Ladies and gentlemen, good morning, and good evening. Thank you, and welcome to DouYu International Holdings Limited's First Quarter 2024 Earnings Conference Call. At this time, all participants are in the listen-only mode. We will be hosting a question-and-answer session after the management's prepared remarks. I will now turn the call over to the first speaker today, Ms. Lingling Kong, IR director at DouYu. Please go ahead ma'am.

Thank you. Hello everyone. Welcome to our first quarter 2024 earnings call. Joining us today are Mr. Mingming Su, Chief Strategy Officer; Mr. Hao Cao, Vice President of Finance; and Ms. Simin Ren, Vice President from the Interim Management Committee. You can refer to our first quarter 2024 financial results on our IR website at ir.doyu.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 Security Litigation Reform Act of 1995. These forward-looking statements are based on management current expectations and observations that involve known and unknown 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 this forward-looking statement. All forward-looking statements are expressly qualified in their entirety by the cautionary statement, risk factors, and details of the company's filing 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. I will now speak on behalf of our Interim Management Committee on business update and the call will be handed over to our Vice President of Finance, Mr. Hao Cao, for financial discussion. Presented with another period of challenging market conditions, in the first quarter we focused on leveraging our company's key strengths and improving our revenue structure by strengthening our cooperation with game developers. At the same time, we [bolstered] (ph) our streamlined operations by optimizing our organizational structure and user strategy. As always, we remain committed to fostering a healthy, vibrant, game-centric content…

Thank you, Lingling. Hello, everyone. While we continue to face challenges from both macroeconomic trends and evolving industry dynamics, we are focused on executing our long-term sustainable growth strategy. During the period, we continue to diversify and strengthen our revenue mix. Revenues from our innovative businesses continue to grow on sequential quarter basis, while we further streamline our operations and maintain our overall solid financial position. Now let's look at our financial performance in the first quarter in more detail. Our total net revenues decreased by 29.9% year-over-year in the first quarter to RMB1.04 billion. Livestreaming revenues were RMB0.8 billion, down 41.5% from RMB1.37 billion in the same period of 2023. Live streaming revenues were primarily impacted by soft macroeconomic conditions and a planned reduction in revenue generating promotions during the seasonally low first quarter. These factors notably affected some new enterprise-sensitive paying user spending, leading to a year-over-year decrease in total paying users. To address the soft consumer sentiment, we strategically maintained low-priced revenue product offerings to support stable spending habits among our existing paying users. While our approach was effective in this regard, it also impacted our quarterly ARPU, which declined by 24.2% to RMB238 from RMB314 in the same period last year. Conversely, advertising and other revenues increased significantly in the first quarter by 109.3% to RMB238.8 million, up from RMB114.1 million in the same period of 2023. The year-over-year increase was primarily driven by an increase in other revenues generated through other innovative businesses, such as our voice-based social networking service. Cost of revenues in the first quarter of 2024 decreased by 28.8% to RMB0.93 billion, compared with RMB1.31 billion in the same period of 2023. This cost reduction was largely based on 37.7% decrease in our revenue sharing fees and the content costs to RMB0.68…

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Lei Zhang from Bank of America Securities. Please go ahead.

[Foreign Language] Thanks, management, for taking my question. My first question is regarding the net loss in the first quarter. Can management share any update on the three-year margin outlook? And the second one is on the use of cash? Thank you.

Thank you for your question. As we noted amidst challenging macroeconomic dynamics, our primary focus remains on long-term sustainable growth by strategically adjusting our business operations. We stabilized our traditional businesses and refined our streamlined operations, while further exploring diversified revenue streams. In 2024, navigating heightened market competition and persistent macroeconomic headwinds, we have taken a more agile operational approach, driving growth momentum in our innovative ventures. At the same time, we have continued to adopt a disciplined approach to controlling costs. Looking ahead, due to macroeconomic and operating uncertainties, as well as revenue pressures from ongoing adjustments to a live streaming business, we expect to experience some deleverage on the profit level due to the downsizing of our revenue base. Despite these challenges, we will closely monitor market dynamics and our business trajectory, flexibly fine-tuning our strategies accordingly to ensure the company's solid advancements. Regarding financial planning, our financial standing remains exceptionally strong. As of the end of first quarter, we had cash and cash equivalents, restrict cash, and short-term and long-term bank assets of RMB6.76 billion. We strictly follow positive ROI standards and are prudent when allocating funds to new business ventures, fostering continuous innovation and business improvement. In the meantime, we prioritize our shareholders' long-term interests, consistently repurchasing shares to bolster market confidence. In short, we will consistently implement prudent financial strategies, optimize fund allocation, and further enhance our platform's diversified commercialization capabilities, elevating operating efficiency, and providing robust support for the company's long-term growth. Thank you.

Operator, next question, please.

Thank you. The next question is from the line of Thomas Chong from Jefferies. Please go ahead.

[Foreign Language] Thank you for taking my question. My question is about our MAU. Can management comment about the softness in Q1 and how should we think about the outlook? Thank you.

As we noted in our prepared remarks, the MAU decline in the first quarter was primarily due to competition from short video platforms. Their expanded live streaming gaming content offerings and aggressive periodic promotional campaigns impacted our MAU in the short term as some users' attention shifted. We took a deep dive into user behavior that revealed our MAU losses were predominantly from low-engagement users with relatively short viewing hours. These types of users frequently switch platforms and exhibit inconsistent payment habits. So despite the drop in MAU, we believe it had a minimal impact on our platforms or our monetization efficiency. Amidst the intense market competition, we responded proactively, harnessing our platform's strength and implementing multiple initiatives. We wrapped up cross-platform content collaboration and sharing, offering exceptional premium content to meet our users' diverse needs. We also depend our collaborations with game developers and promote game prompt sales, catering to the needs and interests of hardcore gamers. This fostered user engagement and satisfaction with DouYu, thereby fortifying and expanding our user base. While overall MAUs declined, our platform's core user behavior metrics remained relatively stable. While this demand in 2024, we are enhancing our core user operations to elevate user monetization efficiency. Our platform thrives on our core users. They are the backbone of our community, driving the platform's growth with their active engagement and high loyalty. Their consistent payment patterns are instrumental in driving our monetization. Notably, during previous game prompt marketing campaign, we noticed a significant demand among avid gamers for gaming services and a higher payment conversion rate with our more attractive gaming services. Thereby, we will offer products and services that align more closely with the needs of our core users in order to increase user commercialization efficiency. We anticipated potential downward pressure on mobile MAUs in 2024. Over the years, with our consistently agile operational approach, we have swiftly adapted to industry trends and involving user needs. We secured operational stability and efficiently adjusted and aligned our operations strategies to our core competitive strengths. Through the continuous rollout of new products and models and further advancement and scaling of these offerings, we are actively pursuing opportunities for DouYu's second growth engine. Thank you.

Thank you, operator, next question, please.

Thank you. Our next question is from the line of Ritchie Sun from HSBC. Please go ahead.

[Foreign Language] Thank you, management for taking my question. I have one regarding the cross-collaboration with other platforms. Can management share the progress made in terms of the content collaboration and the effectiveness seen so far and the expectation going forward. Thank you.

Hi, Ritchie. So as we noted last quarter, cross-platform content sharing has become the prevailing trend with the rapid evolution in content creation and distribution, there has been a parallel surge in user demand for more diverse and high quality content. During the quarter we focused extensively on content innovation and cross-platform collaborations, maximizing content utilization and distribution under fair and equitable terms. Through resource pooling and collaborations, we strategically worked with multiple platforms to tap into each other's high-quality streamer's assets. In the first quarter, we rolled out on a series of jointly-produced events across signature gaming segments of live streaming platforms. Instead of live streaming platforms competing for resources, these content collaboration models have proven highly effective in increasing the border-based traffic and user engagement across all of the participating platforms. Additionally, by harnessing cross-platform visibility, streamers reached border audiences and expanded their influence, increasing their commercial value. Our cross-platform collaborations also extended to more comprehensive platforms like through our deepened partnership with Taobao. In late 2023, we co-launched the gaming shopping bonanza with Taobao, selling and promoting game props and gaming merchandise. During the quarter, we co-created appalling content with Taobao in the Valorant segment, hosting Valorant challenges that were exclusively streamed on Taobao and DouYu, expanding the reach of our gaming content distribution. Right now, our cross-platform content collaborations are being piloted on a relatively small scale. Based on user feedback and data analysis, we will continue to refine and optimize our collaborators models. We believe that through these content collaboration, platforms can learn from one another and leverage each other's experiences, raising the bar for content [indiscernible] and catalyzing the healthy advancement of the gaming live streaming industry. Thank you.

Thank you.

Thank you. Operator, next question, please.

Yes, thank you. The next question is from the line of Raphael Chen from BOCI Research. Please go ahead.

[Foreign Language] Thanks, management, for taking my question. I want to follow up on our cooperation with game developers. Could mainly share the current revenue contribution from our cooperation with game developers and games already included in this model. Lastly, could we have any thoughts on the future plan? Thank you.

Commercialization collaborations with game developers are a natural extension of DouYu's content offerings. Gamers account for most of our core user base. So there is a building appetite for both game prompts and new game releases, which perfectly matches our platform's gaming content offerings. Our collaborations with game developers may lead to follow two approaches. The first centers on game prompt sales, primarily through collaborative promotional channels and gaming memberships. As we explained in our prepared remarks, revenue-wise, the collaborative promotional channels currently make minor contributions to our revenue. However, the GMV facilitated through our promotional channels was meaningful. The revenue generated from game memberships, which is included in other revenues, has substantially boosted year-over-year growth in other revenues since the second half of 2022. Over the past two years, we have explored promoting game prompt sales in several gaming segments, yielding valuable insights. We have currently established collaborations with game developers in over 10 games. The second approach involves updating our game promotion model. We are pivoting away from streamer-sponsored product placements and gradually transitioning to performance-based cost per-sell promotions. The CPS model covers new games across diverse genres, allowing streamers the flexibility to select which new game get promoted based on their expertise and audience preferences. Most of our users are gamers, leading to higher than market average gaming promotion conversion rates. With the release of more new games as we expand our collaborative channels, such as our co-promotion with QQ mini games, we will consistently amplify the scale of our game promotions, progressively extending the CPS model from top tier streamers to niche streamers within specific verticals. Additionally, as we actively advance collaborations with game developers, our other smaller innovative businesses are also demonstrating promising growth momentum and making notable revenue contributions. Overall, we expect advertising and other revenues to grow year-over-year in 2024 with the overall revenue share exceeded 20%. Thank you.

Thank you. That's all the time we have for questions. I would now turn the call back over to the management for closing remarks.

Thank you. On behalf of the Interim Management Committee, thank you all for joining our call tonight. We look forward to speaking with everyone next quarter.

Thank you. Thank you for joining our call. We look forward to speaking with everyone next quarter.