JOYY Inc (YY) 2018 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to YY Incorporated Second Quarter 2018 Earnings Call.

(Operator Instructions) I must advise you that this conference is being recorded today, Tuesday, the 14th of August, 2018.

I'd now like to hand the conference over to your speaker host today, Mr. Matthew Zhao, IR Director of YY.

Thank you.

Please go ahead.

Thank you, operator.

Good morning, and good evening, everyone.

Welcome to YY's Second Quarter 2018 Earnings Conference Call.

Joining us today are Mr. David Xueling Li, Chairman and acting CEO; Mr. Bing Jin, CFO; and Ms. Ting Li, COO of YY.

For today's call, management will first provide a review of the quarter and then we will conduct a Q&A session.

The second quarter 2018 financial results and webcast of this conference call are available at ir.yy.com.

A replay of this call will also be available on our website in a few hours.

Before we continue, I refer you to our safe-harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements.

Finally, please know that, unless otherwise stated, all figures mentioned during this conference call are in renminbi.

I will now turn to the call over to Mr. David Xueling Li, our Chairman and acting CEO.

Please go ahead, sir.

Thank you, Matthew.

Hello, everyone.

Welcome to our second quarter 2018 earnings conference call.

This is Bing Jin, CFO of YY.

I will now speak on behalf of our Chairman and acting CEO, Mr. David Xueling Li.

We once again sustained our strong growth trajectory and delivered a robust quarter.

Our total revenues increased by 44.6% year-over-year to RMB 3.77 billion, which exceeded the high end of our previous guidance.

Revenues from our live streaming business grew by 50% year-over-year to RMB 3.56 billion and remained the primary driving force of our growth in the second quarter.

Our continued growth momentum in YY Live demonstrates our achievements in 3 areas: innovative traffic acquisition, continuous product advancement and AI-backed technology enhancement.

First, during the second quarter, we continued our unwavering commitment towards designing innovative measures to increase our traffic.

One such measure is to promote our host, not only on our own YY live platform but also through other social media or short-form video platforms, and then channel their fan base back into our ecosystem.

A prime example is how we have boosted one of our top host called Modern Brother, (foreign language), to stardom and then capitalize on their popularity.

Recognizing that short-form-video platforms are flourishing rapidly in China, we have leveraged their traffic to help Modern Brother multiply their fan base.

Once Modern Brother became an online phenomenon in China from the short-form-video content, we then actively connected the increasing number of loyal followers back onto our YY Live platform to enjoy live streaming performance and real-time interaction with the celebrity.

Going forward, we will replicate the model into promoting other hosts.

We will also continue exploring new and innovative ways to promote our hosts through other social media and short-form video platforms.

Now moving to our achievement in continuous product advancement.

As announced during last quarter's call, in May this year, we launched a new feature on YY live live called Host Battalion.

Since then, many host and users have been playing Host Battalion, which improved host interaction and user participation.

We recently rolled out 2 new games called Happy Chinese Checkers and Happy Sheep into the Host Battalion feature.

By infusing social features into live streaming and casual games, we have further enhanced our user experience, boosted user engagement and strengthened host interaction with fans.

Going forward, we will use Host Battalion as a testing ground to cultivate the next-generation live streaming entertainment services, which will aim to make more interactive and more engaging than ever before.

Last but not the least, following the appointment of Mr. Jeff Pengjun Lu as our CTO in June, we have made substantial progress towards enhancing our technology with artificial intelligence.

As we mentioned before, Jeff is a top AI scientist.

Under his leadership, we have successfully implemented audio and visual recognition technologies to automatically identify and classify live streaming content into various categories.

Embedded with the sophisticated machine learning models, based on our user behavior data, our AI-based content recommendation engine enables us to accurately and efficiently match live streaming content with user preference.

As a result, average user time spent on live streaming content on our mobile platform has improved significantly quarter-by-quarter.

To further strengthen our technological prowess, we have also appointed Dr. Lei Zhang, as the company's Vice President, reporting to Jeff.

Prior to joining us, Dr. Zhang served at Baidu, as its Chief Architect for the search advertising platform called Fengchao.

The addition of more top-class technological expert empowers us to continuously upgrade our technological capabilities, thus upholding YY's market leadership in the live streaming industry.

Overall, we are pleased with our achievement in traffic acquisition, product advancement and technological enhancement.

However, we are not resting on our laurels.

Instead, we wake up every day excited about the prospect of engineering new innovations in our products, devising new breakthroughs in our user engagement and developing new additions to our comprehensive ecosystem.

That concludes the remarks of our Chairman and acting CEO, Mr. David Xueling Li.

Now as the company's CFO, I would like to discuss our financial results in more details.

During the second quarter of 2018, we continue to deliver strong financial and operating metrics.

Our total net revenues for the second quarter increased by 44.6% year-over-year to RMB 3.77 billion.

Specifically our live streaming revenues increased by 50% year-over-year to RMB 3.56 billion, accounting for 94.3% of our total net revenues this quarter.

Our ongoing efforts and investment into our mobile platform and related technologies have also continued to yield results.

In the second quarter, mobile contributed 57.2% of our live streaming revenues, while mobile live streaming MAUs increased by 21.3% to 80.2 million from 66.1 million in the same period last year.

Live streaming paying users increased by 21.1% to 6.9 million in the second quarter of 2018, while mobile paying user constituted 72.7% of overall live streaming paying users.

Cost of revenues for the second quarter increased by 48% year-over-year to RMB 2.31 billion.

The increase in revenue-sharing fees and content costs paid to performance, guilds and content providers was in line with the increase in live streaming revenues.

In addition, bandwidth costs for the second quarter increased to RMB 246 million, primarily reflecting continued user base expansion and live streaming quality improvements.

Gross profit for the second quarter increased by 39.6% year-over-year to RMB 1.46 billion.

Gross margin was 38.7% compared to 40.1% in the prior year period, primarily due to the increase in revenue-sharing fees and content costs.

Our operating expenses were RMB 779.6 million during the second quarter of 2018 compared to RMB 476.3 million in the prior year period.

Sales and marketing expenses for the second quarter were RMB 246.1 million or 6.5% of total revenue compared to RMB 204.4 million or 7.8% of total revenue in the prior year period.

Our R&D expenses for the second quarter were RMB 295.9 million or 7.8% of total revenues compared to RMB 167.4 million or 6.4% of total revenues in the prior year period.

G&A expenses were RMB 237.5 million or 6.3% of total revenues in the second quarter compared to RMB 104.5 million or 4% of total revenues in the prior year period.

Our GAAP operating income for the second quarter 2018 increased by 19.1% to RMB 713.8 million compared to RMB 599.4 million in the prior year period.

Our non-GAAP operating income, which excludes share-based compensation expenses, impairments of goodwill and investments, and gain on deconsolidation and disposal of a subsidiary, increased by 45.5% year-over-year to RMB 933.1 million in the second quarter of 2018.

GAAP net loss attributable to YY was RMB 136.9 million in the second quarter of 2018.

Our GAAP net loss attributable to YY this quarter includes our nonrecurring and noncash item of RMB 2,273.4 million in fair value loss on derivative liabilities, which resulted from the preferred shares of Huya Inc.

that existed before its IPO and the increase in Huya Inc.'s enterprise value as indicated by the price of its initial public offering in May this year.

GAAP net loss attributed to YY this quarter is partially offset by RMB 1,205 million of fair value change of investment, including a gain on fair value change of Bigo Inc.

Our non-GAAP net income, attributable to YY, increased by 51.6% year-over-year to RMB 873.2 million in the second quarter of 2018.

Non-GAAP net margin in the second quarter of 2018 expanded 23.1% from 22.1% in the prior year period.

Diluted net loss per ADS in the second quarter of 2018 was RMB 2.14 compared to diluted net gain per ADS of RMB 9.98 in the prior year period.

Non-GAAP diluted net income per ADS increased by 34.3% to RMB 13.46 or USD 2.03 from RMB 10.02 in the prior year period.

Looking forward to the third quarter of 2018, we expect our net revenues to be between RMB 3.89 billion to RMB 4.02 billion, representing a year-over-year increase of 25.8% to 30%.

This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change.

That concludes our prepared remarks.

Operator, we would now like to open the call to questions.

(Operator Instructions) And our first question comes from the line of Thomas Chong from Crédit Suisse.

(foreign language) I have 2 questions.

My first question is about the user trend for YY Live in second half and 2019.

Is there any KPI in terms of the user level?

And my second question is about Bigo, given the facts that -- I think, we have talked a lot on Bigo in last earnings conference call.

Just want to see, if there is any update about the Q2 and also the second half outlook for Bigo?

(foreign language)

Let me do the translation.

Firstly, in terms of YY Live's future users' growth, this is not our major KPI.

Actually, they will be continue to be one our key focus for the management teams in the long-run goal.

In terms of the future initiatives, how we can grow our users that will be the following parts: firstly, when we look at the domestic competitive landscape, actually it's become more and more diversified, especially we notice that emerging of the short-form video platform as well as the social media platform.

Actually, we look at all the traffics from those kind of platforms, and we made to using those kind of traffic to promote our top host or the top celebrities in -- on those kind of platforms, such as Weibo and Douyin.

One of the very good example recently happened is we actually using Douyin to promote one of our top host, which is called Modern Brother.

So they attract a lot of fans in the Douyin's platform, but after that, we bring those kind of traffic back to the YY Live to watch their live streaming content.

That will be one of the good example, and it will continue to replicate this successful case to other top host.

And the second part will be we will continue to look at other ways in terms of the product innovation, and we will look at more ways to grow our user number.

And the third part is we also look at the outside traffic monetization capability because we know in China there, except for us there also has a lot of different kind of traffic, large traffic platforms.

We actually looking for the cooperation opportunity with all those kind of large platform.

Hopefully, we can find out some of the competition, which is going forward.

And the last part, we continue -- we will be focused on the Tier-3 and Tier-4 city users, especially the lower end of users, because they are going to be another huge growth potential in China going forward.

So we will find out a way to grow our user numbers in the Tier 3 and Tier 4 city users.

(foreign language)

And so let me answer your question in terms of Bigo's recent updates.

So in the first half of 2018, actually in terms of both of the user number as well revenues for Bigo has seen continuously rapid growth.

So the monthly active users for Bigo has been -- exceeds 40 million in the first half of this year.

And the income -- the revenues coming from the first half of this year has reached to the whole year's -- the last year's whole year scale -- the revenue scale.

And our next question comes from the line of Eileen Deng from Deutsche Bank.

(foreign language) My first question is regarding the third quarter guidance.

How much is the impact from the world cup actually have you seen?

And how strong have you seen the recovery post the event?

My second question is regarding the promotion of top host in other social media and the short-form video player platform?

Management, quantify how big the user base and paying user growth, based on the example of Modern Brother?

And do we have any target, the progress of such strategy, in the following quarter?

Thanks, Eileen.

Let me address the first question and Ting Li can address the second one.

So for the third quarter revenue guidance, I think, there are 2 main factors.

One is the world cup, because the world cup broadcasting time is highly overlapping with our peak timing, which is 8:00 p.m.

to 12 midnight.

That's why it impacted the user and as well the revenue side.

Second factor is we are seeing declining revenue from other segments, including our gaming segment because of the competition of the mobile game in China.

The mobile game as well web game continue to decline.

That's why I think that was flat in the second quarter -- third quarter revenue guidance.

For the world cup, we are seeing recovering trend.

After world cup is over, we're seeing the user and host coming back to the platform as normal.

So I think that trend has already been gone.

For the declining of the mobile game, I think, that will still continue, given the market environment in China these days.

So that's the general observation.

(foreign language)

Let me do the translation.

So in terms of your question for the promotion of our top host in the -- outside of traffics, firstly, for the Modern Brother, actually in the past 2 months, their follower number in the wireless platform has been doubled and their rallies actually has been 10x compared to the promotion before.

So actually from the Modern Brothers' case, actually, it's very successful case.

We can further replicate to other, our top host, going forward.

And in terms -- except for the online promotions, so we actually also using other ways to promote Modern Brother.

Firstly, it's a good brand recognition promotion, for YY's brand as well, and meanwhile, we are also trying to using our off-line events, such as music, concert, or other ways to promote the popularity of Modern Brother going forward.

So all those kind of practice will continue to replicate to other top host.

And secondly, in terms of our plan to doing of the outside promotions, so all of our top 100 of the host will be into the list and will continue to -- based on the data internally, we will continue track those data and to dynamically to monitor and manage of this list.

So once the host enter of the top 100, definitely they got the chance to using the platform's traffic, and we will help them to using the outside traffic to promote their content as well as increase their popularity.

So that's the answer of your question.

Thank you.

And our next question comes from the line of Natalie Wu from CICC.

(foreign language)

I would translate myself.

Sir, I have 2 questions here.

Firstly, excluding Huya, sales and marketing expanding in the second quarter actually went down compared with the first quarter.

So just wanted -- can you help us understand what your sales and marketing plan in the future?

And you just touched the plan to -- how to check actual users in the future.

So just wondering what kind of the assets will you need to resume the growth in terms of paying user number for YY Live in the future?

And secondly, you have accumulated abundant cash in your balance sheet.

Just wondering how is management plan in terms of the use of the cash?

Will you consider repurchase or dividend payout or potential M&A?

Thanks, Natalie.

Let me address those questions.

So first question regarding the sales and marketing expense, you are right that excluding Huya, our second quarter sales and marketing, as a percentage of revenue, is roughly 7% compared with first quarter is roughly 8% to 9%.

The decrease of the percent of revenue for sales and marketing, I think, mainly because in the second quarter, we don't promote that many new products.

In the first quarter, we promote Happy Go as a leisure game collection platform.

In the second quarter, we do not promote that many product.

However, having said that, in the third quarter and fourth quarter, we have other new product in our pipeline, both in China and offshore, mainly focused on new traffic acquisition.

So it could be leisure game, it could be short-form video, it could be other formats.

So when time matures, we will make sure that we spend decent amount of sales and marketing.

So in general, you expect percentage of revenue for sales and marketing in the third quarter and fourth quarter, and the rest of the year, it will be higher than the second quarter.

That's the answer to your first question.

For the -- how we grow the paying user, I think, again, we will focus on introducing more games into Host Battalion because we see increasing activities in Host Battalion.

We will explore and innovate other similar features, such as Host Battalion 2, enable more host to compete among themselves and enable more host to compete against the fans, as a way of increasing the paying behavior and ARPU -- paying region ARPU.

For the third question, we do have lot of cash on hand.

We have over RMB 6 billion onshore.

We have roughly USD 20 million offshore.

I think we would make sure that we use those money to the place that we think makes sense.

So we will continue to -- and we are actively looking at different kinds of M&A targets.

As I've said before, focusing on new traffic acquisition, enhancing the user engagement and also enhancing our AI and technology capabilities, both through organic product and through external M&As.

So we are looking actively for onshore and offshore M&A targets.

Any plans to -- in terms of the share buyback or dividend payout?

Not in immediate term.

We do think there is many interesting opportunity we can capture.

So we'll focus on organic product, sales and marketing and M&A acquisition.

And our next question comes from the line of Jerry Liu from UBS.

(foreign language)

My question is on the product competitive landscape with guys like, Douyin and Weibo, specifically, for example, Douyin is more a competition model, since we would like to use some -- as a content distribution platform, but at the same time, they will be interested to do live streaming products themselves.

And then the second question is around any direct monetization for content exporting?

We obviously benefit from additional fans and tipping on the YY Live platform, but could we see any new revenue streams?

(foreign language)

Let me do the translation.

So address your question in terms of the competition between YY and Douyin and all other short-form video platform, firstly, we truly believe the short-form video content, we have the live streaming content, is coming from the different DNA.

So the short-form video platform is more flattish, it's more diversified content platform compared with the live streaming platform.

And we truly believe it attracts different talent for the different kind of platforms.

For the live streaming platform, we have a lot of true, what we call, the UTC producers, which is our host, and they can produce very valuable of live streaming content comparably the short form videos.

And for those kind of people, actually, it's very -- for them, actually the short-form video platform is very ideal destination for amplified of their influence and meanwhile also to more distribute their content to more targeted of the users.

But comparably, the people who can do the short-form videos may not have the possibility to do the live streaming content.

So my point is, this -- both are -- the different kind of platform actually has been attracted different kind of talents.

And definitely compared with the people doing the short form videos, actually the talent, which is doing the live streaming definitely will be -- have a better position going forward.

And meanwhile, with respect to the Modern Brother's case, as I mentioned before, so firstly, in terms of their -- as I mentioned before, so after they have become a phenomena in the Douyin's platform.

Actually their site number as well as the interaction or the revenues generated from the YY platform also has been significant growth.

And meanwhile, we also consider seriously of their -- other agency business growing.

So in the past 2 months, instead of the live streaming content, actually we got a lot of invitation in terms of different layers of the business events from other kind of arcade agency contract.

But during this period, actually, we are more serious considering and more carefully to pick up of those kind of arcade agency events because we want to -- trying to maximize our top host valuation in both of our platform as well as for themselves.

So all-in-all, actually, we truly believe we are totally different compared with Douyin.

So we'll continue to find out more ways to distribute our content as well as promote our host in their platform.

Thank you.

And our next question comes from the line of Pinny Wang from HSBC.

(foreign language)

Pinny, you want to translate?

Okay.

Sorry, sorry, sorry.

In terms of the increase in the revenue sharing piece and also the content cost, it's actually good to see that it was in line with the increase in the live streaming revenues and most of the paying ratio has also remained quite stable.

But we understand that there is a quite intensively competition environment, right, for top guilds and hosts.

Do you think that is more just because of our strong leadership position and that we'll maintain such ratio?

Or you think that because we want to step up our market share and then down the road that we might see some changes in terms of, like, the sharing ratio, the guild, just in terms of our strategy, how you will -- in face of the increasing intensive competition?

And then second is just in terms of the competition of the top hosts' revenue concentration, because we previously have been talking, say, the top 10 or top 100 hosts concentration in terms of our revenue contribution.

With our new strategy, how has that been diversified down the road?

Thanks, Pinny.

Let me address those questions.

I think first question regarding the revenue sharing, it has been stable in the past and will continue to be stable in the future because we have already formed a very healthy ecosystem with our host and the guilds and also our fans.

So given our massive revenue scale, a lot of the guilds are willing to cooperate with us on a continuing basis.

But if you see the Modern Brother example, it just demonstrates how well we can promote our content and promote our host through different platforms.

So I think that revenue sharing percentage will continue to be stable going forward.

For the second question regarding the concentration of our top host, we actually track the data for the top 1% of the host, top 3% of the host, top 10% of the host, how much revenue they contribute, and that number has continuously decreasing on a quarter-by-quarter basis.

So I think that indicate that we have achieved more decentralization with regard to the guild -- to the host as well as guilds as well.

Yes.

And our next question comes from the line of Karen Chan from Jefferies.

(foreign language) I'll translate myself.

For the first question, management mentioned that YY Live streaming is showing recovery trend after the world cup.

I was just wondering how should we think about the full year YY Live revenue growth and into the next couple of years?

And secondly, can management share some of the user feedback or operating metrics on Host Battalion?

And lastly on -- across different tier cities, especially Tier 3 and 4, what's the current user penetration?

Karen, thanks.

Let me address those questions.

For YY Live live streaming revenue, as I mentioned that we are seeing recovering trend from the world cup.

I think for the rest of the year as well as next year, the key focus will continue to be on user growth.

Our revenue user times the paying ratio times ARPU, even though we still think ARPU and paying ratio has room for improvement, but I think the primary driver will be on the user growth.

So we would need to see how we systematically roll out our product, and how systematically we can sustain the user engagement and then monetize them.

So I think, in general, that's the pattern.

For the Host Battalion, we have introduced more games into the Host Battalion and is getting more popularity compared with the Happy Contest last year.

Host Battalion hasn't reached a systematic scale yet, but we are seeing encouraging pattern.

So what we will do is, we will continue to embed more interesting leisure games into Host Battalion, and hopefully, they can be used more and more by different levels of hosts.

For the user demographic distribution across first tier, second tier and third tier, I think, that is stable.

Over half of our users, 50% of users, are on third tier cities or below.

And as Ting Li mentioned in the call just now, one of our focus in the future will also continue to find out more new users in third tier and 4-tier cities in China, which -- among which they have lot of idle time, and they have needs to pursue better quality entertainment, including live streaming.

So I think, going forward, we will find more ways to attract those users.

And next question comes from the line of Alex Yao from JPMorgan.

(foreign language) So I have 3 questions.

The first one is regarding the third quarter revenue guidance and the potential fourth quarter revenue outlook.

So the implied growth rate for the core YY Live is only at low teens based on the current revenue guidance.

You guys have talked about the impact of the world cup and then the operation metrics recovers in the following weeks.

Based on the current visibility, would you be able to give us a little bit preliminary color in terms of how you think about 4Q revenue growth outlook for core YY Live as well as the entire group?

And then secondly, you guys discussed the initiative, such as Modern Brother to drive traffic generation from external sources.

Would the additional traffic generated from these initiatives ceasing to the use case of our immersive company experience on the YY Live live broadcasting platform?

And more importantly, would these guys potentially become -- converted to the heavy core users who spend lot of money and a lot of time on the platform?

And third question is regarding the R&D.

So if we take out the Huya part of the financial, R&D increased to almost RMB 40 million on sequential basis in second quarter 2018.

How shall we think about this line item in second half?

Alex, thanks.

Let me address question 1 and 3 and then Ting can address question 2. So for the first question, I think some colleague have asked that question before.

We do see recovering trend from the world cup.

The third quarter guidance currently reflect our current assessment.

But again, we need more visibility down the road in the rest of the third quarter as well as the fourth quarter, given we will launch the end of gala event, et cetera, to see how the growth of YY Live, the core live streaming business, will grow.

So that's the first question answer.

The third question regarding R&D, actually the second quarter, the percentage of R&D expense as a revenue is around 6.4% that compare with the 6% in the first quarter.

So I don't see a big increase as a percentage of revenue per say.

But a pattern that I can share with you is after our CTO joined, as our Dr. Zhang Lei joined, we continued to recruit more high-quality R&D and AI expert.

So that will incur some of the R&D expense as well, but again, that's manageable.

I think for the rest of the year, the percentage of R&D as per revenue will be relatively stable compared with the second quarter.

(foreign language)

Let me answer your question in terms of the monetization value for the Modern Brother's fans in YY's platform.

Actually, I already answered the question.

So as mentioned before, so Modern Brother's fans number is up -- it just grow like twice compare before.

But actually the revenues for or the income for the Modern Brother actually has been increased almost 10x.

So that actually demonstrates the strong monetization capability coming from their fans' base.

And our next question comes from the line of Eddie Leung from Merrill Lynch.

(foreign language) So my question is more about artificial intelligence.

From the management's remark, it seems like at the moment the company has been using artificial intelligence mainly to drive the efficiency as well monetization of the platform.

Just wondering whether there is any opportunity for us to use AIs to do a better job in terms of marketing and user acquisition?

Eddie, thanks.

Let me address the question.

I think at the end of the day, we are technology-enabled company, and we focus on voice and video content.

So we need to make sure that we are the world leader in that aspect.

AI is the second, I would say, layer of our technology capability, meaning, we will find more ways to mine the data and analyze the data and push the relevant content to the right audience.

That includes the enhancement of our current content, push the relevant content to right audience and also attracting the new traffic, who would like to see a certain categories of content.

So in general, to make our video and audio content to be more interactive and high quality and cater for different audience.

So you're absolutely right that AI can be applied to the existing content, to the new content, to the existing user and new traffic.

And our next question comes from the line of Hillman Chan from Citigroup.

(foreign language) So my first question is about the upcoming new games of Host Battalion to be rolled out in second half.

Can management share more on the trend and also the direction of the development outlook?

And the second one is on the Blockchain adoption that Xueling has been talking publicly about?

Is application in the messaging and communication, could management share more on these development and also the synergy with consistent YY products?

And lastly, on Bigo, could management share more on the investment and also the profitability outlook of this business?

Thanks, Hillman.

Let me address question 1 and 3 and Xueling Li can address question 2. Question 1 is regarding Host Battalion, we have introduced Happy Chinese Checker and Happy Sheep.

We will continue to add more interesting, I would say, games into Host Battalion.

As I said, we have seen increase in the enhancement of the user stickiness, even though it hasn't become systematic compared with host Happy Contest that we introduced last year.

So I think there is still room for improvement.

So definitely, we'll continue to launch new games to attract and retain users.

For the Bigo investment, Bigo's the live streaming business is highly profitable in many Southeast Asia markets as well as Middle East market.

Bigo also has a record growing short form video app called, Like, that is still in the initial investment stage.

So we will continue to invest for quality content and for sales and marketing, for branding, et cetera.

So that's the general pattern for Bigo.

I'll have Xueling Li answer the second question.

(foreign language)

Let me address your question in terms of Blockchain.

So firstly, we noticed in the market, most of the currency -- the start up of the Blockchain, they all focus on the visual cash applications.

But for us, we truly believe the future for the Blockchain will be more focused from the technical perspective.

So especially in the long run -- so we truly believe the valuable Blockchain for the Internet service is all coming from -- as well as some of the 2 basic demand from the users.

Firstly, it will be the ID, the identification of the users, and secondly, is Internet transition.

So who will tend to provide the better service to fulfill those 2 of the basic demand from users, definitely will be the leader for the Blockchain going forward.

So from our coverage perspective, definitely, we'll continue to develop more applications as well as doing more innovation in terms of Blockchain going forward.

Thank you.

I'll now like to hand the conference back to the management team for your closing remarks.

Thank you, operator.

Thank you all for joining us today.

We look forward to speaking with you in the coming quarters.

Thank you.

And that does conclude your conference for today.

Thank you for participating.

You may all disconnect.