JOYY Inc. (JOYY)

Earnings Call: Q3 2019

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Nov 13, 2019

Welcome to YY Inc. Third Quarter 2019 Earnings Call. At this time, all participants are in a listen only mode. After the management's prepared remarks, we will have a question and answer session. Please note this event is being recorded. I'd now like to hand the conference over to your host today, Mr. Matthew Zhao, IR Director of YY. Thank you, sir. Please go ahead. Thank you, operator. Good morning and good evening, everyone. Welcome to YY's Q3 2019 earnings conference call. Joining us today are Mr. David Xueling Li, Chairman and CEO of YY Mr. Bing Jin, CFO of YY and Ms. Ting Li, COO of YY. For today's call, management will first provide a review of the quarter and then we will conduct a Q and A session. The Q3 of 2019 financial results and webcast of this conference call are available at ir. Yy.com. A replay of this call will also be available on our website in a few hours. Before we continue, I refer you to our Safe Harbor statement in our earnings press release, which apply to this call as we will make forward looking statements. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in renminbi. I will now turn the call over to our Chairman and CEO, Mr. David Xueling Li. Please go ahead, sir. Thank you, Matthew. Hello, everyone. Welcome to our earnings call today. Our Q3 2019 results are characterized with continued success in our group's globalization and AI technology driven strategies. Our total revenues increased by 67.8 percent year over year to RMB6.88 billion demonstrating our solid progress in 3 key areas. 1st, organization efforts resulting in significant growth in both users and revenues. 2nd, technology advancement leading to increase in our user loyalty and operation efficiency. 3rd, content innovation, revitalizing domestic business. On the globalization front, we achieved significant progress in expanding the market reach of all 4 key products which are LIKI, IMO, VIVO Live and HAGO. Notably, LIKI, our leading short form video platform with global footprint hit the milestone of 100,000,000 monthly active users in the Q3 of 2019, representing a year over year growth rate of 413.4%. Such rapid growth in user base is a result of our relentless drive for content localization, innovative features and AI technology enhancement. First, let me share more details on LIKI. Short form video has become the mainstream content format of choice for generating Z users around the world increasingly influencing their social values and lifestyles. As the 2nd largest short form video platform globally outside of China, LaiQi is well positioned to capitalize on the growing market demand. To extend LIKE's global footprint, during the Q3, we continue to explore the best venues to localize short form video content for diverse cultures, backgrounds and values. For example, in Russia, LaiQi hosted an offline event called LaiQi Party Moscow in August. This event marked LaiQi's 2nd anniversary as an international short form video brand. The on stage performance dazzles more than 10,000 audience in the capital city of Russia. Our success in organizing such local events in Russia demonstrates LaiQi's unique capability in establishing cultural connections among young users, inspiring their creativity and self expression and boosting their enthusiasm towards original content production. All of which in turn help us expand our brand influence as well as strengthen our leadership in more global In addition to content localization, LaiQi also sought to attract and retain users through continuous introduction of new features and functions including data visualization tools, collaborative travel VLOG project, AI based image cropping, total series and face swapping features. These new features significantly lowered the short form video production entry barrier to users became smash hats hits upon launching and attracted millions of users worldwide to create and share videos with their friends. Besides extending its own market reach, LaiQi was also successful in distributing its content in our instant messaging platform, IMO. By granting access to LaiQi's short form video feeds to IMO users in over 45 countries and regions, we were able to increase our IMO embedded short form video monthly active users to 50,200,000 during the Q3 of 2019. This is also a good example demonstrating the great synergies across multiple products. Now let me share more colors about our progress with IMO. In addition to video content, IMO was also injecting additional innovative social features to enhance user stickiness and promote social interactions. As a result, in the Q3 IMO's communication services were utilized over 400,000,000 times per day on average, while each user's average daily usage exceeded 38 minutes. As IMO's user stickiness continue to grow, we were able to unlock its monetization potential through advertisement. As a result, IMO's advertising revenues increased by 25% sequentially during the Q3 of 2019. To further establish IMO as a world class video based instant messaging platform, we plan to continue cultivating cross platform operational model, diversifying content and services and refining monetization tactics through both live streaming tipping and video and I'm related advertisements. Besides short form video and instant messaging, our international live streaming platform, BIGO Live also achieved solid progress both operational and financially. During the quarter, Bigo Live's monthly active user reached a record breaking level of 21,900,000 representing a 9.7% year over year increase. As VIVO Live secures its foothold in emerging markets, it is able to further expand into developed markets and grasp more opportunities. As a result, its revenue contribution from developed markets such as Europe, Americas, Japan and other regions increased further to 26% in the 3rd quarter from 21% in the Q2 of 2019. All of our aforementioned business success is built on the foundation of our technology advancement. During the Q3, we continue to incorporate AI based recommendation technologies into our platform. Through our proprietary multi target intelligent recommendation model and real time exploration discovery model, we are able to characterize, manage and distribute global short form video and live streaming content more efficiently. Our multi target intelligent recommendation model analyzes comprehensive user behaviors such as viewing, commenting, interacting etcetera to improve the relevancy and accuracy of our overall recommendations. The real time exploration discovery model compiles and analyze a massive amount of content generated by users each day to timely discover short form video clips of top quality that could potentially become smash hits. As a result, the number of high quality videos discovered by AI machines in September has more than doubled compared with June. In addition to enhancing our recommendation capability, we are also leveraging software algorithms to improve our operational efficiency. For example, Bigo's encoder system, a technology we developed in house recently could automatically adapt and improve the live streaming video quality by over 10% without putting any extra strain on network or bandwidth. Meanwhile, HAGO, our casual game oriented social media platform has not only maintained its rapid expansion of user base but also achieved meaningful progress in monetization. During the Q3, Hago's MAUs increased to 32,300,000 representing a 92.4% year over year increase. Leveraging its past success in Indonesia, Hago was able to further penetrate into other markets such as India. In addition, HAGO has paved a very clear path to monetization through its user group based interaction model in its previously developed markets. We expect HAGO to make profits in its previously developed markets in the 4th quarter. Going forward, we seek to increase Hago's user engagement and retention continuously on 3 fronts, expanding its casual game variety and quality quantity, accelerating its content centric community development and introducing new social features such as interest based user groups. While we are successfully implementing our growth strategy through globalization, we are also revitalizing our domestic live streaming business, YY Live through continuous innovation and reinvention. As we keep close attention to the constantly evolving user entertainment demand, we have uncovered the growing user preference for variety shows. During the Q3, we launched our partnership with Wow Ke Zhang, a renowned Chinese singer and songwriter to add more content of variety show style to our library. Our effort has paid off handsomely. Wangzhi Zhang's initial live streaming session attracted 7,200,000 cumulative users and viewers and 240,000 peak concurrent viewers. Our partnership with Wowki Zhang continued to render success in producing premium live streaming content, attracting viewers and fans, shaping a new live streaming plus artist business model and opening up another monetization trail for entertainment stars. Since then, we have formed partnership with 13 additional celebrities specializing in variety shows. Consistent with our efforts of incorporating variety shows into our live streaming content, we are also introducing new interaction features to provide our YY live users an immersed variety show experience. Through the multi person microphone relay feature and the multi party PK function. YY Live can dynamically generate personalized variety show programs on a real time basis. As a result, our YY variety show live streaming received stable and widespread viewership during the daily premium time slots thus leading the industry charge in pet entertainment innovation. In summary, we achieved substantial success in globalization, AI technology enhancement and revitalization of our domestic growth engine. Going forward, we envision vast market potential for our global video based social media platform. We are confident that we can continue to deliver consistent and superior shareholder value through the synergies across our multiple product and markets, continuous efforts in globalization through localization and enhancement of our operation efficiency. With that, I will turn the call to Bing Jin, our CFO to go through the details of our financial results. Now as YOOI's CFO, I will talk about the financial results. We continue to deliver robust financial and operating results during the Q3 of 2019. Total net revenues for the Q3 increased by 67.8 percent year over year to RMB6.88 billion, exceeding the high end of our previous guidance range and suite expectations. Specifically, live streaming revenues for the 3rd quarter increased by 66.2% year over year to RMB6.47 billion mainly driven by the continued growth in live streaming revenues from the Huawei and Huya segment as well as the consolidation of Bigo which contributed RMB1.42 billion in the quarter. Other revenues in the 3rd quarter increased by 98.3 percent to RMB408.3 million driven by higher advertising revenues from both Huya and Bigo. Cost of revenues for the 3rd quarter increased by 76.2% year over year to RMB4.71 billion. Revenue sharing fees and content costs increased to RMB3.46 billion in the Q3 from RMB2.21 billion in the same period of last year as a result of increase in live streaming revenues of the company. Bandwidth costs increased to RMB496.8 million from RMB249.5 million in the same period last year, mainly reflecting the continuous expansion of our global user base and time spent following the Bigo consolidation. Gross profit for the Q3 increased by 52.1 percent year over year to RMB2.17 billion. Gross margin was 31.5 percent compared to 34.8% in the prior year period. The decrease in gross margin was caused by increases in both revenue sharing fees and content costs. In addition, both Huya and Bigo had lower gross margins but contributed significantly greater portion of the net revenue in the Q3 of 2019 compared to the prior year period which also contributed to the gross margin contraction. Operating expenses for the Q3 were RMB2.16 billion compared to RMB RMB864.7 million in the prior year period. This increase was primarily due to higher sales and marketing expenses which reached RMB1.08 billion in the 3rd quarter. The increase in sales and marketing expenses was primarily attributable to our increased effort in sales and marketing activities in overseas markets as well as the impact of depreciation and amortization related to the consolidation of Bigo. R and D expenses for the Q3 rose to 673.1 million from RMB 314.1 million in the prior year period, mainly due to the increase in staff related expenses. GAAP operating income for the Q3 was RMB160.3 million compared to RMB610.9 million in the prior year period. Operating margin for the Q3 was 2.3% compared to 14.9% in the prior year period, primarily due to the decrease in gross margin, the impact of depreciation and amortization related to Bigo consolidation and other overseas expansion initiatives. Non GAAP operating income which excludes share based compensation expenses impairment of goodwill and investments, amortization of intangible assets from business acquisitions was RMB611.4 million in the 3rd quarter compared to RMB774.2 million in the prior year period. Non GAAP operating margin for the 3rd quarter was 8.9% compared to 18.9% in the prior year period. GAAP net income attributable to controlling interest of YY for the Q3 of 2019 was RMB109.9 million compared to RMB650.7 million in the prior year period. Non GAAP net income attributable to the controlling interest of YY was RMB574.1 million compared to RMB787 1,000,000 in the prior period. Non GAAP net margin in the Q3 of 2019 was 8.3% compared to 19.2% in the prior period. Diluted net income per ADS in the Q3 of 2019 was RMB1.11 compared to RMB10.01 in the prior year period. Non GAAP diluted net income per ADS was RMB6.42 compared to RMB12.07 in the prior period. Looking forward to the 4th quarter of 2019, we expect our net revenues to be between RMB7.32 billion and RMB7.52 billion representing a year over year increase of 57.7 percent to 62%. This forecast reflects our current and preliminary views on the market and operational conditions which are subject to change. That concludes our prepared remarks. Operator, we would now like to open up the call to questions. Certainly. Ladies and gentlemen, we will now begin the question and answer session. Our first question comes from the line of Thomas Chong from Jefferies. Thanks, management, for taking my questions and congratulations on a solid set of results. I have two questions. The first question is about Bigo. Given that Bigo demonstrates very strong user growth as well as geographical coverage, can management talk about the KPI in terms of user and revenue across our different product offerings, Bigo Life, Beagle Life, IMO and Hago in 2020? And my second question is about our AI capabilities. Given that our AI capabilities is getting so strong right now in getting the user traction, retention and providing very personalized content. Can management share about what other areas or how we can further strengthen our AI capabilities in 2020 to attract more user growth and retention in domestic and overseas markets? Thank you. Thank you for the question. This is David. Firstly, in terms of our international strategy, we actually have been implemented our counter international strategies about 2 years already. So if you look at our global product map, we actually have 3 major product, which is LaiKey, IMO and Bigo Live. So if you look at the Q3 results, which has already demonstrated the very strong synergies between the 3 different platforms. So looking into next year, we were quite confident firstly in terms of the IMO's strong support in terms of the short form video content from liking distribution, we think of the IMO's platform. And meanwhile, the social relationships within IMO also will significantly help our further content distributions within the different platforms. And meanwhile, on the other side, the experience monetization experience coming from Bigo Live also will continue to help both IMO and LaiQi to further explore of the monetization opportunities. So in summary, we truly believe the synergies between among all the 3 platforms as well as we further exploring of the users' social relationship within of the 3 platforms. Stephanie will continue to help us to grow our international business with a very prospectus future. Thank you. The second question in terms of the AI development, so the main reason why the companies are really focused on to develop the short form video content is because if you look at the nature of the short form video platform, it actually has been embedded all different types of the AI related technologies there. It could be divided by the 3 parts. The first one is the relatively traditional what we call the recommendation systems. So we use continue to develop our personalized recommendation capability to further to recommend more targeted content into the users. And the second part is content engine. So it's majorly focused on the how to better recognize, explore as well as re editing of the different types of the content. And we truly believe that part of the technology will continue to develop and will have more competitions within that sectors, especially all the peers will compete each other in terms of how we which peers can deliver the better content search engines in terms of how to have a deep understanding of the content as well as the relevancy and the logic within of those kind of content. And we truly believe we were one of the best within of the industry as well. Then the third part and most importantly is AI also will back to further develop and help of the evolution of the search engines. We truly believe in the next several years, short form video content will become the major content format in terms of to gather people education as well as informational. So in the future, a lot of the different types of the information and knowledge will reserved, produced as well as searched in the short form video product. So, we truly believe after the decade, it will be a totally different world. So, the Generation Z, all the young people, they will majorly using short form video as a major way to get access of the information as well as get educated. And we are still very excited about the future development. Thank you. Thank you. Our next question comes from the line of Daniel Chen from JPMorgan. Please go ahead. I will translate myself. So my question is related to Bigo Live revenue, which grows very strongly this quarter, up by 25% quarter over quarter. And how much of that actually come from Bigo Life? And how much come from other products like iQI and IMO? What's the drivers behind? Is it more from developed country or developing country? And how should we think about the revenue growth trajectory of Bigo in the future quarters? Thank you. Thank you, Daniel. This is Bing. Let me address those questions. So for Bigo Live and IMO and Likis monetization, the majority still majority of revenue is coming from Bigo Live. IMO, as we mentioned, they have some revenue from advertisement, which increased by 25% quarter by quarter. But on an absolute dollar trend, it's still much smaller than Bigo Live's live streaming revenue. LaiQi is in very early stage of monetization. So LaiQi will continue to explore monetization both from advertisement and live streaming, but in terms of dollar value it's very small. So to give you a picture that majority of revenue from Bigo segment is from live streaming or Bigo Live. That's the first question. 2nd question in terms of the country breakdown, we are seeing obviously more rapid growth from developed world. As we mentioned in the call that 26% of revenue is coming from developed world including US, Europe, Korea and Japan etcetera, compared with 21% last quarter. So obviously, developed world will contribute more and more portion of the revenue. Meanwhile, Middle East and Southeast Asia market are still the mainstream monetization regions currently. And then for the future forecast, I think that is consistent with what we discussed with all the analysts and investors before. So I wouldn't go into detail, but we are confident that Bigo will continue to maintain that revenue growth. And obviously additional level will be coming from further synergies into IMO and LaiQi. Thank you. Our next question comes from the line of Natalie Wu from CICC. Please go ahead. Congratulations on the LIKE of exceeding 100,000,000 mobile MAU. Just wondering what's the highest penetration rate in your top five cities for LaiQI on top of the mobile Internet user population? And what do you see as a tipping point for the exclusive growth in the same region for LAIKI? And second question is for David. So David, just wondering what will be the resource or time allocation for you next year? Thank you. Thank you, Natalie. I'll address the first question and then Xu Ling and David will address the second one. So in terms of the LaiQi MAU, you're right, we achieved over 100,000,000 MAU. In the top five countries, those as we said before, it's our India, Indonesia, Russia and some of the other developed and emerging markets. You asked about the penetration rate, what I can tell you, if you look at the industry landscape, all the short form video markets in global markets, except China, are very, I would say, relatively low penetrated. My take would be less than 10% penetration in terms of Momo Internet users. So, from that perspective, we are seeing massive opportunities and potentially across all those emerging market and developed world. As David mentioned in the last question that we truly believe short form video is just starting to take off globally. So, we're very excited in terms of the penetration of future market potential. This is David. David, let me address your second question. So we truly believe in the next year or even the longer period, our key focus as well as the major energy allocation will be into the short form video arena because based on our understandings definitely the short form videos will be further improve our comprehensive capabilities for the whole companies. That's also the major reason why we took the short form video as one of the key strategies for the corporation. If we look at the international development in terms of short form video content, we truly believe it will be in the future it will be similar as China, which means every person will be use of the short form video apps. So, the ultimate penetration rate for the short form videos will be very similar as the social media or even social network products. And this trend actually already happened in China, But I'm afraid actually for the rest of the world probably still a lot of people still question that in terms of the future of the short form videos. So based on our understandings, we truly believe this is a historical opportunity for the company. So in the next while 2 years, Tencent will continue to develop our Xiaofeng Video apps in order to catch those massive market opportunities. That's the first part. And second part, after we have a development of the Xiaofeng video content as well as it also will back train of our AI capabilities and train our teams because as I mentioned previously, the AI technology actually has been the short form video actually has been used most of the AI capabilities in the market. And if we look at the nature of the short form video, it's actually already quite similar as a reality world. The only difference will be a camera, right. So, understanding about the short form videos will also represent the understanding of the reality world through of the AI capabilities. So once we have the industry leading of the AI capability has been established is that actually gave us more opportunities to grab of the future opportunities we think of the sector. So that's the major reason why we will keep on keep most of our energies focused on the short form video development in the future. Thank you. Our next question comes from Li Zhang from Bank of America. Please go ahead. Thanks management for taking my question. Congrats on the strong results. My first question is still on the overseas competition maybe with TikTok. Won't your management's updated view on the competitive dynamics and your recent user churn in user acquisition and the next year short video spending overseas? And second question about Leggate's or should we use regulatory risk consider what has happened with TikTok? Thank you. This is David. Let me address your question. So in terms of the short form video competition, we have to agree the year 2019 is most of the difficult year for us. The major reason behind that is firstly, if you look at our short form video platform's history, we're actually much shorter than other of the major peers within this sector. We only developed likely about 2 years compared with other peers already existing in the market like 5 years. And meanwhile in terms of the recommendation capability behind of the short form video platform, Our peers even had the longer experience which is more than 8 years. But and meanwhile in terms of the sales and marketing spending on the full year of 2018, our major peers also has more than 5 times of the sales and marketing expenses compared with LaiQi in the last year. So put all those factors together, 2019 is most of the I would say the most of the difficult year for our short form video platform development. But meanwhile, even we facing those kind of difficulties, but the likely market share continue to increase. In the Q3 of this year as we mentioned before, our overall short form video MAUs has been reached to 150,000,000 outside of China, which is already amazing scale for the short form video user base already. And so we truly believe especially followed by our the AI as well as other technology capability continue to improve definitely looking into 2020, the competition pressure for us will be significantly eased. And except for that, I also want to mention IMO, right, our I'm products. So for the I'm product, currently we only allow the users to watch of the short form videos, but in the future once we start to allow and encourage the users to produce and upload more short form video content using IMO, it definitely can leverage IMO's very strong social relationships to further boom of the activities as well as viewership of the Xiaofao videos within of the I'm products. So all in all, this year we actually focused on to continuously solidify our fundamental capabilities, especially AI capabilities. So next year, once we see more users growth, definitely we will see those kind of capability will continue to help us to grow the short form video platform. Thank you. The second question related to the regulatory risk in overseas. The difference in terms of our short form video platform compared with other peers is likely starting from day 1 we were a global company. We really focused on to understand of the demands of the global users compared with most of our peers is their short form video business oriented from the China business. So it's very different. And since we are actually starting from a global company, so even starting from day 1, we are really focused on the compliance as well as the deep understanding about the local regulatory as well as the local government requirements. So that is behind that, so that can help Leki to build up more mature of the policies and the technical actions in terms to better protect the user privacy as well as the data the overall data protection. So all in all, we believe we are in terms of the regulatory risk globally, we are better than most of our peers. Thank you. Our next question comes from Alex Lu from China Renaissance. I'll translate myself. So first of all, given we see some sort of easing sign on the sales and marketing expense for people this quarter, just wondering how should we think about this cost item shifting into the trend of this cost item into 2020 and the Q4 of 2019? And also given the fact we have multiple different products within Bigo umbrella, namely IMO, LITE Key and also Bigo Life, Would the management share a bit of color on the user acquisition costs across different products at the moment? Thank you. Thank you. Let me address those questions. So the first question regarding sales and marketing expense for Bigo. We did see that the Q3, the sales and marketing expense is relatively lower compared with Q2 because we're seeing very healthy pattern for our user retention. And as David mentioned that we start with small base, we're seeing more rapid progress in more emerging markets and developed world. So we'll continue to monitor our user retention as well as the balance of the growth for the user base and marketing spending. In 2020, David did mention that our pressure will be less, but that doesn't necessarily mean that we're going to spend less money for sales market. It just means that we are seeing more opportunities. And once we see that pattern, meaning user retention pattern continue to be healthy, we are confident to spend more dollar value to attract more users to build a bigger ecosystem. And meanwhile, we also focus on monetization on the LaiQi. As I mentioned, we will monetize through live streaming and advertisement to really leverage synergies among different products. So that's I would say the trend that I can foresee for Bigo sales marketing. For the user acquisition cost, it is different across different product. But for IMO, our key focus right now is focused on enhancing the quality of the content into IMO rather than spend sales money to attract more users. So I think the near term we'll focus on content quality enhancement for IMO. For LaiQi, as I said, it differs from country to country. It differs according to different stage of development. So we cannot share a single number for LaiQi's user acquisition cost. For Bigo Live, we've been doing Bigo Live for quite a long time. So I'd say it's a relatively stable business. We will continue to do sales marketing for Bigo Live users, but it's not on a big scale compared with LIKI. So that's I think the colors I can share. Thank you. Our final question will come from the line of Jialong Shi from Nomura. Please go ahead. I have two questions. And first question is about YY Lite, the live broadcasting business in China as we are approaching year end. So I just wonder if management can share any colors as to the potential growth rate YY could achieve next year? And also just wondering if the management see any change in the competition landscape in China's live broadcasting business that is caused by new entrants such as Douyin and Kaishou? My second question is about the relationship YY's relationship with the game live broadcasting subsidiary of Huya as we are approaching the 2 year anniversary upon which Tencent will likely become a majority shareholder of Huya. So I just wonder if we should expect to see any changes in YY's relationship Huya before and post the divestment as Huya is also talking about expanding into a broad category of non gaming entertainment content, which could potentially make it a competitor to YY in China and overseas market as well. So just wonder if YY currently has or will you sign a long competition agreement with Huya post the divestment? Thank you. This is CEO Liqing. Let me address your question. So firstly, in terms of the competitive landscape with the short form videos in China, we all agree the short form video products is a very comprehensive product, which is can have an impact with the different types of the services or product at the same time. That's also the major reason why we develop the overseas short form videos. So for the China part, we already noted the trend for example, in terms of the new music distributions, the short form videos such as Douyin already become the mainstream platform, which is already impact of the traditional of the music distribution channels. Another good example is, since the short form video has occupied a lot of users' time as well as interactive features that is why it also has some of the impact for the stranger social network. By comparison, since the live streaming business, our live streaming platform has a very stickiness of the user feature as well as immersive user experience. So that is why if you look at this year's YY live development, although we are facing the competition from the short form videos, but we actually keep the very stable of the growth for the overall YY Labs revenue. And we expected next year also have the same similar situation. And meanwhile, a worth to mention is for this year, the paying user number for YY live also has been significantly improved, demonstrates a very healthy trend for the whole platforms. So, all in all, in the future, in terms of our live streaming business in China especially since we continue focus on to create more diversified content as well as to create the different types of the interactive features, definitely we are still very confident in terms of future YY Labs development. Thank you. And Zhang, I'll address the second question with relationship with HUYA. First of all, we still very favorable look upon HUYA's potential as China's leading game live streaming platform and also the enormous esports market opportunity. So we will continue to support Huya and consolidate Huya until the point where Tencent can exit the option, which is coming from March next year to March 2021. If they access the option, we can obviously consider sale portion of Huya's shares to Tencent. Regarding your second question for the competition of Huya's non game live streaming, meaning entertainment live streaming business with YY. I don't think that's a big issue. As I explained before, both in China and overseas entertainment live streaming is never a zero sum game market. The market opportunity is enormous both from the supply side and demand side. On the supply side, we have seen more and more ordinary people becoming popular online live streaming stars. So the abundant supply will continue to drive more and more hosts coming into different and the similar streaming platform. On the demand side, even in China with this huge competition as you have asked the question, YY Live will continue to grow. And overseas, it's a very early stage for entertainment live streaming. So I don't think competition within entertainment live streaming is a big issue. Thanks, gentlemen. I'll ask a quick follow-up. So how are you going to use the cash proceeds to be received from the sale of Huya shares? That we can have a range of options depending on the ROI of different alternatives. So I think our strategy right now is to remain flexible. Obviously, we also pay attention to the shareholder value. Meanwhile, we're also trying to find new ways of generating high ROI project for ourselves. Thank you. I'd now like to hand the conference back to management for closing remarks. Thank you, operator. Thank you for joining our call. We look forward to speaking with everyone next quarter. Thank you. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you so much for your attendance. You may now disconnect.

• Earnings release