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spk08: Hello, ladies and gentlemen. Thank you for standing by for the fourth quarter and fiscal year 2021 earnings conference call for Huya Inc. At this time, all participants are in the listen-only mode. Today's conference call is being recorded. Now turn the call over to Ms. Han Yu Liu, Company Investor Relations. Please go ahead.
spk07: Hello, everyone, and welcome to HUYA's fourth quarter and fiscal year 2021 earnings conference call. The company's financial and operational 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. Participant 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 prepared remarks and the call will conclude with a Q&A session. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. 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 WHO-YAS earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. WHO-YAS 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. 2021 was a solid year for Huya as we strive to fortify our leadership position in China's game live streaming market. Amid macro headwinds, related to the subsiding pandemic effects and the evolving regulatory landscape. We finished the fourth quarter with a record high mobile user base and net revenues of 2.8 billion RMB. For four year 2021, we performed overall, generating 11.4 billion RMB total net revenues and 454 million RMB non-GAAP net income. Throughout the year, we expanded our investments in licensed esports tournaments, self-produced content and content creators across our platform, and continued to advance technology and product development, launching innovative interactive features to further enhance user experience and boost user engagement. We also broadened our commitment to corporate social responsibility, fostering deeper bonds with our community of users and broadcasters as we promoted positive social values nationwide. First, let's look at our user growth driven by esports events and new game launches in Q4. Our user base sustained healthy growth, momentum, and well-life mobile MAUs reached 85.4 million during the quarter, up 7% year-over-year. On an annual basis, Guya Live's mobile emails were $88.9 million in 2021, compared with $76 million in 2020. As we remained focused on ramping up content investment and rolling out product innovations, we maintained our Huya Life Apps. Next month, user retention rate about 70% on average in 2021. Next, I would like to provide some updates on our recent efforts to advance technology and product development. Let's begin with our open platform for third-party application developers, which is growing rapidly and gaining popularity with users, broadcasters, and developers alike. By the end of December 2021, more than 310 Huya mini-tools had been created and offered by developers through this open platform, extensively diversifying and enriching our users' live streaming interactions with new formats. Furthermore, in the fourth quarter of 2021, the average number of broadcasters using mini-tools per day by approximately 160% year-over-year. And those tools engaged more than 5 million daily active users during the quarter, up over 240% year-over-year. One noteworthy example is Battle of Roads, A recently added mini-tool utilizing incremental game features to help streamers increase users' loyalty to their live broadcast rooms by enticing users with virtual rewards when they visit. Also, to build on the successful launch of a series of interactive games features including gift droppers and one-click to joint broadcasters gameplay. Earlier in 2021, we introduced more innovative features in the fourth quarter for the enhancing game live streaming experiences. For instance, In December, we joined forces with Peacekeeper Elite to roll out a three-day campaign featuring our live streaming sale for in-game virtual items, inviting a few popular streamers to promote in-game skins and other virtual items during their live broadcast sessions. Notably, the campaign generated a record growth billing for our live streaming sale on our platform, with users viewing this game title on our app during the week of the campaign growing by 60% sequentially. On top of our general live streaming e-commerce functions, which allow users to place orders directly during streaming sessions. The Peacekeeper Elite event included an inventive feature enabling users to receive virtual in-game purchases immediately in their game accounts by connecting their game ID with their Huya account. while greatly benefiting the game's operations. Events like this also support new live streaming content creation and increase streamers' engagement in the game value chain, thus potentially diversifying their income sources. Our initial success in this initial initiative also demonstrated the value of our enhanced cooperation with the Tencent ecosystem's game studios. In a concerted effort to prepare growth while delivering a better experience to our users and broadcasters, we also working to combine the above-mentioned Huya mini tools and the interactive features to enhance their mutual benefits. As the mini tools connect us with application developers and the interactive features link us with game companies we can leverage those synergies to integrate upstream and downstream partners, raising our platform's profile as an industry leader. As for corporate social responsibility, we have redoubled our efforts by upgrading our risk control and compliance system, expanding our Huya volunteer team and encouraging our broadcasters to create more content in pursuit of positive social impact. In 2021, over 9,600 broadcasters on our platform joined our campaign to promote a healthier and more positive social environment and performed approximately 83,000 hours of related live streaming covering a wide range of topics such as anti-fraud, education, volunteer social activities, and cultural heritage. We also made encouraging progress with our business diversification initiatives in the past year, providing game videos appealing to a wider range of audience demographics. Furthermore, our international product Nemo TV recorded further user expansion and significant revenue growth. Driven by Nemo's solid performance, international business is emerging as a growth driven for our company. Ashley will elaborate on these two topics in just a moment. Last but not least, Although our revenue growth slowed in the first quarter, primarily due to a soft macro environment, we sustained our strategic efforts in content investment to expand our offering and drive continued user growth that we believe is the key to our sustainable business development. This, however, caused higher costs and lower margins for the first quarter. Overall, we are proud of our accomplishments in 2021 and ready to embrace the challenges and opportunities the new year is likely to bring. As we enter 2022, macroeconomic uncertainties and regulatory changes continue to pose pressure for us. Thus, we are experiencing a softer start compared with previous years. Nevertheless, we remain confident in our business fundamentals and operational capabilities. Given our leadership position in the game streaming industry and our strong value proposition in the massive game and e-sports market, as the market events out and user sentiment returns to more favorable levels, we expect to see a recovery in our financials with our investments paying off. Looking ahead, in order to deliver long-term value to our stakeholders, we will strategically focus on enriching the quality and diversity of our content, cultivating content creators, and advancing technology and product innovations, as well as further improving operational efficiency and exploring new business opportunities as we strive to support a better, happier community. Given that esports titles are now included in the official mental programs of the Asia Games, we see tremendous opportunities to leverage our strengths in esports content to enhance Huya's brand image and promote overall industry development. With that overview, I will now turn the call over to our VP of Financial, Ashley Wu, to share more details on our operating metrics and financial assessments. Ashley, please go ahead.
spk04: Thank you, Mr. Dong, and hello, everyone. To expand on Ms. Dong's remarks, I will start with updates on our content enrichment and diversification initiatives. Professional esports content remain viable on our platform. During the fourth quarter, we broadcasted 125 third-party esports tournaments, generating total viewership of approximately 605 million. Notably, the 2021 season of League of Legends World Championship, or World 2021, achieved record high viewership on our platform, and peak concurrent viewers of this event The book compared with the period edition in 2020. KPL Autumn, Demo Seer Club, The International 2021, and PEL Season 4 are also quite popular among our users. Furthermore, we have some exciting news to share about esports broadcasting rights. Following our agreement with TJ Sports last year, through which we locked down the 2021 to 2024 exclusive broadcasting rights in China for LPL, LDL, and LPL All-Star Weekend Series. We are securing rights for a greater variety of licensed esports tournaments by forming multi-year partnerships with esports event organizers. In November, We signed an exclusive Chinese media rights agreement with ESL Gaming for a series of its key events in 2022 and 2023, including ESL Starter 2 and ESL Mobile Ecosystems, as well as the ESL Pro Tools for CSGO and StarCraft II. This collaboration will help us enhance the license coverage for those games tournaments as well as add high quality international esports content to our platform. On the self-produced content front, we broadcasted 64 esports tournaments and entertainment PGC shows in the fourth quarter. For which total viewership reached 153 million in the fourth quarter. going over 40% year-over-year. The Huya All-Star Cup Final Season, Huya Mengnan Bay for Peacekeeper Elite, the Huya Pojun Cup, Pojun Bay for Honor of Kings, and the Junction Cup Season 2, Junction Bay S2 for LOL Wild Wings are our top-performing self-organized events. Going forward, We plan to proactively generate more Huya branded programs and further increase the proportion of self-produced content in our content portfolio, as self-produced offerings are typically differentiated to gain user attraction and deliver good return on investment. By leveraging our rich esports and game live streaming content resources, joining forces with our existing co-broadcasters, and establishing new cooperation with video content creators. We continue to enrich video content offerings on our platform. As of now, a majority of the key broadcasters on our platform have already participated in video content creation. As a result, the number of videos uploaded and video viewership both recorded double-digit sequential growth in the fourth quarter. We believe our effort to build synergy between our video content and live streaming content will promote our user growth and content consumption as well as provide more commercialization opportunity. In terms of our international business, Nemo TV's average MAUs increased to more than 30 million in the fourth quarter, highlighted by strong user growth in Indonesia, particularly by cooperating with game studios and broadcasting local esports tournaments. We solidify our leading position in that region. Within Nemo TV, we continue to add entertainment genre such as live show and voice chat to build a more comprehensive content ecosystem, which also helps to enhance its monetization capability. Our overseas revenues go by over 110% year over year in the fourth quarter, as we constantly refine our cooperation with local talent agencies to pursue more sustainable and healthy future revenue growth. Next, let me walk you through our Q4 financial results. Unless otherwise specified, the growth rates I will be reviewing are all on a year-over-year basis. For the fourth quarter of 2021, our total net revenues are approximately RMB 2.8 billion, decreasing by 6.1% year over year. Our live streaming revenues were RMB 2.6 billion for Q4, compared with Q3, but decreased from RMB 2.8 billion for the same period last year. The decline was mainly due to the lower number of paying users and average spending per paying user on Huya Live, partially offset by growth in overseas live streaming revenue. As Microsoft missed in Q4, adversely affected users' willingness to play. We saw a decrease of paying users for Huya Live from 6 million in Q4 of last year to 5.6 million in this quarter. as well as a lower R pool. Advertising and other revenues increased by 11.6% year-over-year to nearly $196 million for Q4, primarily driven by revenues from content licensing. To provide more color on content licensing's contribution, because our content licensing revenues are related to the licensing of esports tournament forecasting rights and are recognized according to event schedule. We often experience fluctuation in this category between quarters. Cost of revenues increased by 17.3% to RMB 2.8 billion for Q4. primarily due to the increase in revenue sharing fees and content costs, as well as bandwidth costs. Revenue sharing fees and content costs increased by 20.5% to close to RMB 2.5 billion for Q4, primarily due to the increase in spending on e-sports content and the increase in revenue sharing fees. in relation to certain broadcaster incentive programs. Particularly, the impact on content cost in relation to LOL World 2021 was greater than previous years, mainly because this last tournament occurred in Q4 and we booked the event's full course in one single quarter. Whereas in the past, it usually spent two quarters Q3 and Q4. Bandwidth costs increased by 9.6% to RMB 183 million for Q4, primarily due to an increase in bandwidth usage as a result of our higher concurrent user base during the large esports events in the quarter. Gross profit was RMB 1.1 million, and gross margin was approximately zero for Q4, excluding share-based compensation expenses. Non-GAAP gross profit was RMB 16.2 million, and non-GAAP gross margin was 0.6% for Q4. Research and development expenses decreased by 4.6% to RMB 206 million for Q4, primarily due to decreased personnel-related expenses. Sales and marketing expenses increased by 13.1% to RMB 280 million for Q4, primarily due to increased marketing expenses to promote our content, products, services, and branding, particularly in promotional activities for esports events, partially offset by decreased personnel-related expenses. General and administrative expenses decreased by 5.8% to RMB 90 million for Q4, primarily due to decreased professional service fees. Other income was RMB $56 million for Q4, compared with RMB $95 million for the same period of 2020, primarily attributable to lower tax refunds and government subsidies. As a result, operating loss was RMB $457 million for Q4, compared with operating income of RMB 187 million for the same period of 2020. Excluding share-based compensation expenses, non-GAAP operating loss was RMB 386 million, and non-GAAP operating margin was negative 13.8% for Q4. net loss attributable to Huya Inc. was RMB $313 million for Q4, compared with net income attributable to Huya Inc. of RMB $253 million for the same period of 2020. Non-GAAP net loss attributable to Huya Inc. was RMB $242 million for Q4, compared with Non-GAAP net income attributable to Huya Inc. of RMB 306 million for the same period of 2020. Non-GAAP net loss margin was 8.6% for Q4. Diluted net loss per ADS was RMB 1.31 for Q4. Non-GAAP diluted net loss per ADS with RMB 1.01 for Q4. As of December 31, 2020, we had cash and cash equivalents, short-term deposits and short-term investments around RMB 11 billion compared with RMB 11.1 billion as of September 30, 2021. Move on to our full year 2021 results. Total net revenue for 2021 increased by 4% to RMB 11.4 billion, from RMB 10.9 billion for the prior year. Livestreaming revenues were RMB 10.2 billion for 2021, compared with RMB 10.3 billion for the prior year. Advertising and other revenues increased by 93% to RMB 1.2 billion for 2021, from RMB 603 million for the prior year. Notably, advertising and others accounted for approximately 10% of our total revenue for 2021. increased from 5.5% from 2020. Non-GAAP gross profit was RMB 1.7 billion, and non-GAAP gross margin was 14.6% for 2021. Non-GAAP operating income was RMB 260 million, and non-GAAP operating margin was 2.3%. for 2021. Non-GAAP net income attributable to Huya Inc. was RMB 454 million and non-GAAP net margin was 4% for 2021. Non-GAAP denoted net income per ADS was RMB 1.88 for 2021. to be mindful of the length of our earnings call. For the other full year 2021 financial results, I will encourage Ms. Nguyen to refer to our earnings success release for further details. With that, I would now like to open the call to your questions.
spk08: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. For the benefit of all participants on today's call, if you wish to ask a question to management in Chinese, please immediately repeat your question in English. Once again, a star 1 for questions. Our first question comes from the line of Thomas Chong from Jefferies. Please ask your question.
spk00: My question is about the 2022 outlook. Can management share about the overall strategic direction as well as the trend for user and revenue? Thank you.
spk03: Right, and then Q4's MAU reached 85.4 million, and then continued to maintain a leading position in the game live broadcast market. Right, in 2022, Huya hopes to further enhance a share in the game live broadcast market, right, and continue to consolidate a leading position. In addition, Huya will also strengthen some explorations in diversifying businesses this year, and continue to improve the ability to transform businesses.
spk06: Thank you for that question. This is from Mr. Dong, CEO of the company. We always believe that users are the core of our business growth, and we will continue to have user-driven growth for our long-term development strategy. For the year 2021, our user increased by 6.4%, with Q4 MAU reached 85.4 million users. further cementing our leading position in game live streaming area. In 2022, Huya will continue to increase our market share in game live streaming and cement our leading position. Of course, Huya will continue to explore the diversification of our business and to enhance our monetization ability. 为了达到用户的增长, In order to hit our user growth target, Huya in 2022 will continue to invest effectively on the content and product, try to cover the mainstream tournaments and esports events, and also to enhance our ability to make self-produced tournaments and content and increase the proportion of self-produced content. On top of that, we will continue to acquire streamers to adjust our incentive schemes according to the market dynamic, and also keep an eye on overseas live streaming and video businesses.
spk03: In addition, Huya will further enhance cooperation with Tencent to jointly explore the new business model and operation methods of e-sports. In terms of operation, we will continue to strengthen the regularity of the platform, hoping to adapt better to some changes in supervision and achieve a long-term development of the business.
spk06: On top of that, Huya will continue to improve its technology and product, trying to have virtual streamers to optimize our audio and video technology to improve the user's viewing experience and to promote interactive features on live streaming as well as Huya mini programs. Also, we will try to step up our effort in partnering with Tencent and explore new operating models and commercialization models for e-sports as a whole. In terms of operation, we will try to enhance and continue to be compliant in our platform, trying to adapt to regulatory changes and to realize long-term business development.
spk04: Let me answer the question about users and income. In 2022, our goal for users is to keep users on the mobile end of the platform growing. This is mainly achieved through the content of our further enriching platform and strengthening the user interaction experience. But it should be noted that the number of users will also be affected by some major competitions and holiday season factors during the season.
spk06: Ms. Ashley Wu, VP of Finance. As to the trend of user growth and revenue outlook for the year 2022, our target is to keep the mobile user number increase for the year by enriching our content in our platforms and also to enhance interactions with our users. It is worth noticing that the user numbers have seasonality changes, pretty much depending on the scheduling of the big events as well as holidays and other seasonal issues.
spk04: 在收入方面,我们观察到直播用户的付费行为在21年Q4一定程度上收到了宏观经济的一些负面的影响。 In terms of revenue, we noticed that the paying behavior of our users
spk06: in Q4 2021 somehow was affected by the macro economy, the negative impact. And because this, you know, regulatory changes and macro economy impact is still continuing, we expect that for the first half of 2022, our revenue probably will continue to be under some pressure. But generally speaking, the fluctuations in our revenue are mainly due to external forces. Our company will continue to work on and have the right confidence that our business will enjoy a sustainable growth for the long term. Generally speaking, the users are the key to our business development, and we'll continue to have content-driven user growth. And we believe that when the market situation turns better, our business will return to an up-growing business growth.
spk07: Okay, next question, please. Thank you.
spk08: Thank you. Our next question comes from Lei Zhang from Bank of America Merrill Lynch. Please ask your question.
spk05: 我的问题主要是关于内容策略的,尤其是我们在电竞赛事方面的策略,因为有看到我们最近也买了一些独家版权,但同时我们的竞争对手也在这个内容方面做了一些策略的调整,然后所以想请那个管理层分享一下我们对内容方面整体的一个看法,谢谢,我自己翻译一下。 Thanks management for taking my question. My question is mainly regarding your content strategy, particularly on the esports tournament set. I'll consider your competitors' adjustments in esports tournaments recently and thank you for sharing your thoughts here. Yeah, thank you.
spk03: This includes e-sports matches, daily matches, and PCC shows, broadcasts, etc. In terms of e-sports matches, we continue to provide more matches. Currently, in some mainstream games, for example, in League of Legends, Huya is the only one in China that uses LCK, LEC, LCS, and PCC. S, the live streaming platform of the region. King and Peace Elite actually also realized the cover of the main tournament and the domestic professional league. And then the Inflame mobile game in New Year's Eve, we have already started its official professional tournament, some live broadcasts of WRIL. We also mentioned last November that ESL and WRIL reached the two-year exclusive version of .2 and CSGO. Thank you for your question. This is from CEO Mr. Dong.
spk06: In order to enhance our competitiveness and continue to provide attractive content for our users, we'll continue to purchase and establish high-quality content, including IP tournaments, self-produced events, as well as PGC programs and streaming content. To be more specific, in terms of IP tournaments, we'll continue to provide popular tournaments and events. In the mainstream games, for instance, in League of Legends, We have the LPL in China, as well as the only platform that provides LCK, LEC, LCS, as well as PCS. In terms of Honor of King and Peacekeeper Elite, we are also covering the main events and tournaments, as well as the professional league in China. In terms of the new games, for instance, LOL Mobile, we had established the live streaming for its professional league, WRL, White Rift League. And I also mentioned that last year in November, we have established two-year exclusive IP agreement with ESL for Dota 2 and CSGO. And this actually helped us to make up for the shortcomings we had in the past in the portfolio of games and make it a more complete platform that provides professional live streaming content for the games. And to be more specific, as of year 2021 Q4, we live streamed 124 IP games and with a viewership of 605 million in total.
spk03: Overall, we will continue to invest in high-quality, copyrighted games. But compared to the past year, we will indeed start to consider the cost-effectiveness of comprehensive games. So we may pay more attention to this aspect this year. The main strategy in terms of this content is to improve the proportion of this content to be able to cultivate more effectively. This is a proof of the autonomous competition and the IP of the program. For example, the current Huyah's e-sports competition, such as the Menan Cup, the Palm Cup, the Pogun Cup, has held many competitions. Godline has also done many seasons. In fact, these competitions and programs have gradually formed a group of users. In Q4 2021, the number of people who watched the autonomous competition and PC programs reached 1.53 billion, which is more than 40% of the growth. 对,整体来说,这个自制菜市一般情况下,ROI会比较好。 长期来看,这个对于整体的内容成本的一个平衡是有利的。 We will continue to invest effectively on high-quality IP events and while also considering the cost efficiency while we are purchasing them.
spk06: Even though some IP events or top events, they are quite expensive, but we believe these are very important for us to keep traffic of users and provide better services for our existing users. In terms of self-produced content, the strategy is to increase the proportion of self-produced content by making better use of our program IP metrics as well as self-produced tournaments. For instance, right now we have a Huya content that covers mobile gaming arena, Shouyou Dianjing Dacai, as well as All-Star Cup, Mengnanbei, Roar Cup, Panghubei, and Pojun Cup. And we also have made many seasons of guideline entertainment programs as well. And gradually we form a very good and solid user base for these events and programs. In Q4 2021, The total viewership for self-produced content and PCG content reached 153 million with an year-on-year growth of over 40%. Generally speaking, self-produced content can give us a better ROI and for the longer term help us to balance the cost for making the content of all. Thank you.
spk03: In terms of live broadcast content, in addition to continuing to invest in live broadcast signing, we are also actively exploring the technical capabilities of virtual live broadcast and virtual live broadcast, hoping to find better, more cost-effective live broadcast content. At the same time, our interactive live broadcast technology promotion also helps to create more participatory content for the users. 所以综合来说,结合我们现在已有的赛事节目以及直播内容, 我们还会在这个视频内容上面进行一些拓展。 希望能够进一步丰富平台内容, 对形成视频内容和直播内容之间的一些协同。 In terms of live streaming, on top of keeping investing in the...
spk06: streamer split as well as contracting them. We will also explore virtual streamers as well as virtual studio technologies, trying to create more innovative and more cost-efficient live streaming content. We would also try to launch more interaction technologies so as to create more fun and have more interactions and engage the users. So by combining the existing tournaments, programs, and live streaming contents we have, we were also trying to explore video content in order to enrich our content on the platform and to create some synergies between the live streaming and video content.
spk07: Next, please. Thank you.
spk08: Thank you. Our next question comes from Brian Gong from CT Group. Please ask a question.
spk02: Thanks, Benjamin, for taking my questions. This is Nelson asking on behalf of Brian. I have a question on margin and cost. Can management share your view on content cost and streamer cost outlook in 2022? And how about the margin trend outlook going forward? Thank you. Thank you for your question. Let me answer this question.
spk04: In order to improve the attractiveness of the streamer, since Q3 2021, Huya has given the streamer some leverage based on the market environment. At the same time, in Q4, due to some of the holiday activities at the end of the year, the share share ratio will be slightly higher than before. This is due to certain seasonal factors. Combining the operation and transformation capabilities of our platform, we believe that the share share ratio provided by Huya for the host is relatively competitive. We also expect that the overall share share ratio in 2022 and in 2021 will generally be the same.
spk06: Thank you for that question, Ashley Wu, VP for Finance. In order to increase our attraction to streamers since Q3 last year, while maintaining the split policy stable, we had tried to provide more incentives for our streamers according to the market dynamic. And due to the year-end event in Q4 last year, the split ratio was slightly higher. So that was a seasonal impact. So based on our overall operation of the platform and monetization ability, I believe that our split policy for the streamers are now quite attractive. For now, we expect that the total split ratio for the year 2022 will be at the same level we had for the year 2021.
spk04: 那在运营费用方面, 我们会持续优化公司的运营效率, 但是受到毛利降低的影响。 22年运营利润率相较21年预期可能会有所降低。 While we continue our investment in content and also to carry forward our split policy since the second half of 2021, we believe that the content
spk06: cost as a percentage to our revenue for the year 2022 would be slightly higher than that in 2021. And therefore, the whole year gross margin rate will somehow be affected a little bit. In terms of operating expenses, we'll try to continue optimize our operating efficiency, but due to a slightly lower gross margin level, our operating margin will be lower than the year 2021.
spk04: Due to some challenges in this year's industry and promotion, we think it is very necessary to invest in content. This also helps us to increase competitiveness and increase market share. Of course, the company will also make more enhancements and improvements in terms of overall operating efficiency. For example, to do more targeted analysis of content ROI, and to invest resources into more effective content. In addition, we will strengthen the optimization of bandwidth technology, improve the efficiency of bandwidth use, and make more optimization in terms of operating costs. Our investment strategy is flexible and will be adjusted in time according to the market situation. Huya has been financially stable for a long time and has a lot of cash. This provides a good foundation for our investment.
spk06: Given the major challenges for the whole industry and microeconomy, we believe that it is necessary for us to continue to invest in content because it would help us to increase competitiveness and increase the market share. Of course, we'll try to be more optimized in terms of operating efficiency. For instance, to be more specific in analyzing the content ROI, and to allocate our resources to make more result and efficient. For instance, we would probably also trying to optimize our bandwidth technology, make it more efficient, and also to optimize on our operating expenses such as marketing expenses. Our content investment strategy enjoys a certain level of flexibility which can be adjusted to market situation. And for a long time, Huya has always been very healthy in our cash flow and our finance performances, which laid down a very good foundation for our further investment in content.
spk04: Right now, the revenue situation is somehow subjected to the external impact. As we mentioned before, we have a good foundation for user growth
spk06: Our users are loyal to our platform. The second month retention rate for our users on the application is 70%, and we have very nice commercialization capability. So when the market situation turns better, we believe that our revenue will continue to rebound and grow.
spk04: For example, in overseas live broadcast, video, and copyright, and copyright distribution. In 2021, the ratio of non-live broadcast revenue is more than 10%. It is expected that the ratio of non-live broadcast revenue will also increase in the medium and long term. In terms of profits, we will continue to optimize costs and improve operating efficiency. We will also invest in more efficient content, and we will conduct some tests on ROI. After the entire competitive situation is stable, 分成成本和其他内容成本的投入是可以进行一些调整。 此外,海外亏损也将会进一步收窄。 长期来,股价是可以维持一个盈利的状态。 On top of the gifting income, we would also actively explore other models for revenue and businesses. For instance, to have...
spk06: overseas live streaming or video with advertisement income. We could also make money out of IP sales. Non-streaming revenue in the year of 2021 accounted for over 10% of our total revenue, and we believe that for the mid and longer term, our non-streaming revenue as a percentage will keep growing. In terms of the profitability and margin, we will continue to optimize our costs and operating efficiency and to make our resources more effective. And we will also have better evaluation of content ROI. And once the competition landscape becomes stabilized, we would be able to address our split costs as well as other costs for our content producing. And our loss rate in overseas business will continue to narrow down. So for the longer term, I believe that we are able to drive a profit.
spk07: Thank you. Our last question, please.
spk08: Thank you. Last question comes from Yiwen Chang from China Renaissance. Please go ahead.
spk01: Hi, everyone. Thank you for your question. 我這邊有個海外問題的一個提問。剛我們在Prepare Remarks也說了做MAU也好、零售也好,都長得非常好。可不可以請觀眾分享一下海外業務的一個進展? Thank you, Benjamin, for taking my question. So I have a quick question regarding overseas business. Can Benjamin share the latest update on overseas business and our target for 2022? Thank you.
spk04: 好的,这个问题我来回答一下。 那我们可以看到2021年Q4海外业务是取得了一个积极的进展。 MAU增长是超过了3000万,创下了历史新高。 收入也取得同比超过110%的一个增长。 2021年全年海外收入占公司的收入达到4%左右。
spk06: In Q4 2021, our overseas business achieved very nice positive progress with a MAU over 30 million with a new record high. And our revenue also registered in year-on-year 110 percentage growth. The overseas business gave us about 4% of the revenue for our company in the year 2021.
spk04: In 2021, we optimized resources to focus on the key areas of Southeast Asia. While optimizing costs, we also increased the size of users. In terms of NEMO content, in addition to providing local games and competition content in various areas, we also added some Fan Entertainment content on the platform to form a more complete content ecosystem, which also helps to improve income transformation.
spk06: In the year 2021, we allocate resources to Southeast Asia and those key areas. While optimizing our costs, we increase our user base. In terms of animal content, while providing popular games and tournaments which are popular in the regional level, we had also increased pan-entertainment content on our platform to make our ecosystem more complete, and it is also favorable for us to on our content. Based on our experience in 2021, we will continue this strategy for our overseas business in 2022 with a goal to further consolidate and increase user base and increase our revenue and also at the same time trying to optimize and reduce loss.
spk07: Okay, we finished the answer.
spk08: Right, thank you. So now I'd like to turn the call back to the company for closing remarks.
spk07: 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.
spk08: Thank you. This concludes this conference call. You may now disconnect your line. Thank you.
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