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spk06: Ladies and gentlemen, thanks for standing by and welcome to Blue City's third quarter 2020 earnings conference call. Currently, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now, I'll turn the call over to Lingling Kong, head of investor relations of the company. Ms. Lingling Kong, please proceed.
spk03: Thank you, operator, and hello, everyone. Welcome to Blue City's third quarter 2020 earnings conference call. Joining us today are Mr. Bao Li Ma, Chief Executive Officer, and Mr. Ben Li, Chief Financial Officer. We released results earlier today. The press release is available on the company's IR website at ir.blue-city.com, as well as from Newswire Services. A replay of this call will also be available in a few hours on our IR website. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding this and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please note that during today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. Also, please note that unless otherwise stated or figured, mentioned during the conference call are in Chinese, there may be. With that, let me now turn the call over to our CEO, Mr. Bao Lima. Mr. Ma will deliver open remarks in Chinese. I will then translate his remarks. Our CFO, Mr. Ben Li, will take over to discuss on business and financial highlights. Mr. Ma, please go ahead. 大家好,感谢大家参加蓝城兄弟本季度的财报电话会议。
spk05: The performance of the third quarter was strong. The total income was RMB 2.976 billion, which increased by 47.3%. The total number of paid users was 49.4 million, which increased by 43.8%. It is worth noting that we achieved the first profit after adjustment this quarter. These results reflect our continued improvement in commercialization and strong execution.
spk03: Hello, everyone. Thank you for joining our earnings conference call today. We finished the third quarter on a strong note, with total revenues of $297.6 million, up 47.3% year-over-year, and total paying users of $494,000, up 43.8%. Notably, we generated positive adjusted net income for the first time. These results demonstrate our ability to drive steady and healthy growth through improving manipulation compatibility and strong execution.
spk05: 除了自身业务的稳健增长外,我们还在进一步加强蓝城兄弟在LGBTQ人群中的领先地位。 In addition to solid organic growth, we further strengthened our leadership position in the LGBTQ community. We have developed a portfolio strategy
spk03: that provides different product and services through acquisition and expansion to other subgroups and geographies. Let me share with you our latest breakthroughs on those fronts.
spk05: For this strategic acquisition, we are very excited. Whether it is from the main communication and sliding product functions, or the user group, Fanca has strategic meaning for BlueD. Through this acquisition, we have further strengthened the leading position in the LGBTQ community. At the same time, it is more important that we can further enrich the products of BlueD. First, acquisition. Today, we have completed the acquisition of Finca, a leading gay social networking app in China, targeting younger generations. We are excited about this strategic acquisition.
spk03: FinCon complements our Blued app both in functionality, centered on dating and strap, and in user demographics. With this acquisition, we have further strengthened our leadership and dominance in the LGBTQ community. But more importantly, it has enabled us to enrich our product matrix by injecting younger and more training elements into our community. We are confident in their future development and look forward to building a complementary business and strategic synergy.
spk05: 其次,随着在全球的持续扩张,我们基于不同市场提供更加本地化和多样化的服务。 我们在拉丁美洲市场推出了BlueDee简洁版本,并针对一些亚洲市场推出了定制版语音聊天功能,
spk03: Second, as we continue to accelerate our global expansion, we are providing more localized and diversified services in different markets. In Latin America, we introduced a simplified version of the Blues app. For some Asian markets, we rolled out an exclusive tailored voice chat room feature. Our goal is to build a product that closely matches the needs of the local community.
spk05: 再次,在产品和服务创新方面, 第三季度,我们在VD中国版本中引入了基地功能。 用户可以选择加入基地的不同群组。 We also launched a new version of Let's Do, including the new Catch feature. This feature is considered to be an effective way for community users to break the ice. We are working hard on product innovation to further enhance user experience and deepen community connection.
spk03: Third, we continue to innovate and develop new products and services. In this quarter, we introduce the community feature on the China version of Bluetooth, where users can join a variety of affinity groups and better engage with the like-minded community. We are also promoting effective connection on Let's Do through new features, such as the so-called catch function, which serves as an icebreaker between the newly connected friends. This demonstrates our continued effort in product innovation that further improves the user experience and deepens the bonds of our community.
spk05: HIV-related services and comprehensive male health services. In this quarter, the income of Health Health has increased more than 6 times, reaching 9.6 million yuan. At present, although the income is relatively small, we believe that we have the advantage of having a natural customer base and service system. With the gradual improvement of HIV prevention and treatment awareness, health businesses will have more room for development.
spk03: I would also like to highlight the performance of Heat Health, one of our sub-brand health platforms that provide a wide variety of health-related services, primarily including HIV-related services and comprehensive men's health services. This quarter, revenue from Heat Health grew approximately six times to $9.6 million. Although it still represents a small fraction of our total revenue, we see a huge potential in heat health with a strong awareness of HIV prevention and treatment in the LGBTQ community and our further advantages of user acquisition and service capabilities. 公益事业自第一天起就根植在公司的基因中。
spk05: We have been working hard to improve the public's awareness and prevention awareness of AIDS. On the eve of World AIDS Day, the company promised to donate RMB 1 million to support non-profit HIV prevention work. Over the years, we have made a lot of contributions to the prevention of AIDS, and have received support and recognition from government-related institutions, academic institutions, and business partners. In the future, we will launch more measures As we continue to advance the public interest and make relentless efforts in promoting HIV awareness and prevention, we recently pledged to donate 1 million RMB to support non-profit HIV prevention in the lead-up to World AIDS Day.
spk03: Our many years of action towards HIV prevention has been strongly supported and well recognized by governmental, academic, and corporate partners. Going forward, we will launch more initiatives and continue to promote LGBTQ awareness around the world by organizing and participating in a wide variety of social and public events.
spk05: 2020 November is the 20th anniversary of the establishment of LanCheng Brothers' predecessor, DalanWang. For me, this journey is long and difficult, but it is also full of commemorative meaning. From one person to 58 million registered users around the world, we want to thank all those who have recognized, encouraged, and helped us along the way. We strive to provide the best service to users through innovation, technical upgrade, and operation optimization.
spk03: Finally, I want to mention that November 2020 was the 20th anniversary of the founding of Danland.org, Blue City's predecessor. It has been a long, arduous, yet meaningful and memorable journey for me, from one person to 58 million registered users around the globe. We would like to thank all of those along the way who recognized, encouraged, and helped us to be who we are. We are dedicated to providing the best services to our members through deeper understanding, product innovation, technology advancement, and operational improvement.
spk05: To conclude, Q3 was a strong quarter.
spk03: We made meaningful progress in many aspects of our business. We believe that our leading market position, strong execution capability, and industry consolidation will benefit from the fast-growing consumer demand. and we can achieve robust growth in the near future.
spk05: Now let me turn the call over to our CFO, Ben, who will provide details on business and financial performance.
spk04: Thank you, Mr. Ma, and thank you everyone for joining our call today. As Mr. Ma just mentioned, we delivered another strong quarter with impressive business development and solid financial growth. Total revenues were RMB 297.6 million, up 47.3% year over year. Gross profit was 96 million, a significant increase of 61.7% from the same period of last year. Gross margin was 32.3%, 2.9 percentage points better than 29.4% in the same period last year. Notably, we generated positive adjusted net income for the first time, which was a remarkable improvement as it demonstrated the potential of our business model and our capability to grow in a profitable manner. We announced the Finca acquisition at the end of November. Finca is a geo-social networking app that uses a swipe feature in which users swipe left for dislike and swipe right to get matched with other nearby men. Finca compliments Blued. which is focused on building the community as a whole and connecting people in a much broader sense. Finca users are mostly millennials that live in the first and second tier cities and who'd like to pursue a better quality of life. As such, they are more willing to pay for high quality services. As of September 2020, the Finca app had approximately 3 million registered users with average monthly active users and daily active users are about one-tenth of bloat. As we integrate Finca, we will accelerate its growth by providing financial support and technological and operational assistance. Specifically, with Finca's features more appealing to overseas users who share similar profiles, we see huge growth potential for Finca to expand overseas. backed by our years of experience on global expansion and operation. Likewise, Finca will add younger members and fresh ideas to the community, which will further optimize our product and service offerings, enabling us to drive further monetization opportunities. Turning to our recent developments in operations, we continue to develop resources to improving operating efficiency. We also invested in technology innovations to improve the user experience, as always. In August, we rolled out a Blue City original short video series called Dear Sirs. With seven episodes, it tells same-sex love stories from seven different angles. The series has generated over 33 million views, as well as numerous interactions within Blue and other social networking apps. We believe this new series touched the hearts and minds of our members and maturely promoted the level of user engagement. Leveraging our strong data analytics capabilities and AI-driven technologies, we launched an all-new community feature on our China edition of the Blued app. Under the community feature, which is similar to Facebook groups, Users can join groups based on their common interests and backgrounds and enjoy even richer themed social interaction online. We're pleased to see that the number of topics reviewed by each user and interactions have increased significantly since its launch. Our growing user base and improving data analytics and algorithms provide a solid foundation to optimize our service and product offerings. which will build and foster a greater sense of belonging in this community. Since our August acquisition of Labdu, a leading social networking app for the lesbian community in China, we are pleased with the results of a smooth integration and effective cooperation. We invested in human resources, technology improvement, corporate governance, and marketing activities. And we are very pleased to see that As of November, monthly active users increased by 1.2 times since that acquisition. The introduction of the new version of Levdu is just a starting point. We plan to roll out live streaming services in this December and expect Levdu will contribute a meaningful share of revenue in 2021. We continue to build our global presence and improve brand awareness internationally. we introduced a major update to the Blue Mobile app in Latin America with optional photo verification and a streamlined user interface, reflecting Blue City support for the local LGBTQ community. The results are encouraging so far, with both MAU and DAU in some major countries increasing 40% compared to the pre-launch. We are confident to future developments through our marketing and operational efforts. Over the past few years, we have executed on a clear expansion strategy, serving the LGBTQ community globally with tailored features for local users. Now, I will go through our financial highlights for this quarter. Before I go into details about our financial results, Please note that all numbers presented are in RMB and are for the third quarter of 2020, unless stated otherwise. All percentage changes are on a year-over-year basis, unless otherwise specified. Detailed analysis is contained in our earnings press release, which is available on our IR website. Our total revenues increased by 47.3%, to RMB 297.6 million. Growth was driven by better monetization of our diverse services and rich content offerings, as well as geographic expansion. Revenues from overseas contributed 9.7% of total revenue, up from 5.6% from the same period last year. Revenues from live streaming services reached RMB 255.2 million up 42.9% from the same period of last year. Quarterly paying users for live streaming services increased by 22.8% to 159,000. ARPPU increased 16.4% to RMB 1,609, as promotional activities during the quarter increased the willingness of top users to pay for services. Revenue for membership services was RMB 18.2 million, up 56.4% year over year. Our quarterly pay users for membership services increased to 55.9% to 378,000, while ARPPU increased 0.3% to RMB 48. Our users have adopted fee-paying membership services quickly thanks to our rich content, customized services, and unique products. Revenues from advertising were RMB 10.1 million, up 38.8%. Other revenues were 14.1 million, compared with RMB 4.5 million from the third quarter of 2019. The increase was mainly attributable to the growth of our merchandise sales. Cost of revenues increased by 41% to $201.6 million, growing in line with our total revenue. The increase was primarily due to the growth of revenue sharing costs, along with the continued growth of live streaming services. We also had share-based compensation expenses related to the IPO. Gross profit was 96.0 million, up 61.7%, representing gross margin of 32.3%, 2.9 percentage points higher than last year. The improvement in gross margin mainly came from lower revenue sharing, as live streaming revenue was a smaller portion of total revenue. Live streaming was 57.4% of total revenue, down from 65.4% in the third quarter last year. As we have more members using the platform with more popular and growing attractions, we expect to further reduce the revenue sharing percentage with service providers and achieve a sustainability higher gross margin. Meanwhile, faster adoption of the membership services fee model, which is higher margin, means we can further diversify our revenue stream and shift to a subscription-based model. Looking at operation expenses, they were $240.7 million, up 255.2%. The increase was mainly due to the share-based compensation expenses relating to the IPO. Furthermore, they were in line with the growth of our business. We added more employees, enhanced R&D capabilities, and ramped up advertising in connection with our business expansion. Selling and marketing expenses were $58.0 million, up 86.3% year-over-year. The increase in sales and marketing were mainly due to the higher advertising and promotion expenses and staff cost, as well as share-based compensation expenses related to the IPO. Technology and development expenses were $50.3 million, up 49.5%. This increase was due to increase the headcount in technology and development personnel, as well as the share-based compensation related to the IPO. G&A expenses were $132.4 million, up 4,349%. The increase was mainly due to the professional services fees and share-based compensation expense related to the IPO. Net loss was RMB 137.8 million, compared with a net loss of RMB 7.1 million last year. The adjusted net income was RMB 7.1 million, compared with adjusted net loss of RMB 6.5 million last year. What a remarkable improvement. Going forward, We will continue to advance our live streaming models and upgrade membership services to promote the consumption of paid services. We will also broaden our user base within the LGBTQ community via prudent global expansion and selective acquisitions. We are confident in our long-term growth prospects. With that, let me offer guidance. We reiterate our revenue outlook of RMB 1,030 to RMB 1,070 million for the full year 2020. Therefore, for the fourth quarter of 2020, we expect the net revenues in a range of RMB 277 to RMB 297 million, representing year-over-year growth of 24% to 33%. That concludes my prepared remarks. Let's now open the call for questions. Operator, please go ahead.
spk06: Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. To ask questions on the phone, please press star 1 and wait for a name to be announced. If you would like to cancel a request, you can also press the pound or hash key. Once again, to ask questions, please press star 1. Our first question comes from the line of Laura Shampai of Loop. Please go ahead.
spk01: Good morning and thanks for taking my question. It seems in this quarter that live streaming posted very strong growth, but your guidance for the fourth quarter seems to indicate a slight slowdown. Can you give more color around the dynamics on live streaming revenues in both Q3 and heading into Q4? on specifically on the growth trajectory.
spk04: Thanks, Laura. This is Ben. Do you mind that I do a quick translation of your question to Mr. Ma? Okay. Mr. Geng. The question Laura asked is actually that she saw that our income growth in the third quarter of this year's live broadcast was still very good. But why didn't we adjust the annual income forecast? I plan to answer this question myself. Mr. Geng.
spk05: Okay, thanks, Laura.
spk04: Yes, we do have a very strong quarter of live streaming revenue contribution this third quarter as opposed to last year. But we do see the management also have a very clear position and vision that with the COVID-19 impact here in China gets less negative and everything is back to norm right now. So people would like to spend, consume less time online in general. So we do see in the fourth quarter that might be impacted to some extent and that is one of the critical reasons we would like to just hold this same guidance for the whole year. Laura.
spk01: Thank you. Another interesting dynamic for me anyway was that MAUs declined but you're paying sequentially. but your paying customers grew very rapidly. How did you drive the migration towards paying users, and what drove the slowdown in MAU growth?
spk04: Sure. Laura, I will do the translation to Mr. Gell first. Mr. Geng, Laura's second question is that she sees that our MAU is actually from Jiangsu. However, the growth of our paid users is very positive. She wants to know what good actions the company has made during this change to achieve the positive growth of the paid users. Mr. Geng, I can also answer this question directly.
spk05: OK. Let me make it simple first, and then you can add more, OK? When you translate it. Yes, the first one is mainly due to the influence of China-India relations in the Indian region. Our market promotion in India has shrunk a bit, so it has affected the growth of MAU. But in fact, it is not a regular growth expectation. We think that if China-India relations improve, then the growth of MAU is still very good. The second one is the payment of members. We have always believed that BlueD is a product that is absolutely leading in the vertical field. It is a product that has the definition of price and all kinds of play. The user's desire to pay is very strong. We are also very optimistic about the future growth and comparison of the user's payment. Now we can see that through two seasons, the number of paid users has increased significantly. We expect that there will be a good increase in revenue in the future. This is mainly due to the advantage of leading in the market, the strong payment capacity of the users, and the strong demand for social media. It is also due to the fact that our political team is constantly optimizing our payment scenarios, OK. Laura, actually, Mr. Geng made some quick, brief answers, and I will add more colors based on his statement. So Mr. Geng actually just
spk04: explained that one of your statements that why the MAU, the interest quota seems to have slowed down. The main attribution is just because we do have some challenging for marketing online or offline in India due to the geopolitical issue well known globally. And given that part was not even being monetized in history, so it does not actually affect our revenue. contribution globally. But it does impact the MAU, but does not impact the revenue side. That's one quick background for the detailed answers before we go into details. And then number two that Mr. Gong mentioned, that given we are right now the number one market share player, we do have our competence to have the strong engagement based on the sense of strong belongings of our users. So our users could be allocated from time to time, over time, quarter over quarter, based on our interesting and attractive features kept introduced on this platform. Number three is that our team, the management actually keep developing new features on this membership model that we keep improving the user's interface and feelings and joy on this platform in general. So that's a quick brief to your question, Laura.
spk06: Thank you. Thank you for the questions. I'll move on to the next questions from the line of Mayher from US Tiger Securities, please go ahead.
spk02: What is the reason behind the drop in revenue and share price? What is the trend of the future? The second question is about the acquisition of Finca. If the acquisition is now completed, what will happen to the financial situation for next quarter and next year? What is the current financial situation of Finca and potential currency? So I have two questions. First, about live streaming business in this quarter. We can see that the live streaming are full up-to-date, both Q&Q and YOY. What is the reason behind and how will be the future trend? Meanwhile, live streaming revenue sharing costs down a lot, both Q&Q and YOY. So what is the reason behind and how will be the future trend? So if we have completed the acquisition, how will FinCar impact our financials in terms of revenue or profit in the next quarter or next year? What is the potential or current monetization factor for FinCar? Thank you.
spk04: The first question is about the ARPPU and total revenue growth in this quarter. He wants to know what our management team thinks and what the reason is. The second small question is about the decrease in the share ratio of the live broadcast. He wants to know what the management team has to say about this plan. The second big question is about the FANCA that we acquired in 2020. It also wants to know the overall impact of the fourth quarter of 2020 and the annual income of 2021. At the same time, MEIHE also wants to know about the currency exchange in this FANCA product. What is the current situation and what are the company's plans and plans for the future? Mr. Geng, why don't you make a statement first? Mr. Geng, can you hear us?
spk05: Okay, I can hear you. The increase in the up value of live broadcasts is due to the refined operation of our operating team, especially for those who have paid for it, and through various income-oriented operating activities, it stimulates everyone to have more desire to pay for it. So in general, the income of live broadcasts in the third quarter has achieved a large area of growth. Then we can also see that our share ratio with the anchor is declining further. This is in line with one of the expectations of our management team. In the last quarter of the financial report, the investors of the second-hand market said that in the future, the two Qs will gradually decline and the share ratio of the anchor can reach a standard of transportation in the industry. 60% down to about 50%. Now it's just a process of downfall. We expect that in the future, the share ratio will be further downfall. So the company's revenue in terms of live broadcasts will also be further improved. So this is the first big problem. The second big problem is about the card flip. The card flip is currently a product with a level of revenue of one level per year. and achieved profit. However, we believe that this product is still in the early stage of commercialization. In the future, it still has a lot of opportunities to further enrich its payment scene, increase its playability, and more detailed operation to improve the user's payment desire and up value, and achieve a better scale of revenue. In addition, we also believe that Banka still has a lot of room for growth in user scale. We will use various operating methods and market promotion to increase the market share of Fanca and its user size. This will further improve the overall income level. After we acquire Fanca, we expect it to have a very valuable financial performance in Q4 and next year's financial income. Okay, thank you.
spk04: Should I do the translation? Okay, to anyone online, regarding the two questions just mentioned by Mei He from Tiger Securities and answered by Mr. Geng at an earlier stage, the question number one regards to the ARPPU growth and revenue growth, the reason, and also the live streaming revenue sharing slow down, sorry, been decreasing over time and the reason and the target. Okay, the key reason for ARPPU grow and also live streaming revenue in total pie growing is just because the measurement actually keep enhancing our operation for live streaming by developing more features to attract more attention from the online platform user in general. And we also do see that with this enhanced operation methodology applied over time, we are getting more and more attractive efficient rate from the live streaming through the DAU and MAU in general. And that's the key driver for the ARPPU and also the total revenue from live streaming. And the target of the management is definitely that given we are right now already the market number one player, of this LGBT community platform globally, we do have this strong negotiation power to the live streamers from time to time. And at this time last year, we still have around something between 66% to 70% revenue sharing to live streamers. And right now, based on the management's efforts over the four quarters just to pass by, that we have successfully achieved make it down around below 6%. And we are still trying every effort trying to bring that down to somewhere in between 50% to 55% in the next several quarters. So that is our tactic to enhance our gross margin by lowering down the live streaming sharing with the live streamers. The second question regards to the FinCAR's general financial performance to the next quarter and for the quarters in 2021, and also the business model diversity of this FinCAR product. Speaking of that, currently everything just completes from the paper acquisition-wise. And we are right now in the emerging sector of this deal. And everything is being audited right now according to the GAAP requirements. And we are going to share with detailed information as requested some time later. That said, still the total revenue annually is on the level of RMB 100 million something in general for a sharing information purpose only. And the monetization pie recursives from Finker were managed also by live streaming but with a very stronger than Blue Dap, the membership services in general. I think that's a quick brief of the questions and the answers.
spk06: Thank you for the questions. Next question comes from the line of Brian Lee of AMTD Group. Please go ahead.
spk07: Thank you for taking my question. Yes, it's a strong quarter as you mentioned. as your company turn profit this quarter. So my question on the expenses side. So if we deducted SBC and your adjusted OPEX ratio was 30% and declining substantially, sequentially, and also on a yearly base, so can this trend continue? When can you achieve the operating leverage on the sales and marketing? As we can see, the sales and marketing still accounted for nearly 20% of your total revenue. And in particular, you just acquired Fanky. So when can you realize the synergy with the acquisition? Thanks. I am very happy to see the company's profit this quarter. My question is mainly about the cost. We can see that the proportion of profit and loss is now about 30%, whether from the quarter or from the year-on-year ratio, it has dropped a lot. So I want to ask if this trend can continue. Secondly, I would like to ask about the cost of sales and marketing. Will there be room for further improvement in the future? In addition, we have just acquired Fanca. I would like to ask about the synergy cost after integration. Thank you. Okay, Mr. Gang. You can answer. Okay, sure.
spk04: Just for efficiency of translation, do you mind, Brian, that I just conduct in English to answer all questions?
spk07: Sure. No problem. Thanks.
spk04: OK. In general, our share-based compensation cost for this quarter actually touched based on the P&L in total is around 20 million US dollar or something. So that was huge, but that was just a non-cash accounting treatment in general. and most of them actually just in SG&A. So excluding them, you will conclude a very promising OPEX as percentage of total revenue grow. What I can tell you that this is very promising, but we do not see it going to just keep decreasing in this kind of pace. just because during the IPO process, I think we conducted over a year or so, that we do enhance a lot by building up, strengthening our corporate governance procurement process, election selection, tender process, et cetera. That was actually the legacy of our enhancing our corporate governance from the periods passed by. And this is just starting to impact from the quarter, in recent quarters. But we do not see that we'll just be, you know, in warm in next quarters onwards. So, yes, the result was promising, but we do not see it was going to be as aggressive at this pace in future. That said, still, we are going to optimize our operation cost as a percentage of total revenue in general. Yes, it is going to decrease, but not in that aggressive pace. That's the answer to this question. And regarding the S&M as percentage of total revenue, you mentioned as 20%. The management holds strong confidence that if we are going to grow bigger, we have to spend more. So the percentage as As in my last quarter earnings statement, I mentioned that 20% is just as healthy and as acceptable by management for S&M as a percentage of total revenue. So especially we are going to be a global company. So we are going to keep that level of percentage of revenue for marketing and sales. in general in future quarters onwards. For the synergy, I assume you were asking about for the cost and the GNA of OPEX, et cetera, for that synergy. Currently, yes. According to the agreed terms, We are going to merge our functional departments post-IPO, but we'll keep operating these Finca brands and business separately or independently for next several quarters, definitely. And we are going to optimize our human resource, to optimize our finance department, and also the legal procurement, et cetera, et cetera. Yes, of course, we are looking at a very significant opportunity that if we just combine the two procurement process together, that we definitely have a very stronger negotiation position to deal with vendors in general, especially for these IT-related, like the cloud, like the concept of moderation machine, et cetera, et cetera. Brian, yeah.
spk07: Oh, very detailed answer. Thank you so much.
spk06: Thank you for the questions. Ladies and gentlemen, in the interest of time, we will now take the last questions from Bo Pei from Oppenheimer. Please go ahead.
spk08: Good evening, Mr. Geng, and good evening. Congratulations. I have two questions. The first one is about Let's Do. It's been a while since our acquisition in August. I just mentioned some of the current process and future prospects in the Pre-Paid Remarks. Then I want to combine our acquisition of Finca and the strategy of overseas promotion in the future. I want to know if we have any relevant strategies for Let's Do to promote it overseas. Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan I have two questions. The first one is about last year and Finca. And we acquired last year in August. So I'm just curious about our overseas expansion plan, like... we mentioned in our prepared remark for Finca, we're going to promote these apps in the overseas market. So I'm just wondering if we have similar strategy for last two. And then the second question is about our overseas M&A strategy. I mean, since our IPO, our two M&A deals in China. So I'm just curious about our M&A strategy in the overseas market. And then is the global pandemic kind of slowing down our efforts in overseas market in general. Thank you.
spk05: 好呀,谢谢您的问题。 那我来回应你的问题,然后之后Ben来帮助补充和翻译一下。 首先回应Let's Do的问题。 Let's Do我们收购之后在很短的时间之内它的用户规模MAU的增长 Let's do the直播功能,那么它对于 The increase in the traffic flow of Let's Do users, the increase in the annual online hours of users, and the increase in income will be of great help. At present, the overall income of Let's Do is relatively small, but we expect that in 2021, Let's Do will contribute more to the whole company. This is the first question. The second question is...
spk04: Okay, let's do it.
spk05: Okay, I'll do the translation for the first question regarding Web4 Pay.
spk04: after about, you know, in general, the status quo of LAF2, which we acquired in this summer, and also any overseas expansion plan for LAF2 in general. So Mr. Geng answered that post-acquisition, the management are making great efforts to make the user growth of LAF2, and as earlier mentioned during the prepared remarks, that we have the MAU of last year actually increased by 1.2 times over those several months post-acquisition. Based on the product enhancement and also some limited marketing activities, we achieved these kind of results. With a heavier marketing activities conducted later, the management holds strong confidence that Lasto is going to be even stronger performed in general. Specifically that in this December we are going to introduce the live streaming features embedded in Lasto. Regarding the oversea strategies for Lasto, according to Mr. Gov's statement that yes, we are going to go overseas to surface the underserved global lesbian market. That said, still, our first priority is trying to win the market number one share player in China. So our tactic is trying to do China first as number one, then move to overseas. We see that is not in the long-term future. So that is our general plan. And my own add up to you, Peibo, regarding our general geography overseas expansion plan under such COVID situation is that, you know, again, our mission is trying to be an international LGBTQ community lifetime demand service provider. So we will never stop expanding internationally, globally, overseas-wise. So that is our, like our strategy, like the law of our general plan. That said, under such current situation, not just COVID, but also the geopolitical issues raised recently this year, that you can see from our earlier prepared remarks that we actually are trying to compensate alternative options through Latin America market. It's also a very attractive market, which we just recently introduced new products into those markets. So let's wait one or two quarters to see. how that performed, which the matchmakers do hold a strong confidence in that regard. That's the answer to question number one, Pei Bo. Mr. Geng, we can start. The second question, he wants to ask, after the IPO, these two acquisitions are all in China. He wants to know what our overall acquisition strategy is in overseas, especially in the current epidemic situation. Mr. Geng. Okay.
spk05: Then the impact of the epidemic is indeed on us before Some countries and regions that we have already started to contact Some potential investment and purchase landmarks are affected by some Because there is no way to meet, or even the local epidemic may be more serious Their local team does not have much time and energy to further negotiate with us And promote some potential investment and purchase opportunities But this did not stop us from using investment and purchase methods to sue us into some of these We still continue to promote such a strategy of local leading products in such areas. This is the first idea and idea about investment and acquisition. In addition, our international expansion actually has very clear ideas. In addition to acquisition, our internal recently also has three clear battlefields. The first battlefield is to consolidate and dig deep in the Asian market. Now we are absolutely leading us to further realize the decline of products and expand the market to acquire more users and increase revenue. The second sentence is to enter Lame strongly. We can also see that we have launched a localized version for Lame users in Q3. It is very suitable for local users to experience the habits and local network environment. At present, the increase in users of Lame version is also very pleasing. The third sentence is to gradually enter Europe and the United States. We believe that under the influence of Sino-US relations, and under the strict supervision of Europe's protection strategies for users' privacy safety, we are gradually improving our product collection and our strategy of entry. So we are gradually entering Europe and the United States. But in general, these three lines are all in line with the full coverage of the online traffic of this company to become the absolute leader of the global LGBTQ community.
spk04: Paypal and everyone else on the line, again, I would like to highlight before I go into the detailed answers translation to Mr. Geng's just now statement that our mission of this company, this platform, is trying to position ourselves as an international global success. service provider to serve the global LGBTQ community in general. So the second question from people regarding the M&A strategy over CUIs actually does have some interconnection with our global expansion plan in general. So Mr. Gong answered this question from two aspects. Number one, it's just a up to Apple answer that if there is an existing strong market dominant player that we would like to explore any acquisition opportunities with them first in order to save efforts and save time to acquire the customers in general in that market. If that new territory market does not have a you know, a presentable, good-looking target, our strategy for that market is trying to do it by ourselves, either to develop a new featured product or just to copycat our international version of Bluetooth in general. So that is the statement of our global expansion. M&A is only one of the options in general. My own add-up for this aspect, people, is that it's not just a restriction raised from the COVID, but also from many other aspects like geopolitical issue. These years, the China-U.S. tension, even India tension, et cetera, et cetera. That's also quite challenging for a China company going abroad. I believe everyone understands that. And also, the cost. I mean, cost does not really just only relate to the economic cost, but also the effort cost that even maybe the data protection cost, like the GDPR in Europe, et cetera. That echoes Mr. Goff's just now statement that our three tactics to go abroad. Let's take consideration for how we go abroad, either by acquisition or organic growth. The second aspect stated by Mr. Gong is that we do have a clear globalization strategy in general. Number one is that we are going to keep solid, expand, enhance our strong presence in APAC territories to keep dominating these markets by developing new features by doing more sales and marketing online, offline, and to help users get more engaged, et cetera, et cetera. Number two is that we do find another alternative market, Latin America. And we just entered into that market proactively since this quarter. And by this quarter, I mean the fourth quarter this year. And we do see, to date, the data, the KPI resulted from Latin MAP is quite promising, and we will take a serious study in this market, keep developing new features and doing more operation proactively in general to get that market to a more promising stage. The number three is that As Mr. Gunn mentioned, of course, you know, North America and Europe, the users actually, they were very, very good users. They are willing to pay. They are more well-educated. And they're good users. So definitely, again, back to my earlier mention, the law of this company, that we are going to be a success international company. We have to face the challenging to be moving to North America and Europe sometime in some way. And from now on, and even 2021 or 2022, we management already had a series of dialogue internally and preparation to try to get conquered, sorry, pardon my words, not conquered, trying to get some meaningful first step in that mentioned North America and New York markets table. That's the answers to the second question. Operator?
spk06: Thank you very much. Seeing no more questions in the queue, let me turn the call back to CFO Ben Lee for closing remarks.
spk04: Thank you, operator, and thank you all for participating on today's call and for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress. Thank you.
spk06: Ladies and gentlemen, that does conclude the conference for today. Thank you for your participation.
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