DOYU

Good morning and good evening, ladies and gentlemen. Thank you, and welcome to DouYu International Holdings Limited's Fourth Quarter Full Year 2024 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I will now turn the call over to the first speaker today, Ms. Lingling Kong, IR Director, DouYu. Please go ahead, ma'am.

Thank you. Hello, everyone. Welcome to our Fourth Quarter and Full Year 2024 Earnings Call. Joining us today are Ms. Simin Ren, Co-Chief Executive Officer; Mr. Mingming Su, Chief Strategy Officer; and Mr. Hao Cao, Vice President of Finance. You can refer to our fourth quarter 2024 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 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 these forward-looking statements. All forward-looking statements are expressly qualified in their entirety by the cautionary statements, 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. With that, I will turn the call over to our Co-Chief Executive Officer, Ms. Simin Ren, for business update. Ms. Ren, please go ahead.

In 2024, amid the dual challenge of a soft macroeconomic landscape and intensified market competition, we remained focused on strengthening our game-centric content ecosystem. We adopted more flexible operational strategies, swiftly adjusting how we allocate our resources and diversifying our revenue streams while rigorously controlling costs and expenses, achieving incremental progress. First, we were pleased with the early success of our revenue diversification efforts. The promotion ramp-up of our voice-based social networking business and game membership services drove revenues from our innovative business, advertising and others to reach 28% of our total revenues for the year, marking a 63.6% increase in revenue contribution year-over-year. This growth partially offset the decline of our livestreaming revenues. Second, we continued to drive cost optimization. We proactively cut back on inefficient business and fine-tuned the compensation structure for streamers, reducing our content cost by 19% year-over-year. Additionally, by streamlining our business flow and aligning our staff structure, we achieved a 17% year-over-year decrease on -- in sales and marketing, research and development and general and administrative expenses. Third, we considerably bolstered shareholder returns. Drawing on the company's historical cash surplus and future plans, we declared 2 special cash dividends totaling USD 600 million on -- one in July 2024 and a second in January 2025. This distribution highlights our commitment to rewarding shareholders and also reflects our confidence in the company's stable growth potential over the long term. In addition, we continued to enhance our platform's ecosystem governance, strengthening compliance standards and fostering a healthy content and consumption ecosystem to support long-term sustainable development. Before diving into our 2025 growth plan, I'd like to share a brief snapshot of our performance in the fourth quarter. In the fourth quarter of 2024, our mobile MAUs were 44.5 million, increasing 5.9% quarter-over-quarter and decreasing 13.9% year-over-year. The year-over-year decline remains largely a result of the evolving gaming video content industry dynamics. However, the quarter-over-quarter increase exceeded our expectations and shows the benefits of our content-driven growth strategy. Our platform's content innovation and operational activities have consistently drawn in and retained high-quality users with this quarter's sequential MAU growth, led by 3 key drivers: first, stronger content partnerships; second, broadcast of mainstream international official tournaments and related operational activities; and third, more frequent game promotions that improved market awareness. Overall, despite short-term pressure on the platform's user base, we have been focusing resources on strengthening our core user base at the same time promoting our new business ventures, particularly game prop sales has helped us acquire new users. During the quarter, we broadcasted over 50 large-scale official tournaments. During the off season, we broadcasted nearly 40 self-produced eSport tournaments extending our cross-platform content co-creation partnerships. We rolled out collaborative events across diverse game segments. For example, the Honor of Kings [ Thunder Glory Cup S2 ], which we co-produced with multiple content partners featuring multiple top professional players from different platforms further strengthened its IP recognition. In addition, we gradually rolled out diverse self-produced tournaments for Valorant featuring professional teams and streamer communities, effectively maintaining high activity levels. Moreover, we tailored tournament production to align with streamer resources, new game launches and their unique gameplay characteristics. A notable example is the [ DouYu Golden Rush Cup for Delta Action ]. By implementing cross-platform content sharing, we effectively enhance the tournament's visibility. Beyond gaming content, we launched an array of entertaining annual events around the year-end holiday season, enriching the platform's content ecosystem and successfully maintaining user engagement. Moving on to monetization. Our total number of paying users in the fourth quarter was 3.3 million with a quarterly ARPPU of RMB 246. The year-over-year decline in paying user was partly caused by macroeconomic headwinds, leading to a continued contraction in the spending willingness of transient users on our platform. More importantly, we proactively adapted our user acquisition strategy, scaling back high-cost initiatives, such as cash subsidies. While these activities typically attract users in the short term, they fail to drive sustained user spending and drive up our operational costs. The total number of paying users remained stable quarter-over-quarter, highlighting the incremental progress of our adjusted user operations strategies and successfully stabilizing the spending patterns of our core users. We also launched products under a tiered pricing model for our core users to help promote our membership system with premium benefits and gaming product, increasing their payment frequency. For the broader user base, we promoted pricing-friendly revenue-generating product. Combined with the diverse game content and our platforms incentives and benefits, these strategies boosted user engagement, and we maintained our overall paying user base. Despite a year-over-year decline, our quarterly ARPPU slightly increased quarter-over-quarter, validating the effectiveness of our refined strategies. Furthermore, our innovative business continued to grow in the fourth quarter, gaining initial moment of and scalability. As we advanced our game prop commercialization initiatives, we consistently refined our strategy capitalizing on key gaming milestone and exploring additional marketing scenarios. For example, we integrated offline content with online sales to further encourage users' willingness to spend. Meanwhile, our voice-based social networking business expanded rapidly driven by our well-structured product design, effective recruitment mechanism and high-precision user targeting. Overall, in 2024, more intense industry competition and weaker consumer spending leads to a contraction in our total net revenues for the year. These factors place greater pressure on allocating our fixed cost, resulting in decreased gross margin and increased net loss. In light of this, the company's core strategy for 2025 will center on cost reduction, efficiency improvement and narrowing losses, emphasizing 3 key areas to improve our structure. First, we will reinforce our revenue resilience by unlocking monetization opportunities within our niche game ecosystem, advancing the commercialization of new business ventures. We will ramp up product innovation and marketing around game props, enhance AI capabilities and user conversion efficiency for our voice-based social networking business and continue to increase the revenue contribution from our innovative business. This will reduce our dependency on revenues from our livestreaming business and improve our ability to weather macroeconomic fluctuations. Our second priority is optimizing our cost structure to mitigate the adverse impact of scale inefficiencies. Over the past year, we performed an in depth ROI analysis of our content and tested multiple approaches to enhance returns. So far, the results have been modest. Moving into 2025, our focus will be on adjusting fixed cost components, especially content costs, in order to improve gross margin. In terms of streamers resource management, since the third quarter of 2024, we have gradually adjusted the streamer compensation framework introducing performance-based compensation assessment matrix. This has allowed us to achieve a year-over-year reduction in streamer compensation cost. Nevertheless, given our current revenue size, streamer compensation costs still account for a large portion of our total revenues. In 2025, we will continue to optimize our streamer resources through ongoing adjustments, leveraging flexibility -- flexible contracting models. We will actively explore cross-platform content cooperation, unleashing streamer traffic and commercial potential while significantly reducing streamer compensation costs. In terms of acquiring official tournaments copyright, with more platforms broadcasting official tournaments in 2024, the typical traffic driven to our platform from official tournaments content gradually declined. Our historical data suggests that large-scale eSports events have not significantly boosted our revenue, and in some cases, may have had a negative effect. Although we experiment with direct monetization activities in 2024, such as promotion -- promoting game props in official tournaments live streaming channels, these initiatives did not notably improve the ROI for copyrighted content. In 2025, we will focus on acquiring official tournament copyrights with higher ROI potential and work with copyright holders to secure more advantageous pricing, optimizing our copyright cost. Additionally, we are ramping up our AI initiatives to drive efficiency. Our intelligent content review system continues to evolve with integrative advancement in large models, improving the accuracy of identifying risk content and shortening processing time. At the same time, our R&D center is applying AI-powered programming productivity tools, which enable content-based [ difference driving ] code generation, boosting overall R&D efficiency. In February, we completed the technical research and development of open-source models based on DeepSeek. We expect our development efficiency to increase as AI programming tools become more deeply integrated. Operationally, we will continue to focus on our core business, extending our AI capabilities across a broader range of business scenarios, optimizing costs by reducing efficiencies and further streamlining the workforce. These initiatives are designed to boost productivity, reduce operating expenses and free up more resources to grow and innovative within our core business. Naturally, these adjustments might help achieve cost optimization goals. But they might also lead to a noticeable decline in our user base and revenue for a period of time. Additionally, favorable macroeconomic dynamic may extend the time line for narrowing of a loss. We have developed an array of contingency plans to mitigate these challenges. This includes consolidating platform resources for more content collaborations to ease traffic pressure and trimming key costs to ensure margin improvement among others. We believe that these initiatives will narrow our net loss in 2025, securing financial stability through cyclical macro fluctuation while balancing business growth. With that, I will now turn the call over to our Vice President of Finance, Mr. Hao Cao, to go through the details of our financial performance in the quarter.

Thank you, Ms. Ren. Hello, everyone. In 2024, we continued to navigate challenges posed by macroeconomic headwinds and an evolving industry landscape. In response, our financial focus has been on revenue diversification, cost control and expense optimization. We made significant strides in diversifying our revenue structure with revenues from our innovative business, advertising and others increasing by 63.6% year-over-year to RMB 1.2 billion for the full year of 2024. However, both our gross margin and net margins were negatively impacted by an increase in overall revenue, coupled with relatively fixed cost components. Looking ahead to 2025, our top financial priority is margin improvement to restore our financial resilience. Let's take a closer look at our financial performance for the fourth quarter. Our total net revenues decreased by 12.3% year-over-year in the fourth quarter to RMB 1.14 billion from RMB 1.3 billion in the same period of 2023. The decline was primarily driven by a decrease in livestreaming revenues, which dropped by 28.4% to RMB 0.73 billion compared with RMB 1.02 billion in the same period of 2023. The ongoing macroeconomic softness and evolving user spending patterns were the key factors impacting livestreaming revenues. To address these challenges, we have continued our revenue strategy of focusing our core paying users, reducing new paying user acquisition promotions and prioritizing the promotion of more affordable product offerings to encourage consistent spending. As a result, we saw a year-over-year decline in both total number of paying users and our quarterly ARPPU, which decreased by 11.5% to RMB 246 from RMB 278 in the same period last year. On a positive note, our revenue diversification efforts are showing momentum. Innovative business, advertising and other revenues increased significantly in the fourth quarter by 47.2% to RMB 405.1 million up from RMB 275.2 million in the same period of 2023. The year-over-year increase was primarily driven by higher revenues from our voice-based social networking service and game membership service. With 8 consecutive quarters of growth in our innovative business, the contribution to total revenue from innovative business, advertising and others reached 35.7% in the fourth quarter, marking a significant milestone in our revenue diversification strategy. Cost of revenues in the fourth quarter of 2024 decreased by 8.8% to RMB 1.07 billion compared with RMB 1.17 billion in the same period of 2023. For comparison purposes, we reclassified certain costs related to our innovative business from other costs to revenue-sharing fees for the fourth quarter of 2023. After this reclassification, revenue-sharing fees and content costs in the fourth quarter of 2024 decreased by 9.3% to RMB 896.2 million compared with RMB 988.6 million in the same period of 2023. The decrease was primarily driven by a reduction in content costs as well as a decrease in revenue-sharing fees due to lower livestreaming revenues. However, this decrease was partly offset by increased revenue-sharing fees related to revenue growth in our innovative business. Bandwidth costs in the fourth quarter of 2024 decreased by 30% to RMB 70.3 million from RMB 100.5 million in the same period of 2023, primarily due to a year-over-year decrease in peak bandwidth usage. Gross profit in the fourth quarter of 2024 was RMB 69.8 million compared with RMB 126.2 million in the same period of 2023. The decline in gross profit was primarily driven by a faster decrease in livestreaming revenues relative to the cost of revenues, resulting in reduced gross margin efficiency. Gross margin in the fourth quarter of 2024 was 6.1% compared with 9.7% in the same period of 2023. However, we observed a slight quarter-over-quarter increase in gross margin, primarily due to decreased content costs. The sequential improvement in gross margin not only highlights our ongoing efforts to optimize content costs, but also reinforces our strategy for 2025 of continuously fine-tuning our cost structure to enhance gross margin. Sales and marketing expenses declined by 5.5% in the fourth quarter of 2024 to RMB 79.3 million from RMB 84 million in the same period of 2023. The decrease was mainly attributable to a decrease in staff-related expenses. Research and development expenses were reduced by 42.2% to RMB 34.2 million from RMB 59.1 million in the same period of 2023, again mainly due to a decrease in staff-related expenses. General and administrative expenses decreased by 10.4% in the fourth quarter of 2024 to RMB 71.7 million from RMB 80 million in the same period of 2023. The decrease was mainly attributable to reductions in staff-related expenses and provision for receivables and was partially offset by an expense related to our ongoing employee streamlining initiatives. Our loss from operations was RMB 183.5 million in the fourth quarter of 2024 compared with RMB 120.4 million in the same period of 2023. Adjusted loss from operations, which excludes impairment loss of goodwill and intangible assets, was RMB 108.1 million in the fourth quarter of 2024 compared with RMB 86.4 million in the same period of 2023. Our net loss for the fourth quarter of 2024 was RMB 163.7 million compared with RMB 62.2 million in the same period of 2023. Our adjusted net loss, which excludes share of loss in equity method investments, impairment loss of investments gains from fair value changes in long-term investments and impairment loss of goodwill and intangible assets was RMB 144.3 million (sic) [ RMB 68.8 million ] in the fourth quarter of 2024, compared with RMB 5 million in the same period of 2023. For the fourth quarter of 2024, basic and diluted net loss per ADS were both RMB 5.43, while adjusted basic and diluted net loss per ADS were both RMB 4.78 (sic) [ RMB 2.28 ]. As of December 31, 2024, we had cash and cash equivalents, restricted cash, restricted cash in other noncurrent assets and short-term and long-term bank deposits of RMB 4.47 billion or USD 612.1 million compared with RMB 6.86 billion as of December 31, 2023. The year-over-year decrease in cash balance was primarily due to the special cash dividend distribution of USD 300 million and USD 20 million share repurchase program, both of which reflect our commitment to returning value to shareholders while maintaining a healthy cash position. Looking ahead, we are focused on improving margins and achieving financial resilience. We will continue to refine our operational efficiency and pursue profitable growth, particularly by lowering our content costs and growing our innovative business. We are confident in our ability to navigate market conditions through the solid execution of our strategies and remain dedicated to creating long-term value for our shareholders. This concludes our prepared remarks for today. Operator, we are now ready to take questions.

[Operator Instructions] Today's first question comes from Nelson Cheung with Citibank.

[Foreign Language] So let me translate myself in English. I have 2 questions. The first question is regarding the new business growth drivers entering into 2025. Wondering if management can introduce on your audio business? And what is your expectation regarding the audio business and game props business as well? And then my second question is wanted to -- wanted management, wondering if you could share what's your plan on the future use of cash?

Thank you, Nelson. So I'm going to answer your first question. In 2024, revenue from innovative business, advertising and other increased by 36.6% year-over-year and accounted for 28% of our total revenue, which is a significant improvement from last year's 13%. Our voice-based social networking business and game membership program are the 2 key drivers of our revenue diversification strategy. In 2025, we plan to allocate more resources to our innovative business further propelling revenue growth. Let me briefly outline our voice-based social networking business. Our chat room live streaming and other voice-based interaction format bring users and immerse social audio experience. Streamers can interact with users in real-time within their chat rooms while users can engage by sending voice messages and joint voice chat with streamers and other participants. Additionally, users can express their appreciation and support for streamers by purchasing and sending virtual gifts, fostering stronger connections and stickiness between users and streamers and generating revenue for the platform. In terms of commercialization, our voice-based social networking business mainly generates revenue from virtual gift sales with a small portion coming from subscription-based membership services and virtual customization options. In 2022 -- sorry, in 2025, our voice-based social networking business will focus on 3 key areas. First, we will adopt more refined traffic distribution strategies to improve the efficiency of traffic utilization, specifically targeting higher user conversion rates. Second, we will integrate AI capability into the voice-based social networking scenarios to enhance social matching efficiency and overall user experience. Third, we will continue innovating product features and revenue-generating activities to expand user consumption scenarios and increase overall revenue. For our relatively established game prop sales, we will continue to advance the following 3 business models. First, we will partner with game developers on joint large-scale promotional campaigns to increase business visibility and draw in traffic from external channels. Second, we will extend the multi-platform marketing approach led by game developers to more streamers, encouraging them to engage in more commercialization ventures. Third, we will strengthen our game membership program by combining platform benefits and incentives with game props to drive product innovation. At the same time, we will expand the membership program to more gaming segments for continued revenue growth. Overall, in 2025, we expect revenue from innovative business advertising and others to remain a healthy growth trajectory and contribute approximately 35% of our total revenue.

Let me answer the second question regarding cash usage. Following the dividend distribution in February 2025, we had cash and cash equivalents, restricted cash and short-term and long-term deposits of RMB 2.24 billion as of the end of February 2025. In line with our overall business plans for 2025, we aim to substantially reduce our net losses. Given this, we believe the company maintains sufficient cash reserves to manage business fluctuations and support the orderly development of our business initiatives. Thank you.

Our next question comes from Ritchie Sun of HSBC.

[Foreign Language] We have tweaked our strategy for a while, and there have also been 2 large dividend payouts. So how should we interpret the long-term development strategy for the group going forward?

Thank you for your question. I think we outlined much of the background and direction of our operational strategies adjustments in our prepared remarks. To build on this a bit and given the evolving competitive environment and our current revenue scale, it is paramount for us to reevaluate the ROI of our business as a platform deeply engaged in the game-centric diverse content industry. So this strategy is not about a contraction, it's about reallocating our resources from inefficient initiatives to high-value business segments. The strategic steps we are taking will continue to strengthen the platform's core content advantages in niche segments and alleviate the pressure on our margins. Meanwhile, we continue to identify and go after opportunities that will grow our business and revenues. We are also prioritizing shareholder interests with our buyback program and the special cash dividend allocation totaling USD 620 million. Since 2024, we repurchased USD 20 million in share buybacks and we have issued 2 special cash dividends of USD 300 million each. The decision to distribute this special cash dividend was primarily based on the company's cash surplus and future cash utilization plans. We believe that cash dividends are the optimal way to improve the utilization of our surplus cash. Overall, I would summarize our trend as exchanging short-term operational adjustments for stable healthy growth. Further, particularly in 2025, we aim to improve margins by reducing content costs, streamlining our workforce and improving operational profitability. Then we plan to enhance our revenue mix by growing innovative business, building a healthy business ecosystem and striving for operational profitability. In the long term, we remain committed to fostering a vibrant game-centric content ecosystem focusing on differentiated operations for core users and continuously optimizing our diverse content. Thank you.

And our next question today comes from Raphael Chen at BOCI Research.

[Foreign Language] I'm just wondering the user and the financial impact of tournament procurement and the streamer strategic adjustments on our platform.

Thank you, Raphael. Regarding your question on cost restructuring, let me address copyrighted content and stream content separately. First, let's look at copyright content. We have been applying a flexible approach to acquiring copyright since 2022 that aligns with our company's development goals, historical ROI from copyright content and copyright fees. In 2025, our primary goal is cost reduction and loss narrowing based on mobile-focused operations. After thoroughly assessing the contribution of official tournaments to traffic, revenue and associated costs, we identified certain high-cost copyright tournaments that didn't meet our ROI standards. As a result, we decided to forego acquiring some copyright tournaments in 2025, where we couldn't justify making continued investment based on the elevated copyright fees and diminishing returns in incremental traffic growth. Much of our platform's traffic from these games have historically come from tournament users, mostly users on PCs, TVs and other large screens, which are less conducive to promoting and marketing our mobile business. Additionally, the potential for commercializing tournament traffic on a large scale was still limited. Since monetization mainly depends on redirecting tournament traffic to other content on our platform, the process was long and inefficient, leading to lower monetization efficiency. With this in mind, we prioritized more cost-effective tournaments such as Peacekeeper Elite, which boosted strong commercialization [ moment ] and the wildly popular King Pro League, which leads a border audience base. Our official content-driven activities around these 2 events have shown promising results. For example, we successfully promoted game props within the official Peacekeeper Elite live streaming channel, including marketing campaigns led by game developers and DouYu's game-specific membership program. By linking these gaming accounts and completing specific in-game and interactive tasks in the live streaming channels, users are rewarded for redeeming game props. This approach not only boosted traffic to tournament content, but also increased in-game engagement creating valuable commercialization scenarios for both our platform and game developers. Honor of Kings was similar as a mobile game with broader upheld across demographics and extensive official tournament content, it offers us upheld opportunities for derivative content creation and operations to convert tournament viewers into game content users more effectively. Furthermore, we have been in discussions with game developers to secure more favorable copyright pricing. At the same time, we are exploring ways to optimize ROI on copyrights through flexible partnerships. Based on these strategies, we expect that our 2025 full year copyright cost to decrease significantly year-over-year. We also recognize that the absence of copyright events in certain gaming segments could temporarily affect our platform's overall traffic. We will closely monitor the dynamic in gaming segment missing copyright tournaments with the goal of offsetting any traffic decline with a diverse range of self-produced content and platform-wide operational activities to help minimize the impact of overall engagement on our platform. Then let's turn to streamer content. The adjustment of streamer resources is a key initiative for optimizing the company's business efficiency in 2025 aimed at optimizing the cost structure, reducing fixed cost pressure and laying the groundwork for the company's long-term healthy growth. In line with our goal of significantly narrowing operational losses, we will be fine-tuning stream our resources and reducing streamer compensation costs to alleviate pressure on gross margin. These adjustments include adopting a more flexible streamer contracting models to fulfill leveraging streamer resources, actively advising -- advancing content creation and expanding content partners and models as we build on last year's cross-platform content creation partnership. While these refinements will impose short-term pressure on the business, we expect a clear decline in platform traffic as the adjustments are phased in. Accordingly, revenue from the live streaming virtual gifting might also face some pressure. Nevertheless, we firmly believe that this adjustment is a crucial step in the company's proactive effort to break free from inefficient operations, a necessary measure to facilitate our long-term growth. We will redirect resources towards cost-effective streamer assets, self-produced content and commercialization initiatives. These initiatives will improve content ROI and enhance gross margin in the long run. The development focus will be directed towards our innovative business, driving growth in revenues from new business ventures. We will focus on diversified monetization streams such as game prop sales, voice-based social networking services and other opportunities. With a refined revenue structure, improved gross margin and optimized operating expenses, we will achieve our goal of significant narrowing operational losses. At last, let's turn to the potential impact on our financials. Some adjustments such as those 2 copyrighted content will deliver immediate cost savings, while others like streamer adjustments is a relatively ongoing process. As these adjustments continue, we expect a noticeable year-over-year decrease in content costs, leading to a significant improvement in gross margin for 2025.

And our next question today comes from Thomas Chong with Jefferies.

[Foreign Language] My first question is about the G&A expenses. Can management comments about the sequential increase? And my second question is about the 2025 operating profit. Can management share about how we should think about the outlook?

Okay. Thank you for the question. We have been consistently working to optimize our operating expenses as we manage to reduce staff costs by streamlining our workforce. We also took a measured investment approach to marketing our innovative business. Overall, in the fourth quarter, our sales and marketing expenses, G&A expenses as well as R&D expenses all declined year-over-year. The quarter-over-quarter increase in G&A expenses was mainly due to the costs related to workforce optimization aligned with our business adjustments. Looking ahead to 2025, while our business adjustments may exert some pressure on revenue growth, we remain committed to optimizing our cost structure and controlling expenses to improve gross margin, enhance business efficiency and reduce operating expenses. We expect some improvement in our operating losses for 2025 as compared to last year. Thank you.

Thank you. This concludes the question -- that's all the time we have for questions today. I will now turn the call back over to management for closing remarks.

Thank you. On behalf of the management, thank you for joining our call today. We look forward to speaking with everyone next quarter.

Thank you. This concludes today's conference call. You may now disconnect your lines, and have a wonderful day.

Good morning, and good evening, ladies and gentlemen. Thank you, and welcome to DouYu International Holdings Limited's Third Quarter 2024 Earnings Conference Call. [Operator Instructions]

I would now turn the conference over to the first speaker today, Ms. Lingling Kong, IR Director at DouYu. Please go ahead.

Thank you. Hello, everyone. Welcome to our third 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 Interim Management Committee.

You can refer to our third quarter 2024 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 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 these forward-looking statements.

All forward-looking statements are expressly qualified in their entirety by the cautionary statements, 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.

I will now speak on behalf of our Interim Management Committee on our business update. The call will then be handed to our Vice President of Finance, Mr. Hao Cao for financial discussion.

In the third quarter, we stayed closely aligned with market dynamics and proactively adopted our operational strategies. First, we focused on maximizing our core competitive edge to enhance our commercialization capabilities and diversify our revenue stream. In addition, we further refined our business model and optimized our resources to reduce expenses. While solidifying our fundamentals, we continued to systematically invest in our streamer resources and new initiatives, further enriching the premium content and gaming service line across our platform. All these initiatives reinforce our platform's game-centric content ecosystem.

In the third quarter, our mobile MAUs were 42.1 million, a decrease of 18.6% year-over-year. We are seeing increased competition from short video platforms, particularly during the peak summer season when these platforms ramped up their user acquisition promotions. Our data analysis continue to indicate that user attrition was predominantly from low-frequency users with short video hours and low stickiness. Despite certain short-term pressure on our user base, the engagement patterns of our core user group, especially their viewing hours and activity levels, remained relatively stable, thanks to our consistent and strategic content operation optimization. Moreover, our gaming commercialization ventures have been actively drawing in fresh users and reengaging active ones, fostering a more vibrant gaming ecosystem.

During the quarter, we broadcasted nearly 30 large-scale official tournaments, including the LPL Summer split, the KPL and CFPL Summer tournaments, the PEL Spring tournament, the CS: GO Blast Fall tournament and the eSports World Cup, among others. Capitalizing on this official event broadcast, we regularly rolled out innovative derivative content.

For example, during the eSports World Cup, we initiated targeted activities across gaming segments aligned with EWC events. curating distinctive content tailored to highlight our streamers' individual styles. This included a mix of streamer vlogs paired with live streaming, outdoor shows featuring streamers with event commentary, streamer coaching and celebrations for [ champion ] streamers. Through these activities, we enriched the user viewing experience and fostered more robust engagement between streamers and their audiences.

Additionally, we have been actively expanding our gaming event content portfolio. Recognizing our users' enthusiasm for hardcore eSports titles, we exclusively broadcasted the CS: GO XSE Pro League this quarter, enriching the professional gaming content lineup for shooting game enthusiasts. With our self-produced content, we broadcasted close to 80 self-produced eSports tournaments during the quarter. We expanded our core platform content co-creation partnerships. Leveraging our platform's unique assets, we launched an array of collaborative tournaments across official event cycles spanning a broad spectrum of gaming segments like League of Legends, King Pro League, CrossFire and Teamfight Tactics as well as DnF Mobile.

Another standout was our League of Legends event, the [ Legendary Cup ], known for bringing veteran streamers and seasoned professional players together over the past decade and innovative play format featuring a [ ban exception ] card, all while preserving streamers' distinctive play styles. This dynamic and engaging tournament format garnered enthusiastic user feedback, sparking widespread discussion and engagement. It not only sustained the buzz and appeal of our earlier collaborative tournaments, but also facilitated user increased engagement, elevated streamer visibility and breathed new life into our gaming segment.

Blockbuster new games also bolstered our gaming ecosystem. With the high-profile launch of the much anticipated Black Myth: Wukong in August, we rolled out promotional incentives and tapped into our robust network of PC game streamers to deliver exceptional streaming content. Thanks to the games' immense popularity, numerous streamers spontaneously took to live streaming, dramatically boosting the content supply during the initial launch phase. To expand on streamer content, we rolled out waves of event-driven content like gaming strategies and interactive challenges, which boosted user reengagement and drew in new users, elevating the overall user activity across our platform.

We have long been committed to optimizing our platform's content ecosystem by acquiring official tournament copyright, signing top-tier streamers and innovating self-produced content. Each piece aims to provide users with high-grade content and viewing experience. With the shifting macro dynamics and revenue pressure on the platform in mind, we needed to maintain adequate investments in premium content while simultaneously enacting new cost-saving strategies by improving content efficiency.

To begin with, we enhanced the commercialization of our gaming event content. We have continually deepened our collaborations with game developers, harnessing game resources to explore and stage more diverse marketing initiatives. During the quarter, we continued to promote our game-specific membership program during the PEL official tournament. We also offered time-limited game promotions during broadcasts of official CrossFire events.

In addition, we executed similar game commercialization initiatives in our self-produced events, such as the DouYu [ Commentary ] Cup and the collaborative event [indiscernible] Cup, both in the CrossFire gaming segment, all of which had successful outcomes and boosted our gaming content commercialization efficiency.

We also focused on enhancing our streamer management efficiency to reduce costs, which promoted us to refine our streamer management strategy. First, we performed an in-depth ROI analysis for our existing streamers and modified their compensation assessment criteria. This new approach emphasized live streaming content quality and commercialization capabilities, motivating streamers to actively engage in more commercialization programs while pursuing their creative endeavors. So far, we have noted an uptick in the ROI for streamers after implementing the updated assessment criteria.

Second, our summer recruitment campaign for streamers successfully attracted new streamers. By widening the recruitment scope, diversifying recruitment channels and improving streaming incentives, we notably increased the daily average number of streams in the third quarter compared to June's daily average, coupled with substantially enhanced streamer retention rates. Overall, the ROI from our streamer recruitment initiatives was higher than expected.

Moving on to commercial monetization. Our total number of paying users in the third quarter was 3.4 million with a quarterly ARPU of RMB 237. The year-over-year decline in paying users was caused by prolonged macroeconomic challenges and our strategic decision to scale back promotional activities and incentives that carry high operational costs. These initiatives were unlikely to result in sustained spending by the users they attracted as these users typically have low stickiness to our platform, consequently leading to low ROI and higher operational costs. The number of paying users remained stable quarter-over-quarter as we focused on maintaining our core users' spending habits.

To address the macroeconomic impact on users' willingness to spend, we introduced more budget-friendly paid products tied to platform rewards and game props, while continuously promoting traditional affordably priced revenue-generating products. This approach encouraged gamers' diversified spending and helped maintain the overall spending patterns of our paying users. As a result, while quarterly ARPU was down year-over-year, it remained relatively stable quarter-over-quarter.

During the quarter, we deepened our commercialization collaborations with game developers, consistently promoting game prop sales through various models.

The first model was a seasonal sales-driven approach based on collaborative promotions. We worked closely with game developers on large-scale promotional initiatives featuring DouYu's top-tier streamers. Our promotional strategy prioritized fun and appealing marketing initiatives as well as our platform incentives and benefits. We also harnessed cross-platform marketing channels to maximize our reach. Since piloting this sales-driven promotional model in late 2021, we have successfully attracted substantial external traffic and boosted gaming users' impression of DouYu's game prop offerings. Whenever a similar promotion takes place, gamers associate it with DouYu's initiatives, successfully positioning our platform as the to-go destination for game prop purchases and setting the stage for rolling out our diversified game prop sales models in the future.

The second model is DouYu's game-specific membership program. We established long-term partnerships with game developers to market game props. Our membership offerings integrated game props with platform incentives, aligning seamlessly with our streamers' marketing style and the needs of our users. Since its launch in the second half of 2022, this model has consistently driven stable revenue growth.

The third model featured a multi-platform marketing approach led by game developers. Game prop stores were set up by game developers and embedded with links in our partnered live streaming channels. By leveraging our platform's content promotion and streamers' outreach efforts, we drew users into streamers' channels where they could click links to access game prop stores and complete their purchases. This promotional model standardized streamer participation and better facilitated streamer engagement, bringing shared revenue opportunities for both streamers and the platform from game prop sales.

In general, within these 3 models for game promotions, we strategically planned our marketing initiatives to capitalize on the timing of game updates, new prop launches, festivals and seasonal events, increasing our game prop marketing visibility while expanding our diversified revenue streams.

Moving forward, we will replicate these models for game prop promotions through a more comprehensive selection of gaming content scenarios, further reinforcing the commercialization capabilities across our platform.

In summary, we proactively navigated various challenges during the third quarter, steadily advancing our revenue diversification strategy while reducing costs through adopted operational strategies and optimized resource allocation. We pursued balanced growth across traditional and new business segments, strategically allocating corporate resources to secure solid business fundamentals while consistently investing in new ventures with promising growth prospects.

Each of these steps was underpinned by our commitment to our long-term development strategy for cultivating a vibrant, diverse game-centric content ecosystem. We believe these initiatives position us well to overcome short-term challenges and lay a solid foundation for the company's long-term sustainable growth.

With that, I will now turn the call over to our Vice President of Finance, Mr. Hao Cao, to go through the details of our financial performance in the quarter.

Thank you, Lingling. Hello, everyone.

This quarter, we focused on strengthening our new revenue streams and tightening cost control measures in line with our long-term development strategy. Despite a challenging macroeconomic environment, our revenue diversification efforts have already shown a promising growth trajectory.

Let's take a closer look at our financial performance for the third quarter. Our total net revenues decreased by 21.8% year-over-year in the third quarter to RMB 1.06 billion. However, supported by increased revenue contribution from our innovative business, we achieved a 3% quarter-over-quarter increase in our total net revenues, making our first sequential growth in the past 8 consecutive quarters.

Live streaming revenues were RMB 0.75 billion, down 34.7% from RMB 1.15 billion in the same period of 2023. Prolonged macroeconomic challenges and shifts in user spending behavior primarily impacted live streaming revenues. In response, we continued to scale back paying user acquisition promotions and provide more affordable product offerings to promote ongoing spending from our existing paying users. As a result, there was a year-over-year decline in both the total number of paying users and our quarterly ARPU, which decreased by 22.5% to RMB 237 from RMB 306 in the same period last year.

Meanwhile, our efforts to enhance our innovative business segment delivered continued growth. Innovative business, advertising and other revenues increased significantly in the third quarter by 49.4% to RMB 311 million, up from RMB 208.2 million in the same period of 2023, contributing 29.3% of our total revenue. The year-over-year increase was primarily driven by increased revenues from our voice-based social networking service and game membership service.

Cost of revenues in the third quarter of 2024 decreased by 14.1% to RMB 1 billion compared with RMB 1.17 billion in the same period of 2023. These cost reductions were largely due to a decline in our revenue sharing fees and content costs, which dropped 6.2% to RMB 0.87 billion from RMB 0.93 billion in the same period of 2023. Revenue sharing fees deductions were largely from decreased live streaming revenues, which were partially offset by increased revenue sharing fees related to increased innovative business. In addition, the decrease in content costs primarily came from improved cost controls in streamer payments.

Bandwidth costs in the third quarter of 2024 decreased by 32% to RMB 72.2 million from RMB 106.1 million in the same period of 2023, primarily due to a year-over-year decrease in peak bandwidth usage.

Gross profit in the third quarter of 2024 was RMB 60.8 million compared with RMB 192.4 million in the same period of 2023. The decline in gross profit was primarily due to live streaming revenues decreasing faster than the cost of revenues, resulting in reduced gross margin efficiency. Gross margin in the third quarter of 2024 was 5.7% compared with 14.2% in the same period of 2023.

In line with our strategic initiatives to streamline our operations, we reduced staff-related expenses across the board, leading to a 23% year-over-year decline in total operating expenses. Breaking this down further, sales and marketing expenses declined by 11.9% in the third quarter of 2024 to RMB 79.3 million from RMB 90 million in the same period of 2023. Research and development expenses were reduced by 42% to RMB 43.2 million from RMB 74.5 million in the same period of 2023. General and administrative expenses decreased by 18.7% in the third quarter of 2024 to RMB 41.5 million from RMB 51 million in the same period of 2023.

Loss from operations was RMB 94.2 million in the third quarter of 2024 compared with RMB 8.8 million in the same period of 2023.

Net income for the third quarter of 2024 was RMB 3.4 million compared with RMB 76.4 million in the same period of 2023.

Adjusted net loss, which excludes share of loss or income in equity method investments, gain on disposal of investment and impairment loss and fair value adjustments on investments, was RMB 39.8 million in the third quarter of 2024 compared with an adjusted net income of RMB 71.9 million in the same period of 2023.

For the third quarter of 2024, basic and diluted net income per ADS were both RMB 0.11 while adjusted basic and diluted net loss per ADS were both RMB 1.32.

As of September 30, 2024, the company had cash and cash equivalents, restricted cash, restricted cash in other noncurrent assets and short-term and long-term bank deposits of RMB 4.38 billion or USD 624.7 million compared with RMB 6.86 billion as of December 31, 2023. The decrease was primarily due to our special cash dividend distribution of USD 300 million and USD 20 million allocated to the share repurchase program.

Finally, I would like to update you on our share repurchase program. At the end of last year, we announced our 2024 share repurchase program for up to USD 20 million. As of September 30, 2024, we have completed the program, repurchasing an aggregate of USD 20 million in ADS under this program.

Looking ahead, we are committed to navigating macroeconomic challenges and a shifting business landscape with resilience and agility. We will continue to use our new revenue streams to drive growth and sharpen our focus on cost efficiencies to mitigate near-term financial pressure. By pursuing new growth opportunities and reinforcing our fundamental strengths, we aim to support sustainable development of our platform while delivering enduring value for our stakeholders.

This concludes our prepared remarks for today. Operator, we are now ready to take questions.

[Operator Instructions] Our first question comes from Lei Zhang of Bank of America.

My question is mainly regarding your live streaming business. And how should we look at the future growth of live streaming business and any strategic change here?

Thank you for your question. As discussed earlier, ending 2024, we faced 2 key challenges: fierce market competition and a softer macroeconomic environment, both of which have impacted our platform's traffic and revenue. The decline in traffic was mainly due to persistent market competition as short video platforms aggressively stepped up their promotions of gaming content and gaming services during the summer vacation, accelerating user trend, in particular by low-frequency users. As a result, our mobile MAU for the third quarter decreased both year-over-year and quarter-over-quarter.

On a related note, the scale of our revenue was mainly impacted by the macroeconomic sluggishness with a notable drop in paying users' willingness to spend on live streaming virtual gifts, placing continued pressure on revenues from our traditional live streaming business. To tackle these challenges, we actively adapted our operational strategies.

On the traffic side, we have been consistently adjusting our user acquisition strategies based on market competition and evolving user habits. For example, in 2021, recognizing the maturing market and established gamer base, we put an end to the purely channel-driven customer acquisition approach at a relatively earlier stage. By 2023, we took a further step to scale back investments in low-ROI marketing initiatives. Rather than solely chasing user growth, we placed a strong emphasis on retaining our core users. We further upgraded this user strategy in 2024, focusing on maintaining core users and improving user operational efficiency, which all aim at ROI enhancement.

This involves increasing the appeal of our platform's content offerings, retaining and attracting users through distinctive premium content and diversifying user traffic monetization channels to offer a variety of content consumption scenarios, including through game props and other engaging offerings. We also upgraded our content strategy. We continued to enhance our different content metrics enriching official tournaments and innovating our derivative content.

Based on the content consumption patterns of our hardcore users, we tailored niche content targeting their needs, reinforcing our leading edge in these gaming segments. Additionally, we actively advanced resource sharing partnerships in cross-platform content collaborations, enhancing both the depth and breadth of our alliance. Amid fierce market competition, we believe high-quality content and a healthy, vibrant content ecosystem are the foundation for sustainable growth.

Since content initiatives may not yield immediate results in the short term, our platform's traffic may continue to face competitive challenges for the foreseeable future. Nevertheless, our core users' consistent and stable content consumption behavior has afforded us more time and opportunities for exploring new ventures.

Regarding new ventures, leveraging our deep partnerships with game developers, our strategy mainly focused on launching diverse marketing products related to game props. We have long recognized our platform's reliance on revenue from live streaming, and we have made an array of attempts to diversify our revenue streams. So far, the most effective commercialization channel to align with our user base has been monetization initiatives that leverage game props.

Since late 2021, we have been actively engaging with game developers and implementing a phased approach, which has proven successful. The commercialization of game props is largely facilitated through content promotions with a small share tied to official event content and the majority driven by platform operations and streaming content.

With the implementation of multiple business models, we have established our platform as the preferred choice for users thinking to purchase game props. And we will consistently and methodically invest in new content and new ventures, seizing opportunities to drive renewed growth and prioritizing our platform for long-term development. Thank you.

The next question comes from Ritchie Sun of HSBC.

Can management elaborate in detail about the strategy to optimize our cost structure as well as the streamers' operations? And what are the detailed measures and goals and achievements?

Thank you, Ritchie. So to answer your question, let's first review our relatively fixed cost, specifically the content costs within our primary business expenses, which have constantly accounted for 20% to 25% of our total revenues. Our content costs include streamer compensation, copyright fees and costs associated with our self-produced content with the first two making up the bulk of our content cost. To optimize our content structure, we have implemented a series of adjustments to our content cost, including refining our streamer management strategies.

So let's get into the details. Firstly, we refined the control of copyright content cost. We dynamically evaluated the value of our platform's content through the lens of both traffic and monetization and adjusted our content strategy based on ROI. For example, in 2022, amid rising copyright cost of official tournaments, we adopted a selective purchasing approach, foregoing certain high-cost official tournaments. As price of these tournaments normalized in 2023, we resumed the strategy acquisition of the copyrights for key official tournaments. And then in 2024, navigating intensifying competition and industry shifts, we engaged actively with copyright holders to negotiate lower royalties for cost saving, exploring sustainable long-term commercialization models for copyrighted content. These initiatives directly reduced copyright costs and enhanced ROI for our copyrighted content.

And secondly, we optimized the cost of our self-produced content. By proactively balancing the supply of copyright events and our self-produced tournaments, analyzing the ROI for self-produced and PGC content and scaling back on low-ROI self-produced content, we effectively controlled our overall content cost. In 2024, embracing the trend of collaborative content creation and content sharing, we actively pursued cross-platform partnerships and integrating each of the parties' advantageous resources, with these enhancements, we delivered more high-quality content, amplified streamer visibility and lowered the cost of our self-produced content.

Second, we restructured our streamer compensation framework under our long-term exclusive contract with core streamers. The average base compensation for those signed in recent years has been relatively high. This has been particularly impactful during period of revenue decline for the company, resulting in a rising share of overall streamer compensation cost related to our revenue.

To improve the efficiency of streamer management and achieve better cost control, we have implemented a series of targeted adjustments. We conducted an in-depth ROI analysis for our existing streamers and revised their performance assessment criteria, placing greater emphasis on the quality of live streaming content and their ability to drive commercialization. We offered support by aligning platform resources with streamers' needs. We encouraged streamers to actively engage in more commercialization programs while creating high-quality content, taking part in collaboration with game developers, cross-platform content partnerships, new game promotions and game marketing, et cetera; all aimed at enhancing streamers' personal brand values and generating additional revenue for our platform. We have been gradually phasing in our adjustment to the streamer compensation system with ongoing improvements based on streamers' feedback to ensure a smooth transition to the new framework.

Fourth, we adjusted our approach to streamer contract renewal and recruitment. For streamers nearing the end of their contract, we renegotiated their compensation terms, primarily focused on lowering base compensation while elevating performance-based incentives. This strategy tiered streamer compensation to performance, fostering greater creativities and marketing effectiveness. Under the updated compensation framework, we comprehensively evaluated the signing cost and operational efficiencies of our streamers, negotiating and selectively renewing their contracts. In the meantime, we continue to recruit and nurture new streamers to inject fresh vitalities into our content offering. During their initial onboarding phase, we assessed new streamers' performance based on the ROI achieved through our resource support to better align streamer compensation with ROI.

So all these initiatives are designed to drive efficiency improvements and cost control through strategy adjustment and refined management. All will preserve the high quality and appeal of our platform content. We seek to secure the company's financial health through these measures, allowing us more time to adapt our business strategies to emerging industry shifts and to continue to deliver premium content and services to our users, thereby maintaining DouYu's leading position in the crowded live streaming market. Thank you.

The next question comes from Thomas Chong of Jefferies.

My question is about the GP margin. So we see the change of GP margin in third quarter. So how should we think about gross profit margin and also the profit for the whole year of 2024? And also with the adjustment of the operating strategies, so do we expect the profit improvement in 2025?

Thank you for your question. In the third quarter, the year-over-year decline in gross margin was still mostly due to the decrease in live streaming revenues. Revenue sharing fees and content costs as a percentage of revenue significantly increased year-over-year from 68.2% in the third quarter of 2023 to 81.8% this quarter.

First, to look at revenue share fees, revenue share ratio of live streaming business increased year-over-year, primarily driven by the increased incentives over the summer relating to user retention. In addition, revenue from our voice-based social networking business significantly increased year-over-year, leading to a substantial rise in relevant cost of revenues.

Then regarding content costs, the changes in relatively fixed cost within our live streaming business, such as copyright fees and streamer-based compensation, et cetera, did not align with the year-over-year shift in our live streaming revenues. Consequently, as live streaming revenues declined, this cost continued to weigh on our gross margin. While we have implemented diverse measures to optimize content costs and streamer compensation, the effect of our gross margin improvement remained modest. On a quarter-over-quarter basis, the increase in content costs as a percentage of revenue was primarily driven by higher copyright fees due to more copyright events being broadcasted during the summer.

Regarding bottom line, by continuing to control operational expenses, the company's net loss did not widen sequentially in the third quarter despite a sequential decrease in gross margin and reduced interest income. Specifically, our research and development expenses as well as general and administrative expenses continued to decline, driven by workforce optimization, while sales and marketing expenses slightly increased quarter-over-quarter, largely resulting from the promotional ramp-up for our innovative business during the summer.

In general, as we continue to refine the revenue mix, we have been taking a series of proactive measures to tackle the challenges posed by revenue decline. On the cost side, we managed content costs through a variety of strategies, including controlling copyright costs, balancing the supply of our self-produced tournaments, increasing partnership content and adjusting the streamer compensation structure. We also leveraged technological solutions to reduce bandwidth costs.

All these endeavors are aimed at minimizing the impact of relatively fixed costs on gross margin. However, restructuring cost is a gradual process and positive effects take time to materialize. In the near term, we aim to contain the extent of losses and refine our revenue cost structure through ongoing operational adjustments, steadily improving the company's financial performance over time. Thank you.

[Operator Instructions] Our next question comes from Nelson Cheung of Citibank.

My question is regarding the domestic new console TV game Black Myth: Wukong. Given the strong popularity of the title, can management share more details regarding the performance on DouYu platform? And how should we think of the future promotion and operation strategy for this type of game title?

Thank you for your question. So Black Myth: Wukong has become a breakout hit among both domestic and international gamers for its stunning graphics and classic journey to the vast narratives and innovative gameplay experience. As a highly anticipated single-player blockbuster, Black Myth not only amplified the appeal of China's single-player game, but also drove traffic growth on our platform.

On its launch day, 23% of all streamers who went live across the DouYu platform were those in the Black Myth segment, and viewers of Black Myth content [ comprised ] nearly half of our platform's daily active user base. Additionally, among our new and returning mobile users, 37% were drawn in by Black Myth, making the game our traffic engine for that day.

So to fully capitalize on its buzz, we partnered with the developer for Black Myth before it released, creating excitement for its debut through diverse promotions like downloading rewards, viewing giveaways and community discussions, et cetera. We also recruited streamers and rolled out streaming incentive plans, facilitating significant streamer participation with a wealth of content offerings, which drove a surge of interest on the release day.

For Black Myth, we employed a diverse content operation strategy and catering to different user needs. We offered speed running streams for viewers eager to quickly grasp the storyline while also supporting streamers who engaged in slower exploratory streamers, highlighting the intricate details of the game, enhancing user immersion and retention. This immersive streaming approach resonated particularly well with console gamers and traditional players, fostering deeper interactions through stream viewing and game experience sharing, and thereby elevating user stickiness to our platform.

This in-depth content consumption model underscore DouYu's differentiated advantages appealing to our core user base of hardcore gamers. Their engagement with game content is more profound and enduring with more frequent interactions with streamers, which benefits the development and refinement of our overall gaming ecosystem.

In addition, we initiated interactive activities such as game reviews and challenge competitions, continually encouraging community engagement and discussions to extend the game's popularity. We also shared created highlights and standout moments in short video from live streams within and beyond our platform, driving additional traffic growth.

While the excitement surrounding Black Myth as a single-player narrative game might be challenging to sustain in the long term, we proactively channeled users to more [Technical Difficulty].

Operator, are we still on the line?

Yes, you are connected. Please go ahead.

Yes, please continue.

Okay. So with our comprehensive and sophisticated content recommendation capability, we guided users from the Black Myth segment to other top-performing gaming segments such as classic PC games and other console gaming segments and further enhancing user retention.

For example, we encouraged streamers in these top-performing gaming segments to actively feature Black Myth in their live streams, providing them with traffic support and facilitating initiatives like collaborative live streams with other gaming streamers to boost content visibilities. As users assessed any streamers' content, they could further explore the streamers' distinct style, sparking new interest and gradually converting them into long-term users of our platform.

So in summary, Black Myth: Wukong delivered fresh content to our platform and boosted traffic growth in the short term. Harnessing this opportunity with our carefully created content and tiered content operations, we effectively directed this influx of traffic from the high-quality new title to other gaming segments, contributing to our platform's ongoing traffic retention. Even as the buzz of the new game close down, we expect to retain this user stickiness and activity, reinforcing the development of DouYu's stable, sustainable and diverse platform ecosystem.

At this time, we have no further questions. I will now turn back over to management for closing remarks.

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

Thank you. The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect your lines.

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

Thank you. Hello, everyone. Welcome to our second 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 Interim Management Committee. You can refer to our second quarter 2024 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 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 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 update -- 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 our business update. The call will then be handed over to our Vice President of Finance, Mr. Hao Cao, for financial discussion. In the second quarter, we undertook several initiatives under our strategy of fostering a healthy, vibrant game-centric content ecosystem. Mainly, we focused on harnessing our robust assets in top-tier streamers and premium content, and deepen our cooperation with game developers to explore more diverse and sustainable partnership models. At the same time, we worked closely with streamers to drive content innovation and more revenue-generating scenario. As we optimize our revenue structure, we are introducing premium content that is more resonate with user preferences and enriching our gaming service lineup. All of these initiatives serve to consistently elevate user experience and refine our platform's game-centric content ecosystem. In the second quarter of 2024, our quarterly average mobile MAUs were 44.1 million, a decrease of 12.3% year-over-year. The decline was primarily due to competition from short video platform. Our ongoing data tracking indicated that user attrition was predominantly from low-frequency users with short viewing hours and low stickiness. While this shift places short-term pressure on our overall user base, total user behavior has remained stable in terms of viewing hours and activity levels. We are joining in fresh users and reengaging in active ones by rolling out game commercialization programs in [waves] (ph), fostering a more vibrant ecosystem across our gaming segments. During the quarter, we broadcasted nearly 30 large-scale official tournaments, including the LPL Spring Split and MSI, alongside the spring tournament of KPL, PEL and [CS:GO BLAST] (ph) among others. Aligned with the strategy we introduced last quarter to refine our gaming event content operation, we ramped up our collaboration with game developers on promotional campaigns centered on game [props] (ph), enhancing user engagement and driving monetization. For example, we launched an area of special initiatives for our game-specific membership services during the PEL official tournament and offered time limited game prop promotions during QQ Speed's official tournament. The organic integration of gaming event content with game props has driven higher ROI of copyrighted content. Through game prop monetization, we are also elevating user interaction during livestreaming and in turn advanced our healthy vibrant gaming ecosystem. Regarding our self-produced content, we broadcasted over 50 self-produced eSports tournaments during the quarter. We continued exploring cross-platform content sharing collaboration, leveraging our unique streamer assets to [craft] (ph) high-impact collaborative tournaments across diverse gaming segments, including King Pro League, Dota 2 and VALORANT. If we look at the [PL Center] (ph) Glory Cup as an example, we enriched the KPL professional tournament experience with entertainment elements closely aligned with user preferences. This included enlisting popular call streamers for live commentary to boost engagement and hosting show matches, featuring professional teams and streamer face-off beyond official gaming events. This enhancement brought our users more captivating and enjoyable content, generating lively discussions. We also launched targeted self-produced events tailored to different gaming audience, including the Douyu Heroes Cup Season 5 for Teamfight Tactics, our signature Peacekeeper Elite [Mount Haruna] (ph) Cup, as well as the Valorant Cup, which we have held for fourth consecutive series. While managing large-scale gaming content, we also focused on refining our content operations within gaming verticals where we have a strong competitive edge. Harnessing our robust streamer network, the dedicated user base we've nurtured over the years and our extensive experience in year round operation, we unveiled a wide range of personalized content and initiatives, including self-produced events, PGC programs and in-game commercialization ventures. In the [billiard] (ph) segment, we leverage the momentum of this game's return to the domestic market by orchestrating engaging [iron cup] (ph) gaming events. This sparked substantial enthusiasm among streamers and users alike. Our initiatives boosted engagement across the community and enhanced streamer/user discussions, facilitating deeper cohesion community wide. In the Dota 2 segment, we capitalized on streamers' reach and impact to launch offline PGC variety shows that blended local scenes and culture IP. This innovative approach fully showcased local culture, amplified the program's appeal and fostered greater user engagement. In the Moonlight Blade segment, we strategically aligned games for promotions with streamer content through targeted marketing campaigns and active streamer participation. This approach increased the user engagement levels, promoting lively involvement and interaction. As a result, the campaign was a success. This innovative approaches to content operations not only sustained the enduring appeal of classic games, but also cemented engagement and user stickiness across our platform, raising new life into our community ecosystem. Streamers are crucial to our content ecosystem. While enhancing the efficiency of streamer management, we launched various streamer recruitment initiatives. First, we widened our recruitment scope to cover all gaming segments, eased entry [stress hosts] (ph) and added additional streaming rights and benefits. Second, we diversified our recruitment channels by conducting promotional activities on multiple external platforms, reaching a broader audience of game enthusiasts. Third, we improved streaming incentives by accessing streamer performance across multiple metrics, such as streaming duration and efficiency. We also introduced a tiered incentive system to motivate our streamers and increase streaming consistency. Overall, by increasing the content depth of top-tier streamers and improving the streaming frequency of mid-tier and [long-tail] (ph) streamers, we significantly enriched our content lineup, laying a solid foundation for refining our game-centric content ecosystem. Moving on to monetization. Our total number of paying users in the second quarter was 3.4 million, with a quarterly ARPU of RMB243. The year-over-year decline paying users was caused by prolonged macroeconomic challenges and our strategic decision to scale back promotional activities and initiatives focused on paying user acquisition. Our long-term data monitoring revealed that this initiative rarely resulted in sustained spending by the users they attracted, instead led to higher promotional costs. The number of total users remained stable quarter-over-quarter as we focused on maintaining our core user spending habits. To address the macroeconomic impact on users' willingness to spend, in addition to promoting traditional affordably-priced revenue-generating products, we introduced more budget-friendly paid products, tied to platform rewards and game props. This approach encouraged spending among gamers and helped to maintain the overall spending patterns of our paying users. As a result, while quarterly ARPU was down year-over-year, it remained stable quarter-over-quarter. In the quarter, we continued to deepen our commercialization collaborations with game developers. We recently rolled out DouYu's game-specific membership program in the League of Legends: Wild Rift. This offering was crafted to meet the characteristic and the needs of DouYu users. Highlighting the appeal of our platform benefits, exclusive game props and game prop discounts, we promoted this initiative through multiple channels across and beyond our platform and attracted the participation of more users. For games already backed by our commercialization collaborations, we have been experimenting with diversified promotional strategies aligned with game updates, new game prop rollouts and seasonal or holiday events to boost the commercialization efficiency. Moving forward, we aim to broaden our collaboration with more game developers, diversifying and advancing game prop commercialization avenues tailored to different gaming genres. Moreover, we have been expanding our partnership channels for game promotions. Our game center's integration with popular mini game platforms like QQ enabled us to refine our operations and promotions to better suit user interest, while earning a decent share of in-game purchases and advertising revenue. We are pleased with the impressive growth momentum in user engagement and relevant revenue since the debut of QQ mini games on our platform. In summary, during the second quarter, we have stayed the course. We refined streamer management and optimized content while steadily diversifying our revenue mix. Our achievements have confirmed that the effectiveness of our strategy is fostering a healthy game-centric content ecosystem. Amidst the changing macro dynamics and industry shift, we will keep our finger on the [indiscernible] and adapt our operational strategy to maximize DouYu's core competitive edge. We believe that by optimizing resource allocation, deepening collaborations with diverse stakeholders and consistently investing in new ventures with promising growth prospects, we are well-positioned to navigate short-term challenges and steadily advance our business, laying a solid foundation for the company's long-term sustainable growth. With that, I will now turn the call over to our Vice President of Finance, Mr. Hao Cao, to go through the details of our financial performance in the quarter.

Thank you, Lingling. Hello, everyone. This quarter, we focused on strengthening new revenue streams and enhancing cost control measures to advance our long-term development strategy, while also increasing shareholder returns. Despite the second quarter's tough macro environment, our revenue diversification efforts have already begun to yield positive outcomes. Let's look at our financial performance for the second quarter in more detail. Our total net revenues decreased by 25.9% year-over-year in the second quarter to RMB1.03 billion. Livestreaming revenues were RMB0.79 billion, down 37.2% from RMB1.26 billion in the same period of 2023. Livestreaming revenues were primarily impacted by challenging macroeconomic conditions, which prompted us to reduce promotional activities aimed at acquiring paying users and offer lower-priced revenue products to encourage consistent spending among our existing paying users. Consequently, we saw a year-over-year reduction in both the total number of paying users and our quarterly ARPU, which declined by 25.5% to RMB243 from RMB326 in the same period last year. Meanwhile, our accelerated exploration of new revenue stream produced encouraging results. Innovative business, advertising and other revenues, formerly known as advertising and other revenues, increased significantly in the second quarter by 80.7% to RMB242 million, up from RMB133.9 million in the same period of 2023. The year-over-year increase was primarily driven by an increase in revenues generated through our innovative businesses such as voice-based social networking service. Cost of revenues in the second quarter of 2024 decreased by 21.2% to RMB0.95 billion, compared with RMB1.2 billion in the same period of 2023. These cost reductions were largely due to a 18.1% decrease in our revenue-sharing fees and content costs to RMB0.8 billion from RMB0.98 billion in the same period of 2023. Revenue-sharing fees reductions were largely due to decreased livestreaming revenues, which was partially offset by the increase in revenue-sharing fees related to innovative business. Furthermore, the decrease in content costs primarily came from improved cost management in streamer payments and copyrighted content. Bandwidth costs in the second quarter of 2024 decreased by 33% to RMB79.6 million from RMB118.8 million in the same period of 2023, primarily due to year-over-year decrease in peak bandwidth usage. Gross profit in the second quarter of 2024 was RMB84.2 million compared with RMB188.9 million in the same period of 2023. The decline in gross profit was primarily due to decreased livestreaming revenues outpacing the reduction in cost of revenues. As a result, the disproportionate decrease in revenue led to margin compression. Gross margin in the second quarter of 2024 was 8.2% compared with 13.6% in the same period of 2023. Sales and marketing expenses declined by 11.5% in the second quarter of 2024 to RMB77 million from RMB87 million in the same period of 2023. The decrease was mainly attributable to a decrease in staff-related expenses. Research and development expenses were reduced by 29.4% in the second quarter of 2024 to RMB50.1 million from RMB71 million in the same period of 2023. The decrease was primarily attributable to a decrease in staff-related expenses. General and administrative expenses increased by 3.4% in the second quarter of 2024 to RMB48.5 million from RMB46.9 million in the same period of 2023. The increase was primarily due to increased expenses related to our employee streamlining initiatives. Loss from operations was RMB119.6 million in the second quarter of 2024 compared with RMB7.5 million in the same period of 2023. Net loss for the second quarter of 2024 was RMB49.2 million compared with net income of RMB6.8 million in the same period of 2023. Adjusted net loss, which excludes share of loss in equity method investments and impairment loss of investments, was RMB45.5 million in the second quarter of 2024 compared with adjusted net income of RMB61.4 million in the same period of 2023. For the second quarter of 2024, basic and diluted net loss per ADS were both RMB1.58, while adjusted basic and diluted net loss per ADS were both RMB1.46. As of June 30, 2024, the company had cash and cash equivalents, restricted cash, restricted cash in other non-current assets and short-term and long-term bank deposits of RMB6.56 billion compared with RMB6.86 billion as of December 31, 2023. Finally, I would like to update you on our commitment to shareholder returns. At the end of last year, we announced our 2024 share repurchase program for up to US$20 million. As of June 30, 2024, we had repurchased an aggregate of US$11.2 million in ADS under this program. Additionally, we declared a special cash dividend of approximately US$300 million in early July. Moving forward, we will remain proactive amid macroeconomic headwinds and changing business environment, responding with innovative revenue diversification initiatives and tighter cost and expense controls to overcome short-term pressures on our financial performance. By exploring new commercial pathways and strengthening our fundamentals, we aim to foster the long-term healthy development of our platform and consistently create value for our stakeholders. This concludes our prepared remarks for today. Operator, we are now ready to take questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Ritchie Sun with HSBC. Please go ahead.

[Foreign Language] Thank you, management, for taking my questions. How does management view the current macro challenges and changes and the impact on the operations? How would you assess these challenges in terms of the impact on our business fundamentals as well as financials? Thank you.

Thank you for your question. [At the present] (ph), we face two primary challenges, intense market competition and macroeconomic headwinds. Height in the market competition, particularly the surge of gaming content and services on short video game platforms, has drawn users with short viewing hours and low stickiness away from our platform. This pressured our MAU in the short term, as reflected in the year-over-year and the sequential MAU decline in the second quarter. Nonetheless, our core user base continued to demonstrate the stability. Our long-term data monitoring and analysis revealed that our core users' key metrics, like viewing hours and activity levels, remained stable, thanks to our year-long strategy to focus on fostering a game-centric content ecosystem. So, it not only features a variety of gaming content, but has also established a stronghold across diverse verticals, catering to the wider ranging preferences of both mainstream gamers and niche gaming fans. Our particular significance is our loyal user base in the PC and the console game segments, which remains highly engaged, thanks to our focused cultivation efforts. To stay competitive in the market, we will prioritize our core users and maximize our platform's advantages while also driven ongoing content innovation and operational optimization. On the content front, we will continue to building our distinct and different content metrics. Operationally, we aim to offer a greater variety of gaming services to maintain the virtuous cycle between core user stability and healthy content ecosystem. We have also been actively advancing cross platform of content sharing collaborations, including [indiscernible] our streamer access for content co-creation, new game promotions, commercial partnerships and game prop marketing campaigns. This content and services offerings not only cater to existing users depending engagement, but also draw in new users through innovative business approach. In terms of our second challenge, macroeconomic headwinds have noticeably affected our traditional livestreaming revenue, primarily due to reduced consumer willingness to spend. Starting last year, we refined our revenue strategy by phasing out revenue-oriented initiatives and the low ROI revenue-generation activities, which lead to the departure of some price-sensitive users. This year, we further scaled back on initiatives designed to boost the paying user numbers, resulting in a decline in paying users. In response, we rolled out budget-friendly products to support the payment habits of core paying users. As this revenue strategy [has matured] (ph), the number of paying user has stabilized, remaining within a consistent range over the past two quarters. To address the pressures of declining livestreaming revenue, we actively diversified our revenue mix, preemptively enhancing gaming services. Thanks to our platform's substantial base of average gamers and the high alignment between their needs and our game-related services, we have made significant strides in the commercialization of game profits. We are committed to actively promoting diversified revenue streams to enhance our overall business resilience to economic cycles. We have responded to macroeconomic dynamics by proactively and [flexibility] (ph) adjusting our operational strategies, consolidating our traditional business and expanding new areas to alleviate revenue pressure. Financially, we have implemented a series of operational measures, including optimizing resources allocation and strengthening cost control, to ensure financial stability. We believe that through the continuous creation and the growth of new content and product models, we can concentrate on the platform's long-term development and identify opportunities for our secondary growth engine. Thank you. Operator, please, next question.

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

I'll translate myself. Thanks, management, for taking my question. So, based on current competition environment, how's the stability of the streamers on our platform and any large investment on streamer resources in future? Thanks.

Thank you for your question. So, at present, DouYu's overall streamer assets remain stable. Competition for top-tier streamers in the livestreaming industry is ongoing. As user demand evolves and the industry develops, we continuously adapt our streamer strategies to address the competition for top-tier streamers. We maintain advantages in exclusive contracts, streamer training and operations. First, given our many years of experience in content operation within the gaming industry, our platform has accumulated a substantial pool of streamers, ensuring stabilities during their contract period. We also enhanced streamer content quality and efficiency through continuously refined operations. For streamers nearing the end of their contracts, we actively assess market conditions, operational strategies and signing costs and operational efficiencies before negotiating and selectively renewing the contracts. Second, we placed greater emphasis on streamers' refined operations, especially in niche game segment, DouYu, having grown alongside PC games, boosts deep streamer resources and a strong user base in evergreen game categories. By creating content and marketing activities tailored to the characteristics of these segments, we improved interactions between streamers and users, enhanced our community ecosystem and increased the stickiness of both streamers and users. In terms of streamer compensation, besides base compensation, we provided streamers with some resources and diverse income opportunities. We focused on game promotion and the sales of game props to provide streamers with more growth opportunities and earning potential, and this further solidified the stability of our top-tier streamers' resources in niche category. With the arrival of summer season, we also allocate more resources to streamer recruitment. Firstly, we revised our recruitment model, which previously focused on specific game categories. So, now, we no longer restrict streaming categories that's giving streamers more freedom to choose and experiment with different content. Second, we improved the reward mechanism, providing streamers with guaranteed income and resource support. By enhancing earnings and streaming experience, we aim to increase streamers' willingness to go live. Third, we established a clear streamer development path. Through a tiered task system, we identified potential streamers and designed growth paths for them using our platform resources. The results for the first series of our updated streamer recruitment initiatives was quite positive, and we will continuously refine our recruitment policies in the next series to attract more gaming enthusiasts. Additionally, we are continuously upgrading our streaming technologies and support tools to provide streamers with a better user experience. Our streamer big data [analyzer] (ph) system helped streamers accurately understand user needs and market trends, enabling them to optimize their streaming strategies and thus improving their livestreaming qualities and efficiency. We also offered more convenient content production tools that support intelligent editing based on streamer content, producing high-quality videos, images and [bullet charts] (ph). This enhanced streamers' content production efficiency and made content dissemination more effective. In the content industry, competition for streamer resources is long term and continues. We believe that by leveraging our platform's core resources and adjusting our operational strategies, we will continue to maintain a leading position of streamers in game livestreaming industry. Thank you.

The next question comes from Lei Zhang with Bank of America. Please go ahead.

[Foreign Language] Thank you, management, for taking my question. My question is mainly regarding margin. Can you share the driver behind year-on-year decline on second quarter's gross margin? And how should we look at full year gross margin and the overall margin trend? Thank you.

Thank you for your question. The second quarter's year-over-year decline in gross margin was mainly due to the decrease in livestreaming revenue. Although revenue-sharing fees have remained constant with the changes in livestreaming revenue and our revenue-sharing ratio has always stayed within a healthy range, the relatively fixed costs in livestreaming business, such as copyright costs and base compensation for streamers, did not decrease in line with year-over-year decline in livestreaming revenue. Therefore, the decline in livestreaming revenue put pressure on gross margin. While we have implemented a series of measures to optimize content costs and streamers' payments, the positive impact on overall gross margin has been relatively limited. In the face of macroeconomic and operating uncertainties, we have undertaken a series of measures to address the challenges posed by the decline in revenue while adjusting the revenue structure for 2024. On the cost side, we aim to alleviate cost pressure, so copyright control costs, increasing the co-creation of self-produced content, enhancing production efficiency and optimizing streamers' payments. On the expense side, we will continue to refine the company's organizational structure and optimize marketing strategies to strictly control operational expenses. Additionally, interest income is expected to decrease in the second half of 2024 due to decreased cash balances following dividend distributions, which will also impact our profitability in the second half of the year. As a result, it will be challenging for us to achieve net level breakeven for 2024. Looking forward, we will continue to refine our revenue structure, enhance operational efficiency and control costs to gradually improve the company's financial profile. Thank you. Next question please, operator.

The next question comes from Raphael Chen with BOCI. Please go ahead.

[Foreign Language] Thanks, management, for taking my question. Just wondering the estimated cash balance by the end of this year, and any cash usage [pecking order plan to show there] (ph)? Thank you.

Thank you for your question. As of the end of second quarter, we had cash and cash equivalents, restricted cash and short-term and long-term deposits of RMB6.56 billion. In the second quarter, we repurchased US$8.5 million in ADS, a significant increase compared to the US$2.7 million in ADS we repurchased in the first quarter, reflecting our enhanced share buyback efforts in the second quarter. To-date, aside from normal business operations, large cash expenditures have primarily been used for shareholder returns, including a US$20 million share repurchase plan and a special cash dividend of US$300 million at the end of August. This demonstrates the company's commitment to shareholder interest and our determination to provide reasonable returns to shareholders while ensuring the company's long-term development. Despite the aforementioned large cash expenditures, our overall cash balance remained healthy and is sufficient to support our business operations and development. We will continue to closely monitor market dynamics and business development trends, flexibly adjusting our strategies to ensure the effective use of our funds and related risk control. Meanwhile, we will continue to invest in our communities' ecosystem and new businesses. These investments not only helped enhance user experience and strengthen our platform's competitiveness, but are also key to the company's long-term sustainable development. Through continuous technological innovation and service optimization, we remain committed to fostering a more vibrant and healthy community ecosystem and promoting the rapid growth of our businesses, thereby building the company's enduring momentum and long-term success. Thank you. Operator, next question, please.

The next question comes from Nelson Cheung with Citibank. Please go ahead.

[Foreign Language] Let me translate the question myself. Thanks, management, for taking my question. Wondering if management can share the latest development plan and progress regarding the cooperation with game developers and your expectation on the revenue growth. Thank you.

Nelson, thank you for your question. So, we implemented a revenue diversification strategy in 2022, including commercial collaborations with game developers based on our gamers demand, recognizing streamers' substantial influence on gaming commercialization and the vast opportunities in this space. We continue to delve into new revenue-generating avenues within the game content value chain and have established two primary forms of commercial collaborations with game developers. Last quarter, we shared that game membership revenue from sales of game props contribute to our innovative business revenue growth. Within this segment currently covered by our game membership business, we have boosted revenues by enriched game prop categories, enhancing platform benefits and increasing market frequency. In terms of expanding into new game segments, we launched game membership services in the League of Legends: Wild Rift in mid-July. We promoted these new services in livestreaming sessions by distributing limited edition props and platform benefits based on the current game theme. The real props provided by game developers and promotions both on and off our platform attracted gamers' attention and interest, contributing additional revenue streams. In terms of the progression -- the progress with our game developer cooperation, the convenience of collaborative promotional channels allows us to quickly expand this business model. Although this model currently contributes only a very small proportion of revenue, we see gamers' strong demand for game props sales and the growth potential for this business. For example, Moonlight Blade, a game launched in 2016, is one of the first games for which we initiate commercial cooperation on game props. Through various forms of cooperation with game developers, we have updated our product offerings to enable users to place orders directly through the prop mall, optimizing the users' purchasing experience. And as a result, users' average prop consumption level through our channel is higher than that of other channels. In the Peacekeeper Elite game segment, which features our deepest cooperation with game developers, we launched our exclusive Peacekeeper Elite boutique store in the first quarter of 2024. This event generated over 3 million user orders within three days during livestreaming sessions. Furthermore, during the recent multiplatform boutique store campaign, DouYu shared the -- DouYu's share of the related GMV lead the industry, highlighting our operational advantages and commercialization efficiency in leveraging segment-specific content. Prop marketing has also enriched the gaming segment's content and activities, which further enhancing their exposure and attractiveness. And in the future, we plan to expand our game prop sales to more game segments, customizing exclusive promotion plans based on the characteristic of different games and user needs. These initiatives are designed to drive revenue growth in our innovators business and provide gamer with rich and more diverse game-related services. In addition to the commercial collaborations with game developers, our other innovative businesses are also progressing well and contributing to revenue. We are maintaining our year-over-year growth expectation for innovative businesses, advertising and other revenue, which we expect to account for over 20% of our total net revenue in 2024. Yes, I think that's it.

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

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

The conference has now concluded. Thank you for attending. You may now disconnect.