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spk37: Ladies and gentlemen, thank you for standing by and welcome to the Joy Incorporates third quarter 2023 earnings call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. I'd now like to hand the conference over to your host today, Jane Xie, the company's senior manager of investor relations. Please go ahead, Jane.
spk32: Thank you, Operator. Hello, everyone. Welcome to Joy's third quarter 2023 earnings conference call. Joining us today are Mr. David Sherwin Lee, Chairman and CEO of Joy, Ms. Ting Lee, our COO, and Mr. Alex Liu, the Vice President of Finance. For today's call, management will first provide a review of the quarter, and then we will conduct a Q&A session. The financial results and webcasts of this conference call are available at ir.joy.com. A replay of this call will also be available on our website in a few hours. Before we continue, I would like to remind you that we will make forward-looking statements, which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risks and uncertainties, please refer to our latest annual report on Form 20F and other documents filed with the SEC. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in U.S. dollar. I will now turn the call over to our Chairman and CEO, Mr. David Shillingly. Please go ahead, sir.
spk16: Hello, everyone. Welcome to our third quarter 2023 earnings call. First, we will provide a quick snapshot of our performance for the quarter. During the third quarter, we once again delivered a strong performance. Our group revenue coming at 567.1 million at 3.6% sequential increase. Approaching the high end of our guidance, We see a non-GAAP net profit of 81.2 million, a 5.5% year-over-year increase, with a non-GAAP net margin of 14.3%. Our core business segment, Beagle, maintained its recovery momentum and recorded revenues of for 494.1 million, a sequential increase for 4.9%, and a year-over-year increase of 2.2%. The first year-over-year top line growth for Bigelow in six quarters. Bigelow's revenue remuneration was accompanied by improvements in user activity and monetization efficiency. At the group level, our global average mobile MAUs grew by 2.6% year-over-year to $276.8 billion. Notably, Bitcoin Live's MAUs maintained its strong growth trajectory, increasing by 14% year-over-year to 40.3 million, because number of pain users experienced a steady increase for 6.6% year-over-year, with AR pool also improving sequentially during the quarter, with Monetization recovering and as we continue to enhance our operational efficiency because non-GAAP operation profits grew by 11.7% year-over-year, reaching 81.9 million, representing expanding non-GAAP operation profit margin of 16.6%. As one of the leaders in the global social entertainment sector, we have always been committed to building equitable device and inclusive global user community. We aim to provide users with unique value and exceptional experience through our broad range of social entertainment products. We firmly believe that creating of positive user value and experience are the foundations of effective user management and monetization. maximize product value for our users, we have always our highly localized operations and, you know, V2 product optimization are our most effective instrument for enhancing user content and improving user social interaction experience. To give you a better understanding of our progress on those two fronts, I'd like to share some examples from the third quarter. On the content front, Big O Live extends its collaborations with top POS and introduce more diverse and viral content. We also launched several major updates for our content separation strategies and recommendation algorithms. These upgrades improved our ability to effectively channel users to content they enjoy. particularly our new user cohorts. On the social interaction front, we prioritize the optimization of interactive tools within BeagleLive's family feature and allocated additional operation resources to support families. We also further integrate to insert new social features such as real match, which chatter to different user case and help user expand their social networks. These targeted initiatives have effectively driven positive progress in user engagement and motivation. the introduction of more diverse and viral content alongside the collaborations with POS and successfully enhance our brand exposure, expanding product outreach, and fostering organized user growth, organic user growth. This acceleration of organic traffic has been the primary reason for our robust user growth in recent quarters, even as we hide to a disciplined market extent. At the same time, our amplification of families' social functions has yielded positive results in terms of user acquisition, payment conversation, and recruitment of long-tail streamers. Our improved user engagement and user experience coupled with exciting seasonal promotions such as regional mid-year galas have fueled recovery in user paying activity and overall monetization. Looking ahead to the fourth quarter, we anticipate that Beagle's global business will maintain its recovery trajectory on a year-over-year basis. However, given the ongoing uncertainty in the global micro landscape, we believe the pace of recovery across different markets will vary, and short-term fluctuations in users' pain sentiments may persist. We will remain cautiously optimizing the focus on our operational strategy and priority high-quality growth. We will also continue to exposure innovations across our products and operations and drive the steady recovery of our global business with a sustained focus on improving operation cash flow. Now, let's take a closer look at our product. We will start with BeagleLight. BeagleLight maintained its double-digit user growth momentum in the third quarter, with MAUs increasing by 14% year-over-year to 40.3 million. We saw growth across several key regions, with year-over-year increase by 12.9% in Europe and 15.3 percent in the Middle East and 44, 40.4 percent in Southeast Asia and other emerging markets. In the third quarter, we call the single digital revenue growth in sequential basis that developed the country's region, especially Europe and Eastern Pacific countries outpaced other markets and generated high single digital sequential growth in revenue. As I mentioned earlier, Big O Live introduced a diverse range of high-quality and virtual content during the third quarter. In the Middle East, Big O Live premired the Acting Coach exclusive show in which legendary So then the actor shared his personal insights into the art of acting. In Vinicia, Beagle Live debuted Friends of Life, a collaborative needle series featured three Beagle Live streamers and some local up-and-coming actors. The show was broadcast on a popular Indonesia video platform called Video, introducing BeagleLive streamers to new audiences. BeagleLive also expanded its collaboration with top KOLs in the third quarter. We launched a summer-wide campaign in the MENA region and team up with several local KOLs who have tons of millions of followers to share the freshest summer fashion trends and travel experience, significantly boosting user engagement and inspiring creativity. Building upon the success of last quarter's Family Month campaign, we continue to encourage users to explore and participate in family activities on BeagleLine. The third quarter saw a steady increase in the size of families with a 5.1% sequential increase in DEUs and 17.4% sequential increase in the number of
spk11: contracted streamers in families.
spk16: With regards to interaction and optimization of our product features, we retain our focus on content enrichment and improve social interactions. We further refine our content recommendation algorithm and continue to We started to develop a premier content pool on our Bar channel, covering popular genres such as K-pop, pop, and workout. In the third quarter, the number of user sharing videos on Bar suggested by 42.8% from the period quarter. The average effect of views per person for video content rose by 29.3% in the same period. At the same time, we fine-tuned the features to enhance the appeal and interactivity inside live streaming rooms. This drove an 8.5% sequential increase in the total number of livestreamers, along with a 3.7% sequential increase in the number of livestreamers in multi-guest rooms, in line with our commitment to fostering social interaction and forging relationships, we enhanced the BeagleLive's real-mind features to make it easier to connect with people nearby by simply swiping through profiles. The upgrade fueled an 18.3% sequential increase in the number of people mutually following each other through real match and 21% sequential increase in direct chat messages. Next, let me show some updates for our other products. As we have previously mentioned, we compared to BeagleLive, our other products have a much larger aggregated user base. but they are generally in the early phase of monetization as their contributions to revenue and profit are relatively small. As such, our main objective of those products is systematically enhance our monetization efficiency and profitability while strengthening their ability to organically acquire new users. Since this product starts to generate consistent profit, we will have a solid foundation from which we can re-innovate their user growth. Let's begin with Leike in the third quarter. Like its revenue grew by middle single digital sequentially, and it continued to be profitable at the product level. On the user front, despite a sequential decline in like its MAUs and this quarter, it still used in core region, particularly in the developed country region, maintained a high single digital sequential In September, Lanky orchestrated a series of offline community events in celebration of Saudi National Day. This includes streamer parties and movie days accompanied by online discussions designed to deepen connections among user creatures and the platform. During the quarter likely also partnered with a number of more popular creatures to exhibit at the Asian Culture Festival event and kept to fans also. I mean, co-pop and K-pop and then more highlighting the ACG that is an integral component of Leike's content ecosystem and community. At the product level, Leike remained dedicated to forcing community interaction during driving 40.5% over sequential increase in average user timestamp. Overall, user engagement as measured by the ratio of DAUs to MAUs increased by 1% sequentially, while the IM penetration rate rose by 1.5% over the same period. Next, let's take a look at HAGO. During the third quarter, HAGO achieved a sequential middle single digital percentage increase in revenue and its operation cash flow remained positive during the quarter. Efficiently, content remained priority along with a refined notification strategy designed to boost participation in multi-guest interactive rooms across regions. Hangou also iterated enhanced its IAM and interactive features, helping to drive increase of social activity among users. Notably, average user time spent in social channels reach nearly 95.8 minutes per day. And average time spent in multi-guest audio live streaming rooms grew by 1.2 percent sequentially. Besides the HAGO 3D space, HAGO is actively exploring alternative social interactive applications and combining live streaming and interactive gaming experience powered by AI. Finally, some updates on cash flow and capital return. We continue to drive, to generate robust positive operation cash flow reach 72. in the third quarter. Meanwhile, we maintained an active pace of share repurchases and bounced back an additional 43.5 million of our shares. Our board has authorized an extension of the buyback program. which is still at 530 million as of the end of the third quarter until November 2024. To summarize effectively conclusion of our operational strategy and the ongoing recovery of Big O's revenue, profit, and user activity. Looking ahead into the remainder of 2023 and beyond, we remain committed to our long-term targeted strategy to pursue high-quality growth. We will continue to explore ways to innovate across all our products and operations and drive the steady recovery of our global business with a continued focus on improving operation cash flows. We will further concentrate our resources on building our core sciences and the global business that align with our long-term strategy and effectively pursue growth opportunities. At the same time, we will continue to enhance shareholders' returns through share buybacks. This concludes my prepared remarks. I will now turn the call to our Vice President of Finance, Alex Liu, for our financial updates.
spk17: Thanks, David. Hello, everyone.
spk18: Despite the ongoing macro uncertainties, we achieved solid progress in the third quarter. Our global business segment, Beagle, booked positive year-over-year growth in both revenue and non-GAAP operating income during the quarter. We continued to grow our global MEOs even as we adhered to our disciplined marketing spend. The monetization efficiency results were also up during the quarter with the number of vehicles quarterly paying users up by 5.1% and ARPPO up by 2.2% quarter over quarter. It's a result of our continuing dedicated strategy to optimize product value and user experience and the strong execution of our global operational team. Now, let's look at the numbers in detail. Our total net revenues were $567.1 million in the third quarter. Revenues from legal segment were $494.1 million, up by 2.2% year-over-year, the first year-over-year top line growth in six quarters, mainly driving by strong growth in the developed countries. Cost of revenues for the quarter decreased to $357.9 million, among which our revenue sharing fees and content costs decreased to $232.3 million. FICO's cost of revenues were $299.2 million, which was up year over year, consistent with rebound in live streaming revenue. Gross profit was $209.2 million in the quarter, with a gross margin of 36.9%. Beagle's gross profit was 194.8 million with a gross margin of 39.4%. Our group's operating expenses for the quarter were 191.3 million compared with 202.2 million in the same period of 2022. Among the operating expenses, Sales and marketing expenses decreased to 92.5 million from 96.8 million in the same period of 2022, primarily due to the optimization of overall sales and marketing strategies across various product lines to be more focused on ROI and effectiveness of user acquisition. R&D expenses. increased to $71.6 million from $61.2 million in the same period of 2022, primarily due to increased R&D personal related expenses as we prioritize the resources into building our technological capabilities. Vehicles operating expenses for the quarter were $126.7 million down by 5.3% year over year. Our gross gap operating income for the quarter was US dollar 12 million. Our non-gap operating income for the quarter, which excludes SBC expenses, amortization of intangible assets from business acquisitions, loss of the consolidation and disposal of subsidiaries, as well as impairment of goodwill and investments, was $40.4 million in this quarter, with a non-GAAP operating income margin of 7.1%. Beagle's GAAP operating income for the quarter was $68.5 million, and Beagle's non-GAAP operating income was $81.9 million. representing a non-GAAP operating income margin of 16.6%, up from 15.2% in the same period last year. Other groups' GAAP net income, Attributable to controlling interest of Joy in the quarter was $72.9 million compared to net income of $515.3 million in the same period of 2022. GAAP net income margin was 12.9% in the third quarter of 2023. compared to net income margin of 87.8% in the corresponding period of 2022. Our group's gap net income was larger in the third quarter last year, primarily due to a one-off remitment gain of active investment. Beagle's gap net income in the quarter was $78.2 million with a gap net margin of 14.2%. Non-gap net income attributable to controlling interest of Joy in the quarter was $81.2 million compared to $76.9 million in the same period of 2022. The group's non-gap net income margin was 40.3% in the quarter compared to 13.1% in the same period of 2022. Beagle's non-GAAP net income was $81.9 million with a non-GAAP net margin of 16.6%. For the third quarter of 2023, We booked net cash inflows from operating activities of $72.9 million. We remain a healthy value state with a strong cash pricing of $3.8 billion as of September 30, 2023. In the third quarter, we continued to enhance returns to shareholders. and repurchased an additional of approximately 43.5 million of our shares. In the first three quarters of 2023, we have retained an aggregate amount of 355.4 million to our shareholders through dividends and share buybacks. which altogether represents 155.6% of our aggregated non-GAAP net income during the corresponding periods. We will continue to actively utilize our share repurchase program in the coming quarters. Turning now to our business outlook, we anticipate continued recovery in our global operations. However, due to the ongoing uncertainty in the global macro landscape, we recognize that the pace of recovery may vary across different markets, and there may be short-term fluctuations in users' paying sentiment. Separately, as previously communicated, we have made proactive adjustments to certain non-core operations in line with our commitment to high quality growth and global pricing. Taking all factors into consideration, we expect our net revenues for the first quarter of 2023 to be between 551 million and 579 million. This forecast reflects our preliminary views on the market and operational conditions. and business adjustments, which are subject to changes. In conclusion, our dedicated efforts to enhance product value and optimize user experience are yielding positive results, as shown in our accelerating user growth and top-line recovery. Simultaneously, our financial This plan has allowed us to further expand profitability and fortify our financial standing. Moving forward, we will maintain a focused operational strategy and direct our resources towards high potential business that align with our long-term objectives. We will also strive for a steady recovery in our global operations. while prioritizing improvement in operating cash flows with a strong foundation and our proven execution capabilities. We are confident that we are well positioned to seize growth opportunities and deliver sustainable value to our shareholders. That concludes our prepared remarks. Operator, we would now like to open up the call to questions.
spk37: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the headset to ask your question. When asking a question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone on the call. Your first question comes from Thomas Chong from Jefferies. Please go ahead.
spk08: 早上好,謝謝管理層接受我的提問。 我有兩個問題。 第一個是關於我們2024年BGO還有整體集團的利潤的一個趨勢。 第二個問題是關於我們公司在股東回饋方面的想法。 Thanks management for taking my questions. My first question is about the margin trend for Beagle in 2024, as well as the outlook for the group-branded margin. And my second question is about shareholders' capital return. Can management share your thoughts on this front? Thank you.
spk18: Hi, Thomas. Thank you for your question. I'm Alex. Let me answer your question. For the first question, which is the profit trend of 24 years of Beagle and the whole group, we can see that our overall profit performance in the third quarter is actually better than expected, especially Beagle's share. The profit increased from 39% last quarter to 39.5%. Non-GAAP's operating profit also increased from 16% to 16.6%. Q3, due to the year-end event, our overall investment in the broadcast incentive market sales is actually increasing. The profit transfer is mainly brought by the return of revenue better than expected. Let's look at Q4. Entering the year-end event of the year-end season, we will definitely give the broadcast incentive and operating activities more support. Then the content cost and market sales cost will increase significantly. Thank you, Thomas. This is Alex. I will take your first question.
spk32: So if you look at our Q3 results, we actually delivered better than our previous expectation. BGO segment non-GAAP growth margin was improved from 39% to 39.5% with a non-GAAP OP margin improved from 16% to 16.6%. Although we did spend more on content incentives and sales and marketing for our mid-year gala. Our better-than-expected profit was mainly due to accelerating top-line recovery. Looking ahead to Q4, as we enter the year-end peak of operational activities, we expect BGO's content cost and sales and marketing expenses to be sequentially up Therefore, Beagle will have a slightly lower gross margin and non-GAAP operating margin in Q4 as a result. However, if you look at our progress so far, in the first three quarters of 23, we have already, for Beagle segment, we have already achieved a non-GAAP OP of 15.4%. So for the full year of 23, we're still expecting the non-GAAP OP of Beagle segment should be higher than the level of 2022, which was 14.4%.
spk18: Of course, the guidance for 2024 is still a bit early, because how much profit can be released depends on the strength of the recovery of revenue. In the big picture, we will continue to balance the scale and efficiency. In addition to the impact of the inflation factor, we initially expected that Beagle's business would remain relatively stable in the case of steady recovery. In addition to the impact of some business initiative adjustments, All Other Bankroll's big direction is also on a trend of steady improvement of profits. It is no exception in 2024. As for the outlook for Chinese 4, we believe it's still early to give a detailed guidance.
spk32: as our profit potential also depends on the pace of top-line recovery. In general, we aim to strike a balance between scale and efficiency. And on a constant currency basis, we expect Beagle segment to pursue steadily top-line recovery while maintain a relatively stable OP margin, non-gap OP margin. As for the all-out segment, Excluding the impact from our proactive adjustments to certain products, it has been on a continuing trend of narrowing operating losses, which we expect to continue in 2024. So to sum up, we continue to value profit and positive cash flow and drive further improvement in our operating efficiency. And at group level, we still expect to remain profitable and continue to generate positive operating cash flows.
spk18: Thomas, for your second question, about the shareholder return, you can see that we have recently repurchased 43.5 million US dollars. In the first three seasons of this year, the total amount of our shareholder return was up to US$3.55 billion. Thank you.
spk32: But for your second question on capital return, if you look at Q3, we have repurchased approximately $43.5 million of our shares during the quarter. And in the first three quarters of 2023, our aggregated capital return has reached $355 million U.S. dollar through dividends and share buyback, which is representing 156% of our aggregated non-GAAP net income during the corresponding periods. So as of the end of Q3, we do have $530 million unused life quota under our previous Share Buy Back Plan. And our board has just authorized an extension of the program for another year. So shareholder return will remain one of our top focuses, and we will continue to steadily execute our share buyback. Thank you. Next question, please.
spk37: Next question comes from Brian Gong from Citi. Please go ahead.
spk09: Good morning, Mr. Guo. Thank you for accepting my question. First of all, I would like to congratulate Citi for its excellent performance. I will translate myself. Good morning, management. Thanks for taking my questions. Regarding Big O Labs' recovery, can you elaborate a little bit more on the expected growth momentum across different regions in 2024? What factors are driving this recovery? Thank you.
spk11: Thank you for your question, Brian. Let me answer it.
spk16: In the third quarter, our revenue recovery is better than expected. From a single point of view, the recovery rate of Beagle Live is even higher than that of Beagle's entire version. From a deep market point of view, the developed countries have maintained the trend of recovery rate recovery for several seasons. This season has even reached the recovery rate growth of this high number. Q3 in Southeast Asia has also received a good recovery rate recovery. The driving factor behind the recovery is mainly the growth of MAU and the recovery of ARPOOL. We have launched a number of targeted operation strategies, including in terms of goods and customer, product optimization, and operation, etc. We are consciously hiring high-end users from developed countries.
spk35: Thank you, Brian.
spk32: Thank you, Brian. This is David. On your question about Beagle Live's recovery, if you look at our Q3 results, you can see that our revenue recovery in the quarter was better than expected. Looking at a product standalone basis, Beagle Live actually deliver a higher QOQ growth than the Beagle segment. And that was mainly driven by a high single-digit QOQ growth from the developed countries region. Actually, the developed countries have been on sequential recovery momentum for quite a few quarters already. And we've also a positive growth, a decent QOQ recovery for the Southeast Asia region as well during the quarter. And if we look at the driving factors, we believe it's mainly attributes to a strong MAU growth and also our pool recovery. I think it's the result of our continued implementation of highly targeted operational strategies, which actually prioritizes our user acquisition spending product optimization and other operational resources towards premium and users and also the developed countries.
spk16: Considering this factor, in the Q4 Guidance, the revenue of BeagleLive is basically the same as the growth of Wave. I think it's a little early to talk about this in 2024. I think the revenue of BeagleLive will remain the same as the trend of gradual recovery. User growth is still an important focus for us.
spk32: However, as I've just mentioned, given the global macro uncertainties, we believe the pace of recovery across different regions still vary, and that users' pain sentiment are still in a fluctuating status. Therefore, in our current Q4 guidance, we actually expect BeagleLive to achieve a modest growth year-over-year. I think it's still early to give guidance on 24, but generally speaking, we expect BeagleLive to resume a top-line year-over-year recovery gradually, driven by MAU growth together with stabilizing monetization efficiency. Next question, please.
spk37: The next question comes from Yuwen Deng from China Renaissance. Please go ahead.
spk10: Thank you, Mr. Guo. This is my question. I have two questions. The first one is about users. In the past two years, our sales have been relatively low. How should we look at the trend of 20-year users? The second one is about Thank you for taking my questions. So a couple questions. First, user side, how should we think about overall user trend into 2024? And secondly, we see the ongoing impact of the global microenvironment. How should we think about its impact to our business in Europe? And what have the companies done to mitigate such adverse effects? Thank you.
spk11: 谢谢英文的问题。 我觉得从Q2到Q3我们的成果来看, 我们一直是保持比较节制的市场, 这个marketing的开支的前提下的,
spk16: has achieved the rebound of MAU. It has returned to the same growth in two consecutive seasons. In fact, BeagleLive has maintained a double-digit user growth in six consecutive seasons, and the overall efficiency of the customer has been steadily improved. The proportion of natural quantity and KOL, and the proportion of high-end users is also constantly improving. I think the growth strategy of BeagleLive products is still relatively effective at the moment. In the next user growth strategy, we will still focus on several aspects. The first aspect is, in general, to stick to the targeted customer strategy, to prioritize the quality of the growth of the users, especially the RRY. The second aspect is to continue to rely on local operating capabilities in terms of customer methods, especially the innovation in content and social aspects to catch up with customers. In the past few seasons, the content of our team, such as variety shows, short films, and new content that focuses on the user, has achieved a good result in terms of user coverage. After the release of the new social function, RealMatch, it has gained positive response from users in Southeast Asian countries and driven new downloads. KOL has continued to have a relatively good growth trend, especially in these new countries such as Southeast Asia and Latin America.
spk14: Thank you, Yuen.
spk32: This is David. So on user growth, if we look at our progress in the past two quarters, we managed to achieve a rebound in our group's MAU year over year. While we maintained a relatively disciplined marketing spend, our group's MAU rebound achieved positive year-over-year growth for two consecutive quarters, and BeagleLive continued double-digit user growth for the six consecutive quarters. I believe that overall speaking, our user acquisition efficiency has steadily improved as shown by an increasing trend in our organic traffic, influencer-led traffic, and also a higher percentage of premium users. So I think that belief that the current user growth strategy of BeagleLife has been effective and moving forward. We believe that there are a few actual points for continuing our user growth. First of all, we will continue to remain targeted in terms of our user acquisition strategy and prioritizing quality of user growth with a focus on ROI. And second, we continue to leverage our localized operational operations with primary focuses on content and social experiences as the key drivers of our user acquisition. In the recent quarters, you can see that BeagleLive has successfully expanded product outreach with our own original content, for example, our variety shows, mini series, as well as some third-party high-quality content. And our new feature, RealMatch, actually received very positive user feedback in Southeast Asia and drove an increase of downloads in those markets. And by collaborating with KOLs, we have maintained a positive our momentum in influencer-led traffic, especially in Southeast Asia and Latin America and other emerging countries.
spk16: We will also improve the targeted optimization of products and the user experience for the target audience. In the past few seasons, we have launched a more detailed content layer policy for different target users. and the difference in recommendation and calculation. Currently, we are surrounding the high-end users, new users, and female users. We have promoted several rounds of delivery. After each round of delivery, the overall usage of target users has been improved by a good rate. As I said before, BeagleLive is a global user community with extreme diversity. We have to try to narrow down every dimension to improve the experience and flow of each user target. In general, I think BeagleLive can still maintain a more stable user growth. As for other products, the core capabilities and value of the product continue to return to the core of the product at the current stage. On the basis of achieving stable profit, we are exploring the resumption of user size. Some product structures may be a little faster, some slower. But I don't think it will affect the group
spk32: Thirdly, we will continue to work on product features and user experiences for targeting user groups to further improve our user retention. In the recent quarters, we have actually introduced refined content segregation policies and differentiated recommendation algorithms tailored to different target user groups. And after several rounds of iterations focusing on premium users, new users, and female user cohorts, we've actually found that the retention rate and also their user time spent has been consequently improved within those target groups. And as we previously mentioned, BeagleLive has a very diverse global user community, and there is empty room for targeted optimization. And we aim to continue to make perfection in each and every dimension and further enhance user experiences within each and every user groups. And to sum up, we expect BeagleLife to maintain a relatively healthy and steady user growth in the year 24. For other products, I believe that our goal is still to focus on the core functionalities and cultivation of core product value. And once they start to generate a consistent profit, then we will have a solid foundation to revisit user growth. The actual timeline may vary. Some might be slightly ahead. The others may be slightly behind. However, I don't think that it will interfere the big picture here, which is recovering user growth at group level.
spk37: Next question comes from Lei Zhang from Bank of America Securities. Please go ahead.
spk38: Hi, 管理层,早上好,谢谢接受我的提问。 我的问题是关于监管这一块的,就是有看到我们国内最近有一些可能直播相关的监管风险, 所以想请教一下,可以帮我们分享一下我们整个全球业务有没有一些监管方面的一些concern呢? 谢谢,我自己翻一下。 Thank management for taking my question. Want to see any updates on your global business in terms of regulatory risk? Thank you.
spk18: Thank you for your question. I'm Alex. Let me answer your question. For social entertainment companies operating around the world, there is a big difference in the management of each market. And it is in the process of constant change. Our company has always put the safety of business integration as the premise of global business development This is Alex. I will take the question.
spk32: For a global social entertainment company, the regulatory landscape across different markets actually varies and is subject to constant involvement. And we have always considered business compliance and business safety as the crucial prerequisites for a high quality growth of our global business. And to achieve that, we will remain vigilant in monitoring the regulatory developments and actively engage with the local regulatory authorities. And internally, we'll continue to optimize our compliance frameworks and execution, and more proactively adapt our business and operations the regulatory changes to ensure alignment with the evolving regulatory and industry requirements. So that was the end of our Q&A session. It's been great catching up with everyone. Thank you so much for joining our call.
spk14: We look forward to speaking with you next quarter.
spk37: This conference is now concluded.
spk13: Thank you for attending today's presentation. You may now disconnect. Thank you. Thank you. Thank you.
spk37: Ladies and gentlemen, thank you for standing by and welcome to the Joy Incorporates third quarter 2023 earnings call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. I'd now like to hand the conference over to your host today, Jane Xie, the company's senior manager of investor relations. Please go ahead, Jane.
spk32: thank you operator hello everyone welcome to joy's third quarter 2023 earnings conference call joining us today are mr david shillingly chairman and ceo of joy miss tingley our ceo and mr alex liu the vice president of finance for today's call management will first provide a review of the quarter and then we will conduct a q a session The financial results and webcasts of this conference call are available at ir.joy.com. A replay of this call will also be available on our website in a few hours. Before we continue, I would like to remind you that we will make forward-looking statements, which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risks and uncertainties, please refer to our latest annual report on Form 20F and other documents filed with the SEC. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in U.S. dollar. I will now turn the call over to our Chairman and CEO, Mr. David Hsieh-Ling Lee. Please go ahead, sir.
spk16: David Hsieh- Hello, everyone. Welcome to our third quarter 2023 earnings call. First, we will provide a quick snapshot of our performance for the quarter. During the third quarter, we once again delivered a strong performance. Our group revenue coming at 567.1 million at 3.6% sequential increase. Approaching the high end of our guidance, We see a non-GAAP net profit of $81.2 million, a 5.5% year-over-year increase, with a non-GAAP net margin of 14.3%. Our core business segment, Beagle, maintained its recovery momentum and recorded revenues of for $494.1 million, a sequential increase of 4.9% and a year-over-year increase of 2.2%. The first year-over-year top line rose for Bigelow in six quarters. Bigelow's revenue rebound was accompanied by improvements in user activity and monetization efficiency. At the group level, our global average mobile MAUs grew by 2.6% year-over-year to $276.8 billion. Notably, Bitcoin Live's MAUs maintained its strong growth trajectory, increasing by 14% year-over-year to 40.3 million, because the number of pain users experienced a steady increase of 6.6% year-over-year, with AR pools also improving sequentially during the quarter, with Monetization recovering and as we continue to enhance our operational efficiency because non-GAAP operation profits grew by 11.7% year-over-year, reaching 81.9 million, representing expanding non-GAAP operation profit margin of 16.6%. As one of the leaders in the global social entertainment sector, we have always been committed to building equitable device and inclusive global user community. We aim to provide users with unique value and exceptional experience through our broad range of social entertainment products. We firmly believe that creating of positive user value and experience are the foundations of effective user management and monetization. maximize product value for our users, we have always our highly localized operations and, you know, V2 product optimization are our most effective instrument for enhancing user content and improving user social interaction experience. To give you a better understanding of our progress on those two fronts, I'd like to share some examples from the third quarter. On the content front, Big O Live extends its collaborations with top KOLs and introduce more diverse and viral content. We also launched several major updates for our content separation strategies and recommendation algorithms. These upgrades improved our ability to efficiently channel users to content they enjoy. particularly our new user cohorts. On the social interaction front, we prioritize the optimization of interactive tools within BeagleLive's family feature and allocated additional operation resources to support families. We also further entered new social features such as real match, which chatter to different user case and help user expand their social networks. These targeted initiatives have effectively driven positive progress in user engagement and monetization. the introduction of more diverse and viral content alongside the collaborations with TOLs and successfully enhance our brand exposure, expanding product outreach, and fostering organized user growth, organic user growth. This acceleration of organic traffic has been the primary reason for our robust user growth in recent quarters, even as we adhered to a disciplined market extent. At the same time, our amplification of families' social functions has yielded positive results in terms of user acquisition, payment conversation, and recruitment of long-tail streamers. Our improved user engagement and user experience, coupled with exciting seasonal promotions such as regional mid-year galas, have fueled recovery in user-paying activity and overall monetization. Looking ahead to the fourth quarter, we anticipate that Beagle's global business will maintain its recovery trajectory on a year-over-year basis. However, given the ongoing uncertainty in the global micro landscape, we believe the pace of Recovery across different markets will vary and there's often fluctuations in users' pain sentiments may persist. We will remain cautiously optimizing the focus on our operational strategy and priority high-quality growth. We will also continue to exposure innovations across our products and operations and drive the steady recovery of our global business with a sustained focus on improving operation cash flow. Now, let's take a closer look at our product. We will start with BeagleLight. BeagleLight maintained its double-digit user growth momentum in the third quarter, with MAUs increasing by 14% year-over-year to 40.3 million. We saw growth across several key regions, with year-over-year increase by 12.9% in Europe and 15.3 percent in the Middle East and 44, 40.4 percent in Southeast Asia and other emerging markets. In the third quarter, we call the single digital revenue growth in sequential basis that developed the country's region, especially Europe and Eastern Pacific countries outpaced other markets and generated high single digital sequential growth in revenue. As I mentioned earlier, Big O Live introduced a diverse range of high-quality and virtual content during the third quarter. In the Middle East, Big O Live premired the Acting Coach exclusive show in which legendary So then actor shared his personal insight into the art of acting. In Indonesia, Bigo Live debuted Friends of Life, a collaborative middle series featured in three Bigo Live streamers and some local up-and-coming actors. The show was broadcast on a popular Indonesia video platform called Video, introducing BeagleLive streamers to new audiences. BeagleLive also expanded its collaboration with PopQL in the third quarter. We launched a summer-wide campaign in the MENA region and team up with several local kols who have tons of millions of followers to share the freshest summer fashion chains and travel experience significantly boosting user engagement and inspiring creativity creativity building upon the success of last quarter's family month campaign, we continue to encourage users to explore and participate in family activities on BeagleLine. The third quarter saw a steady increase in the size of families with a 5.1 percent sequential increase in de-use and 17.4 percent sequential increase in the number of
spk11: contracted streamers in families.
spk16: With regards to interaction and optimization of our product features, we retain our focus on content enrichment and improve social interactions. We further refine our content recommendation algorithm and continue to We started to develop a premier content pool on our Bar channel, covering popular genres such as K-pop, pop, and workout. In the third quarter, the number of users sharing videos on Bar suggested by 42.8% from the period quarter. Well, the average effect views per person for video content rose by 29.3% in the same period. At the same time, we fine-tuned the features to enhance the appeal and interactivity inside the live streaming room. This drove an 8.5% sequential increase in the total number of live streamers, along with a 3.7% sequential increase in the number of live streamers in multi-guest rooms, in line with our commitment to fostering social interaction forging relationships, we enhanced the BeagleLive's real-mind features to make it easier to connect with people nearby by simply swiping through profiles. The upgrade fueled an 18.3% sequential increase in the number of people mutually following each other through real match and 21% sequential increase in direct chat messages. Next, let me show some updates for our other products. As we have previously mentioned, we compared to BeagleLive, our other products have a much larger aggregated user base. But they are generally in the early phase of monetization as their contributions to revenue and profit are relatively small. As such, our main objective of those products is systematically enhance our monetization efficiency and profitability while strengthening their ability organically acquire new users. Since this product starts to generate consistent profit, we will have a solid foundation from which we can re-innovate their user growth. Let's begin with Leike in the third quarter. LightKey's revenue grew by middle single digital sequentially, and it continued to be profitable at the product level. On the user front, despite a sequential decline in LightKey's MAUs and this quarter, it still used in core regions, particularly in the developed country region, maintained a high single digital sequential In September, Lanky orchestrated a series of offline community events in celebration of Saudi National Day. This includes streamers, parties, and movie days accompanied by online discussions designed to deepen connections among user creatures and the platform. During the quarter, Leckie also partnered with a number of popular creatures to exhibit at the Asia Culture Festival event and captivated fans of I mean, K-pop and more, highlighting the ACG that is an integral component of Leike's content ecosystem and community. At the product level, Leike remained dedicated to forcing community interaction during driving 40.5% over sequential increase in average user timestamp. Overall, user engagement as measured by the ratio of DAUs to MAUs increased by 1% sequentially, while the IM penetration rate rose by 1.5% over the same period. Next, let's take a look at HAGO. During the third quarter, HAGO achieved a sequential middle single digital percentage increase in revenue, and its operation cash flow remained positive during the quarter. Efficiently, content remained priority, along with a refined notification strategy designed boosts participation in multi-guest interactive rooms across regions. HAGO also iterated enhanced its IAM and interactive features, helping to drive increased social activity among users. Notably, average user time spent in social channels reached nearly 95.8 minutes per day. And average time spent in multi-guest audio live streaming rooms grew by 1.2 percent sequentially. Besides the HAGO 3D space, HAGO is actively exploring alternative social interactive applications and combining live streaming and interactive gaming experience powered by AI. Finally, some updates on cash flow and capital return. We continue to drive, to generate robust positive operation cash flow reach 72. in the third quarter. Meanwhile, we maintained an active pace of share repurchases and bounced back an additional 43.5 million of our shares. Our board has authorized an extension of the buyback program which soon adds 530 million as of the end of the third quarter until November 2024. To summarize effectively the conclusion of our operational strategy and the ongoing recovery of Big O's revenue profit, and user activity. Looking ahead into the remainder of 2023 and beyond, we remain committed to our long-term targeted strategy to pursue high-quality growth. We will continue to explore ways to innovate across all our products and operations and drive the steady recovery of our global business with a continued focus on improving operation cash flows. We will further concentrate our resources on building our core sciences and the global business that align with our long-term strategy and effectively pursue growth opportunities. At the same time, we will continue to enhance shareholders' returns through share buybacks. This concludes my prepared remarks. I will now turn the call to our Vice President of Finance, Alex Liu, for our financial updates.
spk17: Thanks, David. Hello, everyone.
spk18: Despite the ongoing macro uncertainties, we achieved solid progress in the third quarter. Our global business segment, Beagle, booked positive year-over-year growth in both revenue and non-GAAP operating income during the quarter. We continued to grow our global MEOs even as they adhere to our disciplined marketing spend. The monetization efficiency ratios were also up during the quarter with the number of vehicles quarterly paying users up by 5.1% and ARPPO up by 2.2% quarter over quarter. It's a result of our continuing dedicated strategy to optimize product value and the user experience and the strong execution of our global operational team. Now, let's look at the numbers in detail. Our total net revenues were $567.1 million in the third quarter. Revenues from legal segment were $494.1 million, up by 2.2% year-over-year, the first year-over-year top line growth in six quarters, mainly driven by strong growth in the developed countries. Cost of revenues for the quarter decreased to $357.9 million, among which our revenue sharing fees and content costs decreased to $232.3 million. FICO's cost of revenues were $299.2 million, which was up year over year, consistent with rebound in live streaming revenue. Gross profit was $209.2 million in the quarter, with a gross margin of 36.9%. Beagle's gross profit was 194.8 million with a gross margin of 39.4%. Our group's operating expenses for the quarter were 191.3 million compared with 202.2 million in the same period of 2022. Among the operating expenses, Sales and marketing expenses decreased to 92.5 million from 96.8 million in the same period of 2022, primarily due to the optimization of overall sales and marketing strategies across various product lines to be more focused on ROI and effectiveness of user acquisition. R&D expenses. increased to 71.6 million from 61.2 million in the same period of 2022, primarily due to increased R&D personal related expenses as we prioritize the resources into building our technological capabilities. Because operating expenses for the quarter were 126.7 million down by 5.3% year-over-year. Our gross gap operating income for the quarter was US dollar 12 million. Our non-gap operating income for the quarter, which excludes SBC expenses, amortization of intangible assets from business acquisitions, loss of the consolidation and disposal of subsidiaries, as well as impairment of goodwill and investments was $40.4 million in this quarter, with a non-GAAP operating income margin of 7.1%. Beagle's GAAP operating income for the quarter was $68.5 million, and Beagle's non-GAAP operating income was $81.9 million. representing a non-GAAP operating income margin of 16.6%, up from 15.2% in the same period last year. Other groups' GAAP net income, Attributable to controlling interest of Joy in the quarter was $72.9 million compared to net income of $515.3 million in the same period of 2022. Gap net income margin was 12.9% in the third quarter of 2023. compared to net income margin of 87.8% in the corresponding period of 2022. Our group's gap net income was larger in the third quarter last year, primarily due to a one-off remitment gain of active investment. FIGO's gap net income in the quarter was $70.2 million with a gap net margin of 14.2%. Non-gap net income attributable to controlling interest of Joy in the quarter was $81.2 million compared to $76.9 million in the same period of 2022. The group's non-gap net income margin was 40.3% in the quarter compared to 13.1% in the same period of 2022. Beagle's non-GAAP net income was 81.9 million with a non-GAAP net margin of 16.6%. For the third quarter of 2023, We broke net cash inflows from operating activities of $72.9 million. We remain a healthy value state with a strong cash pricing of $3.8 billion as of September 30, 2023. In the third quarter, we continued to enhance returns to shareholders. and repurchased an additional of approximately 43.5 million of our shares. In the first three quarters of 2023, we have retained an aggregate amount of 355.4 million to our shareholders through dividends and share buybacks. which altogether represents 155.6% of our aggregated non-GAAP net income during the corresponding periods. We will continue to actively utilize our share repurchase program in the coming quarters. Turning now to our business outlook, we anticipate continued recovery in our global operations. However, due to the ongoing uncertainty in the global macro landscape, we recognize that the pace of recovery may vary across different markets, and there may be short-term fluctuations in users' paying sentiment. Separately, as previously communicated, we have made proactive adjustments to certain non-core operations. in line with our commitment to high quality growth and global pricing. Taking all factors into consideration, we expect our net revenues for the first quarter of 2023 to be between $551 million and $579 million. This forecast reflects our preliminary views on the market and operational conditions. and business adjustments, which are subject to changes. In conclusion, our dedicated efforts to enhance product value and optimize user experience are yielding positive results, as shown in our accelerating user growth and top-line recovery. Simultaneously, our financial This plan has allowed us to further expand profitability and fortify our financial standing. Moving forward, we will maintain a focused operational strategy and direct our resources towards high potential business that align with our long-term objectives. We will also strive for a steady recovery in our global operations. while prioritizing improvement in operating cash flows. With a strong foundation and our proven execution capabilities, we are confident that we are well positioned to seize growth opportunities and deliver sustainable value to our shareholders. That concludes our prepared remarks. Operator, we would now like to open up the call to questions.
spk37: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the headset to ask your question. When asking a question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone on the call. Your first question comes from Thomas Chong from Jefferies. Please go ahead.
spk08: 早上好,謝謝管理層接受我的提問。 我有兩個問題。 第一個是關於我們2024年BGO還有整體集團的利潤的一個趨勢。 第二個問題是關於我們公司在股東回饋方面的想法。 Thanks management for taking my questions. My first question is about the margin trend for Beagle in 2024, as well as the outlook for the group-branded margin. And my second question is about shareholders' capital return. Can management share your thoughts on this front? Thank you.
spk18: Hi, Thomas. Thank you for your question. I'm Alex. Let me answer your question. For the first question, we can see that the overall profit performance in the third quarter is better than expected, especially for Beagle's share. The profit increased from 39% last quarter to 39.5%. Non-GAAP's operating profit also increased from 16% to 16.6%. Q3, due to the year-end event, our overall investment in the broadcast of the base market sales is actually increasing. The profit transfer is mainly brought by the return of revenue better than expected. Q4, we will definitely give the broadcast base and operating activities more support. The content cost and market sales cost will increase significantly. Thank you, Thomas. This is Alex. I will take your first question.
spk32: So if you look at our Q3 results, we actually delivered better than our previous expectation. BGO segment non-GAAP growth margin was improved from 39% to 39.5% with a non-GAAP OP margin improved from 16% to 16.6%. Although we did spend more on content incentives and sales and marketing for our mid-year gala. Our better-than-expected profit was mainly due to accelerating top-line recovery. Looking ahead to Q4, as we enter the year-end peak of operational activities, we expect Beagle's content cost and sales and marketing expenses to be sequentially up Therefore, Beagle will have a slightly lower gross margin and non-GAAP operating margin in Q4 as a result. However, if you look at our progress so far, in the first three quarters of 23, we have already, for Beagle segment, we have already achieved a non-GAAP OP of 15.4%. So for the full year of 23, we're still expecting the non-GAAP OP a bigger segment should be higher than the level of 2022, which was 14.4%.
spk18: Of course, it's still a bit early for the 24-year guidance, because how much profit can be released depends on the recovery of revenue. In the big picture, we will continue to balance the scale and efficiency. In addition to the impact of the inflation factor, we initially expected that the business of Beagle would remain relatively stable in the case of steady recovery. In addition to the impact of some business initiative adjustments, the big direction is also in the trend of steady improvement of profits. It is no exception in 2024. As for the outlook for Chinese 4, we believe it's still early to give detailed guidance.
spk32: as our profit potential also depends on the pace of top-line recovery. In general, we aim to strike a balance between scale and efficiency, and on a constant currency basis, we expect Beagle segment to pursue steadily top-line recovery while maintaining a relatively stable OP margin, non-GAAP OP margin. As for the all-out segment, Excluding the impact from our proactive adjustments to certain products, it has been on a continuing trend of narrowing operating losses, which we expect to continue in 2024. So to sum up, we continue to value profit and positive cash flow and drive further improvement in our operating efficiency. And at group level, we still expect to remain profitable and continue to generate positive operating cash flows.
spk18: Thomas, for your second question, about the shareholder return, you can see that we have recently repurchased 43.5 million US dollars of stock. In the first three seasons of this year, the total amount of our shareholder return was up to $3.55 billion US dollars. Thank you.
spk32: And for your second question on capital return, if you look at Q3, we have repurchased approximately 43.5 million of our shares during the quarter. And in the first three quarters of 2023, our aggregated capital return has reached $355 million US dollar through dividends and share buyback, which is representing 156% of our aggregated non-GAAP net income during the corresponding periods. So as of the end of Q3, we do have $530 million unused life quota under our previous Share Buy Back Plan. And our board has just authorized an extension of the program for another year. So shareholder return will remain one of our top focuses, and we will continue to steadily execute our share buyback. Thank you. Next question, please.
spk37: Next question comes from Brian Gong from Citi. Please go ahead.
spk09: Good morning, Mr. Guo. Thank you for accepting my question. First of all, I would like to congratulate you on your very good 3G performance. I will translate myself. Good morning, management. Thanks for taking my questions. Regarding Big O Labs' recovery, can you elaborate a little bit more on the expected growth momentum across different regions in 2024? What factors are driving this recovery? Thank you.
spk11: Thank you for your question, Brian.
spk16: Let me answer it. In the third quarter, our revenue recovery is better than expected. From a single point of view, the recovery rate of Beagle Live is even higher than that of Beagle's entire version. In terms of the market, the developed countries have maintained the trend of recovery rate recovery for several seasons. This season has even reached the recovery rate growth of a high number of people. Q3 in Southeast Asia has also received a good recovery rate recovery. The driving factor behind the recovery is mainly the growth of MAU, as well as the recovery of ARPOOL. We have launched a number of targeted operation strategies, including in terms of goods and customer, product optimization, and operation. We are consciously hiring high-end users from developed countries.
spk35: Jenny, help me.
spk32: Thank you, Brian. This is David. On your question about BeagleLive's recovery, if you look at our Q3 results, you can see that our revenue recovery in the quarter was better than expected. Looking at products done on a loan basis, BeagleLive actually deliver a higher QOQ growth than the Beagle segment, and that was mainly driven by a high single-digit QOQ growth from the developed countries region. Actually, the developed countries have been on sequential recovery momentum for quite a few quarters already, and we've also positive growth, a decent QOQ recovery for the Southeast Asia region, as well during the quarter. And if we look at the driving factors, we believe it's mainly attributes to a strong MAU growth and also our pool recovery. I think it's the result of our continued implementation of highly targeted operational strategies, which actually prioritizes our user acquisition spending product optimization and other operational resources towards premium and users and also the developed countries.
spk16: Another thing I just mentioned is that the uncertainty of the global overall macro environment is still quite big. There is a difference in the recovery rhythm of each market. And the consumer's ability to consume and the cost of hospitalization also have a fluctuating process. Considering this factor, in the Q4 Guidance, the revenue of BeagleLive is basically the same as the growth of Wave. I think it's a little early to talk about 2024. In a larger sense, I think the revenue of BeagleLive should maintain the same trend of gradual recovery. User growth is still an important focus for us.
spk32: However, as I just mentioned, given the global macro uncertainties, we believe the pace of recovery across different regions still vary, and that users' paying sentiment are still in a fluctuating status. Therefore, in our current Q4 guidance, we actually expect BeagleLive to achieve a modest growth year-over-year. I think it's still early to give guidance on 24, but generally speaking, we expect BeagleLive to resume a top-line year-over-year recovery gradually, driven by MAU growth together with stabilizing monetization efficiency. Next question, please.
spk37: The next question comes from Yuwen Deng from China Renaissance. Please go ahead.
spk10: Thank you, Mr. Guo. This is my question. I have two questions. The first one is about users. In the past two years, our sales have been relatively poor. How should we look at the trend of 20-year users? The second one is about Thank you for taking my questions. So a couple questions. First, user side, how should we think about overall user trend into 2024? And secondly, we see the ongoing impact of the global microenvironment. How should we think about its impact to our business in Europe? And what have the companies done to mitigate such adverse effects?
spk11: Thank you. Thank you for the English question.
spk16: I think from Q2 to Q3, our results, we have always maintained a relatively moderate market market. Under the premise of this spending, has realized the rebound of MAU. It has returned to the same growth in two consecutive seasons. In fact, BeagleLive has maintained a double-digit user growth in six consecutive seasons, and the overall efficiency of the customer has been steadily improved. The proportion of natural quantity and KOL quantity and the proportion of high-end users is also constantly improving. I think the growth strategy of BeagleLive products is still effective at the moment. In the next user growth strategy, we will still focus on several aspects. The first aspect is, in general, to stick to the targeted customer strategy and prioritize the quality of the growth of the users, especially the ROI. The second aspect is to continue to rely on local operating capabilities in terms of customer methods, especially content and social innovation to catch up with customers. In these few seasons, the content of our team, especially the variety and short films, the new content of the focus has achieved a good effect in terms of user circle breaking. After the release of the new feature of social media, Real Match, it has gained positive reactions from users in Southeast Asian countries and driven new downloads. KOL has continued to have a relatively good growth trend, especially in these new countries such as Southeast Asia and Latin America.
spk14: Thank you, Yuen.
spk32: This is David. So on user growth, if we look at our progress in the past two quarters, we managed to achieve a rebound in our group's MAU year-over-year. While we maintained a relatively disciplined marketing spend, our group's MAU rebound achieved positive year-over-year growth for two consecutive quarters, and BeagleLive continued double-digit user growth for the six consecutive quarters. I believe that overall speaking, our user acquisition efficiency has steadily improved, as shown by an increasing trend in our organic traffic, influencer-led traffic, and also a higher percentage of premium users. So I think that belief that the current user growth strategy of BeagleLife has been effective and moving forward. We believe that there are a few actual points for continuing our user growth. First of all, we will continue to remain targeted in terms of our user acquisition strategy and prioritizing quality of user growth with a focus on ROI. And second, we continue to leverage our localized operational operations with primary focuses on content and social experiences as the key drivers of our user acquisition. In the recent quarters, you can see that BeagleLive has successfully expanded product outreach with our own original content, for example, our variety shows, mini series, as well as some third-party high-quality content. And our new feature, RealMatch, actually received very positive user feedback in Southeast Asia and drove an increase of downloads in those markets. And by collaborating with KOLs, we have maintained a positive momentum in influencer-led traffic, especially in Southeast Asia and Latin America and other emerging countries.
spk16: We will also improve the targeted optimization of products and the user experience for the target audience. In the past few seasons, we have launched a more detailed content layer policy for different target users. and the difference in recommendation and calculation. Currently, we are surrounding the high-end users, new users, and female users. We have promoted several rounds of delivery. After each round of delivery, the total usage of target users has been improved considerably. As I said before, BeagleLive is a global user community with extreme diversity. We have to try to make every dimension as detailed as possible. to improve the experience and flow of each user target. In general, I think BeagleLive can still maintain a more stable user growth. As for other products, at this stage, we are still returning to the core ability and value of the product. On the basis of achieving stable profit, we are exploring the resumption of user size. Some product cycles may be a little faster, some slower. But I don't think it will affect the group
spk32: And thirdly, we will continue to work on product features and user experiences for targeting user groups to further improve our user retention. In the recent quarters, we have actually introduced refined content segregation policies and differentiated recommendation algorithms tailored to different target user groups. And after several rounds of iterations focusing on premium users, new users, and female user cohorts, we've actually found that the retention rate and also their user time spent has been consequently improved within those target groups. And as we previously mentioned, BeagleLive has a very diverse global user community and there is empty room for targeted optimization and we aim to continue to make perfection in each and every dimension and further enhance user experiences within each and every user groups. And to sum up, we expect BeagleLife to maintain a relatively healthy and steady user growth in the year 24 For other products, I believe that our goal is still to focus on the core functionalities and cultivation of core product value. And once they start to generate a consistent profit, then we will have a solid foundation to revisit user growth. The actual timeline may vary. Some might be slightly ahead. The others may be slightly behind. However, I don't think that it will interfere the big picture here, which is recovering user growth at group level.
spk37: Next question comes from Lei Zhang from Bank of America Securities. Please go ahead.
spk38: Hi, 管理层,早上好,谢谢接受我的提问。 我的问题是关于监管这一块的,就是有看到我们国内最近有一些可能直播相关的监管风险, 所以想请教一下,可以帮我们分享一下我们整个全球业务有没有一些监管方面的一些concern呢? 谢谢,我自己翻译一下。 Thank management for taking my question. Want to see any updates on your global business in terms of regulatory risk? Thank you.
spk18: Thank you for your question. My name is Alex. Let me answer your question. For social entertainment companies that operate globally, there is a big difference in the management of each market. And it is in the process of constant change. Our company has always set the premise of business compliance and safety as the global business development, This is Alex. I will take the question.
spk32: For a global social entertainment company, the regulatory landscape across different markets actually varies and is subject to constant involvement. And we have always considered business compliance and business safety as the crucial prerequisites for a high quality growth of our global business. And to achieve that, we will remain vigilant in monitoring the regulatory development and actively engage with the local regulatory authorities. And internally, we'll continue to optimize our compliance framework and execution and more proactively adapt our business and operations the regulatory changes to ensure alignment with the evolving regulatory and industry requirements. So that was the end of our Q&A session. It's been great catching up with everyone. Thank you so much for joining our call. We look forward to speaking with you next quarter.
spk37: This conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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