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spk10: Hello, ladies and gentlemen. Thank you for standing by for the second quarter 2022 earnings conference call for Huya Inc. At this time, all participants are in 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.
spk03: Hello, everyone, and welcome to Huya's second quarter 2022 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. 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 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 on the applicable law. Please also know that WHO-YA's earnings press release and this conference call include discussions of unaudited gap financial information as well as unaudited non-gap financial measures. WHO-YA's press release contains a reconciliation of the unaudited non-gap measures to the unaudited most direct comparable gap measures. I will now turn the call over to our CEO, Mr. Rongjie Dong. Please go ahead.
spk06: Hello, everyone. Thank you for joining our conference call today. Our 2022 second quarter was largely conditioned by the turbulence in the macro and regulatory environment. We mentioned in our previous earnings that the new domestic live streaming regulations, which were introduced in May, mainly focused on tipping behavior and protection for mirrors. Accordingly, we adjusted the associated products and operations on our platform, and we will continue to closely follow policy updates and make timely adjustments to ensure compliance. The prudent adjustments we undertook in Q2 carried a very immediate impact to certain facets of our business. And together with the macro headwinds, Q2 domestic live streaming revenue decreased by many single digits on a quarter-over-quarter basis. Despite the impact, we still managed to grow our user base as well as achieve approximately RMB 2.3 billion in revenues and approximately RMB 6 million in non-GAAP net income in the second quarter of 2022. We will work to mitigate the effect on our business by dynamically adjusting our monetization strategies across our platform's operations. Essentially, our strong foundation and business fundamentals will carry us through the long term. We are confident we have leverage in our business as we scale further in the game live streaming industry through consistent investments in quality content and innovative products while continuing to provide attractive game, esports, and entertainment content that satisfies the core needs of our users. Our business is a resilient when which we expect to rebound and prosper as market conditions stabilize. With that in mind, we remain focused on future opportunities. In spite of all the external factors, our Q2 results market Another quarter of user expansion. We sustained growth in mobile MLs and instituted formative measures across our product upgrades and game industry value chain integration. Now, let me walk you through some of our key metrics, starting with user growth. Huya Live's mobile emails reached 83.6 million in the second quarter, representing encouraging growth of 7.7% from the year-over-year period. This growth was mainly due to the continuous enrichment of quality content as well as product upgrades and optimization. which leveled up our platform's user appeal. Additionally, it further highlights both the necessity and efficiency of our content investment strategies and product improvements. User stickiness also improved, with total user time spent on our platform in the quarter growing by about percent year-over-year. Our Huya Life efforts next month's user retention rate remained above 70 percent in addition to our growing active user base. With respect to product upgrades, we have found positive strides in introducing product innovations for our users. Our newest version 10.0 of Huya Live app further integrates community features and enhances the user interaction experience. More specifically, version 10.0 of Huya Live adds a social community called Tiger ChatChat which features broad-based content ranging from videos, images, and text posts to game Q&A strategies and events. The community also serves as a discussion board between users and their favorite broadcasters, promoting better interaction between broadcasters and their fans. to cultivate deeper bonds during non-streaming hours. Engaged in community interactions and activities, users are more motivated to produce high-quality UGC in the video category through our algorithm-driven recommendations and operations. Furthermore, segments for different game titles and tournaments have also been created, and official accounts operated by game studios can join the community to provide the latest game information and strategies. In addition, based on the interactive one-click to join broadcasters' gameplay, feature, which is available in our live streaming channels. We launched a competition function called Community Contest, enabling users to participate in a game competition with peers. We are initiating battles in the matching system with just one click. Here, users can win prizes offered by the platform and also have the chance to compete with celebrity game broadcasters. This new feature is another testament to our ability to recognize and fulfill user needs.
spk04: As a side note,
spk06: I'd like to mention that our community features are not created at random. The foundation of communitization is deeply embedded on our platform through ESO development. The features we institute are based in our understanding of community preferences, and most of our upgrades are born of trends dictated by our users' tastes. Our achievements in product upgrades and value chain integration actively advance us toward our vision of becoming a non-stop destination for comprehensive game-related services as we worked and collaborated with our partners to capture more opportunities across the industrial value chain. Along with a more comprehensive offering, we aimed to unlock more monetization opportunities going forward. In addition, by leveraging our long-term initiatives in game operations, we deepened our collaboration with game titles in recent months, taking LOL Wild Rift as an example. We will team up with a game studio across product, function, development, and game and community operations. Excitingly, Wuya has contributed to the content and the interactive features of Wild Rifts in game streaming function. Additionally, Wuya's community is linked to and synced with the official LOL companion app for popular Wild Rift related videos and posts. On the tournament front, Huya was among the first to stream the Wild Rift League , the games in all general professional leagues in China. We also produced a series of self-branded tournaments for these titles, such as Huya Zhanshan Cup. which has become a division of the official Wild Rift Tour League. These types of linkers help improve users' viewing experience and bring Hooyah's first mover advantage in Wild Rift's mobile esports tournament system, while strengthening Hooyah's leading position in this esports game. In promoting the newly launched LOL Esports Manager game, in addition to our work on general operational activities such as recruiting broadcasters and providing streaming incentives, by working with this game studio We also integrated some game features in the broadcasting sessions of LOL's major events, LOL Pro League and LOL Champion Korea, and sent out GUYA-designated virtual items to users participating in those interactive activities. We are glad to see the game quickly gaining traction on our platform during the summer tournament season. Lastly, I would like to point out that on top of our continuous efforts in growing our user base and game industry integration at the corporate level, we have been focused on improving our operational efficiency and adopting more stringent budget control measures. We see these initiatives as necessary to help us navigate macro headwinds and other external uncertainties. We are already seeing some very encouraging results from our operation optimization efforts, which Ashley will cover in great detail in just a moment. Going forward, we aim to further strengthen our monetization capabilities, optimize our cost and expense structure, and fortify our business fundamentals. to achieve sustainable business development over the long term. With that overview, I will now turn the call over to our VP of Finance, Ashley Wu, to share more details on our operating metrics and financials. Ashley, please go ahead.
spk01: Thank you, Mr. Dong, and hello, everyone. To expand on Mr. Dong's remarks, I will now provide some updates on our content enrichment and diversification initiatives. On the professional esports content front, we broadcasted around 90 third-party esports tournaments in the second quarter of 2022, with the total viewership of those licensed tournaments reaching 608 million. During the quarter, we pursue our ROI-less strategy, procuring tournaments more selectively to ensure our high-quality content offerings align more closely with our budget control goals. In particular, legacy tournaments such as LPL, Mid-Season Invitational, and King Pro League maintain their leading positions in viewership. Thanks to our strengthened cooperation with the CrossFile game, the CrossFile Pro League Spring continued to attract high user attention. I'd like to highlight that in 2022, Huya became one of CrossFile's top-level partners. Our cooperation now spans the game viewing experience, esports content, and virtual privileges. we expect our broader alliance with Cosfile to help further expand our market reach in the first-person shooter game genre, giving us another competitive advantage. In addition to licensed esports content, we broadcasted 18 self-organized esports tournaments and entertainment PGC shows during the second quarter. generating total viewership of approximately 100 million. This was a particularly remarkable achievement given the pandemic-related lockdowns in a few major cities in Q2, as well as our stricter project selection process. During the quarter, outstanding self-organized tournaments included Honor of Kings Thunder Cup, Huya Zhanshan Cup, Huya Division of Team Flytactic Open Championship, and the 7th Huya Mobile Game Arena. It is worth noting that the Thunder Series, a phenomenal Huya IP tournament, created for Honor of Kings, integrated online and offline gaming sessions, promoting the influence of popular broadcasters on our platform. Such efforts are assisting Huya in building its proprietary comprehensive tournament system around Honor of Kings, which will help sustain the stable and healthy development of its esports ecosystem on our platform. Beyond adopting a more selective approach and allocating our resources to more effective content, as Mr. Zhong mentioned earlier. We remain diligent in improving our operational efficiency and optimizing our business expenses in a meaningful way. Our recent efforts in adjusting our overseas business, fine-tuning marketing channels, and streamlining internal processes have led to a reduction of our Q2 total operating expenses. by 17% quarter over quarter and 21.6% year over year. Next, moving on to our Q2 financial details. Unless otherwise specified, the percentage changes I'll be reviewing are all on a year over year basis. Our total net revenues. were RMB 2.28 billion for Q2, compared with RMB 2.96 billion for the same period last year. Livestreaming revenues were RMB 2.05 billion for Q2, compared with RMB 2.58 billion for the same period last year. The decline was mainly due to recent micro and regulatory environment, we saw lower average spending per paying user on Huya Life on a year-over-year basis. As the Microsoftness continued to adversely affect paying users' sentiment, the number of paying users for Huya Life was 5.6 million, flat compared with the same period last year. Advertising and other revenues was RMB $223 million for Q2 compared with RMB $383 million for the same period last year, primarily due to lower content sublicensing revenues as a result of fewer sections for licensing according to the licensing event schedule. The demand for advertising services was also soft due to the ongoing challenging micro environment. Cost of revenues decreased by 13.6% to RMB 2.06 billion for Q2, primarily due to decreased revenue sharing fees and content costs, as well as bandwidth costs. Revenue sharing fees and content cost decreased by 13.3% to nearly RMB $1.77 billion for Q2, primarily due to the decrease in revenue sharing fees associated with declined live streaming revenues. Benvis cost decreased by 9.9% to RMB 154 million for Q2, primarily due to improved bandwidth cost management and continued technology enhancement efforts. Gross profit was RMB 290 million for Q2, compared with RMB 581 million for the same period of 2021. primarily due to lower revenues. Gross margin was 9.6% for Q2. Excluding share-based compensation expenses, non-GAAP gross profit was RMB 223 million, and non-GAAP gross margin was 9.8% for Q2. Research and development expenses decreased by 19% to RMB 168 million for Q2, primarily due to the decrease in share-based compensation expenses. Sales and marketing expenses decreased by 40% to RMB 100 million for Q2, primarily due to decreased marketing and promotion fees as well as personnel-related expenses. General and administrative expenses increased by 13.5% to RMB $82 million for Q2, primarily due to the increase in professional service fees and personnel-related expenses. Other income was RMB $50 million for Q2, compared with RMB 48 million for the same period of 2021. As a result, operating loss was RMB 81 million for Q2, compared with operating income of RMB 182 million for the same period of 2021. excluding share-based compensation expenses. Non-GAAP operating loss was RMB $56 million, and non-GAAP operating margin was negative 2.5% for Q2. Interest and short-term investment income were RMB $66 million for Q2, compared with RMB 58 million for the same period of 2021. Income tax expenses were RMB 1 million for Q2, compared with RMB 58 million for the same period of 2021, primarily due to lower taxable income. Net loss attributable to Huya Inc. was RMB RMB $19 million for Q2, compared with net income attributable to Huya Inc. of RMB $186 million for the same period of 2021. Non-GAAP net income attributable to Huya Inc. was RMB $6 million for Q2, compared with RMB $250 million for the same period of 2021. Non-GAAP net margin was 0.3% for Q2. Diluted net loss per ADS was $0.08 RMB for Q2. Non-GAAP diluted net income per ADS was $0.02 RMB for Q2. As of June 30, The company had cash and cash equivalent, certain deposits and certain investments of RMB 10.72 billion, compared with RMB 10.47 billion as of March 31, 2022. With that, I would now like to open the call to your questions.
spk10: Thank you, ladies and gentlemen. We will now begin the question and answer session. To ask questions on the phone, please press star 11 and wait for our name to be announced. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. The first question now comes from the line of Yiwen Zhang from China Renaissance. Please go ahead.
spk09: Good evening, Mr. Kwong. Thank you for your question. I have a question about our facilities. Because you mentioned that we don't have a testing area. This should be added in the version 7 in July. What are the functions of this facility? So thanks for taking my question. My question is regarding the game community function we added in a recent update. So can you elaborate more on the rationale behind the setting of this game community? And what kind of function does it provide? Does it synergize with the rest of our business? Thank you.
spk06: Recently, in the latest version of Huya, we have launched the Hutsu community version. The specific content includes videos, pictures, and so on. Users can launch discussions together and find questions, strategies, and contests related to the game.
spk02: Thank you for this question. Recently, we have officially launched the Tiger ChitChat community in HUYA's application version 10.0, which covers video and graphic communications. Users can initiate discussions on game Q&A, strategy tips, as well as tournaments and etc.
spk06: On the one hand, this is a platform for communication between users and streamers. Users can communicate with their streamers People with the same interests can discuss the content. The streamer can interact better with the fans in the non-streaming time. It is also beneficial to consolidate their fans. On the other hand, these methods of recommendation and operation can stimulate the user's enthusiasm to produce UGC videos and increase the user's participation. It can also help to improve the quality content of the platform.
spk02: On the one hand, it provides a place for communication between users and live streamers. Users can also discuss interesting content with their peers. The live streamers can better interact with their fans during non-streaming hours, which is also conducive to consolidating their fan base. And on the other hand, through recommendations and operating screening, it can stimulate the enthusiasm of the users to reduce video UTC. and increase the sense of user participation, and help to improve the high-quality content output on our Huya platform.
spk06: In addition, we have set up some branches for some major games and tournaments, and invited the game official to run the accounts, so that we can provide more accurate information on related games, related videos, and live content. In addition, we also set up zones for some major game titles and tournaments and invited the official operating accounts of the games to settle in so as to provide more accurate consultation and related video and live content
spk02: of the corresponding game titles. At the same time, it can also help the game studios to optimize their operation for a better effect and enhance their cooperation relations with Huya.
spk06: Yes, this update is not a random one. In fact, Huya's community planning has been done for several years. Therefore, and continue to upgrade our products. We hope to combine live streaming, video, and community. We hope to be able to meet the needs of players who watch the live stream of the game and play the game at any time. The content of Huya satisfies players' understanding of the game before the game, the consumption of the content after the game, This version update comes as a natural upgrade of function of community. Kuya's community has been gradually built over the past several years.
spk02: and therefore it is necessary to upgrade the product to make an organic combination of a live streaming plus a video plus community and in a one-stop manner meet the user's various needs for watching the game live, sharing and communicating, and joining the game at any time. The content metrics of Huya meets the needs of the players to understand and discover the game before they play, consume the derived content after the game, and also precipitate the needs of the players. We hope to generate greater value in the game industry chain, explore other monetization opportunities in addition to live revenue income, advertising, and games.
spk03: Thank you. Let's have the next question.
spk10: For the question, our next question Our next question comes from the line of Richie Sun from HSBC. Please go ahead.
spk08: Good evening, Director-General. Thank you for accepting my question. I would like to ask a question about supervision. The supervision policy for the ranking and PK since May Thank you management for taking my question. Regarding the regulation titling towards tipping ranks and PK since May, could you please quantify the revenue MAU and paying user impact on our platform? And what are the alternative solutions for us to recruit the loss of revenue or users due to the regulation? Thank you.
spk01: Okay, let me answer this question. In May, the supervision department issued an opinion on the regulation of online live broadcasts and the protection of underage people. After this opinion was issued, we have implemented it as scheduled according to the guidance requirements. The policy this time is mainly to focus on the protection of underage people and strengthen the management of some live broadcasts in the peak period. For example, some adjustments to the PK play method in the late-game period, Since the regulatory authorities issued opinions on standardizing the online live broadcast reward and miners' protection in May,
spk02: we have implemented the requirements on schedule after the policy change accordingly. And this policy mainly focuses on minor protection and strengthening the management during the peak hours, such as the adjustment of PK playing sessions and key functions, such as the TP ranking modification. We believe that this policy change will help us to better regulate the industry and promote long-term development.
spk01: In recent years, we have taken the initiative to make some more reasonable adjustments to some of the products and operations on the platform. At the same time, we have also made stricter management of some of the live broadcast content and behaviors. We will also closely monitor the updates of various policies to improve the product and operation mode in time. to some products and operations on the platform. And meanwhile, we have also made some more stringent management on the live content and behaviors of the live streamers.
spk02: We will also closely monitor the policy updates and timely improve the product and operation practices and create a more healthy platform atmosphere and content supply. 目前来看,我们做的这些调整对于直播收入在一定期间内会造成一些影响, 其中在Q2的影响主要集中在6月,那预计Q3会反映整个季度的影响。 At present, these adjustments have been casting some impact on live broadcast revenue that we have in a certain period of time, amongst which the impact in Q2 is mainly in June, and it is expected that the Q3 will reflect its impact on the whole quarter. We are also continuously assessing the subsequent impact of these adjustments on financial and operational indicators. Nevertheless, on the whole, we believe that these adjustments and changes have limited impact on the demand of the core users on Huya, but still serve the core users by providing high-quality games, videos, as well as other entertainment contents. And at the same time, we better optimize our strategy in operation and monetization for a balanced development of our product and subscription businesses.
spk01: At the same time, we will continue to strengthen the regulatory capacity of the platform and invest in the corresponding technology. For example, we recently launched an AI real-time sound system, which can be used to monitor the content of risk, At the same time, we'll continue to strengthen the compliance capability of Huya and invest in corresponding technologies.
spk02: For example, here, there is this AI real-time sound silencing system, which is the industry's first launch recently. This can help us to realize real-time shielding of audio transmission of potentially risky content and effectively improve our review ability of live content. The establishment of a better platform compliance system is conducive to help us in the longer-term growth in Huya.
spk03: Thank you. Next question, please.
spk10: Thank you. Next question comes from the line of Thomas Chong of Jefferies. Please go ahead.
spk05: It seems that the line, Thomas, are you there? How about we move to next question, please, first.
spk03: Thank you.
spk10: No problem, certainly. And Thomas, if you'd like to repeat your question, just press star 11 again. We will now move to the next question first from the line of Katrina Chiu of Citi. Please go ahead.
spk00: This is my question. This is Katrina from Citi. Can you please share with us the cost and cost optimization measures 然後我們應該怎麼去看下半年的一個利潤率的一個趨勢? Thanks, management, for taking my question. Can management share with us the measures we have taken for cost optimization and how we should expect the margin outlook in second half of 2022? Thank you. 好的,這個問題我來回答一下。
spk01: To improve the company's operational efficiency, take more stringent budget control measures.
spk02: And optimized costs and expenses are an important job of ours, which will help us to better consolidate the company's businesses and financial foundations under the current environment and support the long-term sustainable development.
spk01: First of all, our recent adjustment to overseas business is a move to overall optimize cost-benefit, which can help us reduce overseas business losses for the overall
spk02: First of all, our recent adjustment of overseas businesses is a measure of overall cost optimization, which can help us to reduce the margin drag of overseas business loss on the whole. 其次,在第二季度的成本方面,除了版權和資質內容上有更加嚴格的篩選程序,
spk01: In the case of live streaming contracts, the efficiency of bandwidth usage has been optimized. In terms of operating costs, we are more cautious in terms of channels and promotion expenses, and we have also strengthened the internal process of processing. At the same time, the relevant cost costs of personnel have also been strictly controlled. Although the income of this quarter has been affected and the profits have dropped, we have achieved certain results by improving the operating efficiency.
spk02: In terms of the cost in the second quarter, in addition to more stringent screening procedures for copyrighted and self-made content, it has been optimized in terms of the live streamer signing and bandwidth utilization efficiency. In terms of operating expenses, we are more cautious in channel and promotion expenses, and we also strengthen the internal processes for that matter. We also have made more control over the personal related costs and expenses. Despite the decline in profit margin due to the decline in revenue in this quarter, we still made some achievements in improving the operational efficiency The total operating expenses in the second quarter decreased by 21.6% year-over-year and 17% quarter-on-quarter. We believe that these measures will continue to optimize the cost and expenses. However, due to seasonal factors, our profit margin level will be affected by the increase of event costs and the corresponding promotion expenses in the second half of the year. For a longer-term perspective, by enhancing monetization capability of ours, we continuously optimize the cost and expense structure, such as a more balanced tournament and self-produced content and streamer costs, as well as continuous improvement of operational efficiency were confident in improving the margin and maintaining a positive profit.
spk03: OK. Let's have the next question.
spk10: Certainly. We will take the next questions from Thomas Chong from Jefferies. Again, please repeat your question. Hi, Thomas. Go ahead.
spk07: 我想問一下我們在下半年還有後續的內容的戰略可以分享一下嗎? Thanks management for taking my questions. My question is about our content strategy. Can management comment about how we should think about the outlook in second half as well as in the future? Thank you. 好的,這個問題我來回答。
spk01: As we mentioned before, users are the core of our business. The growth of continuous driver users is a long-term development strategy for our company. Therefore, we think it is very necessary to invest in childish content. Because this is to continue to serve our users well and consolidate Huya's competitive position. At the same time, we will also adopt a more cautious investment strategy to focus resources on more effective content.
spk02: Thank you for your question. As we mentioned before, that users are the core of our businesses and it is the company's long-term development strategy to continuously drive user growth. And therefore, for a quality content investment, it is still necessary because they help us to continuously serve our users and consolidating the competitive position that we have. At the same time, we'll also adopt a more cautious investment strategy and concentrate our resources on more effective content.
spk01: In terms of copyright and knowledge content, we will carry out targeted analysis and detailed evaluation of the ROI of each purchase or self-produced content. We will also adjust the market situation in time. Since we started this year, we have made stricter choices in terms of copyright, competition, and knowledge content. So, in terms of numbers, there may not be as many as before. But overall, the quality has been improved. This is also reflected in the growth of the audience and the MAU of our platform. For example, in the second quarter, a total of 100 million people watched 18 games of the World Championships and PGC. The MAU of Q1 and Q2 is the same as the growth level of a high unit number.
spk02: In terms of IP and self-made content, we carry out more targeted analysis and meticulous evaluation on the ROI of various planned purchase that we have and content production and make timely adjustments according to the market conditions. And since this year we have more strict choices in IP tournaments and self-made content projects, so the total number may not be as many as before, but the overall quality is improved. This is also reflected in the size of the viewerships watching these contents and the growth of the MAU on our platform. Let me give you an example. In the second quarter, a total of about 100 million people watched 18 self-produced tournaments and PGC programs that we have. The year-on-year growth of mobile MAUs in Q1 and Q2 was at a high single-digit level.
spk01: Here, we would like to mention that we will continue to invest in some of the higher-priced competitive games in the near future. In the second half of the year, we will also be live-streaming the top-of-the-line competitive games in S12. We are considering not only the short-term direct costs and income, Here I would also like to mention that at present we'll continue to invest in some top tier events with higher prices relatively.
spk02: In the second half of the year, we'll broadcast top-level professional leagues of various mainstream game titles, including S12. We consider not only the short-term direct cost and revenue, but also the impact on user value, brand reputation, and platform cooperation, and so on. At the same time, we also hope to negotiate for better commercial terms in the future and realize long-term benefits.
spk01: In terms of live streamer content, we will also dynamically address the input of signing and tipping sharing that we have with the live streamers
spk02: Through the upgrading of technology, we can help and encourage the users and live streamers of the platform to create videos and more interactive content to form a more complete matrix of content offering.
spk03: Thank you. Let's have the next question, please.
spk10: Thank you for the question. The next question comes from the line of Lei Zhang from Gang of America. Please go ahead.
spk11: My question is mainly about our long-term growth. What are the growth drivers in the long-term that you can share with us? Thank you. Okay, let me answer that. Our current...
spk06: The income from live streaming is greatly affected by the external environment. Although the Huya platform has the basis of continuous growth and good user connectivity and business operation capabilities, we estimate that the income from live streaming will gradually return to the growth trend. Based on the above, we believe that in the future,
spk02: At present, our monetization result is mainly conditioned by the external environment. Huya has a continuously growing user base and good user loyalty and commercial operation ability. With our commercialization model be further explored and optimized and the market situation improves, We expect that our live broadcast revenue will gradually return to a growing trajectory, and we believe that starting from here, we have a few need to long-term development directions.
spk06: First, as mentioned earlier, Huya is an important part of the gaming industry, providing a lot of value to gaming users and manufacturers, especially for some long-term gaming products. can provide more services from the operating end to help the game to acquire and retain users, and to expand the impact of the game. Currently, the income we get directly is mainly from the user end, and from the game industry end, we also hope to be able to achieve cooperation and provide some special services through deeper cooperation, such as joint operations. From the long-term perspective, It should be a place where business and income have the right to grow.
spk02: First, as mentioned before, Huya as a key part to the game industry trend provides a lot of value for game users and studios. For the category of long-term game titles, more services can be provided from the operation end to help the game obtain and retain users. and expand the influence of the games. At present, our direct income is mainly coming from the user's side, while from the game studio's side, we also hope to achieve win-win cooperation through deeper cooperation with them and more services provided, such as joint operation. In the mid to long term, I think this is a place with the potential for business and revenue growth.
spk06: We need to connect the video business and the live broadcast business better. The community functions we are doing now include the content of the entire video, and also the content of the book version and short video. Through the upgrade of these products, we currently have about 30 versions in the daily user traffic to watch the video. After this data is further improved, we hope to achieve more conversion of income related to the video.
spk02: Second point, we hope to better link the video businesses with live streaming businesses. The community functions that we have now integrated into the video content, and we have also set up a vertical short form video module. And through upgrading these products, about 30% of our daily users watch videos currently. With this data being further improved in the future, we hope to realize more monetization from the video, such as advertising revenue.
spk06: In addition, we believe that some interactive games and virtual live broadcasts and virtual live broadcasts are also a trend in live broadcast development. Currently, these are already being explored by Huya and have achieved some additional results.
spk02: In addition, we believe that interactive games in the live streaming room as well as the forms of a virtual streamer or virtual live room are gaining popularity. So we have explored and tried these forms and achieved some preliminary results. And it is expected that these forms will also present some opportunities to create more value in the future.
spk03: OK, thank you.
spk10: There are no further questions now. I would like to turn the call back over to the company for closing remarks.
spk03: Thank you once again for joining us today. If you have further questions, please feel free to contact We Ask Investor Relations through the contact information provided on today. If you have further questions or relations,
spk10: This concludes this conference call. You may now disconnect your lines. Thank you.
spk03: Thank you. The conference will begin shortly. To raise your hand during Q&A, you can dial star 11.
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