Good morning and good evening, ladies and gentlemen. Thank you and welcome to DouYu International Holdings Limited first quarter 2020 earnings conference call. At this time, all participants are in listen-only mode. We will be hosting a question-and-answer session after management's prepared remarks. Please note this event is being recorded.I will now turn the call over to the first speaker today, Miss. Mao Mao, Investor Relations of DouYu. Please go ahead, ma'am.

Thank you operator. Hello everyone. Welcome to our first quarter 2020 earnings conference call. Joining us today are Mr. Shaojie Chen, Chairman and CEO, Mr. Mingming Su, Chief Strategy Officer and Mr. Hao Cao, Vice President of Finance.You can refer to our first quarter of 2020 financial results on our IR website at ir.douyu.com. You can also check a replay of this call when it becomes available in a few hours on our IR website.Before we start, please note that this call may contain forward-looking statements made pursuant to the Safe Harbor provision for the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations that involve unknown and known risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectations implied by these forward-looking statements.All forward-looking statements are expressly qualified in their entirety by the cautionary statement, risk factors and details of the company's filings with the SEC. The company undertakes no duty to revise or update any forward-looking statements for selected events or circumstances after the date of this conference call.Now, I will speak on behalf of our Chairman and CEO, Mr. Shaojie Chen.

We concluded the first quarter of 2020 with solid financial and operational results. During the period, total net revenue increased by 53% year-over-year to RMB2.28 billion. Gross profit increased by139.2% year-over-year to RMB485.9 million while gross margin expanded to 21.3%. Meanwhile net income was RMB254.5 million representing a net margin of 11.2%. And adjusted net income grew to RMB296.9 million representing adjusted net margin of 13%.Additionally quarterly paying users increased by 26.2% year-over-year to 7.6 million. In the first quarter, our mobile user base maintained a record growth trajectory with our average mobile MAUs increasing by 15.3% year-over-year to 56.6 million. Although the first quarter is a traditionally slow season for us and the Coronavirus outbreak caused a certain amount of uncertainty in the marketplace, we were able to growing our mobile MAUs through effective measures.During the period, for example, we broadcasted more new top tier game, developed more premium eSports content, enhanced our collaboration with game developers and attract more high-quality streamers with growth potential. We also implemented more productive streamer guidelines which helped to augment total live streaming hours. This positive strength was offset by the temporary closure of Internet cafes during the pandemic which cause our PC MAUs to decrease in the first quarter. While the combination of these factors led to a slight decline in our total MAU, which were 158.1 million in the first quarter, compared to 159.2 million in the same period of 2019.Coming to the second quarter, we have been able to maintain our growth momentum in mobile MAUs as we continue to refine our platform operations. Going forward, the mobile market will continue to be our strategic focus for user growth as we believe that it still has a tremendous growth potential. We plan to keep enhancing our eSport live streaming capability,…

Thank you Mao Mao. Hello everyone. I am very excited to announce that our total revenues in the first quarter of 2020 increased by 53% to RMB2.28 billion from RMB1.49 billion in the same period of 2019, exceeding the high end of our previous guidance range. In addition, during the first quarter of 2020, gross margin expanded to 21.3% fro 13.6 % in the same period of 2019. Net income increased to RMB254.5 million from RMB18.2 million in the same period of 2019 and adjusted net income increased to RMB296.9 million from RMB35.3 million in the same period of 2019.Now please allow me to provide you with some more details regarding our key financial metrics. Total net revenues in the first quarter of 2020 increased by 53% year-over-year to RMB2.28 billion, with RMB2.11 billion in live streaming revenues as well as RMB 165 million in advertising and other revenues. Live streaming revenues in the first quarter of 2020 increased by 56% to RMB2.11 billion from RMB1.35 billion in the same period of 2019. This increase was attributable to our ongoing optimization of interactive platform features which helped to further increase user streamer interactions as well as stimulate both the user's willingness to pay and payment frequency. As a result, our paying users in the first quarter of 2020 increased by 26.2% to 7.6 million from 6 million in the same period of last year.In addition, our continuous refinement of refinement of talent agency partnerships and event mechanisms have further boosted the revenue contribution from our platform's daily operations. Furthermore, the implementation of our operational refinement strategy for different segments also helped to improve our monetization efficiency across both gaming and non-gaming segments and further increased mid-tier streamer's income. Advertising and other revenues in the first quarter of 2020 increased by…

[Operator Instructions]. And the first question today comes from Lei Zhang of Bank of America Securities. Please go ahead.

[FOREIGN LANGUAGE]First, congrats on the strong results. And my first question is about user trend. Can you give us more color on the most user-related trend, post people resuming work? And secondly, wondering the COVID-19 impact to our game and non-game content. Thank you.

[FOREIGN LANGUAGE]Hi Lei. Thanks for your question. I will now help translate about the answers. Actually, in terms of your first question, according to data from our platform, out total MAUs and the average daily time spent by each active user have remained stable without any significant fluctuations since the gradual work resumption up in China in March. In particular, our mobile MAUs and user engagement were maintained at a high level. This is because users have formed good watching and using habits in our platform in the years of our platform's operation and also the development.And in terms of your second question. Although the first quarter is kind of a traditional slow season, we implemented productive guidelines to encourage more quality streamers which helped to augment the total live streaming hours. As we increase the amount of quality content on our platform, more users were attracted to our platform, especially from the mobile end. The user engagement level further increase as well.For our gaming segment, the epidemic resulted in an overall improvement of the user traffic in game industry, driving the growth of users for all popular game segments and also the new blockbuster game sectors on our platform during the period. Actually, during the first quarter, our gaming live streaming segment accounted of about 80% of the total viewership and overall revenue generated from the game live streaming also maintained its revenue growth trajectory.In terms of non-gaming segment, actual users and also total viewership have remained relatively stable in general during this epidemic to ensure the abundant production of high-quality content across all segments and satisfied users being preferred through proactive operational refinement. This also helped us in creating user engagement stickiness to our platform.Thank you. Operator, please address the next question.

Your next question comes from Brian Gong of Citigroup. Please go ahead.

[FOREIGN LANGUAGE]I will translate myself. Thanks, management, for taking my question. Congratulations for the solid results. Can management share the objective view on the competitive landscape in game live streaming industry? Any change on the competition from Bilibili and Kuaishou? Thanks.

[FOREIGN LANGUAGE]Thanks for your question. Since the first quarter, the industry's competitive landscape has not changed significantly. As a leading game live streaming platform. DouYu Continues to build our game-centric content ecosystem, energize our eSport community and explore other related areas such as game shops on Baidu. Since Kuaishou and Bilibili entered into the game live streaming industry, both user traffic and also the user traction have been boosted which also helped to raise the entire game live streaming market of Bilibili and benefited the industry's development.From a competition perspective, since the forbidden of streamers switching between platforms, the industry has remained a healthy competitive landscape. On top of this, our premium top and mid tier streamers resources helped us create a strong content barrier. Therefore, we have more advantage when competing with both existing players and also the new players in the industry. We will also take advantages of our professional products and premium content to increase our mobile user traffic and increase our competitive edge.Yes. Thank you. Operator, please address the next question.

Your next question comes from Thomas Chong of Jefferies. Please go ahead.

[FOREIGN LANGUAGE]Thanks, management, for taking my question. My question is about the revenue growth trend as well as the key factors in driving revenue growth? Thank you.

[FOREIGN LANGUAGE]Thanks for your question. The quarter-over-quarter increase in our live streaming revenue resulted from our ongoing improvement to interactive features which were made to increase user and also streamer interaction also the user's willingness to pay and the user payment frequency. In the first quarter of 2020, our quarterly paying users increased by 4.1% to 7.6 million from 7.3 million in the first quarter of 2019. ARPU also achieved around 7% quarter-over-quarter increase. Our refinement of operations across segments helped to improve each segment's monetization efficiency. We also enhanced our development of live streaming content diversification which improved the monetization efficiency and revenue contribution of our gaming segment. We increased our interactive functions, such as the streamer PK system which also aims to improve the monetization efficiency of our mid-tier streamers. Our development of monetization activities helped to increase revenue from daily sales-driven events on our platform also.Okay. Thank you. Operator, please help us address the next question. Thank you.

Your next question comes from Alex Poon of Morgan Stanley. Please go ahead.

[FOREIGN LANGUAGE]I will translate my questions. My question is related to the game streamers. First of all, can you share with us the risk of concentration of your top streamers? And second is, can you share with us your development strategy for game streamers in the future? And third is about how can you raise the monetization efficiency of the middle layer streamers? Thank you very much.

[FOREIGN LANGUAGE]Okay. Thanks for your question. As we mentioned before, we have signed three to five year contracts with the top 100 streamers already. Thus there will be a stable situation in the top streamers on our platform. Moreover, we still keep the strategy which is the top streamers contributing significantly to the premium content and the overall viewership while the mid-tier and long-tail streamers help us diversify our content offering and improve the monetization efficiency. By cultivating the new streamers and talent agencies, it will continuously provide valuable streamer resources to our platform. We have also taken several measures to improve our monetization efficiency of mid-tier streamers. We kept updating our latest functions to enhance our monetization capabilities. According to our efforts, the number and the quality of our mid-tier streamers kept increasing during the first quarter. For example, the total number of streamers with revenue above RMB10,000 per quarter have reached around 40% year-over-year growth.Okay. Thank you. Operator, please address next question.

Your next question comes from Daniel Chen of JPMorgan. Please go ahead.

[FOREIGN LANGUAGE]I will quickly translate myself. My question is on the PC MAU trend. So PC MAU seems to be declining on year-over-year and sequential basis in the first quarter. I am not sure if it's related to the COVID-19 or is there some other reasons for the decline? And how should we look at PC and mobile user growth in the next few quarters when the work resumes? Thank you.

[FOREIGN LANGUAGE]Thank you for your questions. Our PC MAUs declined in the first quarter which was mainly due to the closure of the Internet cafes during the epidemic, actually causing a reduction in Internet cafe PC users. Also, some Internet cafe PC users we have logged year changed their viewing preference to personal computers over to mobile phones during this period. This trend for our PC MAUs has been within our expectation.On the other hand, we actually maintained rapid growth in the mobile MAUs during the first quarter. Such growth actually was mainly driven by the increase in streaming hours, the launch of new quality games and also our continued deepened cooperation with game developers.Actually, if we look at about from the second quarter, actually, with continued addressing of our platform operation has allowed us to maintain a stable mobile MAU growth. Looking ahead, we think that we will continue to focus on the record growing of our mobile users. We also believe that, in general, mobile users actually have higher levels of engagement and also the pay ratio. And the mobile segment of the market, we think we will still have a large growth potential which should allow us to improve our penetration rates.Okay. So, thank you. Operator, let's address the next question.

Certainly. [Operator Instructions]. The next question is from Alex Liu of China Renaissance. Please go ahead.

[FOREIGN LANGUAGE]Thanks for taking my question. My question is on the gross margins. We saw the gross margin trend up pretty well in the first quarter of 2020. How should we think about the trend of revenue sharing, content cost and bandwidth cost down the road? Thank you.

[FOREIGN LANGUAGE]Yes. Thanks for your questions. We will maintain our revenue sharing policy at half-half split between platform and also streamer and talent agency. We will also offer certain incentives to streamers and also the talent agencies during the promotional periods. And therefore, actually, the overall revenue sharing ratio may fluctuate slightly quarter-over-quarter. As a game-centric live streaming platform, we will continue to invest more in content related to eSport games and also the potential blockbuster games, especially in the top eSport tournament and self-produced premium content.We will also invest more on the overseas streamers and new potential streamers with new game title launch. Overall, the content cost will show an upward trend in absolute value but it will keep a gradually decreasing share as a percentage of the total revenue. And also, as we look at about bandwidth cost, actually it's mainly due to the user growth on our platform which we will see looking forward, actually the bandwidth cost will increase as absolute value but it will still keep a rather decreasing trend as a percentage of the total revenue.Okay. Thanks for your question.

There are no further questions. This concludes our question-and-answer session. I will like to turn the conference back over to management for any closing remarks.

Okay. So thank you for joining our call today. We are looking forward to speaking with everyone next quarter.

The conference has not concluded. Thank you for attending today's presentation. You may now disconnect.