gross margin at printouts hockey in past quarters in a row star backward high things all the time to Nike and can you share with us that standoff Mu. They can this whole thing came on the base business.
<unk> gross margin and how should the way new cat. So the margins had going forward. Thank you.
Gross margin is 35, 7% in Q3 increased by four 1% year over year due to the fact that at Ballard.
Foster Middlesex question, Danielle had a significant growth.
Pension in paying user space and improvement in muscle atrophy, you both had positive impact on our gross margin.
The robust growth of advertising revenues also has a favorable impact on gross margin third say gradually ramp up our sales owned content rich benefit our gross margin fourth.
We optimized our content across the model of honesty and increase our speed requirement of content cost.
I'll now move to Daniel gross <unk> ratio was faster than natural ratio of content cost five.
They licensed the cost of long form audio decrease at a year, where you have to pay.
And after the adjustment to livestream penalize the proportion of revenues from leasing membership and advertising in social and Ken mentioned revenues have increased which had a favorable impact on our gross margin.
And the family.
<unk> technology and operations.
Next when demand and the shortage capability and improve the utilization of our service and equipment.
Our gross margin has improved for six consecutive quarters looking forward Q4, <unk> revenue and the advertisement revenue will continue to be strong growth on the cost as such we expect our in house made content that will positively impact our gross margin continually.
And we will continue to increase our operational efficiency and monitor cost items by housing model. Despite the live streaming revenue will be decreased in Q4, we expect our gross margin will be increased sequentially and the local water in accessing to the.
Next year, we expect our gross margin will be increased but the increased equally will be.
Depot will be lethal than this year.
Okay. The next question comes from the line of.
Goldman Sachs recently.
Thank you management for taking my question. So my question was about to Oh.
Subscription business.
So first of all.
Hum.
How this business.
And secondly, do we.
<unk>, including advertising.
Why did your album Hi, etc.
We're particularly good at.
I think that trend into the fourth quarter.
He just passed us and goes away so house.
T D.
Kind of pricing or are wrapping up.
A year off.
Fourth quarter, and how we think about the 24.
What areas, we think that but I still have growth potential.
Awesome.
Let's see.
Okay.
Yeah.
But <unk> got a woman Voya yoga and.
Shrimp <unk> equity ratio of women, hi relates to you've got some wrong.
We're gonna chosen suddenly be Algeria and.
Sure.
Strong pangallo email Samsung the strong fee. So you won't be Eugene Guy assurance Kyocera is you'll have some be chosen.
It's undrawn.
Thank you very much and thanks for your question in Q4 and going to work and implemented a good grasp for the subscription business.
As a key puzzle.
Well regarding the advertising business in Q4, we're.
We're going to have the double 11 shopping festival. So it didn't impact Q4 performance with optical Q3.
The timing and searching Congo minimum in Israel.
Well nobody up with anger, we don't have any issues on hygiene guys, you folks with Undrawn tactical and granular on some gun Lee with Zombie Junior Im sure Youll, probably also a phone call.
Well regarding the outlook of 2024 and in plenty of time before we can move our subscriber base will continue to grow maybe at a gross rate will be slowed down compared with plenty of time for sterling.
And honestly elements only Oh, yeah, you know what.
Onto our high liquidity can do attitude towards on.
Total you don't blow when we kind of go into what the true toward onshore diet on Iot.
Turning to Homeaway, Anthony if I told.
<unk>.
Injuries Yada shoot could you in Chicago now unless you want to.
<unk> told you with it.
Lastly, John Hume Ghansham, we undergo a function shoots in Darwin the Cleveland.
So I'm going to go up.
Well regarding the subscription business model encountered wonderful besides working on the mobile.
Solution, we're also going to intensify our efforts in the in car applications and Iot applications. When I was looking at.
This step up I'll add that regarding the health of the IP position, providing additional functions like the eastern part of the music under the terms of the music and we're also going to continue to go out household or defending membership and copper furniture and continuing to grow.
You can go somewhere in Iowa.
So women women doing them Union, Ginger Ching Kwan with somebody and junior anchor Hydro power. So you got a bunch of you got a little one month. So you want me to you on the commercial auto and Guy will nudge, our mobile high sure.
How do you make sure you go dark either you're going to do.
This is ching Kwan.
Regarding the revenue from the advertising business and for next year in terms of plentiful, let's start with and I have to keep a positive attitude over that total current economic rents. So we're going to maintain our revenue growth target of advertising business encountered plentiful with Athene Aflac Japan's Wilson.
Dominion is Ola Moana highway when we got into them then we'll actually among all your mind women tune beyond the way too.
As you can touch on the table when you go to shortly.
As we gain share in some of the <unk>.
On Florida, only Yogurts immunological now, Sean <unk>, Johnny Eagle Congress, Shanghai, and Angola around the general Shanghai with Humana at home in Xi'an, China, John legal Yes, we'll continue.
Continue the geography to answer one more kind of what are you seeing I mean, I know you've got going on there.
Well regarding the growth for next year and besides what I mentioned in the AD supported smooth well also.
I need to intensify our assets regarding the commercial promotion and welcome it and that goes to the commissioner promotion, along with Aflac events and concerts, because I thought <unk> be able to make sure the site at the bond between our commercialization and events.
<unk> also be a great grand strategy for our <unk> advertising business.
Okay.
The next question comes from Thomas Chong from Jefferies a policy.
Hi, Good evening, Thanks management for taking my questions. My question is relating to our AI and allo and keep them we have been seeing.
AIG is so important on content creation and also supporting our Lucius trends and also driving the user engagement.
Wanted to get some color with regard to our strategy.
In Oh am in AI, and what kind of one Apple spending should we expect over the next.
A couple of years.
Yes, all of it.
Well there wasn't issued one your AI.
Amdocs Goldman Campbell.
They've been through Goldman.
Upon the close rate would go up based on how they got to using some when you thought about your lifetime, then they'll pop one it sounds like you are menopausal, but you can bet.
Yeah.
But in general women considering either on the.
We won't fully functioning eye box. So you can if at all.
Hi.
Sure.
Our main lines in engineering I appreciate your golf it Anshan legal should only see Oakland, which.
Is there a scenario where the Fontana.
Thank you very much. Thanks for the question, where we got into AI related question I believe were going to occur in line with what has been provided by our parent company Tencent will terminate AI going into a store and a robust filing calls for the next 30 days.
John wanted to ask a woman Sheila Gunn condition, John why don't you see a woman weights.
<unk> margin was up to my own pointed high silicon with the NGL to our high share chicken.
Gentlemen, tungsten and far below if we as you know as we want <unk>, Google and Amazon or ebay or going down to a military aircraft.
Well again, that's due to our relationship with Tencent group and for some of the basic models actually we're not going to target for more research. It is patent group has already reduced its <unk> system and lots of ability to leverage up on yen produced by Tencent grid to continue to fund our business with their model.
No I'm not sure conjunction with say a womans van Dongen to Ashford that Tom was similar to Omega.
You'll find our mostly around the helium.
Unless you kill them with their honeymoon beyond engender.
Most of them the Teasel Bureau.
<unk> Hall, Buffalo, Beichuan voluntarily answer, especially in Asia.
Actually you know our business is more application driven so we're looking into two in the near future is to leverage the existing I'll add to that.
Fully supported the solution with great integration and we do believe that we will be able to seamlessly switch to the leading language models in the industry, including backswing plenty Yang and it ends up in coupon at all one way you can create a lot of it they've got a bunch of demolition, although you've got European hard already gone women tornado virtually.
Utah is clearly marching the same margin tweedy jostle to oscillate like element settlements I'm glad you're not showing up on doing go no go down John got nomination of a young fleet on the <unk> hundred rather assume functionality if it on the go shop.
As you probably noted in Q3 of <unk>, we have already launched our music large model.
Next Gen platform to nail down and we are also fully committed in accelerating the Moody's and.
And especially making the model is a part of our production system. So that it can help us trying to continue the low cost and the cost and it also can make at this time, we are working efficiency. So it's a very light sunny.
Well I can answer that a woman can only enter a high side.
They either don't you only own town shoes product, how do you guys see.
200 <unk>.
So the mandate of alcohol women, each aimed at either <unk> or machine to Angola.
<unk> has long shot Manuel hung autonomous strategic now Okay. Let me if I wonder you find transunion womanhood pool multi material OMNOVA Nassau weighed on our feet on the hospital adhesion.
Well there you can also say that in an accessory yes, what am I trying to gain scale and leverage in.
And to continue to extend his application I. For example, we're already has the listening together a product that is based on the updated <unk>.
Out of that.
Now the users to listen to the same music. We are also able to chat with each other and also flat out I haven't does models the Q&A and also the chat efficiencies increasing.
And Xiaomi, which is almost you know well know hydrogen giada tranche or as you say the autonomy.
Well my tongue <unk> Hong is really in China in June when the Tor Aig's Aegean.
Sure Ian.
<unk> sure.
So he's able to ensure that it would be also arbitron book <unk>, So volume in Chile.
Sunday.
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But at the same time compared with what I mentioned is a fundamental and then what are we trying to improve is actually our aig's. The capacity and we are also research and adopting the leading engine in the industry and some preliminary work that has already been achieved in Beijing in graphics and <unk>.
And some of the financial results has already been harvested in our nice training platforms, and so long as Celgene and I'll turn it over to <unk>. How did you have a dominant leader so yes.
Dialog on Yahoo.
Nevada toy alfalfa and your answer to the units yet so it's available to me.
That's what you should hold true for Haynesville Diageo, sometimes reality, we don't the tungsten material.
Material hurdle for Verifone terminal dwell and once you meet a hurdle youre going to Los Angeles Cleveland.
In Ohio, the fact that for 'twenty.
Middle East, we also believe that Aig's they play a vital role for music creation and user experience enhancements it can.
Provider they use a more personalised diversified immersive music experience in the near future. We will continue to invest and explore that improved innovation and this year. We're also going to join hands with our technical partners and music with HFC. So that we will continue to Nevada and the <unk>.
I think in that content industry.
Thank you. The next question comes from Alex Yao from JP Morgan.
Sure.
And our Congress.
Okay.
Hi, guys can you hear me okay.
Yes.
Okay.
Thank you management for taking my question and congrats on a good quarter.
I have a question on sales and marketing you guys has been rationalizing the sales marketing spending very successfully in the past few years, sorry talked a few quarters.
Now that the revenue mix that has significantly shifted towards a music.
And on the back of a potentially more online offline integration and.
And involvement in the offline.
Music activities, how can we think about the sales marketing strategy going forwards. For example, next year are we still going to see a flattish or even slightly lower in sales marketing expenses versus this year.
Or should we think about as you focus increasingly more on music.
With more potential offline activities and sales and marketing will.
Gradually ramp up in an extra few quarters. Thank you.
Okay, Okay, well, Chile, Chile to downtown to somewhat mitigate.
Russell <unk>.
You'll need to <unk>, obviously, the faster cheap I need to go.
Sure.
Thank you very much. Thanks for the question, yes, indeed for the fastest important our sales expense and well managed constantly adapt our osage well manage our expenses.
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Right now you might say.
Isn't one message.
I think the.
Neither mediatek I think GAAP now matches the woman that she thought that you're participating either that she doesn't quite a total kind of isolated silo thing yada you may.
Dupont <unk>, Panama total that chooses to call you talked about so what it would take us either.
Got it.
Well regarding the future actually we took the labor welcoming to improve our profitability regarding the musical.
And Kevin and to invest in the music channels, but as we are adapting the RMC, we will be able to comprehend today translate the investments into weekends.
Pardon me and undergo when they say the woman.
Local in terms of nasal high one and Keith and I think our Shanghai Auto Yes, no moment. They tell you acquired I think a promotion of automobile Cleveland now Madonna and Hartford.
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Delighted to go climbing to shop.
So I know you saw women's shoe all of them in total that they go out shuttle thing so as I mentioned I don't see our Charlotte.
As you may probably medication and on the other side, we'll continue to.
Strive for a better self produced and co creation content and also going into non small ancillary events will activities. So for sure we're going to need more promotional activities. It is that sequentially adopted.
Management methodology, so in order that our investment is highly efficient and effective.
How much is it now closer to 390, <unk> Chaucer tightened so much of what Matt and I'll take that.
He shall does it.
Hold on we got all these achieved no language and the mortality that can you help me on kind of a contingent let's take a closer to 161.
Well regarding the Q4 us plenty of time to say as you probably noticed Q4 is always the season tactical end marketing and promotional event. So I think our sales and marketing expenses in Q4.
Will that be the same as what we saw last year.
Julian anemia, and I got in our audio and.
And indeed, I think Michelle Collins actually it sounds like something that's in the dark as it.
Sounds like you still have to take a.
To the Charlotte.
Charlotte.
So regarding the time to 20 for the cell phone market extensions from the absolute value perspective, it might be some French but comparatively the revenue grants I do believe that our investment is prudent.
Thank you. The next question is coming from Sanchez from Nancy Shaky.
Excuse me of omni channel can be maintained.
Well I can guide us.
Torture, Archie Cleveland vignette that Shan.
Sam with Chad Keetch, what's at your client way more easy to jump to shoot for sale now.
Now I'm, a wheeler quite so much choice.
Shanghai, how much online fulfill E G.
<unk> been intently.
Yes.
A lot of our questions.
Pete.
I first mentioned well are you.
Algae membership.
And so I'd like to ask about your question, that's what's the scope of L P and eating a meal and how many opinion on this.
Whatsapp land to convert them into paying user in the future and how should at least and cutbacks in the long term monetization potential. Thank you.
The Shannon.
Canada as well as soon as Iot then we don't want that's cool Yeah sure. Let me I'll just review the issue.
Young <unk>.
In Shanghai.
Shield.
Hello, Tien calm down closer to where your body that you put on Chaucer I typically you would have to go a year without grammar.
Thank you very much and thanks for your question regarding the Iot business. Our strategy is to make sure. We have a very healthy grants with an obstacle and of the TV pacings, where at the same time, we're also going to step up our assets in further expanding the user base for the in cost savings.
So you recently, Oregon.
It was only when I saw somebody looks at home.
So you want to answer is phenomenal.
So I'll go on holiday or something a lot of banks in the U T is a woman. So I took a magazine, we don't the physical and we own the opportunity.
So as you probably know case for the last speaker end of acuity business, because the future growth potential might be limited in what we're doing now is to trying to translate into.
Into the existing user base, making sure we have a very good monetization and also making sure we can growth in the existing customer base.
So that's what I'd leave you a woman third Hong Kong Dong shouldn't them you until they go find out. So she is not the scenario until you go quite as well, though you go into <unk> in.
Im sure, but I couldn't agree more with Cleveland. So I don't want you can fit on top of it simple.
Well regarding the in car surveys actually way I'll touch escalating protests to the new energy vehicle and the new energy vehicle industry continue to ground and we also believe that in China. We also see ever increasing grants regarding the intelligent costs.
So in general I mean, guys. So it's really a heartbeat arch in humans. We are often told what does altria Tangshan Jimmy fleet hung.
Called Igo quenching Nuncle, a long time, so I'm going to need.
Well there aren't a bulk of it was a lot going on goal.
One woman the nasal Sinhala trembled or two languages.
So actually regarding the strategies for their in car business, we're going to keep medical relationship with the hotel Oems and including the domestic Oems and even Tesla, who I've got to make sure our content could be where they provided into their try the inner conflicts.
Got you.
E mail, the Ginger will ensure the chairman's usual science on good real agenda. So it will fit on.
<unk> rule science I'm glad she taught us sorry to it's got a really really man.
Indra in Charlotte at Kimball, Kimball selling them Paul collar woman.
And you got to him he entered its usual you do you want me.
To be it sounds like it's usually negotiated short IPA recompete answer that for you.
But at the same time, you know that since there for US we lead the way regarding the sound quality and also the strong feedback. So we really want to make sure. We continue with our high quality sound liquidity and a factor in the in cost savings and we also have our indigenous technology regarding the promise on quality and wholesale.
There can be some feedback making sure they use us when they are in their car. They can also enjoy the high quality service from us fulfilling it.
Finally on Eikon, Joseph Tung I told all of you.
The arbitrator I sure be someday, you don't but I'm sure you're going to be.
Although you got to pick your religion.
Now, let me touch you owe me clear.
Oh, what's telling me I shouldn't do what Ohio, Okay kind of all of them die.
Hydro cantata you go full video encoding that does not include yet so tiger woman cumbia high sure Huron and low shambaugh table and saying what are you win one of them goes toward our you'd think about Greenwood I don't actually judo should teach them the angle.
And then finally, what I'll tell you the chute zone.
Well for the past two years, we're also creating a case that they do that.
From the App for that absolute value perspective in cost savings is better than November.
Understood.
We are at the same time, we also noticed that what we're doing now is trying to extend that the user base for the in cost savings.
Well, our customer base, thanks to certain number we're going to leverage more commercial activities and strategies to turn them into paying users.
Okay. Thank you with the interest of time, we take a last question from Louise Chen from UBS.
We shall see.
Thank you management for taking my question and congrats on a good quarter my.
My question is around on the shareholder returns so good to see the execution of a buyback program in the past quarter.
Looking ahead, how should we think about the pace of buybacks.
And what factors do we consider in determining the timing and maybe the pace of the buyback execution and also what other ways do we think about to drive better shareholder return. Thank you.
Okay, well minting and not that easy to assimilate well they can maintain or take a couple months ago.
No matter the case at all.
How long or meetings home.
Changing told them I said halfway Golar channel that as one of the ideas like LG you go you're back came at home yes.
So Chi Chi Chi protocol for Ebola and I don't know, if it's especially the Guangzhou the rest of the time they could be at CIT.
Switching to the to your point you can take off I go back and I'm always turned out going to the doctor kind of Mack.
Cody coming toward us.
Oh, My God that Johan battery.
Thank you very much in Q1 of this year with another 500 meeting sure you asked all of our share repurchase program for repurchasing the class a ordinary shares as of September 30 tonnes of concentrate we made cash repurchases approximately $58 million in Etfs in the open market.
Total concentration Moody.
USD $130 million. So we'll continue to keep an eye on the market, especially the maintenance the market trend and also captured opportunities to create more value for our shareholders.
Keeping our eye on the market, but we're also confident that our repurchase program at that time.
The opportunity to announce.
Okay with that I will turn the call over to your cash flow.
Thank you everyone for joining us today, if you have any further questions. Please feel free to contact <unk> IR team and this concludes today's call and we look forward to speaking with you again next quarter. Thank you so much and goodbye.
Thank you.
<unk>.