Hello ladies and gentlemen. Thank you for standing by for the Fourth Quarter and Fiscal Year 2018 Earnings Conference Call of Huya Inc. At this time, all participants are in listen-only mode. Today’s conference call is being recorded. And I would now like to turn the call over to Ms. [indiscernible], 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 financing and operational results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com. A replay of the call will be available on the IR website in a few hours. Participants on today’s call will be Mr. Rongjie Dong, Chief Executive Officer of Huya and Mr. Henry Sha, Chief Financial Officer. Management will begin with prepared remarks and the call will conclude with a Q&A session. Before we continue, please note that today's discussion will contain forward-looking statements made under Safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherit risks and uncertainties as such the company's result may be materially different from the views expressed today. Further information regarding this and under risks and uncertainties is included in the company's prospectus and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required on the applicable law. Please also note that Huya’s earnings press release and this conference call include discussions of unaudited GAAP financial information’s, as well as unaudited non-GAAP financial measures. Huya's press release contains a reconciliation of the unaudited non-GAAP measures to the audited 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 very 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 first 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 annual profit for the first time with our non-GAAP net income for year 2018 beyond [RMB 450 million]. Our revenue streams were posted by strong MAU growth reaching 116.6 million users in the quarter, 34.5% increase year-over-year. User growth was driven by our major Esports events broadcasted on Huya’s website and mobile apps. We believe the following factors resulted in MAU growth, which was beyond our own expectation for the period. Firstly, we made a significant improvement in Huya’s website viewing experience such as reducing the long-time our entering streaming channels, which promoted user growth, our non-mobile front. Secondly, a few notable Esports tournaments broadcasted by Huya attracted massive gamer’s attention in this quarter. Specifically, when Chinese Esports team named iG won the World Championship in the final of League of Legends World Championship Season 8 in November, [subject to] concurrent user and leadership number on Huya’s platform hit a record high. Lastly, we continued to take efforts in content monitoring enhancing our presence in major app stores. [The all-in] Chinese national holiday’s in October 2018 are key competitor’s mobile app was [suspended] by IOS app store,…

Thank you, Mr. Dong. Hello everyone. We delivered a strong top line performance with fourth quarter revenue growing by 103% year-over-year to $1.5 million RMB and the 2018 full-year revenue growing by 113% to over $4.6 billion RMB. This was driven by solid growth in both live streaming and our advertising business. As a result of our continuous revenue increase and margin expansion we were able to deliver fourth quarter positive operating and net income on GAAP basis. We also achieved non-GAAP net profit for the fifth consecutive quarter reaching a record high of 166.9 million RMB, while net margin increased by 160 basis point quarter-over-quarter to 11.1% in the fourth quarter 2018. Live streaming revenue was supported by MAU’s growth and a year-over-year increase in commercial rates of paying users with notable improvement in gaming content and monetization. The paying user commercial 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 grew to 4.8 million in the fourth quarter of 2018, up 73% from the prior year period, with the 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 stream revenue. Our advertising business benefitted from our strategy of proving value added services, enhance the partnership between [indiscernible] and their broadcasters and our efforts and balancing advertisement slot and the user experience. While we experienced robust growth momentum, we have also worked prudently to enhance our operating efficiency and made significant stride in improving growth margin for both the quarter and the year. That improvement resulted from our continued technology development in order to lower bandwidth consumption and the cost while distributing high quality streaming and video content…

Thank you. And we will now begin the question and answer session. [Operator Instruction] And our first questioner will be Hillman Chan with Citigroup. Please go ahead.

[Foreign Language] Thank you management for taking my question and congrats on a solid quarter result. My first question is on [indiscernible] legends, could management share more on your observation of the initial usage function of this title on Huya in China in terms of the user popularity and how does is compared to other titles in terms of over watching fortnight? And could you also share more on our effort in building up quickly the stream and eco-system for this time in China please? And my second question is on competition, could management share more on how we think about the competition versus [indiscernible] in terms of user popularity if creation of new game launches, recruiting of streamers, and also [indiscernible] IPs and how do we think of our differentiated growth comparative strategy going into 2019 please? Thank you very much.

[Foreign Language] Please go ahead.

Thanks, I will help translate the answers in to English. So, in terms of, like the title coverage of Huya’s platform, we basically cover over 3,000 game titles, which means we have a broad coverage of [indiscernible] games to attract users that’s number one, firstly. And secondly, Huya is a live streaming platform, we will welcome new popular game titles, but speaking of Apex Legends, it’s too early stage, but we see in the U.S. that Twitch has made a successful marketing experience for the game title and that’s good example to say that the game live streaming platforms provide a really effective channel for games to become a new blockbuster, so that Apex Legends from what we observed in overseas market. Speaking of Huya, how we want to prepare the game titles, obviously we have been keeping a close attention of new games in the market and make timely investment, we have provided incentives and support time life for the broadcasters and recruitment them for the game title and we also invited popular broadcaster to attend Huya’s self-organized Apex Legends online tournament. [Foreign Language]

Thanks. I will help translate the answer into English. So, in terms of our comparison with [indiscernible] I think overall, we need to consider game live streaming platform as the content provider, content platform. So, ultimately providing high quality content that's on top of all priority and we are able to provide that content in our platform. Secondly, is that we able to provide the right incentive financial support to the broadcasters, to make sure they can grow together with our platform. Then speaking of those two things we can share that our mobile MAU, make sure we are the largest game live streaming platform in China. And also, we have achieved a 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 shorter broadcasters are also the core of streams of our platform to provide a variety of content. We have also maintained quite strong relationship with talent agencies as we have been walking 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 users at the same time really manage our bandwidth cost to achieve the cost efficiency for Huya platform. And we looking into the future, I think first of all, we still want to maintain the factors we mentioned above to train, promote the broadcasters, grow the broadcasters with Huya, and also achieve better monetization, and maintain all monetization capabilities going forward. Secondly, looking to 2019 overseas is the focus for us. We want to keep the overseas expansion and achieve certain scale for 2019, and I think all of the MAUs if we look at the data last year, the same where we have already achieved over 10 million MAUs. Lastly, I think we wanted to create a platform that also has 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 compensate to the answers provided by Mr. Dong. So, we ask the user base is more recommended, which is disputed to all the [indiscernible] in China, especially for the [indiscernible] and the IOS users around the 10%. So, we believe that we also have the cost advantage and user base advantage from this perspective. That’s the answers to Hillman.

And our next questioner today will be Thomas Chong with Credit Suisse. Please go ahead.

[Foreign Language] Thanks management for taking my questions. My first question is about our trend, in terms of our MAU forecast in coming quarters in 2019. And my second question is about our thoughts on our KPI, for our overseas expenses’ strategy in the future, thank you.

[Foreign Language]

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

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

Hi, really, I'm sorry. We’re just not finished the question for Thomas. Management will go ahead.

Yes, sorry, apologies. This is Henry. So, I will compensate to the answers about Mr. Dong. So, overseas [indiscernible], so our major platform is NIMO TV, as we early briefly introduced in our scripts. Now, the NIMO TV has entered into Indonesia, [indiscernible], Thailand, as well as into the Latin American Market. Because, we believe the user behavior in those regional markets is quite similar to the North American user's behaviors with very great potential and as Mr. Dong mentioned earlier the MAU after NIMO TV in December 2018, the MAU exceeded 10 million. And now it's a 100% owner unit and the Huya, which is operated by the CEO and our VP in charge of the overseas business. Thanks. That's the answer to Thomas. Operator, please go ahead. Thanks.

And the next questioner will be Jerry Liu with UBS. Please go ahead.

[Foreign Language] First just a 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, 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 our content cost in 2019? Thank you.

[Foreign Language]

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

Jerry, I will help to add one more point to our CEO’s answers to you. So, from the perspective of the accounting cost and sign-up bonus fees we paid to the broadcasters we believe we do a very excellent execution on the cost management in considering the results of the last year. So, going forward, we believe that we will [indiscernible] same level of the execution and make sure and trying to improve the margin in the new year in the coming year. Thank you.

[Foreign Language]

And our next questioner will be Daniel Chen with JPMorgan. Please go ahead.

[Foreign Language] I will translate myself. My question is related to the content cost, so this quarter, content cost as a percentage of revenue has upped by 3% this quarter. So, what’s the reason behind and 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? Thank you.

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 has a slight increase in comparison with Q3, I believe that was caused by the season of the ceremony, the year-end ceremony and the increase in number of the broadcasters we signed up to the platform and by the year-end regularly we will pay you like one of the bonus to those broadcasters who performed really well including their personal performance compliance everything good with the platform for the whole year, so we will pay them for the bonus fees at year-end. So, I think that’s the major driver behind this. So, for the forecast of 2019, 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 have the great progress in the P2P technology to have to lower the bandwidth consumption into the same period of the very high-quality dilution. So, actually this technology has been deployed since September last year in Q3 and in Q4. So, this technology has been deployed to more and more users on our platform. So, with the result of bandwidth utilization has improved gradually. So, we believe that’s one of the drivers of the margin expansion. Another is the, because we are growing very fast in the user base in terms of MAU, so the content cost, we have the economics of scale of the content cost will have leverage on that. So, we paid one of the content fee and will be shared by all the users on the platform, the growing user base. So, that is how we caught a leverage on that. So, that I believe the major drivers for the next year. Thank you.

And our next questioner today will be Li Zhang with Bank of America. Please go ahead.

[Foreign Language] My first question is about your investments in [indiscernible] 2019 and any large tournament we can expect? And my second question is a follow-up on the overseas strategy, notice that we also have some entertainments related overseas, how should we look at the competition in overseas markets and how to drive the scalability in overseas and do you have any target in overseas and also want to know our major investments in overseas markets in content creator talent agency or may be the local team? Thank you.

[Foreign language]

Thanks, I’ll help translate with your answers. So firstly, we want to just talk about the overseas expansion strategy at a high level, so as we can already speak on the wider market, lot of game companies also expanding to the overseas market, so it is a natural claim for game [indiscernible] companies to go overseas as well and we have started doing that things in 2018. But then speaking of the overseas market we think there are opportunities for us to explore and not just on game live streaming, but other medium contents, venues, and short-form videos or other entertainment contents. I think we are just generating more opportunities for us to explore in overseas market. And our CFO Henry will supplement more concrete detail.

Hi, Li, let me add some point to Mr. Dong’s answers for you. First, our spending in the overseas market will be extended into the user acquisition cost. So, we call this the launch program, so we need to acquire new users from the channel [indiscernible] or maybe the Google Play, the channels to do marketing to acquire the new users from the overseas market in the regional market. Second, our status has always become, we use the local player, local broadcaster to twist up the local users by playing the local games. So, that’s a part of the cost that we need to pay to find the new talents and new broadcast in the regional market because of language problems. So, to your question about the target, we believe that the overseas business for the 2019, I will 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% growth in terms of MAU. Thanks, that’s the answers to Li’s questions.

And our next questioner today will be Wendy Chan with Goldman Sachs. Please go ahead.

Hi, Dong, hi Henry. [Foreign language] Thanks a lot for taking my questions. So, my question is about the ARPU trend that we are seeing that in the fourth quarter that’s the year-over-year growth after reaching a relatively a slower level, so just wondering how should we proceed ARPU growth in 2019 and also for the newly added PCMU we’ve seen this quarter, which was [indiscernible] robust growth, how is their paying ratio and ARPU trending for this new PC user? Thank you.

Hello, Hi Wendy, this Henry. Let me answer you first question about the output trend. So, as you can see from Q3 to Q4, our output has shown the trends 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 their [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 with the management teams do stay very optimistic on these ARPU growth. So, that’s the answers to your first question. As you can see, our paying users come up from 4.2 million paying users into 4.2 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 TC MAU growth, so actually in Q4, we improved a lot about our user experience, the viewing experience as Mr. Dong introduced earlier in his remarks. So, the viewing 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 in Q4 there are quite a lot of the top tier, the final [indiscernible] tournaments happen, so this bring a lot of like new users to our platform on the TC end. 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 stat is relatively high. So, we were still staying with the mobile strategy. Yes, thank you.

[Foreign Language]

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

Now, I would 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 the investor relations through the contact information provided on our website or the TPG investor relations. Thank you.

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