BlueCity Holdings Limited

Q4 2020 Earnings Conference Call

3/23/2021

spk05: Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Blue City's fourth and full year of 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 will turn the call over to Lingling Kong, Head of Investor Relations for the company. Ms. Kong, please proceed.
spk02: Thank you, operator, and hello, everyone. Welcome to Blue City's fourth quarter and full year 2020 earnings conference call. Joining us today are Mr. Bao-Li Ma, Chief Executive Officer, and Mr. Ben Lee, Chief Financial Officer. We released the results earlier today. The press release is available on the company's IR website at ir.blue-city.com, as well as from NewsWise 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 involving her 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 filing with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law. Please note that during today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. Our GAAP results and reconciliation of GAAP to non-GAAP measures can be found in our earnings release. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese Renminbi. With that, let me now turn the call over to our CEO, Mr. Bao Li Ma. Mr. Ma will deliver opening remarks in Chinese. I will then translate his remarks. After that, our CFO, Mr. Ben Li, will take over to discuss our business and financial highlights. Mr. Ma, please go ahead.
spk04: Thank you, Lingling. Hello, everyone. I would like to thank everyone for attending the fourth quarter of the Lan Cheng Brothers 2020, which is the year-round financial performance conference. 2020年是不平凡的一年,尽管在新冠肺炎疫情下的市场环境充满挑战,我们仍然专注执行增长战略并取得了令人鼓舞的成绩。 Thank you, Lingling, and hello, everyone. Thank you for joining our earnings conference call today. We had an exceptional year in 2020. Despite the challenging COVID-19 environment,
spk02: We remained focused on our growth strategy and achieved encouraging results.
spk04: 首先在纳斯达克证券交易所成功上市是公司发展进程的一个重要里程碑。 自20年前蓝城兄弟的前身淡蓝网成立以来, 我们一直致力于提升社会对LGBTQ社区的认知, 促进大众对LGBTQ群体的理解与包容。 First, our Nasdaq IPO was a remarkable milestone on our long journey.
spk02: Since founding our predecessor website over 20 years ago, we have prepared for the recognition and social acceptance of the LGBTQ community. Being a public company will further broaden our user base and help us to connect with the LGBTQ community globally. We believe we can make a wider and meaningful impact in the world with our unwavering goal to create value for society, promote diversity, and foster a sense of belonging for our members.
spk04: 其次,公司多元化产品矩阵策略的优势已经初见成效。 我们多点发力实现更灵活快速的增长。 例如,我们完成了Let's Do和翻卡的收购, 并将其迅速整合到整体的运营当中。 通过公司在运营经验和技术能力上的赋能, These two acquisitions further enhanced the company's leadership position in the LGBTQ community. After the acquisition of Let's Do in August last year, we soon launched a new version in the fourth quarter. By February 2021, Let's Do's monthly active users increased by 3.1 times during the acquisition. Fangca's monthly active users also reached a new high of 730,000 in December last year, which increased by 15% during the acquisition a month ago. In the fourth quarter of 2020, the number of active users of the company's products has reached 7.6 million. The acquisition of Let's Do and Fanca is the beginning of our multi-brand cooperation and all-person coverage strategy. Through continuous optimization of the company's technology and operating system, we provide full support to each independent brand in the company, and provide differentiated services to different groups in the LGBTQ community. We expect this strategy will accelerate the growth of each brand,
spk02: Second, we demonstrated the strength of our portfolio strategy. We can prove different levers quickly, which makes us agile and able to grow faster. For instance, we acquired and quickly integrated Let's Do and Finca into our operations, leveraging our experience and technology Those acquisitions strengthened our leadership position in the LGBTQ community. After acquiring Let's Do in August, we quickly introduced a new version in Q4. As a result, by February of this year, Let's Do's MAU increased 3.1 times since the acquisition. Meanwhile, Finca's MAU reached a historic high of $730,000 in December, representing 15% growth in one month since the acquisition. In the fourth quarter of 2020, our total monthly active users of our portfolio app reached 7.6 million. These two acquisitions were the beginning of our multi-brand, multi-demographic strategy. They enabled us to leverage and optimize our technology and operating system to support each unique recognizable brand, and provide differentiated services in each specific group of our community. We intend to accelerate the growth of each brand and believe they will soon make meaningful revenue contributions.
spk04: Third, based on the geopolitical situation and local market conditions, we will regularly evaluate and adjust the expansion strategy of the global market. We will evaluate and adjust the expansion strategy of the global market. We will evaluate and adjust the expansion strategy of the global market. to launch customized products and services. For example, we have made major changes to the Latin American BlueD application and received positive feedback from local users. As of February 2021, the number of active users in Latin America has doubled since the release of the new version. It has created a historic height in Mexico and Brazil. Looking forward to the future, we will continue to launch more localized and diversified services.
spk02: Third, we regularly evaluate and adjust our global expansion strategy based on the geopolitical situation and local community readiness. In each region, we customize our offering according to user behavior and the needs of the local community. For example, we introduced a major update to the Blue Mobile app in Latin America, which generated positive feedback from local users. By February 2021, MAU had doubled since the launch of the new version, reaching record highs in both Mexico and Brazil. Looking ahead, we will continue to introduce more localized and diversified services tailored for the local community.
spk04: Fourth, we will continue to optimize the organizational structure of our company. In order to improve operating efficiency, from the beginning of 2021, We will reorganize the structure of the original smart division into a structure dominated by the business department. This adjustment will provide the business department with more flexibility to quickly respond to the latest changes in the network social industry and the LGBTQ community. More importantly, this will further accelerate the company's product innovation and optimization. In addition, we have attracted and retained excellent talents to support the new organizational structure. First, we improved our organizational structure in order to maximize our operation efficiency and productivity.
spk02: Starting from 2021, we reorganized our company from a functional structure to a business unit-oriented structure. This will enable our BU leaders react quickly to the dynamic changes in the online social networking industry and the LGBTQ community. And more importantly, it will further accelerate our product innovation and optimize our product offerings. Furthermore, we attract and retain great talent to support this new organizational structure. We have two new vice presidents with 10 years of experience focused on internet-enabled products, user growth, and global expansion. They will lead domestic and overseas business, respectively, and manage the whole operation together. We look forward to working with them closely and benefiting from their valuable insights and extensive experience.
spk04: I am honored to be selected as the most responsible business list in China by the Chinese Social Research Center. Recently, I am also honored and excited to be selected as the first business leader in China in the list of 100 leaders of the global LGBTQ leaders in Involve 2020. Involve is an international organization that advocates diversity and inclusion in business. Finally, I want to mention our efforts in corporate social responsibility, or CSR, which is one of the most important aspects of our culture.
spk02: Since our founding, we have been dedicated to creating value for society and promoting diversity. In June last year, we were honored to be ranked as one of China's top companies for corporate social responsibility, as compelled by the China CSR Research Center. More recently, I'm excited and honored to be the first person from China mainland to be recognized as the outstanding 100th LGBT executive list from Involve, a global network and consultancy campaigning diversity and inclusion business. These remarkable accomplishments demonstrate our commitment to CSR. We want to make this a better tomorrow for everyone, and we believe our greatest impact on the world will come from our growing global presence and associated CSR efforts.
spk04: Now let's move on to our growth strategy in 2021. For years, we have consistently executed our long-term strategy. Let me give you some updates on our latest thinking. increase the connection with the LGBTQ community, and improve the sense of community belonging to users. We are committed to creating a comprehensive community platform for BlueD, by enriching the activity of the community through rich videos and base content, launching new functions to enhance the attractiveness of live broadcasts, and launching more kinds of member service products. Secondly, we will continue to take advantage of the huge advantage of products, increase technology investment, improve product functions, and strengthen market promotion.
spk02: First, we continuously enrich our products and service offerings to engage and cultivate our community more deeply. We are committed to build our Blues app as a comprehensive community platform through offering more video content and promoting community function to drive up engagement, making the live streaming model more attractive through innovation and offering more options for membership services. With Let's Do and Finca, we are investing heavily in technology and marketing and leveraging on the strengths of our product portfolio to expand our user base and achieve faster revenue growth. Domestic growth is the first pillar of our growth strategy.
spk04: Secondly, we are actively developing overseas business. The company is still in the early stages of global expansion and has a lot of room for development. By entering the new market and strengthening the current market leading position, we will achieve the growth of the overseas market. Latin America will be the focus of the overseas expansion of the company in 2021. We believe that localized products and online and offline operations can quickly attract users. By strengthening overseas live broadcast management and perfecting member service pricing system, Second, we are expanding business overseas. We are in the early stage of global expansion, which leaves us plenty of room to grow. We will drive growth through entering new markets,
spk02: and strengthening our leadership in existing markets, such as Latin America, which is a focus for 2021. We will continue to localize product offerings and run various online and offline events to quickly attract users. We further accelerate monetization in mature overseas markets through well-managed live streaming operations and better pricing of membership services. In addition, We see a huge potential for PINTA to expand overseas because the product is more appealing to younger generations, and we hope we can achieve meaningful progress in the second half of this year.
spk04: Health services based on the prevention and treatment of AIDS have a huge potential for development. We believe that the health service platform that we are widely praised for, Health Health, will become the second growth engine of the company. In the fourth quarter, Health Health's income has increased more than 8 times, to 11.4 million yuan. Next, we will use the operation method of the Internet hospital to create a comprehensive health treatment platform for the male community.
spk02: Third, we are pivoting our service strategy from family planning to strictly health-related products and services. The family planning business never gained great traction, while health-related service centered on HIV prevention and treatment has huge potential. We believe heHealth, our well-recognized health-related service, can be the engine for our next phase of growth. In Q4, revenue from heat health increased more than eight times year over year, reaching 11.4 million. We intend to obtain an internet hospital license and build a comprehensive diagnosis and treatment platform for men's health.
spk04: Now let me hand the call over to our CFO, Ben.
spk02: who will provide details on our business and financial performance.
spk03: Thank you, Mr. Ma. And thank you, everyone, for joining our call today. For the fourth quarter, total revenues were RMB 278.9 million, up 24.2% year-over-year. We remain committed to enhance our monetization capability and diversify monetization methods in order to generate sustainable growth. We are pleased that our revenues from membership services and eHealth continue to achieve robust growth in this quarter. Monthly average users on this Blued app grew by 12.5% year-over-year, reaching 6.6 million, out of which 47% MAUs were from overseas. Monthly active users on our non-Blued apps reached 980,000. DAU over MAU for this quarter on the Blued app remains stable at 44%. Total paying users on the Blued app were 518,000, up 37.9% year over year. In addition to our solid financial growth, we also made meaningful progress in product innovation. We launched a voice chatroom function on the Blued app in mainland China. Users can join chatrooms to have real-time, community-focused audio conversations with other members based on their preferred language, friends, and interests. We believe this function will resonate with users and expect a full rollout sometime in April. A separate voice-based app called BooYin for our community users is expected to launch by mid-April. Together with the community feature and catch function we introduced last quarter, we have been relentlessly devoting resources to product innovation that improves the user experience and deepens the bonds of our community. We continue to drive LGBTQ awareness A recent example was the Let Love Go Home campaign, launched to coincide with the typical family reunion activities of the Chinese New Year holiday. This campaign helped our community members to find a greater sense of belonging at home and cultivate more acceptance from family, thus bridging the gap between generations. On January 30th, We livestreamed an online roundtable session between an openly gay influencer and his mother, who together candidly discussed his experience in announcing his self-identity. In March, we also partnered with UNAIDS on their Zero Discrimination Campaign that aims to end discrimination and inequality in the Asia-Pacific region. Blue City brands such as Blut, Latu, Finca, He Health, and Dunlop Public Interest together voiced their opposition to prejudice of all kinds, especially that based on sexual orientation and gender identity. The campaign was executed using a combination of themed posters, interview with experts, live broadcasts, and short videos. These successful events increased our visibility and strengthened our dominant leadership in the global LGBTQ community. Going forward, we will organize and participate in a wider variety of social and public events to promote LGBTQ awareness around the world. Finally, I want to note our enhancement of corporate governance. We are currently upgrading our ERP system with Oracle EBS which streamlines business process, facilitates information flow between all business functions and finance reporting based on a well-designed control infrastructure. We expect this project to be completed in the first half of this year, and it will improve our overall efficiency and the integrity of financial reporting. Now, I will go through our financial highlights for this quarter. Before I go into details, please note that all numbers presented are in RMB and are for the fourth 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 earnings release as well as our IR website. Total revenues increased by 24.2% to RMB 278.8 million, driven by better monetization of our diverse services offerings. Revenue from overseas contributing 9.5% of the total revenue increased from 5.1% in the same period last year. Quarterly paying users on the Blued app increased by 37.9%, to $518,000. Revenue from live streaming services was RMB $223.9 million, up 18.7%, mainly due to more paying users and higher average spending per user on live streaming services. Our quarterly paying users for live streaming services increased 8.6% to $144,000, while ARPPU was RMB 1,550, an increase of 9.0% compared to the same period of last year. In the fourth quarter, we launched a new live streaming strategy that drives engagement in large group of our meat layer and long tail users with limited spending power, such as promoting new features to enhance participation and developing more first purchase incentive features to cultivate paying habits. This new strategy complements our current high spending program and provides differentiated and diverse options to different cohorts of users. On the supply side of live streaming, we are inviting more talent agencies and promoting more individual live streamers to join our talent agencies. Those initiatives create a good ecosystem for consistent improvement in producing higher quality diversified content and, in turn, to attract and retain our users. Those adjustments of strategy brought temporary pressure on our short-term performance of live streaming services. But we believe the strategy provides holistic solutions and would pave the way for a more sustainable model, which can be exported to our overseas market and other product portfolios. Revenue from membership services was RMB 22.2 million, up 46.5%. Our quarterly paying users for the membership services increased 51.5% to 415,000. Pardon me, 415,000. While ARPPU was RMB 53.6, roughly flat compared to the same period of last year. We expect accelerated growth for our membership services as we drive monetization efforts in both domestic and overseas markets. Revenues from advertising were $19.0 million, up 35.4%. Other revenues were $13.7 million, up 108.7%, driven by growth in e-health merchandise. Cost of revenues increased by 29.0% to $209.3 million. COGS is composed mainly of revenue sharing costs and commission costs. The increase in COGS was primarily due to two reasons. First, the seasonal effect. We usually share higher incentives to streamers during our year-end events, especially for the year, To celebrate our successful IPO, we offered an even higher year-end bonus to our best performing talent agencies and the live streamers as a special thanks. Second, as we mentioned, the new strategy that we launched in live streaming services, which resulted in higher cost. However, we believe it will generate a higher lifetime value and increase transaction volume and frequencies. We expect those investments will be paid off in the second half of 2021. Gross profit was $69.5 million, up 11.8%. Gross margin was 24.9% as compared to 27.7% in the same period last year. The year-over-year decrease in gross margin was mainly due to the relative slower growth of live streaming service revenue and the one-time live streaming related costs incurred for this quarter. Operating expenses were $143.6 million, up 82.5% due to increase in selling and marketing expenses and staff salaries, and IPO-related share-based compensation. Selling and marketing expenses were $49.7 million, up 56.7% due to higher advertising and promotions in overseas markets. and increased the headcount in sales and marketing personnel. Technology and development expenses were $37.3 million, up 9.0%. The increase was mainly due to the increased staff cost in technology and the development personnel. GNN expenses were $56.5 million, up 345.5%. The increase was mainly due to share-based compensation expenses, as well as increased professional fees and staff costs. Net loss was RMB 73.1 million, compared with a net loss of RMB 7.2 million last year. Adjusted net loss was RMB 36.0 million, compared with adjusted net loss of RMB 15.0 million last year. For full year of 2020, our total revenue increased by 35.9% to $1.03 billion, driven by the increase in the total paying users of our online services and the diversity of our revenue streams. Gross profit was $311.0 million, up 46.2%. Gross margin was 30.2%, improved by 2.2 percentage points from 28.0% in the same period last year. The increase in gross margin was mainly benefited from the reduced live streaming revenue sharing percentage and the higher revenue contribution from membership service. Net loss for 2020 was RMB $221.9 million, compared with net loss of RMB 52.9 million in 2019. The increase was primarily due to share-based compensation expenses related to the IPO. The adjusted net loss for 2020 was 39.9 million, narrowed from the adjusted net loss of RMB 52.9 million in 2019. As of December 31st, 2020, We had cash and cash equivalents and term deposits of RMB $611.8 million compared to RMB $380.3 million as of December 31, 2019. Now, let me talk about next year's guidance. We expect our revenue outlook of RMB $1.41 billion to RMB 1.46 billion for the full year 2021, representing a 37 to 42% year-over-year growth. However, the year-over-year growth for the first quarter of 2021 will remain relatively slower, primarily due to our newly adopted new live streaming strategy, as well as a large increase in the number of paying users in first quarter 2020 during the COVID-19 outbreak. which resulted in an unexpected revenue growth. We expect that the robust revenue growth will resume in the second half of 2021. Well, that concludes our prepared remarks. Let's now open the call for questions. Operator, please go ahead.
spk05: Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephones and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Once again, it's star and the number one on your telephone keypad. Your first question comes from the line of Laura Champagne of Loop Capital Management. Please ask your question.
spk01: Good morning. My first question is about the changes to live streaming. Could you be more specific on what the expenses were related to those changes, and in what way do you expect that to increase lifetime value of your live streaming customers?
spk03: Shall I translate to Mr. Ma first? The question on Laura's question is about what we just talked about in our presentation. The income from our live broadcasts has been affected by our strategy adjustment. He wants to know more about how we can improve our strategy by talking more about the long-term effect of it. The strategy adjustment includes several aspects. The first aspect is that we have improved the share ratio of the regular streamers.
spk04: In this way, we can encourage more ordinary people, non-professionals, non-professionals, non-professionals, non-professionals, non-professionals, non-professionals, non-professionals, non-professionals, non-professionals, non-professionals, more professional broadcasters can become our professional broadcasters, so that they can receive more benefits. The third is that the main income we had before was from broadcasters receiving rewards. Next, we will face the broadcasters and the union, there will be some fee services. For example, they can buy our services, Okay. Hi, Laura. And there are three points regarding to your questions.
spk02: The first one is that actually comparing to the percentage of revenue sharing with talent agent, usually the ordinary person, like the ordinary streamers, share a lower percentage. And we intend to increase that to give, you know, actually to increase the engagement from the ordinary streamers. And in turn, that will attract more that will attract more users to join our platform and hopefully we can improve the number of paying users in the channel. The second is that actually we are inviting more agent talents to join our platform. Currently we have a quite limited number of talent agencies on our platform and we are going to invite more agent talents tailored agencies to provide more kind of professional and high quality content on our live streaming platform. The third is that before, you know, from the revenue side, from the revenue side, we actually, the revenue are recorded from the paying users virtual gifting. And we are intent to launch new features to the streamer side generating the revenue from streamer site, which they can, you know, through our platform, they can purchase like promotion tools to increase the traffic to their own channel. Yeah, that's the three points.
spk01: Thank you. And last question, on the launch of your business in Latin America, how will that compare in terms of, push, initial push compared to your launches outside of China into other Asian countries?
spk03: Laura, I'm sorry, we are not quite following you clearly. Can you repeat that question?
spk01: Sure. Your initial advertising spend or your initial launch spend to launch Latin America, how will that compare with your initial spend when you launched Blue Cities apps outside of China into other Asian countries?
spk02: Thanks, Laura. I will translate your question. Is there any difference in marketing in Latin America compared to other countries? In fact, the most difficult stage in promoting social media products is the new cold start stage in a region.
spk04: When it reaches a certain network social effect, then the market cost will be reduced accordingly. Because its reputation and social network will produce a market effect. Then we found that we are in Southeast Asia. All countries have continued to lead. After that, we put our focus on Latin America. But Latin America's advertising channels are basically the same as other regions. Mainly, it still includes three directions. The first is Facebook. The second one is Google. The third one is some local market operations. So from the cost of single new members, it is between Southeast Asia and some areas like Japan and South Korea. So we think the cost of advertising is more concentrated and controllable.
spk02: Okay, I will translate Mr. Ma's answers. The first, Laura, actually, you know, for every new app entering into new markets, the initial launch always is the most difficult part. Okay. And we intend to spend more on the initial launch, and after that, once we gain the reputation, we can easily, you know, spread our brands and to attract users through word of mouth. And as we are in the leadership position in Southeast Asia, we can quickly leverage the marketing channels into Latin American market. Actually, the marketing channels are quite similar to the Southeast Asia market. we usually tend to use Facebook, Google channels, as well as running offline events with local agencies. In terms of the average spending, we see that it's kind of mid-layered, in the middle between our high net wealth countries such as Japan, Korea, such as Japan, Korea. It's like the middle range. Okay. Thank you.
spk01: Thank you.
spk05: Your next question comes from the line of Gopay of Open... 管理層,大家晚上好。我有兩個問題,我先中文問一下,然後我自己再翻譯。
spk08: First of all, we have a slight decrease in growth in the fourth quarter. And then, this year's seeding has a process of acceleration. So I want to ask about our growth strategy for the whole of 2021. Especially, we said that He'er Health will become our second growth engine. So I want to know what we need to do in this regard. uh uh uh And thank you. I will translate for myself. Grieving management, thanks for taking my question. So I noticed our revenue growth slowed down slightly in 4Q, but our 2021 guidance implied a growth acceleration this year. So just wondering, can you talk about the growth strategy this year, especially for heat health? You mentioned it's going to be our second growth engine. So can you talk about the required investment in this business and can you also talk about to achieve the revenue growth in our guidance, what else investments do we need to do for this year? And then my second question is about our M&A strategy. Can you also talk about our M&A strategy this year compared with last year and then Where will our target be? For example, is it in China or overseas market to expand our international footprint? Thank you.
spk04: Thank you for your question. I will answer the first question first. The amount of income guidance in 2021 was carefully calculated by all our business departments. The standard of this calculation is based on the expansion of our MAU users and the commercialization rhythm of each of our business departments. Then, based on our development trend, we finally calculated it. There are probably several directions. The first is the continuous growth of our overseas income. Our commercialization abroad has always been more resilient and steady. Then this year, we will continue to make an impact on live streaming and member income. We believe that this year's income growth will be relatively closer than last year. Then this income, we are confident that we can have a relatively high number of growth than last year. Then the second one is from our acquisition of Fanca. We believe that the commercialization of Fanca has a huge space that can be dug up, including their It's very diverse. Its membership rate is about 30%, membership rate is about 40%, advertising rate is about 30%. It's about this kind of proportion. It's very diverse. So its membership rate is We believe that our revenue growth engine should come from Blue Deep's VS, which is the member growth service. We always believe that social and community-based products' member growth revenue is a Thank you. We believe that the VAS will be greatly improved. I would like to focus on the health care you just mentioned. We believe that for this company, health care will become its new growth engine or the second curve of our company's development. We believe that this is also a huge business opportunity for us to see from our current health care business. For AIDS, or for all men with privacy-related diseases, We think we have a huge competitive advantage. First, we have the advantage of traffic. Second, we have the advantage of medical treatment for diseases, including cooperation resources for hospitals, cooperation resources for doctors, and cooperation resources for the pharmaceutical industry, etc. So He'er Health can break through our two boundaries. The first boundary is the boundary of the male and female community. In other words, it can provide Internet medical services for more male groups. The second boundary is that it can break through the boundary between a single S-BIN online clinic and a treatment platform. It can provide medical services for more male-related diseases, such as privacy-oriented diseases, such as hair loss, weight loss, skin care, and other male-related services. In fact, our internal model is called HEMS Plus. In other words, we use the HEMS model in the United States to convert it into a local model and then upgrade it. So our internal model is called HEMS Plus. We hope to create a platform that provides health and medical services to all men in China. So what we haven't revealed in this announcement is that in fact, We have already received a lot of photos from the Internet hospitals. We believe that there will be a huge room for growth in this area. We have also conducted a deep market survey. We found that the commercialized model of privacy-related diseases, from wiretaps to advertisements, and then to Pu Tian Hospital, needs to rely more on Internet-based medical services. Firstly, it can reduce costs, and secondly, it can protect privacy. So for the first question regarding the growth strategy in 2021, I will answer this question in four parts. First is the monetization opportunity overseas.
spk02: and we see a great potential in overseas market, especially in live streaming and membership services. Before that, we are in the very early stage of monetization overseas, and we will enhance the operations in live streaming and provide more membership service products and offerings to cultivate the paying habits of overseas users. Therefore, we see a huge potential of revenue growth overseas. Second is the revenue contribution from Finca. And after like three months of integration with Finca, we found that there is still plenty of room to grow for Finca's business, especially in live streaming and membership services. We found that based on Finca's user profile, they have a higher willingness to pay for high quality services. Currently, FinCAS revenue structures tend to be more healthy. It's like more than 30% from live streaming, around 30% from advertising, and another 40% from membership services. Therefore, that leveraging on our financial support and the technical technology support we will offer more features in live streaming and in membership services to drive our paying ratio of thinker users third is that we would continue to see there is a huge huge growth opportunities in BlueD membership services. As you know, that membership services is a recurring revenue and have higher growth margin. For BlueD membership services, we will offer more interactive features. We will add in more features to behind the paywall, trying to our users' paying habits and in turn increase the paying ratio of our users. Fourth and the latest is our, as you mentioned Bo, is our he-house strategy. He-house, internally what we position he-house as him-plus. It's like that he-house will be our new home driver for our recent years. First, the opportunity for HE Health is huge. That we started from providing HIV-related services, and then we can quickly expand that service scope into more healthy privacy-related services, and into well-being of men's health. And we see that through the partnership with pharmacies and pharmacy manufacturing pharmacies, we can easily take leverage on the pricing negotiation. And we see that. And right now, we are going to obtain the internet hospital license in the near future. And we are pretty confident that we can build a comprehensive mental health platform and wrap up that business very quickly.
spk04: Okay, let me answer your second question about some investment and purchase plans. We have always defined Lan Cheng Brothers as a company that hopes to be able to master all the traffic of the global online and offline LGBTQ people. Then we will continue to provide this group of people with this life-long commercial service of such a business strategy of such a company. So we have never given up on some similar to our company's vision and to be able to expand our business boundaries. There are some companies that have highly cooperated with each other. At present, we are also actively communicating with some companies in the US, Japan and the European market. Well, for your second question, sorry, let me translate the answers first.
spk02: Thank you. And first, based on our mission is that we are trying to be a comprehensive lifetime provider for the LGBTQ community. So we choose our acquisition target more carefully. We tend to choose the target, share the similar vision with us. And through that, we keep active dialogue with our potential acquisition targets in America, Japan, and Europe, keep a good dialogue with them, and seek for any opportunities so that we can work closely together through partnership or other forms of M&A. Thank you.
spk08: Okay, thank you.
spk05: Your next question comes from the line of Brian Lee of AMTB Global Markets. Please ask your question.
spk07: Thank you for taking my question. Congrats on your solid fourth quarter results. My question is about the two successful M&A deals last year. As you have included the MAUs in the latest reports, so could you please add more color on the integration plans? And when will you expect the company can benefit from the synergy achieved? on the M&A deal. Thanks.
spk04: Actually, from the recent two purchases, their business growth, we can see that our company's strategy of covering more LGBTQ communities through product verification has initially manifested its effect. As of February 2021, Let's Do's monthly users have increased by 3.1 times compared to the time of acquisition. Then, Fanca's monthly users also reached a new high of 730,000 in December last year, It's hard to find a product that can cover all LGBTQ people, including boys and girls, as well as people from different cities. including the three and four-line cities, because the differences in the population and the demand for Internet products are actually different. Including the upcoming product that we are still working on, which is an LGBTQ voice companion product. It also provides services for users who need emotional companionship and entertainment companionship. This product is called Alarm. It should be released soon, and everyone can see it. such products can help us to cover more of such groups. Of course, we have our own slogan inside, which is that we want to be a match group of LGBT people, that is, through different products to cover different types of people, different generations of people, the LGBTQ people. This is in line with our strategy. So we also think that Let's Do is good, Fanca is good, including the upcoming sound wave, as well as the new products that will be hatched in the future and the new products that will be purchased. And thank you for your question, Brian. And let me just a simple translation here. Actually, we're quite pleased with the integration of Finca and Lexu. You can see that the MAU growth
spk02: of Finca Alessu are very encouraging. You can see that in our script. And we haven't disclosed the latest MA use of Finca. It's like it's reached even higher compared to the end of last year. So it's like that our portfolio strategy has proven to be right. And through our portfolio strategy, we can serve more users. We can extend our user base. And each of our portfolios will position them quite differently, try to serve more different group of users. For example, we will quickly launch another voice-based app called Boeing. And to try to cover more users, who like to use the voice-based app. So internally, we aim to be, you know, the match group in the LGBTQ community and we are trying to launch more new apps or new features, try to cover and serve more different groups within the LGBTQ community. Thank you.
spk07: Thank you.
spk05: Your last question comes from the line of Austin Maldo of Canaccord. Jen, would you please ask your question?
spk06: Hi, thanks for taking my questions. Within live streaming, can you talk about which products have the most meaningful revenue contribution currently and what new products have the most potential for growth going forward?
spk03: I will do the translation. Thank you, Austin. Nice to hear you again. This is Ben, and I will do the translation to Mr. Wang first. His question is, in addition to live streaming, which other income do you think is very good and is more important? And in the future, which income is most potential? I prefer these two. The first is VAS, which is member income growth.
spk04: Hi, Austin.
spk03: This is Ben. I'll just do the translation myself. Okay. Mr. Ma just explained that for existing revenue pie that the, apart from the live streaming, he deemed, or the management deemed that the membership services revenue is going to is actually taking a very majority important role for now. And for future, the most potential impactful revenue service pie contributor is coming from the health-related services, Austin.
spk04: From a single disease, there are about 1 million people with AIDS in China. The online treatment service is almost zero. No one provides them with such a service. But they need to take medicine for life, and they also need to add various health care products and regular check-ups and treatments. So we think that this single disease, the treatment of AIDS, if one million people put it online, it will be a huge commercial opportunity. Not to mention those who are in need of prevention and prevention of AIDS,
spk03: Regarding the so-called health-related services, actually it mainly relates to private treatment for men here in China. So currently we do see the HIV-related treatment for the pre-prophylaxis, exposure prophylaxis, and post-treatment, et cetera. Actually, the HIV community here in China we had our internal analysis is around 1 million population. So we do see it is going to be a huge, because people have to taking lifetime drugs to get a qualified treatment. So we do see it is going to be a recurring revenue and a best entry port. for us to get into there, not to mention that HIV treatment is only a start for the private treatment for men here in China, and also other demands from men, like the hair issue, like the sexual malfunction issue, et cetera. Austin?
spk06: Thank you for that. Just following up a little bit, what live streaming products drive the most live streaming revenue? And what are some new live streaming products you're excited about?
spk03: Interesting question. I'll do my translate. Austin asked a more interesting question. He wants to know, in the live streaming industry, are there any new plans for products? For example, any fun, new things? You just introduced a 2B thing. Yes, we're about to launch a new feature called Lighting.
spk04: Austin, we have to say, you know,
spk03: so-called virtual gifting model for live streaming is kind of existing for years. So we keep innovating by developing new features, trying every effort to figure out what to do to better leverage our position for live streaming revenue service contribution to our revenue pipe. And what Mr. Ma explained is only one example. That's too minor. Okay, I'll explain because his earlier speech was also mentioned that You know, currently our revenue mainly from the people who purchase the virtual gift platform, right? So actually, sooner or later, we are going to develop a new feature that actually the live streamers might purchase some services, features from the platform. So basically, we are telling you that we are going to just not doing the monetization from the viewers, audience side, but also from the live streamer side. That's number one. Number two, Mr. Geng just added that, for example, we're going to create some interesting functions like taking the number, the room number. You know how important for a room number for a lucky trial here in China, right? Number six, number eight, meaning lucky, et cetera. Are we going to develop something like that, say, taking a downpour? So we keep innovating from time to time, yeah, often.
spk06: Thank you. That's very helpful. My last question is regarding competition. When you launch into new overseas markets, for example, in Latin America, where you're focusing in 2021, Do you typically find one or two well-entrenched competitors that are already there, or is it typically a very fragmented market that doesn't have any scaled competitors of note?
spk03: That's easy answer. But anyway, his question is mainly about competition. He wants to ask, for example, when we compete in Latin America, we will see if there are already one, two, three more mature players in the field, or if there are too many small players there. He wants to ask a fact.
spk04: The reason why we remember Latin America is because we found that the second largest market for competitors in the US, the second largest market for users, is in Mexico. So we believe that in the Brazilian-Mexican market, there is a huge opportunity for traffic and growth. We have done in-depth research on the episode of the competitors and the comments of the users and have done in-depth user research. We can understand that the existing users are dissatisfied with the product of the product, so we have launched the BlueD, which is in line with the habits of users in the Latin American region. As I just said, this product is online, In the past few months, the number of users has increased by 100%, which is more than double. We believe that these two main areas, as well as the entire Latin America, are very open, tolerant, and legal. Secondly, the entire population is very fond of social media. Yes, sure. I think, actually,
spk03: In Latin America, there are only one named, actually, the so, you know, famous U.S.-based competitor of us already there. And due to the population, you know, Latin America has a large population over there. And also the user behavior, that product was kind of very popular already on site. So basically, as a latecomer, we enter into those new markets. We have to deal with it very carefully, starting from a market analysis. We interview, we engage with third-party consultants to understand the user behavior and engagement based on those local players and the local users in a general manner. And also, we identify those gaps, the demands of the users locally who have not been satisfied by the existing player. So back to your question directly that there are only one meaningful peer in Latin America market, yet still there is some demand. We do see a huge opportunity. We could do something meaningful over there in general. Austin?
spk06: Okay. Thank you very much for taking my questions.
spk03: Sure. Okay. Okay. Thanks. Okay, I think that's all, operator.
spk05: All right, we are now at the end of this call. If you have more questions, please contact us by email directly. Thank you. Let me turn the call back to Mr. Lee for closing remarks.
spk03: 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.
spk05: Ladies and gentlemen, this concludes today's conference call. Thank you. You may disconnect your line.
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