Q3 2024 DouYu International Holdings Ltd Earnings Call
Good morning, and good evening, ladies and gentlemen, thank you and welcome.
Or your International Holdings limited third quarter, 'twenty 'twenty four earnings conference call.
Speaker Change: At this time, all participants are in listen only mode.
Speaker Change: We will be hosting a question and answer session. After managements.
Speaker Change: After managements prepared remarks.
Speaker Change: I would not turn the countries is it to the first speaker today Ms Tingling Kang at.
Speaker Change: At our Victor please.
Speaker Change: Please go ahead.
Thank you Hello, everyone welcome to our third quarter 2024 earnings call.
Speaker Change: Joining us today are Mr Minister Chief strategy Officer, Mr. How Tao lest President Trump all spend on me for restaurants, and some interim Nigel can maybe.
Speaker Change: You can refer telescope, what is 'twenty 'twenty four 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 in a few hours on our IR website.
Speaker Change: Before we start please note that this call may contain forward looking statements made pursuant to the safe Harbor provisions for the private Securities Litigation Reform Act of 1995.
Speaker Change: These forward looking statements are based on management's current expectations and observations that involve known and unknown risks uncertainties and other factors not under the company's control.
Speaker Change: 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.
Speaker Change: All forward looking statements are expressly qualified in their entirety by the cautionary statements risk factors and details of the company's filings with the FCC.
The company undertakes no duty to revise or update any forward looking statements for selected events or circumstances. After the date of this conference call.
Speaker Change: I will now speak on behalf of our income management Committee our business update.
Speaker Change: Paul will then be handed travel that depresses they'll send him Mr household financial discussion.
In the first quarter, we stayed closely aligned with market dynamics.
Speaker Change: The pre actually adopted our operational strategy.
Speaker Change: Sure.
Speaker Change: We are focused on maximizing our co competitive edge to it.
Speaker Change: Our commercialization capabilities.
Speaker Change: And diversifying our revenue stream.
Speaker Change: In addition, with further refined our business model and optimized our resources to reduce expenses.
Speaker Change: While solidifying our fundamentals we continued to systematically in that our stream of resources and new initiatives.
Speaker Change: Whether in ratings of premium content and gaming service Love of course, our platform.
Speaker Change: All of this initiative reinforced our platforms game centric content ecosystem.
Speaker Change: And so a quarter.
Speaker Change: <unk> and May use were $42 1 million a decrease of 18, 6% year over year.
Speaker Change: We are seeing increased competition from short video platforms, particularly during the peak summer season, when this platform ramped up their user acquisition promotions.
Speaker Change: Our data analysis continued to indicate that and use the attrition was predominantly from low frequency users, which shouldn't be you hours and low sickness.
Speaker Change: Despite certain short term pressure on our user base the engagement patterns of Aimco user group, especially their viewing hours and activity levels.
Relatively stable.
Speaker Change: Thanks to our consistent and strategic content operation optimization.
Speaker Change: Moreover, our gaming commercialization when to actually join in fleshy users and re engaging in active ones.
Speaker Change: During a more vibrant gaming ecosystem.
Speaker Change: During the quarter with four constitute nearly 30 large scale officials heartlands incurred.
Speaker Change: Including the L. P L summer slate.
Speaker Change: K P. L. L. C. S. P. L summer tournaments, the P. Alice Green tournament, the Cisco blood flow told them lunch and the esports more com among others.
Capitalizing on this official in well forecast.
Speaker Change: We regularly go down in a way to derivative content.
Speaker Change: For example in esports World Cup, we initiated targeted activities of course gaming segments aligned with ease up you'll see events.
Speaker Change: Cumulative distinctive content tailored to highlight our streamers individuals Dallas.
Speaker Change: This included a mix of drama Velox paired with like screaming outdoor shows featuring streamers with England commentary.
Speaker Change: Coaching and celebrations for champion streamers.
Through these activities, we enrich the user experience and fourth to more robust engagement between streamers and their audiences.
Additionally, we have been actively expanding our gaming, England, causing before you.
Speaker Change: Recognizing our users enthusiasm for hardcore east or titles.
Speaker Change: Wait exclusively forecasted the C. S go ex Etsy, probably this quarter.
Speaker Change: Enriching the professional gaming content lineup for shooting game in celiac.
Speaker Change: With our self produced content.
Speaker Change: <unk> for car T is close to 80 self produced esport tournaments during the quarter.
Speaker Change: We expanded our core platform content co creation Panamax ships.
Speaker Change: Leveraging our platforms unique assets, we launched at every of collaborative tournaments, a pool of course official England cycles.
Speaker Change: Banning affords that true of gaming segments like League of Legends Kimco League caught fire and team five tactics as well as seen as mobile.
And another stand out with our league of legends in rent.
The lagging C Cup known for bringing what Turing streamers and seasoned professionals payers together over the past decade, and innovative pain format, featuring a band exceptional card.
Speaker Change: Oh, well pause there being streamers, 15th he paced out.
Speaker Change: This dynamic and engaging Harman format gambled in Philly at peak user feedback.
Speaker Change: Sparking back spread discussion and engagement.
Speaker Change: It not only sustain the bus and the appeal of our earlier collaborative tournaments.
Also facilitated user every engagement.
Speaker Change: Anyway, he's German visibility and breathe new life into our gaming segment.
Speaker Change: Blockbuster New games also boisterous our gaming ecosystem.
Speaker Change: With the high profile launch off the much anticipated black men, who came in August.
Speaker Change: Israel Ouch promotional incentives and tap into our robust network of PC game streamers to deliver exceptional screening content.
Speaker Change: Thanks to the games in music popularity numerous.
Speaker Change: Dreamers spontaneously chips to life draining dramatic.
Speaker Change: Dramatically boosting the countering some time during the initial launch phase.
Speaker Change: To expand our content with zero out waves of inland driven content that gaming strategies and interactive challenges.
Speaker Change: Which boosted user engagement and Julian New uses Andy.
Speaker Change: Any weightings, it or use it activity across our platform.
Speaker Change: We have long been committed to optimizing our platforms content ecosystem.
Speaker Change: By acquiring official tournaments copyrights.
Speaker Change: I mean top tier streamers in innovating self produced content.
Speaker Change: Each piece aims to provide users with high grade content can do we are eating experience.
Speaker Change: With the shifting macro dynamics and the revenue pressure on the platform in mind.
Speaker Change: We need to maintain adequate investment in premium content, while simultaneously acting new cost savings strategy by improving content efficiency.
Speaker Change: To begin ways, we enhanced the commercialization of our gaming event content.
Speaker Change: We have continually dependent our collaboration with game developers honey thinking Pope resources to explore and stage more diverse marketing initiatives.
Speaker Change: During the quarter, we continued to promote our games specific membership program give me.
Speaker Change: The P L official tournament.
Speaker Change: We also offered time is limited gamecocks promotion during boycott of official caught fire, England.
Speaker Change: In addition, we executed similar game called commercialization initiatives in our self produced in back.
Speaker Change: Such as the Dove. Your commentary Cup ended the collaborated with invents Kun Kin Cup both in the courts five gaming segment.
Speaker Change: Oh wage had successful outcome and boosted our gaming contents commercialization patients.
Speaker Change: We're also focused on enhancing our streamer management efficiency to reduce cost.
Speaker Change: Wake promoting us to refine our streamer management strategy.
Speaker Change: First we performed an in depth.
Analysis for our existing streamers and modified their compensation assessment criteria.
This new approach emphasized live streaming content quality and commercialization capabilities.
Speaker Change: He waiting streamers to actively engage in more commercialization programs well pursuing their creative endeavors.
Speaker Change: So far we have no uptick in the eye for streamers after implementing the updated assessment criteria.
Speaker Change: Second our summer recruitment campaign for streaming successfully attracted new streamers.
Speaker Change: But widening that recruitment scope diversifying recruitment channels and improving streaming incentive.
Speaker Change: Were notable the increase the daily average number of streams in the third quarter <unk>.
Speaker Change: <unk> to June's daily average.
Speaker Change: <unk> with substantially enhanced streamer retention rates.
Speaker Change: Or or they all I from our slimmer recruitment initiative was higher than expected.
Speaker Change: Moving on to commercial that monetization.
Speaker Change: Our total number of paying users in the third quarter was $3 4 million with a quarterly op hu of RMB <unk> 37.
Speaker Change: The year over year decline paying users what's caused by prolonged macroeconomic challenges.
Speaker Change: And our strategic decision to scale back promotion activities and incentive that carry high operational cost.
Speaker Change: This initiative will allow.
Speaker Change: Likely to grids out in sustain spending by the users they attract it.
Speaker Change: This users typically have low stickiness to our platform.
Speaker Change: Consequently, leading to low our eye and higher operational costs.
Speaker Change: The number of paying users remained stable quarter over quarter as we focused on maintaining our core users spending habits.
Speaker Change: To address the macroeconomic impact on users willingness to spend with.
Speaker Change: We introduced more budget friendly paid products.
Speaker Change: Two platform rewards and game pumps will.
Speaker Change: Continuously promoting traditional affordably priced revenue generating products.
Speaker Change: This approach encourage gamers diversified spending.
Speaker Change: <unk> maintains the oral or spending patterns of our paying users.
Speaker Change: As a result, well quarterly up who was down year over year.
Speaker Change: Remained relatively stable quarter over quarter.
Speaker Change: During the quarter, we deepened our commercialization collaboration with game developers.
Speaker Change: Consistently promoting gamecocks, south so very small.
Speaker Change: The first model with a seasonal sales driven approach based on collaborative promotions.
Speaker Change: We work closely with game developers.
Speaker Change: Large scale promotional initiative, featuring w's top tier streamers.
Speaker Change: Our promotional strategy for Alright, hi, fan and in pit and appealing marketing initiative.
As well as our platform incentives and benefits.
Speaker Change: With also harnessed course platform marketing channels to maximize our reach.
Speaker Change: Piloting this self driven promotional modal in late 2021, we have successfully attracted substantial ex no traffic and boosted gaming users impression of those game offerings.
Speaker Change: Wherever a similar promotion takes pace gamers, a sausage at ways, though in this initiative.
Speaker Change: Fully positioning our platform at the to go destination for gamecock purchases and setting the stage for rolling out our diversified Gamecocks south models in the future.
Speaker Change: The second model is don't use games specific membership program.
Speaker Change: We established long term partnerships with game developers to market game pop.
Speaker Change: Our membership offering integrated Gamecocks with platform in Fintech.
Speaker Change: Aligning seamlessly with our SKU immersed marketing cell and the needs of our users.
Speaker Change: His lungs in the second half of 'twenty 'twenty. Two this model has consistently driven stable revenue growth.
Speaker Change: The third model featured a multi platform marketing approach, let that game developers.
Jim talk stores was set up back game developers and in banding, where links in our partners like streaming channels.
Speaker Change: But leveraging our platforms content promotion and streamers outreach efforts, we do users into streamers channels.
Speaker Change: Where they could click links to obsess gamecocks doors and complete their purchases.
Speaker Change: This promotional model centered die streamer participation and banner facility streamer engagement.
Speaker Change: Bringing shared revenue opportunities for both streamers and Caf form from Gamecocks cells.
Speaker Change: In General we think these three models for game promotions with strategic call their plan, our marketing initiatives to capitalize on the timing of game updates new pump launches festivals and seasonal events.
Speaker Change: Increasing our game marketing visibility well expanding our diversified revenue streams.
Speaker Change: Moving forward, we will replicate this model for game from poor promotions to a more comprehensive selection of gaming content scenarios.
Speaker Change: Further reinforcing the commercialization capabilities across our platform.
Speaker Change: In summary, we quit actively navigate various challenges during the third quarter.
Speaker Change: Steadily advancing our revenue diversification strategy, well, reducing costs, so adopted operational strategy and optimize resource allocation.
We pursued balanced growth.
Speaker Change: Traditional and new bid in this segment.
Speaker Change: Strategically all vacating corporate resources to secure solid business fundamentals will consistently invest in new ventures with performance and growth prospects.
Speaker Change: Each of this debt was underpinned by our commitment to our long term development strategy for Coty rating, a vibrant diverse game centric content ecosystem.
Speaker Change: We believe these initiatives position us well to overcome short term challenges and lay a solid foundation for the company's long term sustainable growth.
Speaker Change: With that I will now turn the call over to our Vice President of Finance, Mr. Hao Cao to go through the details of our financial performance in the quarter.
Speaker Change: [noise], Thank you Linda and Hello, everyone.
Hao Cao: This quarter, we focused on strengthening our new revenue streams are tightening cost control measures in line with our long term debate them a strategy.
Hao Cao: Despite a challenging macroeconomic environment.
Hao Cao: Our revenue diversification efforts have already show promising growth trajectory.
Hao Cao: Let's take a closer look at our financial performance for the third quarter.
Hao Cao: Okay.
Hao Cao: Our total net revenues decreased by 21, 8% year over year in the third quarter to RMB, one 6 billion.
However, supported by increased revenue contribution from our innovative business we.
Hao Cao: We achieved a 3% quarter over quarter increase.
Total net revenues.
Hao Cao: Our first sequential growth in the past eight consecutive quarters.
Hao Cao: Live streaming revenues were RMB 1.75 billion.
Hao Cao: Tom stood at four 7% from RMB 1.15 billion.
Hao Cao: I'm period of kind of industry.
Hao Cao: Prolonged macroeconomic challenges on the ships user spending behavior, primarily impacted live streaming revenues.
Hao Cao: In response, we continue to scale back pay use acquisition promotions and provide a more affordable product offerings promote ongoing spending from our existing paying users.
Hao Cao: As a result, there was a year over year decline in both the total number of paying users on a quarterly up.
Hao Cao: Which decreased by 32.5% to RMB 267 from RMB 306 in the same period last year.
Speaker Change: Meanwhile, I'll address.
Speaker Change: In our video business segment delivered continued growth.
Speaker Change: Innovative business.
Speaker Change: And other revenues increased significantly in the third quarter by 14, 9% to 4% to RMB $311 million.
Up from RMB 208.2 minutes in the same period of tenant industry.
Speaker Change: Contributing 25, 3% of our total revenue.
Speaker Change: The year over year increase was primarily driven by increased revenues from our Voip based social networking service on a game membership service.
Speaker Change: Cost of revenues instead of quarter of 2024 decreased by 14.1% to RMB 1 billion.
Speaker Change: Compared with RMB 1.17 billion in the same period of kind of industry.
These cost reductions were largely due to a decline in our revenue sharing fees and content costs.
Speaker Change: <unk> dropped six 2% to RMB <unk> 80.
Speaker Change: A 7 billion from RMB 193 billion in the same period of time the industry.
Speaker Change: Revenue sharing fees deductions were largely from decreased large premium revenues.
Speaker Change: Which were partially offset by increased revenue sharing fees related to increased innovative business.
Speaker Change: In addition, the decrease in content costs, primarily came from improved cost controls and stream of payments.
Speaker Change: Bandwidth costs in the third quarter of 104 decreased by 32% to RMB 72, 2 million from RMB $106 1 million in the same period of time the industry.
Speaker Change: Primarily due to a year over year decrease.
Speaker Change: In.
Speaker Change: Peak bandwidth usage.
Yes.
Gross profit instead of quarter of a patent on before was RMB $68 million.
Speaker Change: Comparator was RMB 192, 4 million in same period of <unk> III.
Speaker Change: The decline in gross profit was primarily due to live streaming revenues decreasing faster than our cost of revenues.
<unk>.
Speaker Change: <unk> gross margin efficiency.
Speaker Change: Gross margin in a sort of quarter.
Speaker Change: 94 was five 7% comparatively 14, 2% in the same period of 10 dentistry.
Speaker Change: In line with our strategic initiatives to streamline our operations, we reduced staff related expenses across the board.
Speaker Change: Leading to a 3% year over year decline in total operating expenses.
Speaker Change: Breaking this down further.
Speaker Change: Sales and marketing expenses declined by 11, 9% instead of quarter of 94 to RMB 17 mine plus 3 million from RMB 19 million in the same period of patent suite.
Speaker Change: Research and development expenses were reduced by 42% to RMB $43 2 million from RMB $74 5 million in the same period of time to industry.
Speaker Change: General and administrative expenses decreased by 18, 7% in the third quarter of 104 to RMB 41, 5 million from RMB $51 million in same period of penthouse suites.
Speaker Change: Yeah.
Loss from operations was RMB $94 2 million in the third quarter of 204, compared with RMB $8 8 million in the same period of time to industry.
Speaker Change: Net income for the third quarter of 2004 was RMB three 4 million.
Comparator was RMB 76, 4 million in the same period of time and territory.
Speaker Change: Adjusted net loss, which.
Speaker Change: Exclusive shelf loss.
Speaker Change: Our income in equity method investments okay.
Speaker Change: Gain on disposal of investment.
Speaker Change: An impairment loss on a fair value adjustments on our investments was RMB 39, a mainly in the third quarter of 10% for <unk>.
Speaker Change: Comparator with adjusted net income of RMB 71, 9 million in the same period of the <unk> suite.
Speaker Change: For the third quarter, our 10, 24 basic and diluted net income per ads as well both RMB 1.11.
Speaker Change: Adjusted basic and diluted net loss per ads were both RMB 132.
Speaker Change: As of September.
Speaker Change: So there is plenty of time before the company had cash and cash equivalents reached.
Speaker Change: Restricted cash.
Speaker Change: The restricted cash in other non current assets and a short term and long term bank deposits of RMB four eight.
Speaker Change: 8 billion.
Speaker Change: You saw a 624 7 million.
Speaker Change: Compared with RMB 6.86 billion as of December 31st Panasonic <unk> III.
Speaker Change: The decrease was primarily due to a special cash dividend distribution of your solid 300 million and you start.
10, 10 minute period, the share repurchase program.
Speaker Change: Finally, I would like to update you our share repurchase program at.
At the end of last year, we announced a 10 to 20 for share repurchase program for up to install a 10 minute.
Speaker Change: At September 30th Pen handy.
Speaker Change: Fourth we have completed the program repurchasing an aggregate of U S. Dollar patent Miller as under this program.
Speaker Change: Yeah.
Looking ahead, we are committed to navigating macroeconomic challenges.
Shifting business landscape with resilience and agility.
Speaker Change: We will continue to use our new revenue streams to drive growth and sharpen our focus on cost efficiencies to mitigate near term financial pressure.
Speaker Change: By pursuing new growth opportunities and reinforcing our fundamental strengths.
Speaker Change: We aim to support sustainable development of our platform, while delivering enduring value for our stakeholders.
Speaker Change: This concludes our prepared remarks for today, operator, we're now ready to take questions.
Speaker Change: Thank you Sir.
Speaker Change: Ladies and gentlemen, we will now be conducting the question and answer session.
Speaker Change: To ask a question you May press Star and then one on your telephone keypad.
Speaker Change: If you are using speaker equipment.
Speaker Change: Please pick up the handset before pressing the keys.
Speaker Change: He said anytime accretion has been addressed and he would like to withdraw your question. Please with stall and then too.
Speaker Change: Would it benefit of all participants on today's call. If you wish to ask Christian to management in Chinese. Please immediately repeat your question in English.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Our first question comes from pleasing of Bank of America. Please go ahead.
Speaker Change: Oh, Hi, Bonnie policy.
Speaker Change: Could you just go over the Q1 all of the ones you talked about a woman.
Speaker Change: Well young adult all.
Speaker Change: What kind of arguing why since I cannot go down going forward.
Speaker Change: Yeah.
Speaker Change: Can you talk why don't you call we like.
Speaker Change: Glad to keep you all year with adults.
Speaker Change: Yes, Oh pardon me adult yeah, yeah.
Speaker Change: Oh, what do you think that management for taking my questions. My question, mainly regarding your lifestyle.
Speaker Change: And how can we do catch all the fuel to grow.
Speaker Change: All right.
Speaker Change: And I need Jackie good change here. Thank you.
Speaker Change: Thank you.
Speaker Change: As discussed earlier.
Speaker Change: And in 'twenty 'twenty four we featured two key calendars.
Speaker Change: Fierce market competition and our self to.
Speaker Change: Macroeconomic environment.
Speaker Change: It's a way to have impacted our platform traffic and revenue.
Speaker Change: The decline in <unk> was mainly due to persistent market competition as.
Speaker Change: As a short video platforms are Gracie really stepped up their promotions of gaming content and gaming services during their summer vacation.
Speaker Change: Okay.
Speaker Change: Accelerating user trend in particular by low frequency users.
Speaker Change: As a result.
Speaker Change: Mobile mail for their standard cordless equally to both year over year and quarter over quarter.
Speaker Change: On a related note with.
Speaker Change: The SKU.
Speaker Change: Revenue was mainly impacted by the macroeconomic sluggishness.
Felipe: Thank you Felipe.
Speaker Change: These are notable job in paying users really needs to spend on live streaming virtual gifts.
Speaker Change: Placing continued pressure on revenues.
Speaker Change: From our traditional live streaming business.
Speaker Change: Could talk with these tenders, we actively adapted to the our operation in those entities.
Speaker Change: On the capital side side.
Speaker Change: We have been consistently adjusting our yogurt is easing surrender fees based on market competition and involving user habits.
For example in 2021.
Speaker Change: Recognizing the mercury market and tabulate the game or game obese. We've put that ended Tuesday are purely channel driven customer acquisition approach.
Speaker Change: Relatively earlier stage.
Speaker Change: By 2023.
Speaker Change: We took a further fabric to skew back investment in low <unk>.
Speaker Change: Marketing initiatives.
Speaker Change: Rather than solely chasing yogurt growth we've placed.
Speaker Change: Stronger FRC.
Speaker Change: On retaining our Hollywood.
Speaker Change: With them.
Speaker Change: We further upgraded the DS.
Speaker Change: Is there a certain date in 2024.
Speaker Change: And on maintaining call you those on the improving yoga, obviously I know you've agencies.
Speaker Change: Yes.
Speaker Change: Which all and we had all our enhancement to this enrolled.
Speaker Change: Increasing the appeal of our platform with content offerings, retaining and attracting users through distinctive premium number content and the diversity.
Speaker Change: Diversifying user traffic monetize these tenders to offer a variety of all contender consumption scenarios.
Speaker Change: Including through came public and.
Speaker Change: The other engaging operators.
Speaker Change: We also upgraded our content strategy.
Speaker Change: We continue though to enhance our deeper into the contender matrix.
Speaker Change: Reaching all these autonomous and.
Speaker Change: Innovating our.
Speaker Change: Hi.
<unk> content.
Speaker Change: A bit stronger content consumption patterns of our had called yogurt, we cannot niche content part.
Speaker Change: <unk> needs, a forcing our leading edge in this gaming segments.
Speaker Change: Additionally, we actively at monster.
Speaker Change: Doug sharing partnership with in cross platform contender collaborations.
Speaker Change: I think both those dams on brands.
Speaker Change: Our lines of.
Speaker Change: To meet the fierce market competition, we believe a high quantity contained on our house see LIBOR into content ecosystem other foundation for sustainable growth.
Speaker Change: Since the contingent initiatives.
Speaker Change: It may not you immediately results in the short term.
Speaker Change: Our platform of champion can may continue to face.
Competitive tenders for the foreseeable future.
Speaker Change: Nevertheless, our Colorado's a consistent and stable contend to consumption behavior on behalf.
Speaker Change: Behavior has afforded us more time and the opportunities for exploring moving towards.
Regarding new ventures, leveraging our deep policy vis a vis game would be bad.
Speaker Change: Serenity.
Speaker Change: Mainly focused on launching diverse the magazine product related to game problems.
Speaker Change: We have long recognized that our platforms. It relies on revenue from live streaming.
Speaker Change: We have made.
Speaker Change: We also attempted to diversify our revenue streams.
Speaker Change: So Paul.
Speaker Change: The motor effective commercialization channel to align with our.
Speaker Change: User base has been monetization initiatives.
Speaker Change: Leverage again province.
Speaker Change: Since late 2021, we have been actively engaging with game developers on the implementing of.
Speaker Change: Phased approach, which has proven successful.
Speaker Change: Okay.
Speaker Change: The commentary coming from like these licensing all the game progress is largely facilitated a throw contend the promotions.
Speaker Change: A small share tied to all diesel event to content and the majority driven by platform operations on the stream of content.
Speaker Change: With the.
Speaker Change: Implement mentioned, although multiple business models.
Speaker Change: We have established with our platform as the dark Gray bar ideal choice for yogurt soup users thinking tool per chance Gan provinces.
Speaker Change: And we will consistently and.
Speaker Change: Mathematically investment in new content and new ventures.
Speaker Change: Thinking opportunities to.
Speaker Change: Drive renewed growth in the prior already tightening our platform for the long term by implemented.
Speaker Change: Thank you next question please.
Speaker Change: The next question comes from Richard <unk> son of a.
Speaker Change: <unk>. Please go ahead.
Speaker Change: She had a one time deal with UNC away Oh, Yeah go ahead, Pete do you want to call your friend salaries, Yeah, you'll watchful, but yeah go for telecom to boats.
Speaker Change: But you did talk I am will be all outstanding outcomes. So thank you management for taking my questions can management elaborate in detail about the strategy to optimize our cost structure as well as the streamers operations and.
Speaker Change: The detailed measures like goals are achieved but thank you.
Yeah.
Speaker Change: Oh, Thank you Ricky so to answer your question, Let's first review our relatively fixed cost.
Speaker Change: Specifically the content costs within our primary business expenses, which has constantly accounted for 20% to 25% of our total revenues.
Speaker Change: Content cost include streamer compensation copyright fees and costs associated with our self produced content with the first two making up the bulk of our content costs to optimize our content structure, we have implemented a series of adjustments to our content cost.
Speaker Change: Including refining our streamer management strategies, so let's get into the deep house, Firstly, we refined the control of copyright content cost.
Speaker Change: We dynamically evaluated the value of our platforms content through the lens of both traffic and monetization and adjusted our content strategy based on ROI.
Speaker Change: For example in 2022.
Speaker Change: Rising copyright cost of official tournaments, we adopted a selective purchasing approach forgoing certain high cost official tournaments.
Speaker Change: Price of these tournaments normalized in 2023, we resumed our strategy acquisition after copyrights for kill official tournaments.
Speaker Change: And then in 2020 for navigating intensifying competition and industry shifts, we engaged actively with copyright holders to negotiate lower royalties for cost saving exploring sustainable long term commercialization models for copyrighted content there.
Speaker Change: <unk> initiated directly reduced copyright costs and enhanced all I fall are copyrighted content.
Speaker Change: And secondly, we optimized the cost of our self produced content.
Speaker Change: By proactively balancing the supply of copyright events and dollar of self produced tournaments analyzing the al I for self produced and PG C content and scaling back on low or self produced content.
Speaker Change: We effectively controlled over all the all content cost.
Speaker Change: In 2020 for embracing the trend of collaborative content creation and content sharing.
Speaker Change: We actively pursued cross platform partnerships.
Speaker Change: Integrating each of the parties at advantages resources with these enhancements, we delivered more high quality content.
Speaker Change: Fight on stream of visibility and lower the cost of our self produced content.
Second.
Speaker Change: We structured we restructured our streamer compensation framework.
Under a long term exclusive contract with core streamers.
Speaker Change: Average base compensation for those signed in recent years has been relatively high.
Speaker Change: This has been particularly impactful during period of revenue decline for the company.
Speaker Change: Without them in a rising share of loss, although a stream or compensation cost relative.
Speaker Change: Related to our revenue.
To improve the efficiency of streamer management and achieve better cost control.
Speaker Change: We have implemented a series of targeted adjustment.
Speaker Change: We conducted an in depth I'll I analyses for our existing streamers and revised their performance assessment criteria.
Speaker Change: Racing greater emphasize on the quality of live streaming content and their ability to drive commercialization.
Speaker Change: We also supported by aligning platform resources with Trimas needs, we encourage streamers to actively engage in more commercialization programs well, creating high quality content, taking part in collaboration with game developers Cross platform.
Speaker Change: Content partnerships.
Speaker Change: New game promotions and game marketing et cetera.
Speaker Change: All aimed at enhancing streamers personal brand values and generating additional revenue for our platform.
Speaker Change: We have been gradually phasing in our adjustment to the stream our compensation system.
Speaker Change: With ongoing improvements based on streamers feedbacks to ensure a smooth transition to the new framework.
Speaker Change: And fourth we adjusted our approach to stream or contract renewal and recruitment.
Speaker Change: Oh streamers nearing the end of their contract we renegotiated their compensation terms.
Speaker Change: Primarily focused on lowering based compensation well elevating performance based incentives this strategy, Ted stream or compensation to performance and fostering greater creativity and marketing effectiveness.
Speaker Change: Under the updated compensation framework, we comprehensively evaluated designing cost and operational efficiencies off our streamers negotiating and selectively renewing their contracts.
Speaker Change: In the meantime, we continue to recruit and nurture new streamers to inject fresh fatalities into our content offering.
Speaker Change: During the initial Onboarding face, we assessed new streamers performance based on the all I achieved through our research support to better our lives streamer compensation with al.
Speaker Change: So all of these initiatives are designed to drive efficiency improvement and cost control through strategy adjustment and refined management.
Speaker Change: All will preserve the high quality and upheld off of our platform content.
Speaker Change: We seek to secure the company's financial health through these measures.
Speaker Change: As more time to adapt our business strategies to emerging industry shifts and to continue deliver premium content and services to our users, thereby maintaining dolby leading position in the crowded last you mean market. Thank you.
Speaker Change: Next question please.
Speaker Change: The next question comes from Thomas Chong of Jefferies. Please go ahead.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Oh, well they want to buy my view that this will come out well go to Martin.
Speaker Change:
Speaker Change: How does that work.
Speaker Change: How do you eat at home.
Speaker Change: Oh, China.
Speaker Change: Okay.
Speaker Change: Wow.
Speaker Change: No I'd say, Joe we're making kind of tells you. What you think you can go on.
Speaker Change: Hum.
Speaker Change: Okay.
Speaker Change: Hi, Thanks management for taking my question My question.
Speaker Change: And J P. Morgan So we've made a change of GP margins. Therefore, too. So how should we think that gross profit margin and those are the profit or the OEM 2024, and those are with adjustments.
Speaker Change: Jackie.
Speaker Change: Great.
About 25.
Speaker Change: Thank you for your question.
Speaker Change: In the third quarter the year over year decline in gross margin was still mostly due to the decrease in live streaming revenues.
Speaker Change: Revenue sharing fees and content cost as a percentage of revenue.
Speaker Change: Significantly increased year over year from 668% sort of.
Quarter of a $10 three.
Speaker Change: 281, 8% this quarter.
Speaker Change: To look at revenue sharing fees revenue sharing ratio of live streaming business increased year over year.
Speaker Change: Primarily driven by the increased incentives over the summer relating to user retention.
Speaker Change: Addition, revenue from our voice based social networking business significantly increased year over year, leading to a substantial rise in relevant cost of revenues.
Then regarding content cost the trend is relatively fixed cost within our rep within our live streaming revenues such as copyright fees and a screamer based compensation et cetera, do not align with the year over year shift in our live streaming revenues.
Speaker Change: Consequently as <unk>.
Speaker Change: Live streaming revenues decline this cost continue to be of.
Speaker Change: Gross margin.
Speaker Change: While we have implemented diverse measures to optimize cotton costs and a streamer compensation.
Speaker Change: <unk> of our gross margin improvement remain modest.
Speaker Change: Our quarter over quarter basis, the increase in content costs.
Speaker Change: As a percentage of revenue was primarily driven by higher copyright fees due to more copyright event being protested during the summer.
Speaker Change: Regarding pipeline by continuing to control operational expenses. The Companys net loss did not acquired sequentially instead of quarter. Despite a sequential decrease in gross margin and reduced interest income.
Speaker Change: Specifically.
Speaker Change: Research and development expenses as well as general and administrative expenses continue to decline driven by workforce optimization.
Speaker Change: While sales and marketing expenses slightly increased quarter over quarter largely.
Speaker Change: Largely resulting from the promotional ramp up.
Speaker Change: Our innovative business during the summer.
Speaker Change: In general as we continue to refine the revenue mix.
Speaker Change: We have been taking a series of proactive measures to tackle the challenges posed by revenue decline.
Speaker Change: On the cost side, we managed cotton cost so a variety of strategies, including controlling copyright cost balancing the supply of our self produced total minutes.
Speaker Change: Cruising partnership content.
Speaker Change: Adjusting the screamer compensation structure.
Speaker Change: We also leverage the knowledge call solutions to reduce bandwidth costs.
Speaker Change: All these endeavors.
Speaker Change: Minimizing the impact of relatively fixed cost our gross margin.
However, restructuring costs is a gradual process and a positive effects take time to materialize.
Speaker Change: In the near term, we aim to contain the comp the.
Speaker Change: The extent of losses and refined our revenue cost structure through ongoing operational adjustments steadily improving the companys financial performance over time. Thank.
Speaker Change: Thank you next question please.
Speaker Change: Ladies and gentlemen, just a reminder, if not also Christian he welcome to Bristow and then one on your telephone keypad.
Our next question comes from Nelson Cheung.
Speaker Change: Citibank. Please go ahead.
Speaker Change: Hum.
Speaker Change: If you would.
Speaker Change: Oh.
Speaker Change: Okay.
Speaker Change: Hum.
Speaker Change: Yes.
Speaker Change: Hum.
Speaker Change:
Speaker Change: You bet.
Speaker Change: Yes.
Speaker Change: Oh wait.
Speaker Change: Thank you.
Speaker Change: 'twenty one.
Speaker Change: Well, let me translate the question myself.
Speaker Change: Yeah. Thanks for taking my question My question is regarding.
Speaker Change: Oh Gee became <unk>.
Speaker Change: Hmm swamping the leverage you have to try to get.
Speaker Change: And then can you share more details regarding the fulfillment.
Speaker Change: And how should we.
Speaker Change: Think of the future promotional operation strategy.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you for your question.
Speaker Change: So a blacksmiths all corn has become a breakout hit them on both domestic and international gamers for its stunning graphics and classic journey to divest narratives and innovative gameplay experience.
Speaker Change: As a highly anticipated single player blockbuster a black man, it's not only amplified the lapel of China's single player games, but also drove traffic growth on our platform.
Speaker Change: On its lunch day, 23% of all streamers, who went live across the Adobe platform were those in the Black Knight segment and viewers of blackness content compromised nearly half of our platform's daily active user base.
Speaker Change: Additionally, our mind, our new and returning mobile user.
Speaker Change: It is 7% or joining by blacksmith, making the game Ava traffic engine for that day.
Speaker Change: To fully capitalize on it but we partnered with the developer for Black missed before it really is creating excitement for its debut through diverse promotions like downloading rewards between giveaways and community discussions et cetera, we also.
Speaker Change: Recruited streamers and rode out streaming incentive plans facilitating significant stream our participation with a wealth of content offerings, which drove a surge of interest on real estate.
Speaker Change: For Black men, we employed a diverse content operation strategy and capturing two different user needs.
While we often speak value streams for viewers eager to quickly grasp the storyline, well also supporting streamers, who engaged in slower exploratory stream, it's highlighting the Inca cots details of the game enhancing user immersion and retention.
Speaker Change: These immersive streaming approach resonated, particularly well with console gamers and traditional players fostering deeper interactions through stream viewing and gaming experience sharing.
Speaker Change: And thereby elevating user stickiness to.
Speaker Change: Our platform.
Speaker Change: This in depth content consumption model underscore the differentiated advantages appalling to our core user base of hardcore gamers.
Speaker Change: Their engagement with game content is more profound and enduring with more frequent interactions with streamers, which benefits the development and refinement of our overall gaming ecosystem.
Speaker Change: In addition, we initiated interactive activities such as game reviews, and challenge competitions continually encouraging come into engagement and discussion Gerry to extend the game's popularity. We also shared on trade.
Speaker Change: It highlights and some standout moments in short video from life streams within and beyond our platform driving Additionally, additional traffic rose.
Speaker Change: Well the excitement surrounding black mist is a single player and narrative game might be challenging to sustaining the London, we proactively channeled users to more of a game.
Speaker Change: Okay.
Speaker Change: Hello Hello.
Speaker Change: Hi, operator.
Speaker Change: Are we still on the line.
Speaker Change: You see all connected please go ahead.
Speaker Change: Yes. Please continue.
Speaker Change: Okay, so with our comprehensive and sophisticated content recommendation capability.
Speaker Change: We guided users from the Black Knight segment, two other top performing a gaming segments, such as and classic PC games and other console gaming segments.
Speaker Change: And further enhancing user retention.
Speaker Change: For example, we encouraged streamers in these top performing gaming segments to actively featured <unk>.
Speaker Change: <unk> in their livestreams, providing them with traffic support and facilitating initiated like cooperative livestreams with other gaming streamers to boost content visibility.
Speaker Change: As users assessed any streamers content. They could further explored the streamers distinct style, sparking new interest and gradually converting them into long term users of our platform.
Speaker Change: So in summary.
Speaker Change: Black Miss all corn delivered fresh content to our platform and boosted on.
Speaker Change: Traffic growth in the short term harnessing this opportunity with our carefully created content and tiered content operations, we effectively direct.
Speaker Change: This influx of traffic from the high quality new title two other gaming segments contributing to our platforms ongoing traffic retention.
Speaker Change: Even as the bulk of the new gaming close down we expect to retain this user's thickness and activity reinforcing the development of donors stable sustainable and diverse platform ecosystem.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you at this time, we have no further questions I'll now turn back over to management for closing remarks.
Speaker Change: Okay.
Speaker Change: Thank you all for joining.
Speaker Change: During our call today, we look forward to speaking with.
Speaker Change: Everyone next quarter. Thank you.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Thank you. The conference has now concluded. Thank you for attending today's presentation and you may now disconnect your lines.
Speaker Change: [music].
Speaker Change: