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spk04: Good day, ladies and gentlemen. Thank you for standing by and welcome to the Blue City Second Quarter 2021 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 for the company. Ms. Kong, please proceed.
spk02: Thank you, Operator, and hello, everyone. Welcome to Blue City's Second Quarter 2021 Earnings Conference Call. Joining us today are Mr. Bao-Li Ma, Chief Executive Officer, Mr. Alfred Ng, Chief Strategy Officer, and Mr. Jim Jensen, Acting 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 News Live 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 reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. Also, please note that, as otherwise stated, all figures mentioned during the conference call are in Chinese. 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 CSO, Mr. Ng, will take over to discuss our growth strategies. Then, our acting CFO, Mr. Sun, will provide details on our financial highlights. Mr. Ma, please go ahead.
spk07: Thank you, Lingling. Hello, everyone. Thank you for attending the second quarter of the 2021 Lancheng Brothers' financial phone conference.
spk02: Thank you, Lingling, and hello, everyone. Thank you all for joining our earnings conference call today.
spk07: 我们对所有业务线的健康发展感到满意。 总收入同比增长18%至人民币2.919亿元。 其中荷尔健康收入同比强劲增长了134.5%。 会员服务收入也同比大幅增长了113%。 旗下产品矩阵的MAU同比增长29.3%达到了830万。 We are pleased with the healthy growth across all our business lines.
spk02: Total revenue grew by 18% year-over-year to $291.9 million, with a strong revenue growth of 134.5% year-over-year from eHealth and a 113% year-over-year growth from membership services. All app MAUs grew by 29.3% year-over-year, reaching $8.3 million. More excitingly, the continuous user growth momentum sets a solid foundation for expanding user engagement and incremental monetization opportunities. In this quarter, our total paying users reached 724,000, up 58.1% year-over-year. This results fully demonstrates our ability to drive study and healthy growth through improving monetization capability and outstanding execution.
spk07: At the end of July, we launched the online consultation service of He'er Health, which is also exciting. The wide range of users and patients can communicate online with dozens of well-known doctors in China's Sanjia Hospital through our platform. During the promotion of the platform, He'er Health also launched a series of activities to raise the awareness and knowledge of men's personal health to attract more users. For example, we held three health live events. Users can contact well-known doctors Another exciting thing in this quarter was the HE Health online consultation services launched in late July. Dozens of renowned doctors
spk02: from China's top hospitals were available to interact with thousands of clients and patients on the platform. Out of the lots, eHealth kick-started a wide range of activities aimed for appealing to more users as well as boosting awareness and knowledge of men's personal health. This includes hosting three live streaming sessions and allowing users to raise questions on topics such as HIV in a live Q&A with doctors from China's top hospitals, and offering users limited time-free one-on-one consultations with special experts. This promotion event was very successful and brought over 50,000 participants in each live streaming session, setting our digital health strategy off a great start with encouraging user feedback.
spk07: In addition to successfully launching the in-person consultation service, We are also very satisfied with the progress we have made in the related areas of HIV. First of all, the coverage of the two-hour rapid response business of HIV drugs has been successfully expanded from 40 cities in China to 55 cities. Second, we have achieved very good results in improving the awareness and promotion of pre-op prevention and promotion aspects. This quarter, the number of domestic pre-op orders has doubled, and they are often looted as soon as they are on the shelves. This shows that the prevention awareness of HIV is constantly increasing, and the demand for national Pryp drugs with reasonable prices is huge. Pryp as an effective HIV prevention drug is still very low among the high-ranking people in China and other regions of the world. We strive to deepen the cooperation relationship with domestic manufacturers and further improve the Pryp recovery rate. I believe this is very important for our users and society.
spk02: In addition to the launch of our successful online consultation services, we are also extremely pleased with the progress on the HIV-related front. First, we have successfully expanded coverage of our two-hour PEP post-exposure prophylaxis delivery service from 40 to 55 cities in China recently. Second, our efforts in improving PrEP Pre-exposure prophylaxis awareness and promotions also proved to be very rewarding. The number of domestically manufactured PrEP orders shriveled this quarter once it was on shelf and soon sold out, showing the increasing awareness of HIV protection as well as the huge demand for affordable PrEP in China. PrEP is an important and useful HIV prevention solution yet awareness still remains low among at-risk populations in China and elsewhere in the world. We are committed to deepening our partnership with domestic manufacturers to further increase PrEP availability and accessibility in China, which we believe will be critical in value for our members and society.
spk07: We are working hard to achieve our health development goals. We are on the right direction to achieve our goals for heat health with our unwavering mission and strong execution capabilities.
spk02: With the growing demand for China's online health consultation and awakening HIV awareness, we are well positioned to capture this enormous industry opportunity with our force-mover advantage and inherent competitive value.
spk07: Let's take a look at our international business. We actively organize and participate in various social and public activities to continue to improve the global brand influence of our products. In this quarter, we launched a global event to eliminate your pride in 2021, creating tolerance and diversity values. BlueD released a brand promotional video with a new pride theme, encouraging community members to participate in the event to eliminate your pride. The event includes online pride parties in the BlueD application, a lively rainbow UI application icon, and regional activities in various regions around the world. On the overseas market front,
spk02: we remain committed to actively organize and participate in a wide variety of activities in social and public events to continue building our global brand presence. In this quarter, we launched the Global Live Your Pride campaign during Pride Month 2021 to advocate inclusivity and diversity as fundamental everyday values. Blued released its new global TV commercial encouraging the LGBTQ community to live your pride to kick off the campaign. The campaign featured an online pride party on the Blue App, a vibrant rainbow app UI, and extensive regional activities across the globe. It encouraged individuals from all walks of life and cultures to share their real self on the Blue App and connect with others via social posts and live streams. a heartwarming celebration of individual identity. Blued also presented the Blued Net Club from June 15th to 29th during Pride Month, which combines the app's diverse features to create an immersive, fun-filled experience.
spk07: The campaign was extraordinarily successful, attracting over 8 million users
spk02: and generating over 8,000 user posts across multiple social media platforms with 1.5 million of views on global TVC. Taking Latin America as an example, app ratings of the Blue mobile app increased from 3.9 to 4.4 on Apple Store after the campaign. Moving forward, we will continue to organize more various social events to further improve our visibility and brand awareness in the global market and enhance monetization capabilities.
spk07: At the same time, we accelerate product innovation and product optimization, and gain meaningful progress. In June this year, we upgraded the domestic map sharing function, allowing users to locate friends in different cities, and not just nearby friends. In August this year, we launched a series of new features on the international board to protect users' identity and privacy, including banning screen-sharing and recording during live broadcasts and video calls. In addition to these new user safety protection measures, the new personal photo function also ensures that the photo will not be exposed in the public search chart. Only after the authorization is obtained can the photo of the authorized person be visited.
spk02: We also continued to accelerate our product innovation and optimize our product offerings and achieve meaningful progress. In June, we upgraded our location-based social networking function on Mainline China Edition to allow users to find friends in different cities, instead of just friends located nearby. In August, we introduced a series of new features to protect users' identity and privacy on the Global Edition, including prohibiting screenshots and screen recordings during live streams and video calls. In addition to this added protective measures for user security, the Private Album feature ensures that faces do not appear album's public thumbnails, and access to the album's photos allowed only when the owner gives individual viewer authorization. Meanwhile, users can choose to send photos that can disappear within seconds of being read, preventing users from capturing screenshots.
spk07: With Thinker, we rolled out a new monthly service package, which allows subscribers to see visitors to their main page and profile.
spk02: This new function added efficiency matching and promoted user interaction. Statistics have shown the paying ratio already exceeded 5% within three months after it launched. Moving forward, we will closely monitor our users' responses and remain committed to further optimize user experience across all our platforms.
spk07: We strive to provide more value to the community On the basis of existing health services, we began to focus on psychological disorders of minority groups. Recently, Dalan Technology has launched a series of video programs on Dalan Psychological Investigation, which aims to increase the knowledge and interest of the minority groups on psychological health issues. At the same time, Dalan Technology will cooperate with psychological consulting institutions with years of experience in the service of minority groups to launch a 100-hour free psychological consultation technology program, which will benefit the community partners in need.
spk02: we remain committed to offering continuous value to our community. In addition to the health services already in place, we began focusing on the psychological issues in the LGBTQ group. Our Dunline public interest recently wrote out a video series called Dunline Psychological Insight, which is expected to increase awareness and interest of the mental health issues within sex sexual minorities. Meanwhile, Dan Lan Public Interest will cooperate with established psychological counseling institutions with years of experience for minority groups to launch the 100-hour free psychological counseling project for supporting community members in need.
spk07: 現在我將電話轉交給首席戰略官Effrey和大家分享公司的戰略規劃。
spk02: Now let me turn the call over to our CSO, Alfred, who will discuss about our growth strategy.
spk05: Thank you, Mr. Ma, and thank you everyone for joining our call today. This is Alfred Yin. I joined the company as a CSO in July this year. The purpose for my join Bull City is mainly planning for the business future and are looking for ways to make a profit when companies maintain sustainable operations. Our long-term strategy is to pursue quality growth. What I define a company with quality growth is that it has resilient business in a competitive market. In order to achieve quality growth, let me give you some highlights on our latest thinking about our growth strategies. The first is about our business model. We will continue to diversify revenue stream and monetization method. When we maintain the leading position in the live streaming services with high-quality content, our long-term goal is to have larger revenue contributions from social networking membership services and health related products and services. As our members and community continue to raise the awareness in health and pursue better lifestyle, we expect HEALTH to achieve stronger growth momentum in the future quarters and become a new driver of growth for the company. The second is about our product offering. We will continue to customize and refine our product portfolio, which provides different branding and unique services in different markets to serve the subgroup of LGBTQ through our R&D effort. In addition to the organic growth from the better products via R&D, we are evaluating potential strategic investment and acquisitions in the market and sectors which have greater synergies to our current product portfolio. remain committed to further exploring those opportunities to complement our current business and expand our reach to a broader range of users. The third is about the probability. We are in the process to reassess our business model and measure our operating efficiency by users lifetime value. While the company was going through the expansion period, we have invested a lot in our products, services, branding, a solid user base, and a community for our members. We are now in the right stage to balance between revenue growth and probability. Therefore, we will not only focus on to strengthen our user engagement and increase retention via our products and services, but also we will implement measures for expense control to improve our operating efficiency, which starts from Q3 this year. Now, let me turn the call over to our Acting CFO, Jun Cheng Sen. who will provide details on our financial performance.
spk06: Thank you, Alfred. Now let me go through our financial highlights for the quarter. Before I go into details, please note that all numbers presented are in the mean B and are for the second quarter of 2021, unless stated otherwise. All percentage changes are on a year-over-year basis, unless otherwise specified. Detailed analysis is contained in our earning price release, which is available on IR website. Our total revenues for Q2 were人民币291.9 million, up 18% year-over-year, driven primarily by our growing user base and improved monetization of our diversified service offerings. In this quarter, our total MAUs from all apps grew 29.3%, to 8.3 million, with a strong growth of 58.1% from our total paying users, reaching 724,000. Revenue from overseas contributed 12% to total revenue, and slightly increased from 11.2% in the same period last year. Notably, we also accomplished meaningful progress in diversifying our revenue streams with encouraging year-over-year revenue growth from membership services and e-health this quarter. Revenue from live streaming services was RMB 223 million, up 6.1%. Our quarterly paying users for live streaming services increased 5% to 182,000 from the same period last year. AIPPU was RMB 1,223, an increase of 1% compared to the same period last year. Revenue from membership services was RMB 33.7 million, up 113%. Our closely paying users for membership services increased 82.9% to 599,000, driven mostly from the new service offerings. ARPPU was MNB 56.3, up 16.5% year-over-year, primarily driven by higher ARPPU for our pay-per-use services. This result fully illustrates our future monetization potential for our membership services, and we expect accelerated growth for our membership services as we continue enriching and optimizing our service offerings. Revenues from advertising were RMB 18 million, up 67.7%. With the increase primarily due to our continuous efforts in attracting more advertisers with new advertising and marketing solutions, as well as improved advertising efficiency. Revenues from merchandise sales of eHealth reached $15.3 million, up 134.5%. We expect eHealth to achieve strong momentum into the future quarters as our priorities in devoting resources to expand our health-related service offerings and geographic coverage remains. Now moving to our cost. Cost of revenues increased by 12.9% to RMB 192.1 million. The increase was primarily due to the higher revenue sharing costs along with the growth of live streaming services, increased cost of products in line with the growth of key health merchandise sales, as well as the increased stock expenses. Gross profit was RMB 99.7 million up 29.9%, and gross margin was 34.2%, up 3 percentage points from the same period of last year, and benefited from the increased revenue from higher-margin membership and advertising services. We expect to further accelerate revenue contribution from our membership services to achieve overall margin improvements. Meanwhile, as revenue sharing is still the key component in our cost of revenue, we remain committed to actively explore options to reduce revenue sharing percentage and implement a more sustainable model for our live streaming service. Operating expenses were $135.9 million, up 64.5% year-over-year. Sales and marketing expenses were MMB 68.9 million, up 68.2%. The increase was mainly due to the increased advertising and promotion expenses, as well as increased staff cost and the share-based compensation expenses. Technology and development expenses were 51.6 million, up 64.6%. The increase was mainly due to the higher staff cost in the technology-related departments, increase in content production, server and bandwidth cost, as well as share-based compensation expenses. J&A expenses were $15.4 million, up 49.4%. The increase was mainly due to the increased professional fees and staff cost, partially offset by the decrease in share-based expense due to the stock auction for features. Net loss was $35 million, compared with a net loss of $3.3 million in the same period last year. Adjusted net loss was $1.5 million. 38.4 million, compared with adjusted net loss of 3 million in the second quarter last year. As of June 30, 2021, we had cash and cash equivalents and the term deposits of 453.7 million, compared to 611.8 million as of December 31, 2020. Now, moving to our guidance. Due to the slower-than-expected growth from our live streaming services and limited monetization progress from overseas markets impacted from the economy downturn resulting from the pandemic, our full-year 2021 total revenue is revised downwards to the range between RMB 1.15 billion to RMB 1.20 billion, representing a 12% to 16% year-over-year growth. As we follow and achieve our long-term growth objectives, we are still confident in our business model and our ability to bounce back strongly. That concludes our prepared remarks. Let's now open the call for questions. Operator, please go ahead.
spk04: Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, please press star 1 on your telephone and wait for your name to be announced. To cancel your request, please press the pounder hash key. Once again, to ask a question, it's star 1 on your telephone. The first question comes from the line of from Loop Capital Management. Please go ahead.
spk01: Thank you for taking my question. I wanted to get more information about the slowdown in the live streaming business. If you could give us more color on what is driving that, if you've got any visibility on how long it lasts. It looks like the guidance reflects it lasting through the end of this year. And maybe talk about what the trend was before we started to see the Delta variants impact sales or impact revenues.
spk05: Hi, this is Alfred. Yeah, regarding the live streaming business in China, as you know, the market actually competitive and complicated. And especially those companies with short videos have entered the live streaming business, which intensifies the market competitions. And this, the result is that increased the share cost of the live streaming. Somehow they have a negative impact on our revenue. That was the first reason. The second reason was that, as you might know, starting from fourth quarters last year, we adopt new live streaming strategies to try to improve the activity of users for the tier three and tier three live streamers. And these kind of adjustments was taking much longer time than our original expectation. That kind of adjustment probably will last to the third quarter as well. So what we are expecting is that the competition in the market will continue. We will try to maintain, try to maintain and improve our revenue from the live streaming business in the second half of this year. But the business compared to our original guidance is either below than our original expectation.
spk01: Are there actions that Blue City is taking to re-accelerate the growth of that part of the business next year, or is the focus really on growing ancillary revenue streams such as eHealth?
spk05: What we are doing is that we are trying to provide lifetime service to our users, which is always our first priority. The most important is that we will try to increase the contributions from the value added services and also the membership services. And these two services are the one with the higher margins. With that, we think that we can improve not only the revenue contribution from live streaming and also the margin improvement going forward.
spk01: Got it. Thank you.
spk04: Thank you. Once again, ladies and gentlemen, to ask a question, you will need to press star 1 on your telephone keypad. The next question comes from the line of Mr. Kevin Hung from Industrial Securities. So please go ahead. Your line is open. Thank you.
spk03: Thank you, management, for taking my question. I have two questions here. First, could you share some color about the geographical distribution of overseas users And second, what's the impact on the company's strategy about the overseas market in the coming expense control from this quarter? Thank you.
spk07: India, Vietnam, Philippines, Malaysia, Indonesia, and other countries and regions. This is our advantageous market. This year, we entered Lame. From the current Lame's entire user growth, it is also optimistic. The second question is our overseas growth strategy. Previously, we still used three strategies, sea and air strategies, including local market operation teams, development and product teams in mainland China, In addition, through Facebook and Google, some of these investment platforms are used to increase and expand the growth and expansion of local users. Because of the changes in the overseas epidemic, we may make some appropriate adjustments to the overall overseas growth strategy. The general principle may be to shrink the market investment cost, return to product power and market operating capacity, through the way of reputation and product core competitiveness, Okay, let me do the translations. Our users are mainly in the Asian region, for example, like Korea, Taiwan.
spk05: And especially in addition to Asia, especially Southeast Asia, for example like Thailand, Indonesia, Malaysia, and so on. In addition to those users in the Asian regions, starting from this year we also have the users, quite a number of users from Latin America. So these are mainly the distribution of our users overseas. In terms of our strategies for our overseas market, in the future we will focus on those markets with higher ROI. We are not only looking at the number of users, we are also looking at the contribution, the real contribution from those users in overseas market. We will look at those markets with higher ROI. And also, we will start implement the measures for the expense control. Because in the past, we spent a lot of money for the user acquisition overseas. Going forward, we will look at that kind of spending very carefully for tight expense control. Because as I mentioned earlier, probability is always one of our strategies going forward. So we will implement the strategies for the expense control and look at the probability of the company not only the overseas market in the future.
spk03: Thank you.
spk04: Thank you. Once again, ladies and gentlemen, to ask a question, you will need to press star 1 on your telephone keypad. Thank you. Once again, to ask a question, please press star 1 on your telephone keypad. Thank you. Thank you. Seeing no more questions in the queue, let me turn the call back to Mr. Song for closing remarks. So please go ahead.
spk06: 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 program. Operator.
spk04: Thank you. Thank you. That concludes our conference for today. Thank you for your participation. You may disconnect your lines now. Thank you.
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