Hello, ladies and gentlemen, thank you for standing by for the Fourth Quarter 2019 Earnings Conference Call for HUYA Incorporated. At this time, all participants are in a listen-only mode. Today's conference is being recorded. I will now turn the call over to Ms. Dana Cheng, Company Investor Relations. Please go ahead.

Hello, everyone, and welcome to HUYA’s fourth quarter 2019 earnings conference. The Company's financial and operational results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com. A replay of the call will be available on the IR website in a few hours. Participants on today's call will be Mr. Rongjie Dong, Chief Executive Officer of HUYA; and Ms. Catherine Liu, 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 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 these and other risks and uncertainties is included in the Company's prospectus and other public filings as filed with the U.S. SEC. The Company does not assume any obligation 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 discussions 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 our earnings call today. We are happy to speak with you today, following the completion of our great year with a strong end. 2019 was a year where we further strengthened our leadership position and increased our market share in China's leading game live streaming industry by leveraging and strengthening our comprehensive and self-reinforcing ecosystem. During this year, we continued to enrich and diversify our content offerings by proactively investing in high-quality broadcasters, expanding our e-sports tournaments coverage and creating new self-generated content. As a result, our user community continued to expand. Our Huya Live MAUs increased by 28.8% year-over-year to RMB 150.2 million in quarter four in line with our previous target. Among our Huya Live users, mobile MAUs grew 21.5% year-over-year to RMB 51.6 million driven by our effective mobile strategy. There is seasonal [indiscernible] our users as more mobile users come to our platform during the summer vocation in quarter three, and there is a winter vocation in quarter one, and more PC users come to our platform during the quarter with big e-sports tournaments. In quarter one, 2020, our mobile MAUs are expected to reach historical high of over 17 million, due to the winter vacation seasonality and the recent lockdown policies during the coronavirus outbreak. Non-mobile MAUs increased 34.5% year-over-year mainly due to the big e-sports tournaments in the quarter. So in-game pop out streaming windows promoted by our game developer, partners and is cooperating with offline Internet cafes during the quarter. Our monetization capabilities also continued to improve, resulting in better cooperation with our broadcasters and the talent agency partners. Our revenue grew by 64.0% year-over-year to approximately RMB 2.5 billion in the fourth quarter, which is the seventh consecutive quarter that we exceeded our management guidance since…

Thank you, Mr. Dong. I appreciate the – warm welcome and it has been a pleasure to join HUYA’s management team. Now following Mr. Dong remarks and then moving specifically onto our content enrichment and diversification efforts, an important growth pillar that has supported our ability to meet the evolving preferences of our users. In the fourth quarter of 2019, our broadcasters live-streamed 45.6 million hours of both game and other entertainment content on our platform, representing an increase of 37% from the same period last year. We will continue to partner with talent agencies and recruit more broadcasters to ensure we are providing high-quality content that remains relevant and interesting to our users. As another important content source, e-sports tournaments remained vibrant and prosperous on our platform. During the fourth quarter, we broadcasted 117 third-party e-sports tournaments, including world’s 2019 PGC, PEL, HoK Winter and KPL Fall. In Q4, our e-sports viewership exceeded 530 million, representing more than a 30% year-over-year increase. For the full-year of 2019, we broadcasted over 400 third-party e-sports tournament with total viewership of over 2 billion, representing a 25% year-over-year increase. Here we have some exciting updates about LoL tournament's broadcasting rights for 2020. Following the strategic partnership that we signed with Riot Games and a three-year exclusive Chinese broadcasting rights of LCK between 2020 and 2022, we also locked down the exclusive broadcasting rights of LCS and LEC for 2020. This exclusivities will make HUYA the only live streaming platform for all four major LoL regional leagues in China, as we also have broadcasting rights of LPL. We also continued to proactively produce our self-organized e-sports tournaments that further compliment the viewing experiences of game enthusiasts. During the fourth quarter, we successfully produced a 30 HUYA branded tournaments, generating total viewership of over…

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Thomas Chong from Jefferies. Please ask your question.

[Foreign Language] Thanks management for taking my questions. And my question is about the long-time strategies for HUYA. First, can management comment about our strategies in cloud gaming distribution and opportunities that we are embracing? And secondly is about the long game broadcasting apps strategies. And then my second question is about our investment plan in overseas expansion. Can management talk about our investment focus, our KPI as we go into overseas market? Thank you.

[Foreign Language] For your first question regarding the cloud gaming. Actually, we have being – closely paying attention to this – in the year for 2019. And earlier this year, we started to review this specific sector and we have noticed that the revenue per user and the cost per user, the gap between the revenue per user and the cost per user is actually narrowing down. And we think the economy of cloud gaming, currently we think is probably ready. And we will take this time for us to enter this specific sector. And as I said earlier in previous calls, we look closely paying attention to this cloud gaming. But let’s just – that is still early stage for this whole industry to grow. So for the user growth influence, we wouldn't think – at least for this year, we wouldn't think cloud gaming is going to impact a lot on the user growth. That's for your question for the cloud gaming. For your question regarding the non-gaming – non-game live streaming, as we disclosed previously, non-gaming live streaming users is actually taking up to – half of the users of the platform is actually watching the non-gaming live streaming. And we think in the year of 2019, the growth rate of the non-gaming streaming users is actually faster than the growth rates of the gaming users. With the rising content categories, such as ACG, outdoor, foody and traditional sports, and these are the fastest growing content categories. As we will keep our content in general, specifically focused on the e-sports as we always do, we will put non-game streaming as a strategic priority. And that strategic priority does not only include live streaming, but also to include videos. So for the non-gaming, we will just try and invest to explore more opportunities whether in the form of a live streaming and videos. For your last question regarding the HUYA's business. We think for the performance of HUYA's business is actually being within management expectation. As we said earlier, we've achieved 20 million MAU in the fourth quarter of 2019, and we think we will keep that growth momentum in the year of 2020 and maybe to 50% year-over-year growth for our overseas MAU. That's it.

Thank you. Your next question comes from the line of Lei Zhang from Bank of America. Please ask your questions.

[Foreign Language] I will translate myself. Thank you management for taking my questions. First question is about user growth in 2020. What's our target and do you see any change around coronavirus outbreak? Especially, we mentioned that we reached a historical high in the fourth quarter about [indiscernible] slowdown after people come back to work? And second one to follow-up on overseas strategy. What is our target counter in 2020? Are we still focusing on the emerging market or any plan to go to the developed market? And what is our plan in monetization of overseas in 2020? Thank you so much.

[Foreign Language] For your first question regarding the user growth, there are several dimensions to answer this question. I mean, firstly is that we will keep on our growth efforts in the game live streaming sector, especially in expectation for the new growth opportunities coming in the year for 2020. For example like Dungeon-Fighters mobile version in the first half and League of Legends mobile version probably later this year. And we think [indiscernible] is actually will help HUYA's user growth. And as the second growth driver could be the e-sports tournaments. As we have seen in Europa 2020, game developers has been inviting a lot to deploy the e-sports tournaments and we think that will further help us to maintain our growth momentum in the users. And the third one is the product diversification. For the Europa 2020, we have some product pipelines lining up, like for example, the first one is the e-sports community and the secondly is the [indiscernible] stand-alone app. And apart from the live streaming business that we have always been doing, we will also spend some efforts in the realm of video services, especially in the entertainment sector and also cloud gaming product will be another product diversification effort for this year. And we will closely monitor the industry involvement. And the fourth growth driver for the users is that we have – overall, we think there is a great growth potential for the non-gaming sector whether in the form of live streaming or in the form of video services. It's a greater market year and it's going to be a strategic priority for us in the Europa 2020. So that's the answer for you, first question regarding the user growth. And secondly, whether people are getting back to work will impact our growth…

Thank you. Your next question comes from the line of Daniel Chen from JPMorgan. Please ask your question.

[Foreign Language] I will translate myself. My first question is to follow-up on the user growth. So management maybe a little bit on your user growth strategy, especially in lower-tier city? And second one is on the monetization front. So we have a very good run in revenue growth in 2019. So what's the key strategy to strengthen the monetization in both gaming and a non-gaming segment in 2020? Thank you.

[Foreign Language] For your first question regarding, our deployment strategy in terms of the Tier 3 and Tier 4 users. We think as we observed that since [indiscernible] has entered into the game live streaming factor and with their special penetration into the Tier 3 and Tier 4 cities. We have observed – there is a positive impact on the user growth on our end. And so in other words, because of the [indiscernible] entrants we see that we are planning treating deeper into the Tier 3 and Tier 4 cities. And also another observation from the company side is that, we think the students – the type of the students, users are taking a larger proportion of the overall user base. And these are – so penetration into Tier 3 and Tier 4 cities and keep on to serve these rising users growth for students will be the two strategic focus for us in the year of 2020. And for your second question of monetization, we think that first that we will still trying to attract more new users and then keep converting, the new users and existing users to paying users. And then second to increase our ARPU, we will continue to one is to improve our current product offerings such as enrich and diversify content. And also we will trying to develop some of the innovative new products to offer to our users to help monetize. Thank you for your question, and then please move to the next.

Your next question comes from the line of Alex Liu from China Renaissance. Please ask your question.

[Foreign Language] I will translate myself. So on the new product side, what's the – could management share more color on the new product, for example [indiscernible] together and the potential expansion into new verticals, what's our advantages on these new initiatives over existing platforms? And the second question is on a cash allocation and usage. How does the management think about the current net cash balance? Thanks.

For your first question for our new product [indiscernible] is one of the categories that were growing pretty fast and it reached a pretty significant scale in terms of the growth billings. So currently we plan to have a standalone product that probably will launched in the second quarter. We will have more metrics that to share with [indiscernible]and investors in probably second quarter. And in terms of your second question of net cash, we are still actively looking at the opportunities of potential investment and acquisition targets and the cash were mainly reserved for the potential investments and acquisitions. We will update the investors on the investments and or the acquisitions that we do – when this happens. Thank you for a question.

Okay. Thank you.

Operator, can we move on to the next question please.

Thank you. Our last question comes from the line of Binnie Wong from HSBC. Please ask your question.

[Foreign Language] I'll quickly translate myself. So the question here is on the revenue sharing fees and content costs. Given that our competitors have been entering the market and they have also been emphasizing that in 2020. They will be lowering their revenue share – increasing their revenue sharing to make it more attractive to incentivize the streamers to go to on their platform. So in the 2020, what is our expectations on our revenue sharing in terms of directionally? And then also whether there will be any changes in terms of competitive strategies to hopefully thinking for this year? Thank you.

[Foreign Language] Historically, we have been [indiscernible] structure, including the platform, which is HUYA and also the talent agencies and the broadcasters. We have been captured that structure for long. So the revenue sharing among the third-parties has been stable over the past few years. And we think in the long run, the main direction for the revenue sharing will be stable as well. But since we have been keeping a medium broadcaster strategy, we have and we will be providing subsidies to those median up and coming broadcasters. So as a conclusion, we will invest more in the – keeping up the broadcaster, content macro system. So that we can [indiscernible] the broadcasters and talent agencies to generate more quality content.

I think it's about time. Is there any further questions? No. Okay. Thank you. Thank you for joining today's conference call. And if you have further questions, please feel free to contact us at ir@huya.com and we'll look forward to speaking with you in the next quarter. Thank you.

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