Release the second quarter financial report of 2020. According to the financial report, the second quarter revenue of Huya was 2.697 billion yuan, a year-on-year increase of 34.2%; the net profit attributable to Huya under non US GAAP was 351 million yuan, up 106.0% year-on-year. < p > < p > after the release of the financial report, CEO Dong Rongjie, CFO Liu Xiaozheng and other senior executives held a conference call to interpret the key points of the financial report and answer analysts’ questions. < / P > < p > Jeffery analyst Thomas Chong: the first question is whether the cooperation between the company and Tencent in live broadcasting and E-sports is likely to deepen in the second half of the year and next year? Are there any specific indicators of cooperation performance that can be shared? Second, what is the company’s outlook for the number of active and paid users per day in the second half of the year? < p > < p > Dong Rongjie: let me answer the first question. We have a deep cooperation with Tencent, and we have more cooperation after Tencent holding tiger tooth. First of all, we have connected the content of live game in many Tencent games and products, and we expect to access more game content in the next few quarters. In addition, in Tencent’s wegame, wechat games and mobile QQ games, our content grew by more than 16% quarter on quarter, which did not include the growth of our daily active users. This is the content aspect. As for the cultivation of anchor, we try to provide exclusive access to the one button broadcast function in some Tencent games. During the process of playing the game, users can start the one button broadcast at any time, and the game can be broadcast live through tiger teeth. As for E-sports events, whether it’s copyright content, or commercial cooperation, as well as the improvement of new user experience methods, we have in-depth discussions with companies like Tencent. The rest is technology. In terms of big data and artificial intelligence, we have also used Tencent’s game data to help Huya platform provide more accurate personalized recommendation for users. In terms of cloud games, we also have strong cooperation with Tencent for these games. We also hope that our cloud game platform can try to find some new models combining live and cloud games < / P > < p > Liu Xiaozheng: as for the number of active users and paid users per day, we can strengthen cooperation with Tencent, and we can also participate in anchor, third-party E-sports events and self-made websites I believe that the two figures will continue to grow in the second half of the year. Li Zhang, analyst at Bank of America Merrill Lynch: first question, I’d like to hear the latest views of management on competition. Recently, Kwai recently released some data on live broadcast, and B station has won the right to broadcast the League of heroes in the second half of the year. Will the above affect the short-term or medium-term development of the company? The second question is about finance. The company’s profit in the second quarter was much better than expected. Can the management of the company introduce the change trend of profit, especially cost, including content cost and share, in the second quarter and later?
Dong Rongjie: on the first question, it has been a long time for Kwai to make short videos. B stands for a long time. We can see that the two companies have invested a lot in the game live business this year, but from the data point of view, the outlook for tiger tooth is not particularly significant. Second, we can see that the main advantages of similar short video platforms may still be in live mobile games. However, Huya has always had a leading edge in the industry in terms of live mobile games. From the current ecological point of view, whether it is “glory of the king” or “peace elite”, the impact on Huya is not particularly great. In addition, we are still talking with relevant parties about the issue of station B’s independent broadcasting, and the issue of Huya broadcasting is still in the process of communication. As a whole, we still hope to win such a good event. Second, we have also assessed that, based on the overall situation of this year, we believe that the impact of this exclusive right on Huya is controllable. In terms of the contribution of self-made content to the number of active users and new users per day, the amount of self-made content is the same order of magnitude as that of third-party events. Of course, we will try to win the broadcasting rights. Even if we can’t get them, the impact on tiger teeth will be small. < p > < p > Liu Xiaozheng: the improvement of the company’s gross profit rate mainly comes from the cost savings after the optimization of the anchor signing fee. In the second quarter, we reduced the payment and saved a lot of expenses for domestic and overseas anchors with low cost-effectiveness. Part of the reason for the improvement in operating profit margin is the improvement of operational efficiency, and we also received more government subsidies in the second quarter than in the first quarter. What problems have we just mentioned about the user management of wechat, such as the user management of wechat? What is the difference between their user behavior and our existing app users? Second, if we don’t consider the factors of competition at present, how does the company view the future development of China’s game live? For example, the entire user group, or are there any new means? Dong Rongjie: as mentioned just now, the content of tiger teeth is displayed in Tencent’s games and products, but there is a big difference between this display and the display in tiger teeth app, that is, there may be some interactive functions and reward functions, which are not particularly complete there. This is a big difference. It is for this reason that we have not included these users in our daily active users. Of course, we are also talking with Tencent related project teams about whether we can enrich the interactive ecology in Tencent, and even say whether it is possible for us to divide them into something like this in the future. Second, as for the future of live game, I mentioned it before from the domestic dimension. What we see now is that since the video platform, especially the short video platform, has joined the game live broadcast, the scale of new users and the capacity of the whole market are growing rapidly. Therefore, first of all, we should thank the short video platform for helping the industry increase a lot of games New users of the broadcast. Second, in the first half of this year, the income growth of the whole game industry in China was the fastest in recent years. In summary, we think that the domestic game industry should be a very good industry in the future, so from a macro perspective, it is certainly no problem for the game live broadcast to rely on the development of the whole industry. Third, with the gradual maturity of the e-sports industry, E-sports has gradually become the standard configuration of the game; around the e-sports, with the continuous development of e-sports, we think that for the whole game live broadcasting industry, it is a relatively big advantage. Finally, from the perspective of tiger teeth, we hope to combine the business form of live game and the business form of game video in the future. A variety of needs of a user can be met on the tiger tooth platform, whether it is watching live or watching game video, all the needs. Tiger tooth can provide the best quality game and video content, and also contribute to the continuous growth of tiger tooth users. < p > < p > Huaxing capital analyst Alex Lu: first of all, tiger tooth has been talking about cloud games for some time. Since the cooperation with Tencent will be more and more in-depth in the future, what kind of follow-up cooperation will be made with Tencent in cloud games? How do management view the commercialization opportunities of cloud game business itself? The second question is about the anchor signing fee. I’ve heard some comments from competitors of some companies. Maybe their signing fees are more based on the ranking of running water. In the long run, does the anchor signing fee become a variable cost? In other words, the salary paid to the game host is based on running water. < p > < p > Dong Rongjie: in fact, the whole development of cloud games is still relatively early. For cloud games, tiger tooth hopes to be able to continuously follow up, and we also hope to solve the user experience problems of cloud games. The large-scale commercialization of cloud games may be difficult from the perspective of tiger teeth, and it may need to be polished for a period of time. From the various behaviors of users on our own platform, we can see that the data on the combination of cloud game and live broadcast is still very good. Therefore, we are very confident about the combination of cloud game and live broadcast platform. As for the anchor signing fee, from the perspective of tiger tooth, our anchor signing fee has little to do with running water. We pay more attention to whether the content provided by the anchor is of high quality. Our signing fee is more related to the quality indicators retained by users. At present, running water is not very important in our consideration of signing fee. However, we also agree that with the development of the live broadcasting industry, especially the problem that the head anchor relies too much on the signing fee, we still hope to do some moderate guidance in this way. Just like the live broadcast of e-commerce, we can see the real anchor, whose revenue ability is also very good. Therefore, we also hope to guide large anchors to gradually try more and make some commercial attempts in addition to the signing fee. Not only for the platform, but also for the long-term development of the anchor itself. < p > < p > HSBC analyst Binnie WONG: first, the number of active users of tiger tooth in this quarter has surpassed that of Betta, and the growth is very strong. However, from the perspective of cost, we have not invested too much, and the profit margin has also improved. What is the reason? In the second half of the year, will the competition be more intense than last year? Or is it because after the successful merger, everyone’s investment will be more rational. < p > < p > Liu Xiaozheng: the strong growth of daily active users in the second quarter is mainly due to the relief of domestic epidemic situation and the re opening of Internet cafes. We mentioned in the financial report of the first quarter that most Internet cafes closed down because of the epidemic in the first quarter. As a result, we lost a lot of users outside the mobile terminal. In the second quarter, the number of users recovered. Second, we just received the merger of tiger tooth and Betta only yesterday. The board of directors of the company will evaluate the merger plan. At present, no decision has been made. If there is any major decision, we will inform the investors in time. Wendy Chen, an analyst at Goldman Sachs: on the issue of internationalization, we mentioned that there are 20 million overseas users in 2019. What are the main areas of the company’s international business at present? Under the circumstances that Chinese enterprises may encounter some geopolitical difficulties when they go abroad, do we have any adjustments in our internationalization strategy? What is the impact on our profit margin? Because after all, we still have some investment in internationalization. Dong Rongjie: there is a big difference between our overseas market this year and the past two years. In the past two years, 2018 and 2019, we have mainly focused on the scale of users. This year, we believe that users