HUYA Inc.

Q3 2021 Earnings Conference Call

11/9/2021

spk07: Hello, ladies and gentlemen. Thank you for standing by for the third quarter 2021 earnings conference call for Huya Inc. At this time, all participants are in a listen-only mode. Today's conference call is being recorded. I'll now turn the call over to Ms. Han Yu Liu, Company Investor Relations. Please go ahead.
spk09: Hello, everyone, and welcome to Huya's third quarter 2021 earnings conference call. The company's financials and operating results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com. A replay of the call will be available on the IR website in a few hours. Participants on today's call will be Mr. Rongjie Dong, Chief Executive Officer of Huya, and Ms. Ashley Wu, Vice President of Finance. Management will begin with the prepared remarks, and the call will conclude with a Q&A session. Before we continue, please know that today's discussion will contain forward-looking statements made under the Safe Harbor Provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and identities. As such, the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements. except as required under applicable law. Please also know that HUYA's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. HUYA's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited, most directly comparable GAAP measures. I will now turn the call over to our CEO, Mr. Rongjia Dong. Please go ahead.
spk03: Hello, everyone. Thank you for joining our conference call today. In the third quarter of 2021, we achieved solid results. Our mobile users reached record high levels, and we continued to steadily grow our top line. Huya Life's mobile emails reached 85.1 million in the third quarter, up 15% year-over-year, and 10% quarter-over-quarter. The strong user growth was mainly driven by our comprehensive content offerings, operational activities, and continued promotion. efforts during the summer esports events. The next month's retention rate for our Huya Live app also remained stable at over 70%. As a technology-driven platform, we have been continuously focused on product and service upgrades to deliver more fun and immersive experience to our users. In particular, we actively promoted the development and application of more interactive features in live streaming, supporting broadcasters' ability to produce quality content more conveniently. as well as make it easier for our users to participate while viewing live streams. I will now provide you with some updates on those initiatives. Our open platform for third-party application developers has been up and running for almost two years. By the end of September, More than 290 tools had been developed on this open platform, and over 880,000 broadcasters covering our core categories, including esports, tournaments, games, and pen entertainment, had used Ctools. In particular, the recently added Capabilities for multi-user participation, such as draw and guest header, and mecha fights are now quite popular. More users can join the streaming interaction and gifting, and the bullet chats sent by users can also influence battle results. This increases the interactivity between broadcasters, helping users to effectively level up and strengthen the monetization capabilities of broadcasters. In August, we introduced a feature called Coded One Click to Join Broadcasters Gameplay. It was first applied in Peacekeeper Elite channels. With this interactive gaming function, users can team up with streamers to play games while watching live streaming sessions. The gift drop feature we released earlier this year is now available in more games. including the latest LOL Wild Rift. Through our cooperation with the game studio, Gift Drop will be triggered in a live channel for users to claim game tools and skins after downloading this new game. Achieving a certain length of viewing time or when a broadcaster strikes us a certain cue. It enhances the engagement in the streaming session as well as the participating patient of the game itself. We believe the introduction of these interactive features not only offers more innovative gameplay for our users and the broadcasters, it also improves the uniqueness how we are to game studios. More importantly, it opens up more opportunities for our deep penetration in the game value chain. In terms of streaming technologies, we recently added HDR support to our esports tournament streaming, enabling users to enjoy more delicate game scenes compared to the existing Ultra HD experience. While leveraging our self-developed voice recognition technology for game live streaming, the newly launched AI captioning function identifies accurate game terms as well as player and team names and provide real-time subtitles for live events. Together with our live event instant playback and simultaneous multi-screen viewing functions, we were able to provide the best tournament viewing experience so far. in the recently concluded 2021 Season of League of Legends World Championships. Supported by the above-mentioned technologies and our operational expertise, we continued our leading market share in Broadcasting World 2021. In light of the dynamic business environment, it is pivotal for us to strengthen our competitive advantages. This primarily resides in fostering and retaining streaming talent, enriching and producing quality content, and delivering technology and product innovations. We are also confident that we can capture the opportunities brought by the new game launches. In recent quarters, there has been more regulatory attention surrounding our industry. We believe that the intention is to better regulate the space and promote its healthy long-term development. We have been closely monitoring and following the regulatory guidelines and will continue to strengthen our operations in accordance with regulatory requirements. Despite the potential impact of regulatory changes on our near-term growth, we believe in our agility and ability to remain competitive and relevant to great long-term value as we continue investing in quality content, upgrading products, driven user growth, improving monetization and solidifying our leading position in the game live streaming market. With that overview, I will now introduce our VP of Finance, Ashley Wu, who has been with Huya for years and has extensive company and industry knowledge. She will provide you with operating metrics in more detail and our financial assessment. Ashley, please go ahead.
spk10: Thank you, Mr. Dong, and hello, everyone. Following Mr. Dong's remarks, I will start with an update on our content enrichment and diversification initiatives. eSports is at the core of our content ecosystem. and we have been committed to bring more high-quality and popular esports content to game enthusiasts. During the third quarter, we broadcasted 131 third-party esports tournaments, generating total viewership of 590 million. LPL Summer, Honor of Kings World Champion Cup, and LCK Summer were among the most watched events in the first quarter. Our exclusively broadcast comprehensive regional tournaments, including National Electronic Sport Tournament and Esports Championship East Asia, were also welcomed by users. Although some key license events were temporarily delayed during the season, we added more professional comprehensive content in comparison with last year's schedule. In the third quarter, we broadcasted 58 self-produced esports tournaments and entertainment PGC shows, and total viewership reached 142 million, growing over 40% year over year. Among the esports tournaments that we produced, the Huya All-Star Cup, Huya Mengnanbei, has become a signature event for Peacekeeper Elite. In this event's summer season, we invited top professional players and well-known broadcasters from multiple live streaming platforms in China, as well as several international teams, to team up and compete, making it especially popular. During the period, we also hosted the round cup, Pan Hubei, for Crossfire Mobile, Crossfire HD, Astro File, and Naraka Breakpoint, all of which further complement the content for those game titles already on the Huya platform, gaining even more traction with game lovers. Notably, our Zhen Shen Cup for LOL Wild Rift, Zhen Shen Bay, held in August, greatly attract users' attention before the formal launch of this much-anticipated game. In addition, during the period of HOK World Champion Cup, we produced a complementary program, Shihou Zhuge, integrating professional gameplay analysts with variety shows. It is the first of its kind for this HOK tournament. We believe It was a success, attaining a viewership of over 12 million during the third quarter. On the entertainment PGC program front, our non-standing Godline Season 6, Lang Ren Sha Godline, a werewolf game show, and Hu Ya Kung Fu Carnival Season 5, a mixed martial art competition, continue to be the top performing shows. In September, we introduced Hu Ya Music Pop, Shen Ye Jiu Guan, our first music scene in-depth interview program. This program invites well-known musicians to share their stories, further enriching our pan-entertainment offerings. We continue to strengthen our efforts for videos by encouraging streamers to also become video content creators. In addition to the popular video on-demand format, the video carousel format, Lunbo Shipping, which supports ongoing replays, is also well-liked on our platform, as it suits live streaming user habits. In the third quarter, average MAUs who watch videos on our platform increased to approximately 40 million, representing quarter-over-quarter growth of 30%. Moving on to our international expansion progress, the average MAUs of Nemo TV, our overseas game live streaming platform, increased to more than 28 million in the first quarter, and the overseas revenues achieved over 200% year-over-year growth. The sequential user growth was mainly driven by certain regional esports tournaments, particularly in Southeast Asia. As we continue to deepen our relationship with local content providers and game companies, we are also refining our cooperation with local agent tendencies for more sustainable and healthy future revenue growth. Next, I will walk you through our financial highlights. In the third quarter, our total net revenues were approximately RMB 3 billion, up 6% year over year. Our live streaming revenue, or RMB 2.6 billion in the quarter, a slight decrease from the same period last year, primarily due to lower average spending per paying user on Huya Life, partially offset by the increase in the overseas live streaming revenue. The number of paying users for Huya Life reached 6 million, which is flat compared with the same period last year. Nevertheless, our paying user numbers improved compared with the second quarter and were in line with our mobile MAU expansion trends. The usual low spending from newly ad-deploying users has resulted in a lower ARPPU in the third quarter. Advertising and other revenues increased by 137% year-over-year to almost 374 million in the third quarter, primarily driven by revenues from quantum licensing. Profit levels in the third quarter were impacted as we set up investment in our quantum. Our non-GAAP gross profit was RMB 516 million. Non-GAAP gross margin was 70.3%. Our non-GAAP operating profit was RMB 154 million and our non-GAAP operating margin was 5.2%. Our non-GAAP net profit was RMB 180 million with a non-GAAP net margin of 6%. Moving on to our financial details, unless otherwise specified, the growth rate I will be reviewing are all on year-over-year terms. Cost of revenues increased by 12.6% to RMB 2.5 billion for Q3, primarily attributable to the increase in revenue sharing fees and content costs. Revenue sharing fees and content costs increased by 16.3% to RMB 2.12 billion for Q3, primarily due to the increase in revenue sharing fees in relation to certain broadcaster incentive programs and the increase in spending on e-sport content and content creators. Benefit cost decreased by 14.2% to RMB 178 million for Q3, primarily due to improved benefit cost management and continued technology enhancement efforts. Gross profit decreased by 18.8% to RMB 504 million for Q3, primarily due to the increased cost of revenues driven by higher revenue sharing fee and content cost. Gross profit was 16.9% for Q3. Research and development expenses increased by 12.9% to RMB 206 million for Q3. Primarily attributable to increase personnel related expenses. Sales and marketing expenses increased by 59.5% to RMB 229 million for Q3. Primarily attributable to increase marketing expenses to promote the company's content, products, services, and brand name. particularly including promotional activities for eSports events and cooperation with various marketing channels during the summer vacation. General and administrative expenses decreased by 32.6% to RMB 80 million for Q3, primarily due to lower share-based compensation expenses. As a result, operating income decreased by 62.7% to RMB $83 million for Q3. Operating margin was 2.8% for Q3. Interest and short-term investment income were RMB $63 million for Q3, compared with RMB $76 million. for the same period of 2002. 20, primary attributable to decreased interest rates. Income tax expenses decreased by 19.9% to RMB 41 million for Q3. Share of income in equity method investments, net of income taxes was RMB 379 million for Q3, compared with RMB 0.2 million for the same period of 2020, primarily attributable to the investment income related to a disposal equity investment. As we disclosed in July this year, a private equity fund that Huya invested in as one of the limited partners entered into a definite agreement to sell its minority stake in a gaming company. Net income attributable to Huya Inc. was RMB 524 million for Q3, compared with RMB 253 million for the same period of 2020. Non-GAAP net income attributable to Huya Inc., which excludes share-based compensation expenses and gain on fair value change and disposal of equity investments, net of income tactics was RMB $180 million for Q3, compared with RMB $361 million for the same period of 2020. Diluted net income per ADS was RMB 2.17 for Q3. Non-GAAP diluted net income per ADS was RMB 0.75 for Q3. As of September 30, 2021, the company has cash and cash equivalent, shortened deposits and shortened investments of RMB 11.12 billion compared with RMB 10.74 billion as of June 20, 2021, primarily attributable to a cash inflow from the equity investment disposal mentioned above. With that, I would now like to open the call to your questions.
spk07: Thank you. Ladies and gentlemen, if you wish to ask a question, please press star 1 on your telephone and light for your name to be announced. If you wish to withdraw your request, please press the pound or hash key. For the benefit of all participants in today's call, if you wish to ask a question to matchman in Chinese, please immediately repeat your question in English. So once again, ladies and gentlemen, if you wish to ask a question, please press star 1 on your telephone keypad. Your first question comes from the line of Thomas Chong from Jefferies. Please go ahead.
spk04: 晚上好,謝謝管理層介紹我的提問。 我有兩個問題。 第一個,管理層可不可以分享一下最近S11賽事的表現呢? Secondly, how do we look at the future trend of users and the expectation of revenue? Thanks, management, for taking my questions. I have two questions from my side. The first question is, can management comment about the performance for S11? And number two is about our expectation with regard to the user trend as well as the revenue expectation. Thank you.
spk03: S1 just ended last weekend. We are very happy to see that this is a national event. We also saw that the AFPL team entered the finals and won the championship. This will further enhance the influence of the tournament.
spk06: The S11 actually took place last weekend, and we are more than happy to see that this event has caused sensational outcomes in the world of games. And we are very happy to see that another LPL team entered into the final and got the title in the end. And we believe that the influence of this event is expanding. 回答来说,我们也很高兴在本次S11的期间
spk03: 对,我们再次全程保持了在市场份额的明显的一个领先的优势。 We're very happy to see that during this whole S11 period, Huya had continued our lead in the market shares. 本次赛事也创下了多项用户数据的记录, S11同时在线的分值达到了接近上一届的两倍。
spk06: During this event, Huya had sought a number of new records made for the viewership, especially for PCUs. This year actually is two times of that from the last edition, and it has also recorded as the highest PCU for Huya platform in its history.
spk03: 这是赛事中 Huya与腾讯合作的运营活动以及 We continue to improve the technology of live broadcasts and optimize the experience of live broadcasts. The penetration rate of this year's live broadcasts is the highest in the last three years.
spk06: During this tournament, we had launched operational activities together with Tencent, and also we launched a mobile game based on the tournament. Both of those activities have delivered very nice results. And we will continue to improve our live streaming technologies to optimize the viewer experiences. The penetration rate of Huya and this event actually is the highest during the past three editions.
spk10: Okay, let me answer the question about users and income. Overall, we expect users to continue to grow. This may have a seasonal impact. We believe that our content investment will benefit users. We also hope that the new games and tournaments in the near future will have a positive effect on user growth.
spk06: Now Ms. Wu will talk about the users and revenue expectations in Q4 next year. So overall speaking, we expect our users to grow continuously, and despite some seasonality changes, we believe that our investment in the content will help us to grow our viewership and also we expect some very positive impact from most recent new game launches as well as tournament events.
spk10: 新游戏一直是我们获取用户的一个重要的来源, 那这次H11的夺冠以及电竞正式进入亚运会 是有利于电竞内容的进一步破圈。 从长远来看的话,
spk06: new games has always been an important source for our users, and winning the title for F11 Does Time and also for esports becoming an official item in Asian games will both create very positive impact for our viewers and will help us to enter into a wider audience's population. So for the longer term, we believe that our potential user growth will continue to increase. In terms of revenue, we believe that revenue to some extent is under the impact of the microenvironment as well as the live streaming sector as a whole. So our target is to keep a higher than average growth pace and continue to grow in years to come. That's it. Next question, please.
spk07: Thank you. Our next question comes from Yiwen Zhang from China Renaissance. Please go ahead.
spk01: Good evening, Ms. Guan. Thank you for answering my question. I have two questions about the Hero League. First, the game has been released for exactly a month. Could you please comment on the impact of the game on the growth of our new users? And can you give us some examples The first question is, how long does it take for a live streamer to log in? The second question is, do you have any preparation for the game? For example, do you have any preparation for the game? For example, do you have any preparation for the game? Thanks for taking my question. I have two questions regarding LOL Mobile. Firstly, it's exactly one more thing to the game launch. Can you show more color on the new user growth from this title? And if we make a reference to Honor of Kings and also Peacekeeper Gambit, what is the gap between the game launch and the user coming into our platform? And secondly, can you discuss the preparation we made for LOL Mobile, including the streamer recruitment and also our self-organized tournament? And additionally, how much incremental content cost do you expect to incur? Thank you.
spk03: It's been more than a month since the first game was released. Just like before, we have been working on this new game You're right by saying that LOL Mobile was launched about one month ago and Huya
spk06: platform continue to take this significant market share, and right now the user or viewership performance is better than other games such as PUBG. But of course, we will continue to monitor the performances going forward. 对,然后我们发现这款游戏跟看这款手游的用户跟看英雄人们端游的用户
spk03: This LOL mobile is by no means replacing the users for LOL PC or HLK. Therefore, we have the right confidence of gaining more viewers and users from live streaming for this mobile game. Of course, the preparation for our operation work is actually very long. It's been almost half a year. And before we went online, we had already made a lot of preparations for signing up as a streamer. We also cooperated closely with a lot of unions.
spk06: In preparation for the launch of the scam, we've done a lot of things in operation. For instance, we had signed some live streamers as well as working together with talent agencies in preparation for the launch. Since the launch, we had organized a number of tournaments and events in order to give opportunities for live streamers to make their shows and make exposures. We have now signed over 1,000 streamers and also had signed a number of professional teams.
spk03: Going forward, we would consider acquiring licensed tournaments in China for domestic leagues as well as other key important tournaments on top of organizing our own tournament events.
spk09: Okay, next question, please.
spk07: Thank you. Next question comes from Lei Zhang from Bank of America, Maryland. Please ask a question.
spk02: Hi, good evening. Thank you for accepting my question. There are two questions. The first one is mainly about our profit rate. I don't know if there is a future trend that you can share, especially our income share and content cost trend. Two questions here. First is on the margin trend. Can you give us more color on the margin trend, especially any change in revenue sharing costs and content costs? And secondly, wondering your updates on your strategy about esports tournaments and how should we think about the tournament-related costs in the future? Thank you. 好的,那我先来回答一下关于这个利润的情况。
spk10: In order to increase the competitiveness of Huya and better service users, Huya has increased its investment in content since Q3. It mainly includes the content of content creators, and the investment in the copyright content and the self-made content. In order to increase the market share and strengthen the competitiveness of the platform, in the current situation where the basic division policy is unchanged,
spk06: 我们也会依据市场的情况给到主播一些额外的一些激励。 In order to improve our competitiveness and better serve our users, we had stepped up our effort in putting more resources in content since Q3, including by making more investment for content creators as well as self-produced high-quality content and licensed tournament content as well. In terms of revenue sharing with our live streamers, in order to improve our competitiveness while maintaining the basics of revenue sharing mechanisms unchanged, we will also address and try to give more incentives for the live streamers according to the market dynamics. 另外我们也会观察到就目前虎牙的这个利润水平会随着一些赛事的安排
spk10: and operational activities will have some seasonal fluctuations. In the fourth quarter of this year, due to some changes in the market, mainly the S11 market was postponed to Q4. This will have some impact on our market cost distribution. In addition, in Q4, because we will have more operational activities at the end of the year, we can see that the Q4 content cost will be relatively higher.
spk06: In terms of margin levels, well, there's some seasonality changes according to the scheduling of our operational events as well as the tournaments, especially in Q4 this year because there are a number of big events towards the end of the year, and also there are some postpones of events and tournaments such as S11 all took place in Q4. So that has generated some impact on our tournament costs and also the operation costs with regard to content.
spk03: 好,我来讲讲赛事这个部分。 对,大家知道最近这个S赛决赛其实挺乐的,也包括说未来的这个杭州亚运会,对,电竞,对,就是,对,这个也是首次进去了。 So Mr. Dong will take the question with regard to our tournament and its IP cost.
spk06: Well, actually, we believe that esports will continue to be very popular in a few years to come, especially with the S11 final title as well as the Asian Games. So we believe that the costs for top-tier tournaments will probably go higher in the future. 对,但是另外唯独来说是这样的,就是我们对新游戏或者是
spk03: This is a very important resource for Huya in the future.
spk06: On the other hand, for some long-tail tournaments or new tournaments really depend on the promotion of live streaming platforms, so the costs for these kinds of events will probably be quite flattish. On the other hand, we also noticed that self-produced content is also a very important source of content for Huya.
spk03: In the past, we have made a lot of attempts in the field of self-proclaimed competitions, including our self-proclaimed e-sports competitions, as well as some self-proclaimed entertainment competitions. We hope to continue to invest in this area in the future, because we think that the cost-effectiveness of this competition is relatively high, and it is also a unique content of Huya. We also hope that with time, we can use this part of the proportion to
spk06: So for self-produced content as well as our own esports tournaments or entertainment events, we believe that this kind of content creates better valuable money and is quite unique to our platform. So we will continue to invest in these kind of areas and we hope to raise the percentage points from the current level to around 10% to 20% in years to come.
spk09: Okay, next question, please.
spk07: Next question comes from Ervichi Sun from HSBC. Please go ahead.
spk05: Hi, good evening. Thank you for accepting my question. I have two questions. First, I would like to ask if you can share the changes in the latest competitive pattern? We are no longer in a situation where there is no merger or competition, how do you look at the long-term profit level of the company? The second question I would like to ask is about the work progress of our game video. As I mentioned earlier, now there are about 40 million users. Is there any other data, such as user history, storage rate, and transformation plans, etc., that you can share? So I will translate the questions myself. So firstly, I want to ask about the competitive landscape dynamic. How has that been trending? And without the M&A and also ongoing intense competition, how should we think about the long-term net margin level for the platform? Second question is, can you share about the progress made in game video You mentioned the MAU of 40 million. So what about the user time span, retention, as well as monetization plan? Thank you.
spk03: Okay, let me talk about the competition pattern. As you all know, our agreement with Douyu has been canceled. So we have to resume the competition. So this... Overall, the competitive pattern of game streaming is not as big as it used to be. As you all know, compared to Douyu, Huya is more efficient. We have been paying close attention to the changes in the trend of the industry. Overall, we believe that the future pattern of game streaming will not change much in the short term.
spk06: Mr. Dong, on the question of competition landscape, well, since we are not joining hands with Douyu and became competitors again, we believe that in recent quarters, the overall competition landscape for game live streaming does not change a lot. Compared with Douyu, I think we have much better operational efficiencies and we have outperformed in terms of users as well as revenues.
spk03: Yes, as you all know, many of our competitors, our friends, have invested a lot in e-sports. But from the data, we think that Huya has always done the best in this area. So, in general, we think that we are doing a professional game live broadcast platform. In fact, the advantage in this area, in fact, we see that it is still growing.
spk06: Even though our peers are making more and more investment in live streaming for esports, however, we are a professional platform for esports, and we rely on our core competitiveness and continue to strengthen our positioning in this regard. 所以我们目前的整体的一个战略还是希望说 As I said before, we will continue to gain our market share and also to keep strengthening our advantages in live streaming for esports. And over time, as we are accumulating more and more professional know-hows and experiences in running esports, we would love to have more diversified business models and by relying on self-produced content, for instance.
spk10: 好的,下面我来回答一下视频方面的一些内容。 那现在能看到就是视频的用户本个季度也有一个比较快速的一个增长。 那这个视频的MAU已经到达了4000万。 Compared to Q2, it has increased by 30%. As we can see, the video business is an extension of our live broadcast content. Many of the video content is based on the editing and live broadcast content of the competition. So Huya has a greater advantage in this regard, because we have the resources and capabilities to create these contents. From the current content output, we will also encourage to create some video content, and provide some better products for the streamers to edit the video content. For example, we can have some AI to detect wonderful content and edit it into a video. These are actually beneficial to the output of our video content and can help us
spk06: on a question of video content production. Well, actually, for videos, the user actually had increased. Since Q3, our MAU reached 40 million. Compared with the previous quarter of Q2, there is an increase of about 30%. We believe that video business is a natural extension to the live streaming business that we have. A lot of video content originated from the events, tournaments, basically about editing and reproduction of the live streaming content. So I think one of our biggest advantages in this regard is that we have abundant resources in terms of content production. and we have a very good ability of editing and reproducing them into videos. In terms of the video content production, we encourage live streamers and talent agencies to make video content. And in terms of the products, we have launched a lot of new features, for instance, We have this highly efficient editing features, and we can use AI technology to identify the key moments and points and generate video clips automatically. So this is a very positive feature that we have for producing content for videos.
spk09: Okay, we can have the next question. Thank you.
spk07: Thank you. Next question comes from Brian Gong from CT. Please ask your question.
spk00: Thank you, Manager. This is my question. I just want to ask, for the game and game live broadcast, the supervision has been out for a while. I don't know if the supervision has a clearer idea about the operation of our company and some of the impact of revenue, and our future development strategy. I will translate myself. Can management share your latest view on the impact from the regulation of gaming and gaming-level streaming toward our operations and fundamentals? And is there any change to our strategies post the latest regulation? Thank you. 好的,我来回答一下这个问题。
spk10: As mentioned earlier, our industry has received a lot of supervision and attention recently. We believe that the purpose of doing this is to ensure a more standardized and healthy development in the industry. So we have been paying close attention to and following the guidance of supervision, and strengthen and meet the relevant requirements of supervision in the business. Thank you. As you rightly pointed out, in recent months, our industry has received quite a lot of attention from the regulators.
spk06: And we believe the purpose of doing that is to better regulate the industry and to promote a healthy long-term growth. We've been keeping an eye on the latest regulatory changes and to make sure that our business operation is in full compliance with those regulations. Even though there will be some short-term changes in terms of the revenue or user-based growth because of the regulatory changes for the short-term, but we believe that for the longer term, we would be agile enough to mitigate the impact on our business and to actively address our product and operation to make sure that we can cater for the demands of the users and also at the same time be compliant. That said, we will continue to invest in high-quality content production to upgrade our products as well as to consolidate our competitiveness of the business as a whole. And for the longer term, we believe that this will help us to better serve our clients and generate long-term value. Thank you.
spk07: Thank you. Our final question today comes from Tianhou from TH Capital. Please go ahead.
spk08: Good evening, Manager Cheng. I have a question about the development of overseas. And what are your thoughts on the future of your collaboration with Tencent? I'll answer that. So, just once, management gave some color on your overseas business development. as well as your plan or some thoughts about the cooperation with Tencent going forward. Thank you.
spk10: 好的,那我来回答一下海外的相关的问题。 Q3,我们海外NEMO TV的MAU超过了2800万, 那主要是因为海外赛事的一个拉动, 以及当地有一些运营活动的一个影响。 Thank you, Ms. Wu, on overseas Nemo TV business. Well, thanks to the tournaments in overseas as well as local operational activities, our MAU in overseas market reached $28 million.
spk06: And especially, we had a very stellar performance in the market of Indonesia. And our revenue from overseas market also continued to increase by over 200 percentage points year over year. Our main strategy going overseas is to continue to use the local partners to cultivate our overseas markets and to expand our user base and to enhance our monetization ability. Since this quarter, we are redefining our cooperation with local talent agents and keep optimizing our cooperation with them. We believe that this will be positive for a healthy ecosystem building for the overseas market. We believe that for the short term, the overseas market will continue to be in the investment stage, but the loss in overseas markets as a percentage point to margin level will continue to be lowered. 那目前的话我们在游戏方面有一个非常紧密的合作。 So with our cooperation with Tencent, we truly hope that we can continue to deepen our cooperation with Tencent. And our businesses, especially in the area of games, has been quite close. 虎牙今年也推出了直播间调报。
spk10: This year we had launched some new features such as gift dropping or one click to join the broadcasters play games.
spk06: And these are to improve the interactivity of the live streamers and its users. And we had first launched such interaction features in games by Tencent, such as PKE and others. And both from our side and from the game side had seen very nice outcome.
spk10: In terms of a tournament, we had a long-term relationship with Tencent, for instance, by signing a five-year agreement of cooperation for LPL, and this will help us to explore new ways of monetization.
spk07: Okay, that's it. All right, thank you. I would like to turn the call back to the company for closing remarks.
spk09: Thank you once again for joining us today. If you have further questions, please feel free to contact Huya's Investor Relations through the contact information provided on our website or TPG Investor Relations. Thank you. Now this concludes the conference call. You may disconnect your line. Thank you.
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