BlueCity Holdings Ltd (BLCT) 2021 Q3 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the BlueCity's Third Quarter 2021 Earnings Conference Call. (Operator Instructions) As a reminder, we are recording today's call. (Operator Instructions) Now I will turn the call over to [Liyao Wu], IR Manager for the company. Ms. Wu, please proceed.

女士們、先生們，大家好。感謝您的支持，歡迎參加 BlueCity 2021 年第三季財報電話會議。（操作員指示）提醒一下，我們正在錄製今天的通話。（操作員指示）現在我將把電話轉給公司的投資人關係經理 [Liyao Wu]。請吳女士繼續。

Thank you, operator, and hello, everyone. Welcome to BlueCity's Third Quarter 2021 Earnings Conference Call. Joining us today are Mr. Baoli Ma, our Chief Executive Officer; Mr. Alfred Ying, our Chief Strategy Officer; and Mr. Junchen Sun, our Acting Chief Financial Officer.

謝謝接線員，大家好。歡迎參加 BlueCity 2021 年第三季財報電話會議。今天與我們一起出席的有我們的執行長馬保利先生、我們的首席策略長應先生以及我們的代理財務長孫俊辰先生。

We released the results earlier today. The press release is available on the company's IR website as well as from Newswire services. A replay of this call will also be available in a few hours on the company's IR website.

我們今天早些時候公佈了結果。新聞稿可在本公司的 IR 網站以及新聞專線服務上查閱。這次電話會議的重播也將在幾個小時後在該公司的 IR 網站上提供。

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 actual results may be materially different from the expectations expressed today.

在我們繼續之前，請注意，今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。前瞻性陳述涉及固有風險和不確定性。因此，該公司的實際業績可能與今天表達的預期有重大差異。

Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligations to update any forward-looking statements, except as required under applicable law.

有關這些和其他風險和不確定性的更多資訊包含在公司向美國證券交易委員會提交的公開文件中。除適用法律要求外，本公司不承擔更新任何前瞻性聲明的義務。

Please note that during today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. Our GAAP results and reconciliation of GAAP to non-GAAP measure can be found in our earnings press release. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese RMB.

請注意，在今天的電話會議中，管理層還將討論某些非 GAAP 財務指標，僅供比較之用。我們的 GAAP 結果以及 GAAP 與非 GAAP 指標的對帳可以在我們的收益新聞稿中找到。另請注意，除非另有說明，電話會議中提到的所有數字均以人民幣為單位。

With that, let me now turn the call over to our CEO, Mr. Ma. He will speak in Chinese first, and I will then interpret his remarks in English. After that our CSO, Mr. Ying will take over to discuss our growth strategies. Then our acting CFO, Mr. Sun will provide details on our financial highlights. Please go ahead, Mr. Ma.

現在，請允許我將電話轉給我們的執行長馬雲先生。他將首先用中文發言，然後我將用英文翻譯他的講話。之後，我們的首席策略長應先生將接手討論我們的成長策略。然後我們的代理財務長孫先生將詳細介紹我們的財務亮點。馬先生，請講。

(foreign language)

（外語）

[interpreted] Thank you, and hello, everyone. Thank you all for joining our earnings conference call today.

[翻譯] 謝謝大家，大家好。感謝大家參加我們今天的收益電話會議。

(foreign language)

（外語）

[interpreted] In the third quarter, we continue to [execute] (corrected by the company after the call) our growth strategy, enrich our product offerings, optimize operations and enhance our user experience. We also further improved the company's revenue structure. As a result, we made multiple stages of solid progress across our strategic priorities.

[解釋]第三季度，我們繼續[執行]（公司在電話會議後更正）我們的成長策略，豐富我們的產品供應，優化營運並增強我們的用戶體驗。我們也進一步改善了公司的收入結構。因此，我們在策略重點方面取得了多個階段的紮實進展。

(foreign language)

（外語）

Total MAU of BlueCity's apps reached 7.5 million, up 19.3% year-over-year, along with 57.1% increase in our paying users. Particularly, our membership services and He Health maintains strong momentum with a 93.1% and 136.8% year-over-year revenue growth, respectively. These results fully demonstrated that our strategies of diversifying our revenue structure as well as creating a new growth engine for the Company have started to bear fruit.

藍城兄弟應用程式的總月活躍用戶數達到 750 萬，年增 19.3%，付費用戶數成長 57.1%。其中，會員服務和他健康維持強勁成長勢頭，營收分別較去年同期成長93.1%和136.8%。這些業績充分證明，公司多元化收入結構、打造新成長引擎的策略已開始取得成效。

(foreign language)

（外語）

[interpreted] During the quarter, we continued to accelerate our product innovation and optimize our operations to provide our users with a more efficient way to get connected and enjoy entertainment content. Some features have already gained popularity among our users. For example, the revenue from voice chat room, which we introduced last year, has gained a two-digit growth on a month-to-month basis.

[解讀]本季度，我們持續加速產品創新，優化運營，為用戶提供更有效率的連接方式和享受娛樂內容的方式。一些功能已經受到我們用戶的歡迎。例如我們去年推出的語音聊天室收入，現在季比都實現了兩位數的成長。

(foreign language)

（外語）

[interpreted] While we have introduced a great variety of offerings on the online space, we are also in initial stage of exploring how to get more off-line traffic. For example, we plan to launch a feature enabling our users to post or share offline activity information. We will also aggregate information of LGBTQ friendly off-line spaces to give our users more offline spending choices.

[解釋] 雖然我們在線上推出了各種各樣的產品，但我們也正處於探索如何獲得更多線下流量的初始階段。例如，我們計劃推出一項功能，使我們的用戶能夠發布或分享離線活動資訊。我們還將匯總 LGBTQ 友善線下空間的信息，為我們的用戶提供更多線下消費選擇。

(foreign language)

（外語）

[interpreted] With Fintech, in the third quarter, by improving algorithm, we saw increases in user success rate, conversation frequency as well as the time spent on the app. Besides, Finka's "Full Visitor List" we rolled out last quarter further boosted the paying ratio of Finka's membership services to more than [20%] (corrected by the company after the call).

[解讀] 金融科技方面，第三季透過演算法的改進，用戶成功率、對話頻率以及在應用程式上花費的時間都有所增加。此外，我們在上個季度推出的 Finka「全訪客名單」功能，進一步提升了 Finka 會員服務的付費比例至[20%]以上（公司在電話會議後進行了更正）。

Meanwhile, we rolled out a feature on Finka through which users can share travel blogs, lifestyle stories and reviews of restaurants and products. It will further enrich our content offerings and provide our community members with greater spending choices, which will enable them to lead the trend of people's daily necessities.

同時，我們在 Finka 上推出了一項功能，用戶可以透過該功能分享旅遊部落格、生活方式故事以及餐廳和產品的評論。它將進一步豐富我們的內容產品，為我們的社區成員提供更多的消費選擇，使他們能夠引領人們日常生活用品的趨勢。

(foreign language)

（外語）

[interpreted] In overseas markets, we are leading in most of the Southeast Asian countries with a strong network effect. We began to cut our cost marketing expenses for advertising in this quarter and transformed our strategic priorities on optimizing product and operations.

[解釋] 在海外市場，我們在東南亞大部分國家處於領先地位，擁有強大的網路效應。我們從本季開始削減廣告成本行銷費用，並將策略重點轉向優化產品和營運。

(foreign language)

（外語）

[interpreted] Privacy is of utmost importance for the LGBTQ+ community and we are always committed to providing a safe and secure environment for our members from different cultural backgrounds and societies. In this quarter, we introduced a series of new features on Blued's, both domestic and international versions to better protect the user identity and privacy. The new protective measures include automatic safety and security reminder during members personal chat, prohibiting screen captures and screen recordings during live streaming and video calls.

[解釋] 隱私對於 LGBTQ+ 社群至關重要，我們始終致力於為來自不同文化背景和社會的成員提供安全可靠的環境。本季度，我們在Blued國內版和國際版上推出了一系列新功能，以更好地保護用戶身分和隱私。新的保護措施包括會員私人聊天時自動安全提醒、禁止直播和視訊通話時的截圖和錄影等。

(foreign language)

（外語）

The past marked another milestone for He Health as we launched Mr. heer on November 5, a consumer health brand providing male personal and sexual health care products. Currently, Mr. heer provides 6 core customer-friendly products in discreet and convenient packing and got great feedback from the community. Mr. heer plans to provide more products and services to expand our consumer base to all male customers.

過去標誌著 He Health 的另一個里程碑，我們於 11 月 5 日推出了 Mr. heer，這是一個提供男性個人和性保健產品的消費者健康品牌。目前，Mr. heer 提供 6 種核心客戶友善產品，包裝謹慎便捷，並獲得了社群的良好回饋。Heer先生計劃提供更多的產品和服務，將我們的消費者群體擴大到所有男性顧客。

(foreign language)

（外語）

[interpreted] He Health services has also stepped closer to our goal of a 100 city express delivery services. We've seen [an over] (corrected by the company after the call) 30% quarter-over-quarter growth of Blue Box orders in the third quarter of 2021. As HIV prevention is a vital part of our commitment to covering the needs of overall men's health, this growth shows us just how important it is for this community.

[解讀]賀生服務距離百城快遞服務的目標又更近了一步。我們看到 2021 年第三季 Blue Box 訂單較上季成長超過 30%（電話會議後公司進行了更正）。由於愛滋病毒預防是我們致力於滿足整體男性健康需求的重要組成部分，這一增長向我們表明了它對這個群體的重要性。

We are proud to gradually develop He Health into a comprehensive online and offline platform, covering all aspects of men's health needs. And we aim to further enhance our products and services to create more value for the community.

我們很自豪能夠逐步將He Health發展成為一個全面的線上線下平台，涵蓋男性健康需求的各個方面。我們的目標是進一步提升我們的產品和服務，為社會創造更多價值。

(foreign language)

（外語）

[interpreted] Our commitment to corporate social responsibility is also proven by the charitable activities conducted this quarter. On the World Mental Health Day on October 10th, we collaborated with a Mexican actor Polo Morín (he is an openly gay) for a video to raise visibility of different subgroups of the LGBTQ communities. We also donated to the organization dedicated to the well-being of marginalized groups.

[解釋] 本季所進行的慈善活動也證明了我們對企業社會責任的承諾。10 月 10 日世界精神衛生日，我們與墨西哥演員 Polo Morín（他是公開的同性戀者）合作製作了一段視頻，以提高人們對 LGBTQ 社區不同群體的關注度。我們也向致力於邊緣群體福祉的組織捐款。

(foreign language)

（外語）

[interpreted] In this quarter, because of the COVID-19 and headwinds in the macro environment, we suffered from some setbacks from our livestreaming business. But I would like to emphasize that by continuously improving our products, increasing users' willingness to pay and improving our revenue structure, we are confident that we will see a robust growth in revenue as well as profits in the near future.

[解釋] 本季度，由於新冠疫情和宏觀環境的不利因素，我們的直播業務遭遇了一些挫折。但我想強調的是，透過不斷改進我們的產品，提高用戶的付費意願，改善我們的收入結構，我們有信心在不久的將來看到收入和利潤的強勁增長。

(foreign language)

（外語）

[interpreted] Now let me turn the call over to our CSO Alfred, who will discuss about our growth strategies.

[翻譯]現在，我將把電話轉給我們的首席策略長阿爾弗雷德 (Alfred)，他將討論我們的成長策略。

Thank you, Mr. Ma. And thank you, everyone, for joining our call today. As Mr. Ma just mentioned, our business stays on the right track, towards our long-term goal. This quarter, as we continued to focus on customizing our product portfolio and diversifying our revenue stream, we are pleased to see increased revenue contributions from our membership services and health-related products and services. The revenue from membership and He Health as percentages of total revenue was 13% and 8%, respectively, comparing with 6% and 3% in the same period of last year.

謝謝馬先生。感謝大家今天參加我們的電話會議。正如馬雲剛才提到的，我們的業務仍然在正確的軌道上，朝著我們的長遠目標前進。本季度，我們繼續專注於客製化我們的產品組合和多樣化我們的收入來源，我們很高興看到會員服務和健康相關產品和服務的收入貢獻增加。會員收入及他健康收入佔總收入的比例分別為13%及8%，去年同期分別為6%及3%。

Furthermore, in addition to pursuing our topline growth, we are still in the process to reassess our business model in order to balance between revenue growth and profitability. In the third quarter of 2021, we implemented measures for cost control to improve our operating efficiency. For example, our overseas advertising and promotion expenses decreased 25.4% on a sequential basis as we targeted our overseas business onto countries and regions with higher ROI and organically-acquired users through means such as word of mouth and activities. We are looking for long-term sustainable growth in the future and see considerable potential for increased monetization as our product and service offerings continue to grow.

此外，除了追求營收成長外，我們仍在重新評估我們的商業模式，以平衡收入成長和獲利能力。2021年第三季度，我們實施成本控制措施，以提高營運效率。例如，我們的海外廣告及推廣費用較上季下降25.4%，因為我們將海外業務定位於投資報酬率更高、透過口碑和活動等方式自然獲取用戶的國家和地區。我們尋求未來的長期永續成長，並看到隨著我們的產品和服務不斷增長，增加貨幣化的巨大潛力。

Looking ahead, we will remain committed to executing our growth strategies with a focus on reaching our product offerings and optimizing our services. We will also stay true to our mission with continued efforts of raising awareness of health and HIV prevention.

展望未來，我們將繼續致力於執行我們的成長策略，並專注於我們的產品供應和優化我們的服務。我們也將忠於我們的使命，繼續努力提高人們對健康和愛滋病預防的認識。

In the quarter, we discontinued the operation of LESDO, which contributed less than 1% of our total revenue in the past quarters. Lesbian users behaved differently from male users with a lower willingness to pay for online social networking services. Going forward, we will continue to focus on growing our core business to serve the wellbeing of the LGBTQ community. We believe we are on the right direction towards our next stage of growth with the soundness of our strategies and strong execution.

本季度，我們停止了 LESDO 的運營，該公司在過去幾個季度對我們總收入的貢獻不到 1%。女同性戀用戶的行為與男性用戶不同，她們對線上社交網路服務的付費意願較低。展望未來，我們將繼續專注於發展核心業務，為 LGBTQ 社群的福祉服務。我們相信，憑藉著穩健的策略和強大的執行力，我們正朝著下一階段的成長方向邁進。

Now let me turn the call to our Acting CFO, Junchen Sun, who will provide details on our financial performance.

現在，請允許我把電話轉給我們的代理財務長孫俊辰，他將提供有關我們財務業績的詳細資訊。

Thank you, Alfred. Now let me go through our financial highlights for the quarter. Before I go into details, please note that all numbers presented are in RMB and for the third quarter of 2021, unless stated otherwise. All percentage changes are on a year-over-year basis, unless otherwise specified. Detailed analysis is contained in our earnings press release, which is available on IR website.

謝謝你，阿爾弗雷德。現在讓我來介紹一下本季的財務亮點。在我介紹細節之前，請注意，除非另有說明，所有數字均以人民幣為單位，且為 2021 年第三季的數字。除非另有說明，所有百分比變化均以同比計算。詳細分析包含在我們的收益新聞稿中，可在 IR 網站上查閱。

Our total revenue for Q3 were RMB270.0 million, down 9.3% year-over-year and driven primarily by the decrease in our revenue from live streaming services. In this quarter, our total MAUs grew 19.3% to 7.5 million, with a strong growth of 57.1% from our total paying users to reach 776 thousand.

我們第三季的總收入為 2.7 億元，年減 9.3%，主要原因是直播服務收入下降。本季度，我們的總月活躍用戶成長 19.3% 至 750 萬，總付費用戶強勁成長 57.1% 至 77.6 萬。

However, the decrease in ARPPU for live streaming services caused overall reduction in our total revenues. Revenue from overseas operations contributed 13.1% to total revenue, slightly increased from 9.7% in the same period last year. Notably, we also accomplished meaningful progress in diversifying our revenue streams with encouraging year-over-year revenue growth from membership services and He Health this quarter.

然而，直播服務的ARPPU下降導致我們的總收入整體減少。海外業務收入佔總營收的13.1%，較去年同期的9.7%略有上升。值得注意的是，我們在收入來源多元化方面也取得了有意義的進展，本季會員服務和健康收入較去年同期成長令人鼓舞。

Revenue from live streaming services was RMB194.2 million, representing a year-over-year decrease of 23.9%. The decrease was primarily due to the decrease in the average revenue per paying user for live streaming services as a result of the headwinds in the talent show live streaming industry in China.

直播服務收入為人民幣1.942億元，年減23.9%。下降的主要原因是，由於中國選秀直播產業遭遇阻力，直播服務每付費用戶平均收入下降。

Revenue from membership services was RMB35.1 million, up 93.1% year-over-year. The increase was primarily due to the significant increase in the number of paying users benefited from diverse membership services on the company's apps. Revenue from advertising was RMB13.6 million, up 34.2% with the increase primarily due to our continuous efforts in attracting more advertisers with diverse advertising and marketing solutions as well as improved advertising efficiency.

會員服務收入為人民幣3,510萬元，較去年成長93.1%。成長主要由於公司應用程式上多樣化的會員服務帶來的付費用戶數量大幅增加。廣告收入為人民幣1,360萬元，成長34.2%，主要由於我們不斷努力以多樣化的廣告和行銷解決方案吸引更多廣告主以及提高廣告效率。

Revenue from merchandise sales of He Health reached RMB22.8 million, up 136.8%. We expect He Health to achieve stronger momentum in the coming quarters as the company devote more resources to expand our health-related offerings.

和健康商品銷售收入達2,280萬元，較去年成長136.8%。我們預計，隨著公司投入更多資源擴大健康相關產品，禾康將在未來幾季實現更強勁的成長動能。

Now moving to our cost. Cost of revenues decreased by 8.3% to RMB184.9 million. The decrease was primarily due to the decrease of revenue-sharing costs along with the decreased revenue of live streaming services and partly offset by the increased cost of products connected with the growth of "He Health" merchandise sales and increased staff cost.

現在談談我們的成本。營業成本下降8.3%至人民幣1.849億元。減少的主要原因是直播服務收入減少，伴隨收入分成成本減少，部分被「他健康」商品銷售成長相關的產品成本增加以及員工成本增加所抵銷。

The gross profit was RMB85.1 million, down 11.4%. The gross margin was 31.5%, remain flat with 32.3% from the same period of last year. We expect to further accelerate revenue contribution from our membership services to achieve overall margin improvement. Meanwhile, as revenue-sharing and commission costs are still the key components in our cost of revenue, we remain committed to actively explore solutions to reduce revenue-sharing percentage and implement a more sustainable model for our live streaming services.

毛利為人民幣8,510萬元，年減11.4%。毛利率為31.5%，與去年同期的32.3%持平。我們期望進一步加快會員服務的收入貢獻，以實現整體利潤率的提高。同時，由於收入分成和佣金成本仍然是我們收入成本的主要組成部分，我們將繼續致力於積極探索降低收入分成比例的解決方案，並為我們的直播服務實施更永續的模式。

Operating expenses were [RMB160.7 million] (corrected by the company after the call), down 33.2% year-over-year. Sales and marketing expenses were RMB56.9 million down 1.9%. The decrease was mainly due to the decrease of share-based compensation expenses, and partially offset by the increased advertising and promotion expenses and staff costs. Technology and development expenses were RMB66.2 million, up 31.6%. The increase was mainly due to the increased staff cost in the technology-related department and the content, server and bandwidth costs, of which was partially offset by the decrease of share-based compensation expenses. G&A expenses were RMB31.6 million, down 76.1%. The decrease was mainly due to the decrease of share-based compensation expenses, and partially offset by the increased staff cost. This quarter, we had impairment of goodwill and intangible assets of RMB6.0 million, which was due to the termination of LESDO-related business.

營業費用為[人民幣1.607億元]（公司在電話會議後進行了更正），年減33.2％。銷售及行銷費用為人民幣5,690萬元，下降1.9%。減少的主要原因是股份支付費用的減少，並被廣告和促銷費用以及員工成本的增加部分抵銷。技術與開發費用為人民幣6,620萬元，成長31.6%。成長的主要原因是技術相關部門的員工成本以及內容、伺服器和頻寬成本的增加，但部分被股權激勵費用的減少所抵消。一般及行政開支為人民幣3,160萬元，下降76.1%。減少的主要原因是股份支付費用減少，但部分被員工成本增加所抵銷。本季度，我們的商譽及無形資產減損損失為人民幣 600 萬元，這是由於終止與 LESDO 相關的業務。

Net loss was RMB73.8 million compared with a net loss of RMB137.8 million in the same period last year. Adjusted net loss was RMB62.2 million compared with adjusted net income of RMB7.3 million in the same quarter last year.

淨虧損為人民幣7,380萬元，去年同期淨虧損為1.378億元。調整後淨虧損為6,220萬元，而去年同期調整後淨收入為730萬元。

As of September 30, 2021, we had cash and cash equivalents and term deposits of RMB370.9 million compared with RMB611.8 million as of December 31, 2020.

截至 2021 年 9 月 30 日，我們的現金及現金等價物及定期存款為人民幣 3.709 億元，而截至 2020 年 12 月 31 日為人民幣 6.118 億元。

Now moving to our guidance. Given the increasing uncertainty in the talent show live streaming industry, we are not providing specific revenue guidance for the full year 2021.

現在轉向我們的指導。鑑於選秀直播產業的不確定性日益增加，我們不會提供 2021 年全年的具體收入指引。

That concludes our prepared remarks. Let's now open the call for questions. Operator, please go ahead.

我們的準備好的演講到此結束。現在讓我們開始提問。接線員，請繼續。

(Operator Instructions) Our first question is from the line of Laura Champine of Loop Capital.

（操作員指示）我們的第一個問題來自 Loop Capital 的 Laura Champine。

Could you outline for us what the key factors are that are negatively impacting the live streaming business and give us a sense of when you think that business might return to growth?

您能否為我們概述一下對直播業務產生負面影響的關鍵因素是什麼，並告訴我們您認為該業務何時可能恢復成長？

Laura, this is Alfred. Yes, for the live streaming business in China, it's become more and more competitive, especially some companies, they actually give the live streamers of high revenue shares. And these high revenue shares might cause different or severe competition in the market.

勞拉，這是阿爾弗雷德。是的，對於中國的直播產業來說，競爭越來越激烈，尤其是一些公司，他們實際上給直播者高額的收入分成。而這些高額的收入份額可能會導致市場競爭的不同或激烈。

What we are doing is that we are implementing several measures to improve our live streaming business. For example, we help some less well-known live streamers, give them some training to help them to attract more audiences. Also, we will introduce or develop some features such as game of patience features to keep users engaged. We expect to see some more concrete results in early 2022.

我們正在採取的措施是，實施多項措施來改善我們的直播業務。比方說，我們幫助一些不太知名的直播主播，給他們一些培訓，幫助他們吸引更多的觀眾。此外，我們還將引入或開發一些功能，例如耐心遊戲功能，以保持用戶的參與。我們預計將在 2022 年初看到一些更具體的結果。

And just as a follow-on question. You mentioned that the market has gotten competitive for performers. But I think in your prepared comments, you also mentioned you think you can raise the cut that BlueCity takes. How would that work?

這只是後續問題。您提到表演者市場競爭已經變得激烈。但我認為在您準備好的評論中，您也提到您認為可以提高 BlueCity 的抽成。那該如何實現呢？

We try to introduce more of the product offering, try to increase the content for the live streaming. And as I mentioned earlier, we will try to help those less well-known live streamer to give them some trainings and help them to attract more audience.

我們嘗試推出更多產品，嘗試增加直播內容。正如我之前提到的，我們會盡力幫助那些不太知名的直播主播，為他們提供一些培訓，幫助他們吸引更多的觀眾。

And also because for those live streamer doing the live streaming with the Blued app, because of our users, they have a stronger stickiness in our products. So we think that due to this nature of our users, we will be able to improve the live streaming business over the next few months.

而且對於那些使用 Blued 應用程式進行直播的主播來說，由於我們的用戶，他們對我們的產品有更強的黏性。因此我們認為，由於用戶的這種特性，我們將能夠在未來幾個月內改善直播業務。

Our next question is from the line of Tim Moore of Zacks Small Capital Research.

我們的下一個問題來自 Zacks Small Capital Research 的 Tim Moore。

Your press release mentioned progress on He Health, and I know you mentioned the 6 products have been launched for Mr. heer. I was just wondering maybe if you can provide us with more color and details on how you're building that awareness and getting it out there? And also how you're kind of maybe going to open it up to all males, all men?

您的新聞稿提到了 He Health 的進展，我知道您提到已經為 heer 先生推出了 6 種產品。我只是想知道您是否可以為我們提供更多細節，說明您如何建立並傳播這種意識？還有，您是否可能會將其向所有男性、所有男人開放？

Okay. We actually are planning quite a few marketing activities to increase the awareness of the brand. Right now, we increased the awareness of the brand. We've seen mainly within our Blued app products.

好的。我們實際上正在計劃相當多的行銷活動來提高品牌知名度。目前，我們提高了品牌知名度。我們主要在我們的 Blued 應用產品中看到。

We also have the plan to open the third-party online store to sell the products. I think in the near term, the sales from the customers through our Blued app will be more than enough to generate significant revenue. But in the mid- to long-term, we will try to sell the products to other customers outside of the Blued users.

我們也有計劃開設第三方網上商店來銷售產品。我認為在短期內，透過我們的 Blued 應用程式從客戶那裡獲得的銷售額將足以產生可觀的收入。但中長期來看，我們會嘗試將產品銷售給Blued用戶以外的其他客戶。

Good, good. The other question I had was what are your plans to do with your net cash? It looks like you have something equivalent of USD58 million. It's 65% of your market capitalization. Do you have any plans to spend that or do more acquisitions or reinvest, anything?

好，好。我的另一個問題是，您計劃如何處理您的淨現金？看起來您有價值 5800 萬美元的東西。這占到你的市值的65%。您有什麼計劃來花掉這筆錢或更多收購或再投資嗎？

We still focus on our core business. For our cash position, although it is quite enough for our operation at least for the next 3 years, we won't use the cash for other purposes other than the core business.

我們仍然專注於我們的核心業務。就我們的現金狀況而言，儘管至少在未來3年內足以維持我們的運營，但我們不會將現金用於核心業務以外的其他用途。

Because as we mentioned earlier, we have the He Health business, and we just launched a new brand and we need the cash to expand our operations. So for our cash position, that will be mainly used for our core business.

因為正如我們之前提到的，我們有 He Health 業務，我們剛剛推出了一個新品牌，我們需要現金來擴大我們的業務。因此，就我們的現金狀況而言，這將主要用於我們的核心業務。

Great. And is there -- lastly, are there any new features or benefits that you think that you are adding to live stream besides training some of the less experienced live streamers that would maybe make you more competitive in the space against some of the peers that are offering higher revenue shares? I'm just wondering if you're putting anything in there that's really going to make you more differentiated.

偉大的。最後，除了培訓一些經驗不足的直播主播之外，您認為您還在直播中添加哪些新功能或優勢，這些功能或優勢可能會讓你們在與提供更高收入分成的同行的競爭中更具競爭力？我只是想知道您是否在其中添加了任何可以真正使您更加與眾不同的東西。

One example is the game-related features. For example, like [PK], among the live streamers, that is the one. And then some features that if the users are the first time to buy the service, we might have some discount for that to try to attract more users to pay for the live streaming services.

一個例子就是與遊戲相關的功能。例如像【PK】，在直播主播裡面，就是那個。然後還有一些功能，如果用戶是第一次購買該服務，我們可能會提供一些折扣，以吸引更多用戶為直播服務付費。

Our next question is from the line of Ethan Yu of First Trust Group, Inc.

我們的下一個問題來自 First Trust Group, Inc. 的 Ethan Yu。

(foreign language) I will quickly translate for myself. My first question is that it seems the company's gross margin was under pressure in Q3. What initiatives are you doing to improve it? And my second question is regarding your plan and expectations for the newly launched brand Mr. heer?

（外語）我會快速為自己翻譯。我的第一個問題是，該公司第三季的毛利率似乎面臨壓力。您正在採取什麼措施來改善它？第二個問題是關於您對新推出的品牌Mr. heer的計劃和期望？

Also, the sales growth of He Health was continuously to be strong in Q3. What is the company's expectation for the sales contribution from He Health next year? Thank you. And I may have a follow-up one later.

此外，和健第三季的銷售成長持續強勁。公司對明年禾健的銷售貢獻有何預期？謝謝。我稍後可能會有後續報道。

(foreign language)

（外語）

[interpreted] Okay. For the improvement of the margin, what we are trying to do is that the first, we will increase the revenue contribution from our high-margin business. For example, the membership services and health-related business. With better revenue structures, we expect to get a better GPM, that is the first point.

[翻譯] 好的。為了提高利潤率，我們首先要努力增加高利潤業務的營收貢獻。例如會員服務和健康相關的業務。有了更好的收入結構，我們期望獲得更好的毛利率，這是第一點。

The second point is that for our overseas business, we also implement the expense control. As we mentioned earlier, the advertising and promotion expenses was down nearly 25% on a sequential basis, and we will continue to do so over the next few quarters. So you will see a much better operating efficiency especially in year 2022. That's second.

第二點，對於我們的海外業務，我們也實施費用控制。正如我們之前提到的，廣告和促銷費用環比下降了近 25％，並且在接下來的幾個季度中我們將繼續這樣做。因此，你會看到更好的營運效率，尤其是在 2022 年。這是第二點。

The third point is that we will also try to improve our technology-related expenses, especially related to the bandwidth. You might already see the high expenses related to tech, but some of the tech expenses are pretty much one-off. So going forward, especially next year, we will see a better expense savings in the tech area. So with all this, we think we will have a better GP margins and probably have a better OP margin as well.

第三點是我們也會盡力改善與科技相關的開支，特別是與頻寬相關的開支。您可能已經看到與技術相關的高額費用，但其中一些技術費用幾乎是一次性的。因此展望未來，特別是明年，我們將看到技術領域的更好費用節省。因此，有了這些，我們認為我們將擁有更好的 GP 利潤率，並且可能也會擁有更好的 OP 利潤率。

(foreign language)

（外語）

[interpreted] Okay. When we started the He Health business back in 2019, we already got quite a solid plan for this business. Meaning that at that time, we already planned to do the OEM business, the so-called the consumer brand business. So when you see our He Health ready business that actually was developed step-by-step, stage-by-stage. So for the first stage, you already see the online medication business.

[翻譯] 好的。當我們在2019年開始做He Health業務的時候，我們就已經對這個業務有一個比較完善的計劃。是說我們當時已經計劃去做OEM業務，也就是所謂的消費品牌業務。因此，當您看到我們的 He Health 就緒業務時，它實際上是一步一步、分階段開發的。因此，在第一階段，您已經看到了線上藥品業務。

The second stage is that we launched Mr. heer, the consumer brand. And Mr. heer, the reason we launched the Mr. heer consumer brand is that we know our users' needs very well. And we know that there will be a strong demand from our users for this kind of consumer products. So that's why we decided to launch the Mr. heer brand.

第二階段，我們推出了消費者品牌Mr.heer。而Mr. heer，我們之所以推出Mr. heer消費者品牌，是因為我們非常了解用戶的需求。我們知道，我們的用戶對這類消費產品會有強烈的需求。這就是我們決定推出 Mr. heer 品牌的原因。

And during the initial stage, the brand has 6 products. For the second stage next year, we will try to expand the product line of Mr. heer. And -- because we think that this deal will get very popularity among our users. We think that Mr. heer product should have quite a significant contribution to the He Health business in the future.

而品牌創立初期，共有6款產品。明年第二階段，我們會試著擴大Mr. heer的產品線。而且——因為我們認為這筆交易會受到我們用戶的歡迎。我們認為Mr. heer的產品未來應該會對He Health業務做出相當大的貢獻。

(foreign language)

（外語）

[interpreted] Okay. As you already seen that we have a strong sales growth from the membership business and also from -- strong sales growth from health-related business. With better revenue structures, we expect to see better margins in the future.

[翻譯] 好的。正如您已經看到的，我們的會員業務銷售成長強勁，健康相關業務銷售成長也強勁。有了更好的收入結構，我們預期未來利潤率會更高。

And although right now, the live streaming business is the biggest revenue contributor, but we are not positioned ourselves as a live streaming company. So in year 2022, you will be able to see much more better revenue structures, because we will try to develop the other line of business. And for the live streaming business, as I mentioned earlier, we will try to develop more features, even probably we will develop some e-commerce-related business along with our live streaming business. So that is one area where we are considering.

雖然目前直播業務是我們最大的收入來源，但我們並沒有將自己定位為直播公司。因此，到 2022 年，您將能夠看到更好的收入結構，因為我們將嘗試發展其他業務線。至於直播業務，正如我之前提到的，我們將嘗試開發更多功能，甚至可能在直播業務的同時開發一些與電子商務相關的業務。這是我們正在考慮的一個領域。

So we are still the company, which are dedicated to provide the lifetime service for our users. This mission has not been changed.

所以我們仍然是一家致力於為用戶提供終身服務的公司。這項使命並未改變。

(foreign language) I have a follow-up. Regarding the global market, would you please give more color on performance of your overseas markets in terms of the total revenue, MAU or other metrics? Any update or change with your strategies on overseas expansion?

（外語）我有一個後續問題。關於全球市場，您能否詳細介紹海外市場在總收入、MAU 或其他指標上的表現？你們的海外擴張策略有什麼更新或改變嗎？

(foreign language)

（外語）

[interpreted] Okay. For our overseas business, the MAU for overseas business was 2.94 million, which means almost 3 million MAU versus 2.66 million in the same period last year. So the year-on-year growth for the MAU was 10.5% year-on-year. And also for sales contribution, as you can see from our release, overseas business accounted for 13.1% in the third quarter this year versus 9.7% in the same period last year. So if you do the calculations, the overseas sales revenue was roughly RMB35 million versus RMB28.7 million in the same period last year. So the year-on-year sales growth was 23%. So you can see that our overseas business continued to grow in the third quarter this year. Even we already implemented some measures for the cost and expense control.

[翻譯] 好的。對於我們的海外業務，海外業務的MAU為294萬，這意味著近300萬MAU，而去年同期為266萬。因此，MAU 年成長 10.5%。至於銷售貢獻，正如您從我們的發布中看到的，今年第三季海外業務佔 13.1%，而去年同期為 9.7%。因此，如果進行計算，海外銷售收入約為人民幣 3,500 萬元，而去年同期為 2,870 萬元。因此銷售額較去年同期成長23%。所以你可以看到，今年第三季我們的海外業務持續成長。甚至我們已經實施了一些成本和費用控制措施。

So as far as the future strategy is concerned for our overseas business, what we will do is that we will continue to implement the cost control measures and expense control measures. And the MAU growth will more rely on the so-called organic growth. That is the first one.

因此，就我們海外業務的未來策略而言，我們將繼續實施成本控制措施和費用控制措施。而MAU的成長將更依賴所謂的有機成長。這是第一個。

The second one is that we will try to enhance our monetization for our overseas business. And especially for our live streaming business overseas, right now, our overseas live streaming business is more social network oriented. In the future, it probably will be transformed to the so-called talent show oriented. We believe in this way, this will bring in more sales revenue for overseas business next year. So our internal target for our overseas business next year is to try to have this business to become profitable at the bottom line.

第二，我們將努力提升海外業務的貨幣化能力。特別是對於我們的海外直播業務，目前我們的海外直播業務更多的是面向社交網路。以後大概就會轉型到所謂的選秀為主吧。我們相信這樣一來，明年海外業務的銷售收入將會更大。因此，我們明年海外業務的內部目標是努力實現獲利。

(foreign language)

（外語）

[interpreted] Another additional information, for the MAU overseas accounted for 43.8% of the total MAU. So meaning that, as far as MAU is concerned, the overseas business is already a very significant part of our business.

[解讀] 另附：海外MAU佔比43.8%。這意味著，就 MAU 而言，海外業務已經是我們業務中非常重要的一部分。

Ladies and gentlemen, we have now reached the end of our question-and-answer session. Now I'd like to hand the conference back to the management for closing remarks. Please continue.

女士們、先生們，我們的問答環節現已結束。現在，我想將會議交還給管理階層，請他們作結語。請繼續。

Thank you, operator. Thank you for participating on today's call and for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress. Thank you.

謝謝您，接線生。感謝您參加今天的電話會議並給予支持。我們感謝您的關注，並期待下個季度再次向您報告我們的進展。謝謝。

Thank you. And this concludes today's conference call. Thank you for participating. You can now all disconnect.

謝謝。今天的電話會議到此結束。感謝您的參與。現在大家就可以斷開連線了。

[Portions of this transcript that are marked

[本記錄中標有

[Interpreted] were spoken by an interpreter present on the live call.]

[翻譯]是由現場翻譯說的。 ]