HUYA Inc (HUYA) 2018 Q4 法說會逐字稿

Hello, ladies and gentlemen. Thank you for standing by for the Fourth Quarter and Fiscal Year 2018 Earnings Conference Call for HUYA Inc. (Operator Instructions) Today's conference call is being recorded.

And I would now like to turn the call over to Ms. [Han Yang Liu], Company Investor Relations. Please go ahead.

Hello, everyone, and welcome to the Fourth Quarter and Full Year 2018 Earnings Conference Call of HUYA Inc. The company's financial and operating results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com. A replay of the call will be available on the IR website in a few hours. Participants on today's call will be Mr. Rongjie Dong, Chief Executive Officer of Huya; and Mr. Henry Sha, Chief Financial Officer. Management will begin with a 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 obligations to update any forward-looking statements except as required under applicable law. Please also note that Huya's earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Huya's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

I will now turn the call over to our CEO, Mr. Rongjie Dong. Please go ahead.

Hello, everyone. Thank you for joining us today. We are pleased to have completed 2018 on a strong note. 2018 was a really important year for Huya. In May, we became the first Chinese game live streaming company listed in the U.S. And throughout the year, we continued to increase our market share by seizing the opportunity of industry consolidation and leveraging our first-mover advantage in the capital market.

In the fourth quarter, we continued delivering solid financial and operational results, including revenue growth of 103% year-over-year that exceeded our expectations. We are also pleased to have exceeded our financial guidance in every quarter since our IPO. As an encouraging milestone, we achieved the annual profit for the first time with our non-GAAP net income full year 2018 beyond RMB 460 million.

Our revenue streams were boosted by strong MAU growth, reaching 116.6 million users in the quarter, a 34.5% increase year-over-year. User growth was driven by our focus on major e-sports events broadcasted on Huya's website and the mobile app. We believe the following factors resulted in MAU growth, which was beyond our own expectations for the period.

Firstly, we made a significant improvement in Huya's website's viewing experience such as reducing the load time of entering streaming channels, which promoted user growth on our nonmobile brand. Secondarily, a few notable e-sports tournaments broadcasted by Huya attracted massive gamers' attention in this quarter. Specifically, when a Chinese e-sports team named IG won -- was awarded championship in the final of League of Legends World Championship Season 8 in November, the peak from current user and the viewership number on Huya's platform hits a record high.

Lastly, we continued to pay efforts in content monitoring, enhancing our presence in major app stores. During Chinese National Holidays in October 2018, our key competitor's mobile app was suspended by iOS App Store and mainstream Android downloading channels in China, which also served to strengthen our overall competitive positioning.

Our mobile strategy continues to be a strategic focus for us. Our mobile user experience supported by cutting-edge technology and early-mover advantages in mobile deployment further reinforces our leading competitive edge and differentiate our content and service offerings in the marketplace. As such, mobile MAUs grew to over 50 million, and we continued maintaining the 1 month retention rate of our Huya mobile app users to be about 70%. We have seen stronger monetization opportunities with mobile users presenting higher conversion rates. For both the fourth quarter and the full year, mobile users drove more than 80% of our live streaming revenue.

Meanwhile, we are happy to share that we are continued to be ranked the #1 game live streaming platform in China in terms of total MAU, mobile MAU and the average daily time spent on mobile app per mobile active user in the fourth quarter 2018. We are proud of our performance in 2018 and view the year as an important step in our growth. In addition to our successful IPO, we worked through the year to further build our content ecosystem in addition to strengthening our partnership with gaming companies, broadcasters and talent agencies.

We also worked diligently to enhance our user interaction experience, our content distribution technology and advantage user platform, providing smooth viewing experience and fostering the creation of professional-generated content will further broaden our content offerings. Huya's content was also broadcasted and shared through external links including WeChat's game live streaming mini program, Weibo WeGame platform and [WearRev Games]. While viewership numbers and user behavior data from third-party platforms are not included in our operating metrics, according to our stated figures total monthly active users watching Huya live streaming content from these external links reached over 40 million in December 2018. Our strategic focus on e-sports continues to deliver encouraging results as popularity of e-sports grow both in China and globally.

During the fourth quarter, we broadcasted over 110 e-sports tournaments with a viewership of over 380 million, including LoL, [SEA], KPL Autumn, PCPI S2 and All-Star LoL, that brought our 2018 total number of e-sports events to approximately 400, which drove over 1.6 billion in total viewership. In the year going up -- going forward, we will increase the investments in high-quality e-sports tournaments by supporting for all major professional leagues like LPL, KPL and OWL, to name a few. We will be the exclusive live broadcasting platform for a series of important e-sports events, such as LCK, MPL, WESG Grand Final during the year.

Besides these e-sports tournaments organized by gaming companies, we also provided e-sports tournament services and hosted approximately 20 events in Q4, which generated viewership of over 58 million in the period. Self-organized e-sports tournaments have become one important part of our e-sports strategy, which strengthens our competitive positioning in upstream content in both Huya's own first tier e-sports tournaments and brand names.

Our efforts have not only generated user traffic but also served to grow and showcase popular broadcasters on our platform. In January, we announced that we are establishing our e-sports [in Taipei] in the Huya Group. We are also evaluating and aggregating all our e-sports assets with the goal of establishing an efficient and effective operating management. Going forward in this year, we will continue to place greater emphasis on self-organized events, including the Huya [dance league] in the Huya mobile gaming arena, and we will drive additional professionally generated content based on the current line up of e-sports tournaments.

Finally, as announced in September of last year, we launched our Chengdu-based team participating in the Overwatch League 2019 season. We are pleased to share the Chengdu Hunters gained victory for its first match in February of this year, as the only team composed of all Chinese professionals among the 10 [Thai] teams in the whole league this year -- this season. We believe the team will be reached -- received well with domestic fans.

As we look forward, our primary objectives for 2019 and above -- and beyond are to strengthen our leadership position in China and largely expand into overseas markets. To strengthen our positioning in China, we will provide more services for our content ecosystem and continue investing to enhance our content differentiator. We have been seeing fast-growing trends in terms of MAU and user time spent in both outdoor activities and amazing content genres since the second half of 2018. We will build up nongame, professionally generated content meant to improve user stickiness leading to enhanced monetization in 2019. On our gaming content side, we will improve visibility into the new game pipeline by establishing more partnerships with gaming companies going forward. These efforts will get us prepared to push out content as soon as the game approval process resumes.

As we evaluate our growth opportunities, we view our overseas presence as a core differentiator in the competitive game live streaming landscape. Our recent entry in Latin America has shown great potential with active user growth and is viewed as a potentially lucrative opportunity for us. In addition, we saw the total MAU of NIMO TV, our major content platform for overseas expansion, surpassed 10 million in December 2018, which was not included in our quarterly MAU stated figures as reported. We believe that the overseas user base of NIMO TV has shown sizable advantages as compared to its peers. Our unique business model composed with capital and operating strength will drive our success in the overseas markets with a sustainable return in the long run.

In summary, 2018 was a momentous year for Huya. In addition to sustaining the rapid growth of our domestic business and overseas expansion, we have been encouraging broadcasters on the Huya platform to create more content advocating social responsibility. During the past year, over 600 live streaming events broadcasted on the Huya platform promoted a healthier and more positive social environment, covering topics such as public welfare and cultural heritage, to name a few.

We intend to work tirelessly to maintain our positioning as a leading game live streaming platform in China while leveraging our technology to capture the tremendous growth opportunities, both domestically and around the globe.

With that, I will now turn the call over to our CFO, Henry, to share the financial details.

Thank you, Mr. Dong. Hello, everyone. We delivered strong top line performance with fourth quarter revenue growing by 103% year-over-year to RMB 1.5 billion and 2018 full year revenue growing by 113% to over RMB 4.6 billion. This was driven by solid growth in both live streaming and our advertising business. As a result of our continued revenue increase and margin expansion, we were able to deliver fourth quarter positive operating and net income on a GAAP basis. We also achieved non-GAAP net profit for the fifth consecutive quarter, reaching a record high of RMB 166.9 million, while net margin increased by 160 basis points quarter-over-quarter to 11.1% in the fourth quarter 2018.

Live streaming revenue was supported by MAUs growth and a year-over-year increase in conversion rate of paying users with notable improvement in gaming content monetization. The paying user conversion rate rose to 4.2% in the fourth quarter of 2018 from 3.2% in the same period last year. As a result, our paying users grow to 4.8 million in the fourth quarter of 2018, up 73% from the period -- from prior year period, with mobile paying users making up about 80% of that total. In the quarter, revenue from gaming-related content contributed more than 65% of total live streaming revenues.

Our advertising business benefited from our strategy of providing value-added services, enhanced partnership between Huya and the broadcasters and our efforts in balancing advertisement slot and user experience. While we experienced a robust growth momentum, we've also worked prudently to enhance our operating efficiencies and made significant strides in improving gross margin for both the quarter and the year. That improvement resulted from our continued technology developments in order to lower bandwidth consumption and cost while distributing high-quality streaming and video content in the top-tier resolutions. We also benefited from our growing scale as content costs were leveraged across the larger user base.

Our fourth quarter non-GAAP gross margin increased by 60 basis points quarter-over-quarter to 16.1% despite the fact of overseas expansion required continuous investment to nurture fast growth. As we enter 2019, we expect our fast-growing user base, the content value we have created and our strategic focus on business diversification will remain as our drivers of strong revenue growth. We see tremendous opportunity to expand our user base in both domestic and overseas markets, and our efforts to efficiently manage cost while leveraging our growing scale will continue to generate positive cash flow. We are confident our strong competitive position and compelling strategy for growth will allow us to deliver solid returns to shareholders.

Now let me briefly go over the financial results for the fourth quarter. Total net revenue for the fourth quarter of 2018 increased by 103.1% to RMB 1,504.9 million from RMB 741 million in the same period of 2017.

Live streaming revenues increased by 108.1% to RMB 1,441.8 million in the fourth quarter of 2018 from RMB 692.7 million in the same period of 2017, primarily due to the increase in both the number of paying users on our platform and spending per paying user. The increase in the number of paying users was primarily driven by our mobile strategy, diversification of content offerings and the continued efforts in converting active users into paying users.

Advertising and other revenues increased by 30.7% to RMB 63.1 million in the fourth quarter of 2018 from RMB 48.3 million in the same period of 2017. This increase was primarily driven by increased demand from gaming advertisers and further recognition of Huya's brand name in the China online advertising market.

Cost of revenues increased by 100.1% to RMB 1,266.3 million in the fourth quarter of 2018 from RMB 632.9 million in the same period of 2017, primarily attributable to the increase in revenue-sharing fees and content costs as well as bandwidth costs. Revenue-sharing fees and content costs increased by 112.8% to RMB 1,042.1 million in the fourth quarter of 2018 from RMB 489.7 million in the same period of 2017, primarily due to the increase in virtual item revenue sharing, which was in line with the company's live streaming revenue growth and continued spending in e-sports content and content creators in both domestic and overseas markets.

Bandwidth costs increased by 42.1% to RMB 161.6 million in the fourth quarter of 2018 from RMB 113.8 million in the same period of 2017, primarily due to an increase in bandwidth usage as a result of the increased user base on Huya's platform and enhanced live streaming video quality improvement, partially offset by improved efficiency in bandwidth utilization as a result of deployment of new technologies in content distribution.

Gross profit increased by 120.7% to RMB 238.6 million in the fourth quarter of 2018 from RMB 108.1 million in the same period of 2017. Excluding share-based compensation expenses, non-GAAP gross margin increased to 16.1% in the same -- in the fourth quarter of 2018 from 14.6% in the same period of 2017 and from 15.5% in the third quarter of 2018, primarily due to our enhanced monetization efforts, technology innovation on bandwidth utilization and the continued leverage on economies of scale.

Research and development expenses increased by 80.9% to RMB 79.1 million for the fourth quarter of 2018 from RMB 43.7 million for the fourth quarter of 2017, mainly attributable to increased headcount and wage inflation in R&D personnel and share-based compensation expenses related to the share awards newly granted in 2018.

Sales and marketing expenses increased by 102.4% to RMB 59.9 million for the fourth quarter of 2018 from RMB 29.6 million for the fourth quarter of 2017, mainly attributable to the increase of marketing and promotion expenses as a result of enhanced efforts in promoting Huya's brand awareness and e-sports content as well as cooperating with various marketing channels in both domestic and overseas markets.

General and administrative expenses increased by 152% to RMB 92.6 million (sic) [RMB 92.3 million] for the fourth quarter of 2018 from RMB 63 -- sorry, RMB 36.6 million for the fourth quarter of 2017, mainly due to the increase in share-based compensation expenses related to the share awards newly granted in the first quarter of 2018, professional fees and salaries and welfare of management personnel.

Operating income was RMB 18.5 million for the fourth quarter of 2018 compared with an operating loss of RMB 1.8 million in the same period of 2017. Non-GAAP operating income, which excludes share-based compensation expenses, increased by 280.9% to RMB 82.5 million for the fourth quarter of 2018 from RMB 21.7 million in the same period of 2017. Non-GAAP operating margin was 5.5% in the fourth quarter of 2018 compared with 4.8% in the third quarter of 2018 and 2.9% in the fourth quarter of 2017.

Net income attributable to HUYA Inc. was RMB 99.6 million for the fourth quarter of 2018, a 19-fold increase from RMB 5.0 million in the same period of 2017. Non-GAAP net income attributable to HUYA Inc. in the fourth quarter of 2018, which excludes loss on fair value change of investments and equity investee's investments and share-based compensation expenses, increased by 486.8% to RMB 166.9 million from RMB 28.4 million in the same period of 2017. Non-GAAP net margin was 11.1% in the fourth quarter of 2018, significantly improved by 3.8% in the fourth quarter of 2017.

Diluted net income per ADS was RMB 0.45 for the fourth quarter of 2018 compared with diluted net loss per ADS of RMB 0.05 for the same period of 2017. Each ADS represents one Class A ordinary share. Non-GAAP diluted net income per ADS was RMB 0.76 for the fourth quarter of 2018 compared with RMB 0.19 for the same period of 2017.

Let me turn into the -- our balance sheet and cash flows. As of December 31, 2018, the company had a cash, cash equivalents, short-term deposits and short-term investments of RMB 5,993 million. Net cash provided by operating activities was RMB 717.5 million in 2018 compared with RMB 242.4 million in 2017. Please be mindful of the length of our earnings call. For the other full year 2018 financial results, I will encourage listeners to refer to our earnings press release for further details.

Now let's come up to the business outlook. For the first quarter of 2019, we currently expect total net revenues to be in the range of RMB 1,510 million to RMB 1,550 million, representing a year-over-year growth of between 79.0% and 83.7%. This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change. This concludes our prepared remarks.

We will now open the call to questions. Operator, please go ahead.

(Operator Instructions) And our first questioner today will be Hillman Chan with Citigroup.

(foreign language) My first question is on League of Legends. Could management share more of your observation of the initial user traction of this title on Huya in China in terms of the user popularity and how does it compare to other titles in terms of Overwatch and Fortnite? And could you also share more on our efforts in building up quickly the streamer and e-sports ecosystem for this title in China, please? And my second question is on competition. Could management share more on how we think about the competition versus Douyin in terms of user popularity, execution of new game launches, recruiting of streamers and also tournament IPs? And how do we think about differentiated growth, competitive strategy versus Douyin in 2019, please?

(foreign language)

I will help translate the answers into English. So in terms of, like, the title coverage on Huya's platform, we basically cover over 3,000 game titles, which means we have a broad coverage of long-tail games to attract users. That's number one, firstly. And secondly, we -- Huya as a live streaming platform, we welcome new popular game titles. But speaking of Apex Legends, it's still early stage. But we see in the U.S. that Twitch has made successful marketing experience for this game title, and that's good example to say that the game live streaming platforms provide a really effective channel for a game to become a new blockbuster. So that's Apex Legends from what we observed in the overseas market. Speaking of Huya, how we want to prepare these game titles, obviously we're having keeping a close attention on new games in the market and make timely investments. We have provided incentives and support timely for the broadcasters and recruitment for the game titles and we also invited popular broadcasters to attend Huya self-organized Apex Legends online tournament.

(foreign language)

I will help translate the answers into English. So in terms of our comparison with Douyin, I think overall, we need to consider game live streaming platform as a content provider, content platform. So ultimately, providing high-quality content is on top of our priority, and we are able to provide that content on our platform, same way that we are able to provide the right incentive financial support to the broadcasters to make sure they can grow together with our platform. So speaking of those 2 things, we can share that our mobile MAU makes sure we are the largest game live streaming platform in China. And also, we have achieved really good monetization if we look at the game live streaming platforms in China. And also, speaking of the business models, we are not hugely dependent on recruiting the top broadcasters. We think the mid-tier shoulder broadcasters are also the core streams of our platform to provide variety of content. We have also maintained quite strong relationship with the talent agencies as we have been working with them for a long time. We work together to support and promote the broadcasters. Lastly, from technology perspective, we are also a leading player in the game live streaming platform. We are able to provide high-quality streaming qualities for the user, and at the same time really manage our bandwidth cost to achieve a cost efficiency for our whole platform. And we're looking into the future. I think first of all, we still want to maintain the [5 streams] that we mentioned above to train, promote the broadcasters, grow the broadcasters with Huya and also achieve better monetization and maintain our monetization capabilities going forward. Secondly, looking into 2019, overseas is a forecast for us. We want to keep the overseas expansion and achieve certain scale for 2019. And I think our MAUs, if we look at the data last year, December, we have already achieved over 10 million MAUs. Lastly, I think we want to create a platform that also have a variety of content besides gaming. So we want to diversify our content offerings going forward as well. Thank you.

Hi, this is Henry. I will add one more point to commentate with the answers provided by Mr. Dong. So Huya's user base is more fragmented, which is distributed to the -- all the tier cities in China, especially for the tier 3 to 5 cities, and the iOS users is around the 10%. So we believe that we also have the cost advantage and the user base advantage from this perspective. That's the answers to Hillman.

And our next questioner today will be Thomas Chong with Crédit Suisse.

(foreign language) My first question is about our trend in terms of our MAU forecast in the coming quarters and 2019. And my second question is about our thoughts on our KPI for our overseas expansion strategy in the future.

(foreign language)

Our target for MAU for 2019 is to about -- to reach about 140 million to 150 million total MAUs, and our overseas user growth will be faster than the domestic user growth.

And our next questioner today will be Jerry Liu with UBS.

Hi, William. Sorry, we just not finished the question for Thomas. Management will go ahead.

Yes, sorry, apologies. This is Henry. So I will commentate the answers of Mr. Dong. So in our overseas business for now, so our major platform is NIMO TV as we early briefly introduced in our script. Now the NIMO TV has entered into Indonesia, Vietnam and Thailand also as well as into the Latin America market because we believe the user behavior in the local -- in those regional markets is quite similar to the North American users' behaviors with a very great potential. And as Mr. Dong mentioned earlier, the MAU of the NIMO TV in December 2018, the MAU exceeded 110 million. And now it's a 100% owned business unit under Huya, which is operated by the CEO and our VP in charge of the overseas business. Thanks. That's the answer to Thomas.

And the next questioner will be Jerry Liu with UBS.

(foreign language) So first, just to follow up on the 140 million to 150 million MAU number for 2019. Does that include users outside of China? And then secondarily, my question is on some of the new recent broadcaster policy that Tencent discussed in recent weeks. And one of the -- especially one of the things is on limiting the bidding process between top tier broadcasters between the different platforms. So I just want to understand how do we think about this. What kind of impact it can have potentially on content cost -- on our content cost in 2019?

(foreign language)

I will help translate. First of all, the MAU target includes overseas market as well. Secondly, on the new rules introduced by Tencent, I think this is a sign to show that the industry is going to be better regulated and become healthier, and that's also something we want to -- we're still really happy to see and we can also contribute to building a healthy and stable game live streaming industry. And speaking of the impact on the sign-up bonus and also the pay to the broadcasters, I think it's still too early to speak firmly on this point. We still want to monitor how the market will play out over the next 2 quarters to make a meaningful comment on the costs.

Yes, Jerry, I will help to -- add one more point into our CEO's answers to you. So from the perspective of the content cost and some of the bonus fees we pay to the broadcasters, we believe we do a very excellent execution on cost management in considering the results of the last year. So going forward, we believe that we will still do the same level of execution and make sure -- and trying to improve the margin in the new year -- in the coming year. Yes, thank you.

And our next questioner will be Daniel Chen with JPMorgan.

(foreign language) I will translate myself. My question is related to the content cost. So this quarter, content cost as a percentage of revenue is up by 3% this quarter. So what's the reason behind? And also, how should we look at the ratio into 2019? And also, Henry just mentioned, in 2019, Huya will have a margin expansion year-over-year basis. So where should we see the operating leverage to come from?

Thanks, Daniel. I will help answer your questions. For your first question about the Q4, the content cost and revenue shares percentage -- as a percentage of revenue had a slight increase in comparison with Q3. I believe that was caused by the seasonal ceremony -- the year-end ceremony and the increased number of the broadcasters we signed up to the platform. And by year-end, regularly, we will pay like a one-off bonus to those broadcasters who performed really well, including their personal performance content compliance, to everything good with the platform for the whole year. So we will pay them for the bonus fee by the year-end. So I think that's a major driver behind it. For the forecast of '19, we believe that -- for the margin expansion, so we believe that we have the huge advantage on the content distribution technology. As I mentioned earlier, last quarter, we had a great progress in the P2P technology to help to lower the bandwidth consumption under the same tier of the high -- very high-quality resolutions. So actually, this technology has been deployed since September last year, in Q3 and in Q4. So the technology has been deployed to more and more users on our platform, so the result of bandwidth utilization has improved gradually. So we believe that's one of the driver of the margin expansion. Another is the -- because we are growing very fast in the user base in terms of the MAU, so the content cost -- we have the economies of scale of the content cost and we have leveraged on that. So we paid one-off the content fee and -- which will be shared by all the users on the platform, the growing user base. So that's how we call the leverage on that. So that's, I believe, the major drivers for the next year. Thank you.

And our next questioner today will be Lei Zhang with Bank of America.

(foreign language) My first question is about your investments in e-sports in 2019 and any large tournament we can expect, and then my second question is a follow up on overseas strategy. Noticed that we also have some entertainment-related IP overseas. How should we look at the competition in the overseas market and how to drive the scalability in overseas? And do you have any target MAU in overseas? And also, I want to know our major investments in overseas markets in content creator, talent agency or maybe the local team.

(foreign language)

I'll help translate our CEO's answers. So firstly, we want to just talk about the overseas expansion strategy at a high level. So as we can already see from the wider market, a lot of the game companies are also expanding to the overseas market. So it's a natural trend for game live streaming companies to go overseas as well, and we have started doing that since 2018. So -- but then speaking of the overseas market, we think there are opportunities for us to explore, not just on game live streaming but other media content bandwidth, whether it's short form videos or other entertainment content. I think there are just generally more opportunities for us to explore in the overseas market, and our CFO Henry will supplement more concrete details.

Hi, Lei. Let me add some points to Mr. Dong's answers for you. First, our spending in overseas market will be spent into the user acquisition costs. So we call it the [quota launch] program. So we need to acquire new users from the channel buy from the Android or maybe the Google Play channels, to do marketing to acquire new users from the overseas market, in the regional market. Second, our strategies have been always become the -- we use the local player -- local broadcasters to set the local users by playing local games. So that's a part of the cost that we need to pay to find new talents and new broadcasters in the regional market because of the language problems. So according -- to your question about the target, so we believe that overseas business for 2019, we'll still prioritize the user growth instead of monetization. But we are looking at the opportunity to monetize our overseas business in the second half of the year. So the user growth, we are looking at more than 100% of growth in terms of the MAU. Thanks. That's the answers to Lei's questions.

Our next questioner today will be Wendy Chen with Goldman Sachs.

(foreign language) So my question is about the ARPU trend we're seeing that in the fourth quarter that the year-on-year growth have reached relatively a slower level. So just wondering how should we foresee the ARPU growth in 2019. And also, for the newly added PC MAU we see in this quarter, which we see a very robust growth, how are you seeing there paying ratio and ARPU trending for these new PC users?

Hi, Wendy. This is Henry. Let me answer your first question about the ARPU trend. So as you can see from Q3 to Q4, our ARPU has shown a trend up, more stabilized. So this was because a lot of the new users become our payers on our platform. So at their first time to pay, the ticket size is relatively small. So I think that's why as you can see the ARPU is more stable. And looking forward for 2019, we -- the management team do stay very optimistic on this ARPU growth. So that's the answer to your first question. As you can see, the -- our paying users come up from a 4.2 million paying users into 4.8 million in Q4 quarter-over-quarter. So I think that's a very encouraging number to explain the expansion of the paying user base. So to your second question about PC MAU growth. So actually, in Q4, we improved a lot about our user experience, the viewing experience, as I -- as Mr. Dong introduced earlier in this -- in his remarks. So the viewing user experience in the website has been hugely improved, especially for the loading time. We shortened the loading time period. And as you may know, in Q3 and Q4, there are quite a lot of the top tier the final of e-sports tournaments happened. So these are bringing a lot of like new users to our platform on the PC end, and we still stay very optimistic to convert them into the mobile end users. But now at this stage, mobile is still our key focus on the strategy, which contributed more than 80% of the total paying users. The paying ratio of the mobile side is relatively high. So we will still stay with the mobile strategy. Thank you.

(foreign language)

I'll help translate the answers. So speaking of the PC -- the growth of the PC MAUs for 4Q, we think it's more sort of one-off instead of a trend that we usually look at going forward. The reason is because from our group level, we always think the value of the PC MAU wouldn't be that high because there's limited interactions available for the users and the paying behavior is not as good as the mobile MAU. Thank you.

Now I'd like to turn the call back over to the company for any closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact Huya Investor Relations through the contact information provided on our website or the TPG Investor Relations. Thank you.

(foreign language)

This concludes this conference call. You may now disconnect your lines. Thank you.

Thank you.