Q3 2023 DouYu International Holdings Ltd Earnings Call
[music].
Good morning, and good evening ladies.
Ladies and gentlemen, thank you and welcome to <unk> International Holdings.
Ltd third quarter 2023 earnings conference call.
Time, all participants are in listen only mode. We will be hosting a question and answer session. After management's prepared remarks, I will now turn the call over to the first speaker today, There's language call IR director. After you. Please go ahead ma'am.
Thank you Hello, everyone welcome to our third quarter 2023 earnings call. Joining us today are Mr. Mainly to Chief strategy Officer and me.
Mr Hao, Cao Vice President of Sun life, some interim management can make them.
You can refer to allowed us to report a 2023 for natural results on our IR website at IR Dot Dot Dot Com you can also check a replay of this call when it becomes available you must feel hours on our IR website.
Before we start Okay. You know that this call may contain forward looking statements made pursuant to the safe Harbor provisions for the private Securities Litigation Reform Act of 1995. These forward looking statements are based on management's current expectations and observations that involve.
And I know risks uncertainties and other factors not under the company's can shell, which may cause actual results performance or achievements of the company to be materially different from the results performance or expectations implied by these forward looking statements.
All forward looking statements are expressly qualified in their entirety by the cautionary statements risk factors and details of the company's filing with the SEC.
The company undertakes no duty to revise or update any forward looking statements for selecting in rental circumstances. After the date of this conference call.
Before I provide an update our business performance for the third quarter of 2023.
On behalf of management.
I'd like to briefly address the recent situation concerning Mr. Shao their chance.
And now do you have formed at E train management Committee to manage the company's operations until further notice.
Now speak on behalf of our ink trim management can me a business update and the call will be handed to irobot depressed enough and that makes your house how to for a financial discussion.
In the third quarter of 2023, but diligently they executed and optimized our corporate growth strategy.
Definitely advancing our business for the quarter, our mobile and they use what 51 7 million quarterly average paying users was three 9 million and our adjusted net profit was RMB 71 9 million.
During the summer peak season, the third quarter was marked by a rising official gave me rent derivative self produced content and promotion for new game launches.
This provided meaningful catalyst for them a momentum in attracting new users and invigorating.
Listing ones.
We alleyways and user engagement and user intention.
Our premium content offerings and product features.
Secondly, we continue to deepen our cooperation with game developers.
Scouting a promotion for new games and consistently introduced a variety of privilege program operations.
In addition, we continue to conduct internal supervision as normal with our commitment to fostering a compliant harmonious and healthy lives Guinea environment with this continuous optimization to our ecosystem.
Houses our game centric community.
All possibility had improved let's take a closer look at our business operations during the quarter.
And so quarter, our mobile and they use or 51 7 million slightly up quarter over quarter. Despite a decrease of nine 5% year over year.
Which was mainly attributable to the fine tuning of our user acquisition strategy.
Starting in early 2023, we began emphasizing use of quality and cut back on low hour I'm marketing spending.
Greatly reducing customer acquisition expenses.
On a year over year basis. This led to a lack of user acquisition from promotional channels in a decline and they use.
Oh recorded on the other hand, our M. A youth increase which we attribute to two primary factors.
First with what caused these multiple mainstream esports stomach ornaments and co stream the performance in that.
Oh, they capitalizing on the seasonality of the peak summer season.
Second our premium content and programs are pending initiatives for revenue generating products and promotions for the launch of new games, all contributed to an influx of new users and engagement with our existing users.
We have long adhered to accounting to the approach to your they'll go out.
Suddenly attracting and retaining high quality users by delivering top tier content with a particular spotlight on esports.
Moving to our content ecosystem.
This quarter, we continue to enhance our diversified Harman systems broadcasting over 50 large scale official gaming, even including the league of Legends Pro League Summer escalate Kimco Lake Delta Chew body nature and react masters at.
As the water in Cancun.
We show out area of derivative programs and activities for the official gaming, but including the coast dreamed that live commentary featuring top streamers as well as post games with new programs.
Thanks to this derivative and their diverse discussion topics. We've got to further engage some users initially drawn to the official game even gave.
Giving an extra boost to use activities.
During the quarter, we produced nearly 80 esports tournament.
During the downtime between official gaming events with strategically launched high engagement self produced tournament that scanners and so he asked he can respond.
This included pre match activities for the all facial L. P L commentator and half the championship.
Do you all know top six though your costs flat net income and <unk>.
Public quite quiet.
Keeping users actually engaged in our game segment with best in class all seen offerings.
Capitalizing on the prime opportunities represented by the summer peak season, which is our cooperation with game developers to the next level.
<unk> favorable outcomes in both the operation of games that were already covered.
Promotion of new ones.
Anti party has been a standout success this year.
In partnership with S developer, we launched the anti go a premiere P. G C. What why do you show featuring AGGY Party.
From the initial video audition two the latter mentor lab group competition, all the way to the final round of important panels. We played an instrumental role in seamlessly integrated entertainment elements into the gaming experience.
Showcasing both of the highly interactive nature and the co allure of Abbvie Party.
In the meantime, along the program with <unk>.
<unk> initiated a theory of community operations and incentive to streamers in the air.
The parties Sakhalin.
Successful at gaining traction among both new and existing users and 45 or your user's thickness.
This type of highly popular high quality content facilities course promotion and synergy between our platform and gamers.
Increasing user penetration on both fronts and you laid by anything all stake holders.
In the third quarter, our focus for new game promotion centered on water and.
And as they appeal of this competitive and highly entertaining game with Max Mike.
Through engaging like dreaming and driven by a combination of official gaming events and self produce tournaments, whether one has thinks his lungs consistently appeared a spot and go east top 20 games left.
Additionally for the promotion of New game lost arc, we invited special guests and platform streamers to comeback exclusive live forecast on the public release date.
Gathering bad spread attention, both wasting and outside of the platform.
Our sophisticated content operation not only boosted the visibility and criminals of the nuc in itself, but also importantly, underscored, though is the ability to consistently deliver premium content, leaving.
Leaving a lot.
Lasting impression on gamers.
Yes.
Let's turn to our monetization strategy.
Total number of paying users in the third quarter was $3 9 million.
Year over year change in the number of paying users is mainly due to two reasons.
First as we executed our strategy to foster a healthy sustainable games century community ecosystem.
With you as the sum of our revenue generating actions intended to boost activity allo platform.
Including discontinuing marketing activities aimed at attracting new paying users.
Second on the revenue side, we improved our operating efficiency by Scouting down loan margin marketing activities.
LNG macro landscape have towards sitting 10 make uses less willing to spend resulting in a reduction is a number of paying users.
As we continue to maintain our KOL paying users given the existing market situation. We offer some modestly priced revenue generating products to accommodate the spending habits of meat and long tail users.
Therefore, our quarterly optimal Martin then they declined year over year and quarter over quarter to RMB 306.
Our platform revenue generated from traditional virtual gifting our membership business also achieved solid growth momentum.
We'll continuously upgrading membership functions and benefits, we advanced our membership system with a rich collection of activities and kept our coping user base stable.
For example, based on our members' long term spending habits. The addition to the existing specialty Amanda for member Anniversaried, We introduced anniversary collaboration Ctrip search at the moment in time photo album to any members who's been with you for one year.
Sure.
Presenting the members memorable moments.
And with streamers positively strengthen seamless connection between streamers and users.
In general we have effectively attended to and if we can co paying users across the platform.
And our membership renewal rates have steadily increased over samuel consecutive quarters.
Regarding product product R&D and functionality innovation in the fourth quarter, we have been continuously refining of a healthy content ecosystem and improving the operating efficiency of relevant business segment in <unk>.
Power technology upgrades.
Firstly accounting review and approval with 45, our text based content monitoring and identification in.
Increasing the accuracy of system reviews, while expanding the scope of this reviews.
Has meant effectively ease the burden of manual review and the resulting in an overall improvement in the efficiency of our content moderation.
Secondly, our conference this function has been greatly enhanced.
As we add more game categories and new games to our lineup. The streamers llama game segments have been become increasingly inclined to cover more than just one specific game library.
Our in house team harness deep learning technology, and developing a search solution for games segment.
Which quickly whose live streaming channels Currie covering the same gaming content into the relevant games segment.
The solution has alleyway he'd counting with ability made it easier for users to find as their desired content.
The solution.
At the end of desired content and improved or content utilization efficiency.
Crucially accurate identification of content covered by each like zooming channel forms the foundation of sufficient content recommendation and distribution.
Which in turn empower us to provide users with more precise personalized recommendations.
In conclusion, we believe that we remain firmly committed to fostering a library that war game centric content ecosystem with our steadfast focus on long term sustainable growth, while upholding regulatory compliance.
Recently it has to.
Come to the knowledge of the company that Theyre, helping investigation with regard to historical activities of certain streamers on the company's platform.
You know the company operation remain normal and the investigation have not had any material adverse impact on the company's operations.
We will monitor the situation closely and provide timely disclosure at necessary.
We would like to emphasize that our platform is formally committed to legal compliance.
And we will take necessary measures against any illegal activity, which is in violation of their views and policies of our platform.
And we have.
Observed the presence of misinformation circulating online.
Strongly recommend that all stake holders womens remain informed by following the press release issued by the company for accurate information regarding this investigation and to the company's rallied.
Related actions.
We will continue to make every effort to build a healthy diversified game centric ecosystem for our users and streamers.
With that I will now turn the call over to our Vice President of Finance Mr. Hotel. It goes through the details of our financial performance in the quarter.
Thank you Li Hello, everyone.
In the third quarter against a challenging macroeconomic environment, we maintain a stable financial performance by executing efficient operational strategies.
Such as.
Adopting a flexible pricing mechanics them for revenue generating products.
Optimizing content costs.
Together with our ongoing effective cost control measures.
Adjusted net profit achieved stay book rose for the third consecutive quarter.
Now, let's take a look at our financial performance in more detail.
Total net revenues in the third quarter of 2023.
III.
<unk> by 24, 4% every year to RMB, one 6 billion.
Live streaming revenues were RMB 115 billion.
Decrease of 32, 5% from RMB 171 billion in the same period of 2022.
The decrease was primarily due to the soft macroeconomic conditions.
<unk> impacted the spending.
And price sensitive paying users.
Coupled with a smaller user base, resulting from our strategically decreased marketing spending.
The number of total paying users decreased year over year.
In response to the soft consumer sentiment, we provided lower priced revenue products to sustain our spending habits among mid to long tail paying users.
This resulted in a decrease in quarterly up.
Quarterly up was RMB 306.
4% from RMB 319 in the same period last year.
Advertising and other revenues were RMB 208.2 million right.
The increase.
And 23, 2% from RMB 93, plus $3 million in the same period of tightened 22.
The year over year increase was primarily driven by the increase.
Revenues generated.
Hi, there.
Businesses.
Cost of revenues in the third quarter of 10 finished III was RMB 1.17 billion.
Decrease of 34, 6%.
Compared with RMB, one 5 billion in the same period.
I need to.
Revenue sharing fees and content.
Costs decreased by 29.7% to RMB point 93 billion from RMB 132 billion in the same period of time.
The decrease was mainly driven by two factors.
First the decrease in revenue sharing fees, which was mainly aligned with decreased lapsed live streaming revenues.
Second a decrease in content costs, which was primarily attributable to improved cost management self produced content and street and a stream of payments.
This decrease was partially offset by higher copyright costs due to the acquisition of <unk>.
Al right.
And with cost in the third quarter of kind of industry decreased by 20.
One 4% to RMB $106 1 million from RMB 135 million in the same period of time attending to.
The decline was primarily due to effective bandwidth cost control measures.
Gross profit in the third quarter of 2023 was RMB 192, 4 million compared with RMB 200.
51.2 million in the same period of 292.
The decline in gross profit was primarily attributable to decreased live streaming revenues and increased costs.
The increase in other costs was largely in line with the increase in other revenues.
Gross margin in the third quarter of 2023.
14.2% comparatively it's 14% in the same period of time.
Sales and marketing expenses in the third quarter of tons of industry were RMB 90 million.
Significant decrease.
44, 5% from RMB $162 1 million in the same period of penetrated too.
This was mainly attributable to a decrease in marketing expenses for user acquisition.
Research and development expenses in the third.
Water of kind of industry were RMB 74, 5 million, representing an 11, 7% decrease from RMB $84 4 million.
Same period up kind of in it too.
This decrease was primarily due to a decrease in personnel related expenses.
General and administrative expenses in the third quarter of tenant industry, while RMB 51 billion.
Job two 5% from RMB 52 points or 8 million the same period of 292.
Loss from operations narrowed to RMB eight 8 billion in the third quarter of kind of industry from RMB $11 1 million in the same period up 10 attended to.
Net income in the third quarter of tenant industry was RMB 76, 4 million compared with a net loss of RMB $6 6 million in the same period.
Two.
Adjusted net income, which excludes share based compensation expenses.
Share of income or loss.
Investments okay.
Gain on disposal of investment.
Impairment loss of investments was RMB 71, 9 million in the third quarter of <unk> compared with RMB $25 7 million in the same period of 2022.
For the third quarter of $10, three basic and diluted net income per I S.
Were both RMB point to for why adjusted basic and diluted net income per ads.
Were both RMB point to too.
As of September 30th tenant industry, the company had cash and cash equivalents.
Restricted cash and short term and long term bank deposits.
RMB 7.14 billion.
Comparatively RMB.
6.81 billion.
<unk> 31 pardon me, if I need to.
Going forward, we are committed to supporting the sustainable growth of our platform.
As we faced short term macro challenges I'll go just improved efficiency of our core business, while actively exploring new business opportunities in house, our revenue generation capabilities.
We will continue to manage our costs and expenses with prudence to further English earnings.
This multi faceted strategy will help stabilize our financial profile and fortify our platform's long term profitability.
Ensure that we.
Not only better macro headwinds, but also strive involving gaming content industry landscape.
This concludes our prepared remarks for today.
We are now ready to take questions.
Thank you we will now begin the question and answer session.
It's a good question.
Co Star then one on your telephone keypad.
If youre using a speakerphone, please pick up the handset before pressing the keys.
It could have in terms of your question has been addressed and would like to withdraw. Your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
With the benefit of all participants on today's call. If you wish to ask a question to management in Chinese. Please immediately repeat your question in English.
Our first question comes from Thomas Chong with Jefferies. Please go ahead.
Since I guess on what that will do.
Sure Gordon condo CTO Paul.
Since the combo Austin, Guam that matured.
Was there do you see that deeply.
Excuse me.
Thanks management for taking my questions. My question is about the macro how the macro environment.
Okay, David broadcasting sector, and how would that affect our operations. Thank you.
Thank you for your question.
Over the past three years.
In the domestic or game live streaming industry has been in a state of all but that's your ginger.
From a macro perspective policies and market and overall.
Economic environment.
Essential factors to consider.
Firstly the.
Screaming industry has entered a stage our regular supervision supervision.
Can you hear deeper and.
Stronger requirements are being implemented for contented revealed comp.
Compliance operations has et cetera.
Our goal is long term healthy development of the platform and are actively cooperating with regulatory authorities.
As always.
We are committed to fulfilling the platform irregular regulatory responsibilities.
We will continually strengthening our compliance programs and the regulator.
Our operations.
Across the platform with the regular.
Internal supervision.
<unk> in appropriate air to Ly with streamers and other irregularities.
We will also continue to optimize our content ecosystem and increase our investment in high quality tournaments, and the programs that infuse, possibly.
Probably the positivity and the.
Quantity contained to drive the hour.
Platform.
These combined efforts to foster how many artists and healthy <unk> streaming environment too.
Next.
From the perspective of the.
Game market.
Game publishing has gradually resumed this year.
Diversity of games, and the users' needs and consumption habits for games.
Instantly changing.
Which brings more opportunities to our platform operations.
A separate issue.
Platform is a game live streaming industry.
Can you give me already upgrading and integrating our content operations and commercialization models.
For example.
New game promotions have.
Shifted the Ob from largest SKU channel related to user acquisition to promotions that are relying on a significant increase in content acquisition.
This change it benefits our continued accretion and operations.
Game, Greg Statistics.
For example.
In terms of content consumption, we have been exploring commercialization models beyond the virtual.
<unk> over the past two years.
Among these is the.
Jim membership business derived from our platform content and associated to the games has shown good growth trends.
In addition.
The economic cycle.
So affects our commercialization strategies is casually into dance relatively weak economic environment.
There is the disposable income.
Entertainment to ready to the consumption is decreasing.
Since June of this year, we have seen a decline trend.
Mid tier users' willingness to pay.
This shift.
We started offering some moderately priced.
Revenue generating products and the Santa <unk>.
The title operation activities with low entry requirements.
These.
Adjustments in operations.
We have with the us maintain paying users payment habit habits.
The overall size of our paying user base in the short term, we believe that the.
Tommy could cycle will be the most important factor to our packaging the companys operating performance.
With the influence of these macro factors.
We face both 10 understand.
Opportunities.
Well, Paul Fry, our retiring long term sustainable development with an eye toward profitability.
Our folks.
Let's be honest Stebbins IV.
Our traditional business fundamentals and optimizing our operational efficiency.
I'm really through adjustments to our marketing strategies and the coaster optimizations.
As a result.
The company's adjusted their profitability has significantly improved.
Now that we.
We have a stabilize our financial position, we have more flexibility to invest through carbon copy me result, it's towards the exploring new business.
Tivoli beauty and improving our platforms gaming community and.
If the pending our gross.
Opportunities.
Chris next.
Next question.
Our next question comes from Derek <unk> with Morgan Stanley. Please go ahead.
Well, let's see about let's call it a third time.
And then she can no cold singles.
So it sounds like a great you're showing your bar chart. It seems on the messenger and mechanical more turns in a sale.
Let's see if I can.
I'm going to go from Kols, who have shown a little bit.
Great.
This is Derek from Morgan Stanley. Thank you management for the time.
Could you share a little bit more on the progress of the innovative business.
In terms of the lunch for new games, how would then improved the number of paying users.
And you're right.
Thank you for your question.
In addition to the traditional and virtual gifting business model.
We are also leveraging our advantage in game centric content operations to further explore new sustainable revenue streams. So.
So far among the numerous innovative businesses, we have looked into the membership business has shown a strongest gross momentum.
So promoting a diverse and sustainable revenue stream.
So it's early 2022 we have continuously improved and promoted platform wide membership system.
Rite aid membership functions and upgraded membership benefits to enhance the companion attributes of our products and strengthen interactions between streamers and members.
All of days target strong stronger retention among our core paying users.
And our membership renewal rate has been steadily rising for several consecutive quarters.
Beginning in the second half of 222.
We designed and rollout membership subsidies that are more closely related to games.
Through our deep cooperation with game developers.
We're able to meet the gamers demand for in game items.
Games specific membership surface.
Lines with platform gaming content and dispose.
Dispose, attracting new users and expanding our revenue streams.
Apart from the membership business several other innovative businesses and the development have shown promising prospects and have started contributing to our revenue.
This innovative businesses remain relatively small in scale and we are still evaluating the vitamin trends and stupidity.
We look forward to providing appropriate updates when they become more viable.
Overall due to the higher proportion of revenue generated from live streaming.
In our various businesses gross rates currently have a fairly limited impact on our paying users at a revenue scale.
Our virtual gifting business on the other hand.
Comprises a significant portion of our revenue.
Over the past two years, we have made a series of adjustments to our virtual gifting business, such as Laurent frequency of revenue generating operations and reducing LOE.
Activities.
These adjustments were partially based on changes in the macro environment and partly on the Chinese operational priorities.
Those were aimed at achieving the platforms long term healthy and sustainable development.
Although our company is a user base and revenue growth were affected.
We have also seen a gradual improvement in <unk> ecosystem.
Since the beginning of this year, we have continued to strengthen the retention of core paying users to maintain the stability of paying users and all revenue.
In the fourth quarter.
We will we will reduce some platform wide operating activities and given the carbon.
Macro environment, we expect to scale of our paying users and the revenue from the virtual gifting business to experience a quarter over quarter decrease.
At the same time, we are working to make new breakthroughs.
Innovative businesses.
Thank you next question please.
Our next question comes from growing golf with Citi. Please go ahead.
Hey, one Shanghai since you got any tangential whether Q1.
Washington C D. That's actually not true.
Brian Gong to one I'm wondering I'm sure Glen Manson shall you Sami pool, so I'm glad that you see actual shoes Xiang.
What I'll tell you to bother you can chime in.
We're going to be trying to.
Management for taking my question. This is Katrina chills MCP asking on behalf of Brian Gong can management share with us the internal regulation policy and the related impact to livestream months. Thank you.
And thank you for your question.
In our ongoing commitment to enhance our compliance and our regulated operations.
We have implemented a very awesome errors to fortify platform management and the manager user conductor.
During the quarter.
You cannot kilometer done noncompliant activities across our platform.
Under the table dealings in game property profits and other items and combating cyber totters, such as cyber violence and ongoing rumors.
We successfully pinpointed the recipe for three months and the users engage with the E comm trying to her behaviors by using advanced their product.
Analysis.
Tegra.
Power the identification and.
Based upon <unk> compliant mechanisms.
To uphold the integrating of our platform and ensure that the cable regulation.
Issued a warning to streamers and users engaging in question are both be hamburgers and administrators.
The granary.
Shane again.
Getting this deal done.
In the event of all more severe violations, we will take a more stringent mirrors inquiry for my name's events.
We are actively conducting day to day into no regulation across our platform.
Maintaining constant center.
Sure.
Vigilance and monitoring.
Yes.
Having improper conduct 100 cheeky stricter discipline disciplinary mirrors to address noncompliant are active.
Our activities on the platform.
We regularly disclose these activities on the website.
Website.
Informing you about the merits that we take to manager.
Positive platform environment and repeatedly.
And before sizing the importance of complying with our platform to rules and regulations.
We are also working with our St users to jointly cultivator positive online environment.
We place a stickier, making up and foresee an emphasis on user guidance and education promoting our platform as the rules and regulations to users through the.
Classroom initiative.
Enhancing users the compliance of their needs and their further improving the cyber environment, regardless of our platform.
Regarding our three Morris we have.
Consistent rate irrigated and guided them on appropriate to conduct.
Content within the platform.
They are reaching their event awareness our complaints on the content front, we have ensured that the sustained the table dinnerware.
<unk>, our high quality content to our users is through <unk>.
In EMEA with the content innovation and diversification.
Additionally, our data tools empower the screen months visa in size Youtube contender production and operational analysis.
This.
Proactive.
Approach has in turn giving screen months.
Better grasp of our user needs and market trends.
All right.
These are in size the need to really a johnson <unk> streaming strategies, which has improved both live streaming quantity and <unk> and the boats that are there.
Interest in producing an IV screaming sessions.
To know the company's operations that are in the normal way below our comprehensive platform management and a guy named some errors.
Effective and our streamers have placed their trust and support in our platform.
We remain committed to further enhancing compliance and their fostering innovation.
During that hour.
Our stream or is a burrito busy.
Healthier lives screaming environments that are theaters greater integrating.
We are also dedicated to elevating the quality of our content and services and the user <unk>.
<unk> earnings.
Thank you. Please next question.
If you'd like to ask a question. Please press Star then one our next question comes from <unk>, Zhang with Bank of America. Please go ahead.
Oh, Hi, Glen you call all my townhouses.
All of the ones, who are also playing a role.
We'll come out with them all into some of the people agenda.
What are your puzzle combat usually people will move back home and sending them for me.
Youll find a home.
Why do you think it sounds shocking that there was something that wasn't.
Oh, Thank you Brian.
Thanks, Michael taking my question.
Can you give us some updates on your margin and you go <unk>.
Oh this remotely.
Color on that high school sweetheart. Thank you.
Thank you for your questions.
The profitability.
In fulfilling our commitment to long term sustainable growth, we continue to adjust our live streaming business.
Here, we have successfully added bet, it companies or private and efficiency by optimizing costs and emphasizing oi.
The gate in today's complex macro dynamics, we have made significant strides.
Fine operations achieving growth in net income and adjusted net income for three quarters in a row.
Let me walk you through how this improved operating efficiency mainly into ethics.
Regarding our cost of revenues, we optimized the cost of our traditional business to counterbalance increased coffee right cost and the cost of innovative business.
Effectively keeping overall cost fairly stable.
The largest component of our cost structure as revenue sharing fees base remained at historically low level after several quarters of activity adjusting all revenue generating activities.
Furthermore, we have significantly optimized our content costs, which mainly include streamer compensation copyright costs and the cost of our self produced content.
We have taken steps in recent quarters to enhance efficiency.
CNC and I'll tie our self produced content on multiple fronts.
Achieving favorable outcomes.
In the third quarter, we assessed our copyright costs and the cost of self produced content.
With us to better align the number of tournaments the self produced programs.
With these insights we were able to strategically consolidate the lineup of complementary premium content offerings.
Achieving a well balanced of all cost structure.
Additionally, we strengthened performance driven assessments are streamers and optimized their compensation metrics, resulting sequential reduction screamer compensation expenses.
For operating expenses, we effectively optimize our expenses by implementing measures such as cutting back on China related user acquisition expenses and refining our organizational structure.
Third quarter operating expenses increased slightly quarter over quarter.
This was largely due to one time expenses.
I hate to workforce optimization.
With our stream find team we have a much firmer.
Burma grasp of all.
Our expenses, which we expect to be more manageable in the future.
In summary, amid a changing macro economic environment.
And the focus on cost and expense control will stabilize the company's overall financial going forward with it.
Increase our focus on it.
The defined.
And expanding in our various businesses based on collaborative initiatives with game developers.
This coordinated efforts are designed to further diversify and empower.
Commercialization capability.
The automated go of fostering long term sustainable profitability and the vitamin across our platform.
As to the cash flows.
In terms of <unk>.
Adjusted net income we have achieved three consecutive quarters of profitability.
This outstanding result, not only underscore.
<unk> cost controls.
Which we could see continuously narrowing operating losses, but also highlight companies productive approach to asset management.
For the nine months ended September 30 is kind of industry.
Net cash outflow from operating activities.
Was RMB $31 million.
A seasonal low in operating cash flow typically comes in the first quarter as we pay a year end bonuses at the beginning of the year.
The second and third quarters of this year.
Operating cash flow turned positive.
Additionally in 2023.
The company has not and we are not engaged in any significant financing in <unk>.
<unk> activities outside of cash management.
Thank you next question please.
Our next question comes from Rafael Chiang with <unk>.
See I research. Please go ahead.
Quite sure Gwen incentives or what if you went out with it she wants at Guizhou <unk>.
Votes, I'm glad he's I think Josh Jos Antonio Garcia to doing so are your.
Discipline that pinch out that you will exercise its option to ask you to go before they can jump off thanks.
Thanks management for taking my question. My question, it's about users firstly could imagine elaborate more about them and using it. This quarter. Secondly, we have some color on the fourth quarter and your guidance, especially with the help of equal batches World Championship. Thank you.
Thank you for your question.
Question.
Is it mobile <unk> performed well in the second quarter as mentioned in our prepared remarks, a sense to the platform with high quality content.
Our approach to growth has always been content driven.
This strategy paid off during the summer season.
Firstly during the summer peak season.
A broader cut it to the finals of several of his short summer tournaments and strengthened our investment in <unk>.
Derivative contains a bit offshore turn Amanda content such.
Such as the code Scream to lie.
<unk> commentary by three months and the approach to game review revealed programs.
With regard to contend is popular among users in largest offshore fundament.
Such as a L P O and the <unk>.
The interactions between streamers and users who are more frequently to our Cherokee mode.
New users.
Next are the comprehensive programs that we launched the based on new gifts and is the introduction of gambro benefits in collaboration with game developers have a check to the new users and.
Invigorate, great to the existing existing ones.
Uh huh.
For example, as mentioned earlier.
Earlier, the Premier PUC.
Well, Ryan Ot show featuring edgy idiopathic.
Reached the record high <unk> in the gaming segments.
Urine is the burden of the catheter in July.
And there's a number of viewing hours also doubled.
Compare that with the typical daily average.
Additionally, you are in there.
Kibera some autonomy to collaborate with our collaborators.
With the game developers to launch two months long.
The activity in the <unk> segment.
<unk> again top pop.
Mitra special effects.
Which also drove an Moe player participation.
With the conclusion of.
Summer tournaments.
Oh in the later part of the third quarter began to wind it down.
In general there are fewer free are all Pedro event in the fourth quarter.
Although the L O L. What shimmies shape tournaments are held in the fourth quarter. The schedule is relatively shorter.
At the same time, they are more holidays in the fourth quarter.
And users typically engage in more offline activities. During this time as all of these factors can we mou levels in the fourth quarter.
We will maintain our prudent marketing strategy and speak to our continued drilling <unk> for user retention and the growth too.
To mitigate the divorce.
Effect.
Oh.
Our contented driven surrendered to facilitate to facilitate platform growth has remained unchanged for a while now.
Michael Let me honestly investing in high quantity contented learning about the user content demands.
Brady contender III Commendation algorithm.
Providing technical support and after.
Updating.
Relevant projects Petrobras, we have stabilized.
Yes.
How user base and the gradually attracted new users therefore.
Therefore, despite the complex market environment, our car user that has remained stable overall.
We are also actively exploring new models two harmata parameter.
Second.
Second is our rapid growth in <unk>.
There are scale on our platform. Thank you operator please.
Thank you.
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 and we look forward to speaking with everyone next quarter.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.