Ladies and gentlemen, good day, and welcome to the Bilibili 2019 Fourth Quarter and Full Year Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Juliet Yang, Senior Director of Investor Relations. Please go ahead..

Thank you, operator. Please note, the discussion today will contain forward-looking statements relating to the company's future performances and are intended to qualify the Safe Harbor from liability, as established by the U.S. Private Securities Litigation Reform Act.

Such statements are not guarantees of future performances and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion.

A general discussion of the risk factors that could affect Bilibili's business and financial results is included in certain filings of the company with the Securities and Exchange Commission. The company does not undertake any obligation to update forward-looking information, except as required by law.

During today's call, management will discuss certain non-GAAP financial measures for comparison purpose only. For definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the 2019 fourth quarter and full year financial results news release issued earlier today.

As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the Bilibili Investor Relations website at ir.bilibili.com. Joining us today on the call from Bilibili's senior management are Mr. Rui Chen, Chairman of the Board and Chief Executive Officer; Ms.

Carly Li, Vice Chairwoman of the Board and Chief Operating Officer; and Mr. Sam Fan, Chief Financial Officer. And I will now turn the call over to Mr. Fan who will read prepared remarks on behalf of Mr. Chen..

Thank you, Juliet. Thank you, everyone, for participating in our fourth quarter and full year 2019 earnings conference call. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen. 2019 was a transformative year for Bilibili, with remarkable and diverse growth to our content and user base.

We significantly enhanced our entertainment ecosystem and expanded our platform’s offerings beyond ACGs. While we remain the leader in online entertainment for Generation Z users, our platform is also beginning to be recognized as a mass market product with offerings that appeal to people across different generations.

Meanwhile, we continue to foster friendly, active, and sticky community with high engagement levels and retention rates making Bilibili an extremely unique and a competitive player in China's fast-growing entertainment industry.

During 2019, we affirmed you the growth as our key strategic focus and raised our MAU target for the next two years to RMB 220 million by 2021. I'm pleased to say we are on the right track to meet this exciting goal. We closed the year on a high note with our fourth quarter results forming a solid foundation for our two-year growth plan.

MAUs grew by 40% year-over-year, reaching a record 130 million users compared with 93 million in the fourth quarter 2018. Mobile MAUs grew at an even faster pace of 46% year-over-year, reaching 116 million users by the end of Q4. At the same time, community engagement is at all-time high.

Our DAUs increased by 41% year-over-year to 38 million, higher than our MAU growth rate, and users are spending an average of 77 minutes on our platform per day excluding gameplay time. These statistics once again demonstrate the high-quality growth we always aim to deliver.

As part of our growth strategy and brand campaign, we rolled out our first ever New Year's Gala, The Most Beautiful Night of 2019 to mark December 31 the turn of the decade. The four-hour entertainment showcase celebrated the coming of age for China's Gen Z, who are entering their 20s and 30s, deeply influencing our society and mainstream ideals.

The event was an immediate hit and has quickly become the most talked about New Year’s Gala in China. The playbacks have been viewed over 90 million times, generating nearly 3 million bullet chats, as well as massive media coverage.

The success of Gala not only exemplifies our profound understanding of young people's interests, but also impresses older generation born in the 1970s and 1980s, opening Bilibili to a much wider audience group. With this far reaching brand awareness of our company, 2020 is off to a good start, especially as we work to grow our brand on broader scale.

With our platform’s increasing influence among multiple generations and mass media, we take our social responsibility very seriously, especially during the recent Coronavirus outbreak.

Following the outbreak, we took immediate action to support and defend against the pandemic, including a donation of RMB 10 million and medical supplies to Wuhan, Hubei province. We also believe that disseminating timely and accurate information is crucial.

As such, we partnered with official media outlet CCTV News to provide 24/7 virus-related news and information.

In addition, we have partnered with over 60 top universities and education groups, including Beijing University, Shanghai [ph] University, and TAL Group to launch live and recorded open courses to support continued education for students, who are unable to leave their homes.

We also designated live broadcasting channel appointed by Shanghai Municipal Education Commission for K-12 students to continue their schooling. As the event progresses, we will continue to evaluate ways we can support our users during this time.

With the extension of the Chinese New Year holiday, hundreds of millions of people have stayed at home spending more time on the Internet. Bilibili had become many people's first choice for online entertainment. At the same time, we are seeing an elevation in content supply as people now have more time to create content.

Based on the increased time spent on our platform and user momentum we have seen so far, Q1 is shaping up to be one of the strongest first quarters in our corporate history. We are also improving our ability to monetize our growing user traffic. In the fourth quarter, the number of paying users doubled year-over-year reaching 8.8 million.

Our paying ratio also increased to 6.8% compared with 1.6% for the same quarter two years ago. Revenue per MAU was RMB 15.4 and the non-GAAP revenue per MAU was RMB 8.7, marking 24% and 83% increases from the same period in 2018, respectively.

We continue to see considerable potential to convert more traffic to paying users, bringing them into the proactive [ph] sticky community. Total revenue for the fourth quarter was also strong, once again beating the top end of our guidance.

Total net revenue for the fourth quarter were up 74% year-on-year, reaching RMB 2 billion, largely driven by our non-game business. Through our increased monetization and the diversified revenue streams, our gross profit margins have also come a long way from 13.8% in Q1 to 19.8% in Q4.

As we move through 2020, we expect to continue expanding our top line and gross margin. With that overview of our improvement across our primary business metrics, I'd like to review some of our activities and upcoming initiatives designed to further grow our content, community, and commercialization capabilities in 2020 and beyond.

First, we will look at our content. PUGV is the root and foundation of our business. It's also the most effective pathway to generate high-quality content at a relatively low cost. In the fourth quarter, PUGV continued to be our primary source for our growing content library, accounting for 91% of our total video views.

Our increasing brand awareness, friendly community environment, and improved platform services continue to attract more content creators to Bilibili. In the fourth quarter, about 1 million active content creators uploaded 2.8 million videos monthly, up 80% and 66% year-over-year respectively.

With the development of mobile devices and adoption of 5G technology, we believe the video industry will be one of the biggest beneficiaries across all sectors. Bilibili, in particular, is poised to be benefited with 5G potential to revolutionize the various ways of how people produce and consume content.

In 2019, we saw a very clear trend on more diversity around content and content creators, helping us to attract more mass audience with varying tastes. While we remain the clear leader in games and Anime related content, we continue to grow our lifestyle and entertainment offerings.

Along with this, we had witnessed many new star content creators rising in those verticals; Vlog, Fuji and technology continued to gain popularity in the fourth quarter. We are also proactively expanding into other pan-entertainment verticals. Music is one of them.

With this universal appeal, music is welcomed by all generations of all different backgrounds to further inspire our content creators and in which our music content offerings, we have partnered with Tencent Music and most recently with renowned record label, Sony Music to bring new experiences to our growing viewership of music lovers.

We are also looking into other universally attractive categories, such as celebrity, fashion, study and information to reach even broader audience. Our smart content distribution continued to play a vital role in our content ecosystem, bringing this cover high-quality content and talented content creators in a speedy fashion.

As our algorithm and operational capabilities improve the number of video that achieved 10 million views grow nearly eightfold in 2019 compared with 2018. The motivations to showcase their work and attract loyal fans make Bilibili the ideal platform for content creators. We continue to support and encourage our content creators on multiple levels.

In January 2020, we hosted Bilibili top 100 Content Creators Award Ceremony in Shanghai, where we celebrated outstanding achievements of leading content creators in various categories. Our cash incentive program continued to motivate our mid-layer content creators. By the end of December 2019, over 220,000 content creators joined our program.

While high-quality and original content creation have been rewarded with cash bonus based on positive feedback from our users. We also provide an increased number of online and offline tutoring sessions as and well as for access to our traffic to help newer content creators grow and flourish. Turning to our future generated video OGV.

Our OGV strategy has a due focus. First, to form IPSS and second to convert visitors to paying users. In 2019, our MAUs for Chinese anime 2019, surpassed Japanese anime for the first time, making Chinese anime the largest OGV verticals on Bilibili.

With a growing viewership and the audience group hungry for new content, we are excited to bring new titles and series to our community. In November, we closed our annual made by Bilibili event, highlighting our updates and the new launch plan for 40 Chinese anime titles throughout 2020 and 2021.

This includes 13 project updates, such as the world-renowned sci-fi serial, The Three-Body Problem, San Ti, and 27 new titles including Heaven Official's Blessing Tian Guan Cì Fú; and the Legend of Mortal Ascension, Fánrén Xiuxian Zhuán and The Daily Life of the Immortal King, San Jie Qi Yuan.

In addition, we see considerable synergy between anime, and our Comics business. Many of the popular anime titles are also the top-selling e-books, our comic platform. In the documentary and the variety show departments, we're delighted to see our self produced an IP on titles gaining traction.

In the fourth quarter, we partnered with Shanghai Media Group and co-produced Police Stories Shanghai Guardians [ph]. This documentary about local police in Shanghai quickly gained popularity among young people.

“The Hidden Kingdoms of China” are phenomenal documentary that we co-produced with National Geographic was also released in the fourth quarter and received positive viewers.

As we welcome more diversified OGV titles in our community, we are accumulating a library of valuable IP assets, while simultaneously bringing us – converting our growing traffic to paying users, our premium members, which offer additional exclusive and advanced content to paid users continue to flourish in the fourth quarter.

By the end of December, we had 7.6 million valid premium members, up 111% year-on-year. While user growth has a tremendously high rate, our community density has not been diluted. As a matter of fact, it continues to sue with high engagement, high retention and tight bonds.

In the fourth quarter, we had 710 million daily video views, up 63% year-on-year. In Q4, our users generated 2.4 billion monthly inductions with bullet chats, comments, likes and Bilibili moment post, up 141% year-on-year. Each user, on average, follow 34 content creators compared with 26 for the same period last year.

The unparalleled level of engagement and the connection among users are making Bilibili the most unique and competitive video community in China. Our official membership program is also on the rise. At the end of fourth quarter, we had 68 million royal official members who passed our 100-question exam, up 50% year-over-year.

This group of users, 12-month retention rate remains high as well at about 80%. This continued to be an excellent indicator of the quality of our user growth. Turning to our commercialization progresses, let's first look at our games.

In the fourth quarter, revenue from mobile games were up 22% year-on-year to RMB871 million, accounting for 43% of our total revenues. We continue to expand our reach in games, covering different genres and gameplays. On the exclusively licensed games, frequent order or FGO continued its popularity during the fourth year of operating in China.

In November, we also began operating the exclusive license title, Girl Cafe Gun 2 making a big slash in China's mobile game market. The newly launched domestic game, ACG game, the Furious Yama was also hit among Enemy Friend following this release in January this year.

As part of our strategy, our jointly operated games also made meaningful progress in 2019. With increasing density of game lovers gathering on our platform, Bilibili has become a top channel to distribute ACG or other high-quality games.

During this year, we had multiple success with our jointly operating game projects including Arknights, Gray Raven, Fox Spirit Matchmaker and [Foreign Language]. Revenue generated by our jointly operated games now account for more than 25 of our total game revenue -- 25%.

Looking at our game pipeline, we have over 30 exclusive licensed game up for releases, many of which have already gained regulatory approvals. This includes two exciting Japanese role playing games, Princess Connect! [Foreign Language] and [Foreign Language], which we plan to roll out in the second quarter.

On the jointly operating game front, we are continuing to work with leading game developers to bring our user premium games, such as [Foreign Language] Shanghai Tsinghua, additionally, leveraging our expertise and understanding of the ACG culture, we plan to expand our game distribution outside of Mainland China, further growing our revenue streams and increasing our global reach.

Turning to our live broadcasting and VAS business.

We have seen excellent growth from this segment, and we believe that they've a great deal of potential to broaden our offerings and attract new users, particularly in live broadcasting, where the natural crossover with our video game platform and our user base revenues from live broadcasting and VAS increased by 183% year-over-year reaching RMB571 million in the first quarter.

Our growth was driven by increased contribution from our live broadcasting, premium members, Maoer and the company business. We continue to build our games and entertainment content for live broadcasting where we see considerable room for growth in 2020.

China is the world's largest game market and e-sports is getting more and more traction among young generations. Viewers demand for premium e-sport content and high and we are poised to deliver.

Our three-year exclusive license for live broadcasting rights for the world renowned League of Legend World Championship places us in the center of the e-sports world. With the S10 game being host in our home base, Shanghai, we believe we can maximize the impact of the game even further.

On the pan entertainment front, we had secured a contract with one of the China's top entertainment host, [Foreign Language] , who has quickly won over Bilibili's users. With top level content and our new host additions, we have now completed our new live broadcasting pyramid and are working to grow this part of our business.

As for our advertising business, our community presents a considerable attractive audience for our advertisers. Our brand awareness is on the rise and we continue to be the go-to platform for the golden Gen Z consumer cohort.

With these significant advantages, we are confident that Bilibili will remain as a top choice as our advertising partners look to allocate their budgets for the year. For the fourth quarter, we saw increased sales in advertising despite the challenges in macro environment.

Revenues for advertising increased by 81% year-over-year to RMB290 million, driven by our heightened brand awareness and efficient ad offerings.

The top three industry verticals for brand advertising in the fourth quarter were games, e-commerce, and food and beverages, and the top three vertical performance-based advertising were games, education, and e-commerce.

On the heels of our successful integrated marketing program with Cabot and T-Mobile for Double 11 and Double 12 shopping events, we continue to deepen our partnership with Alibaba. In the year-end [Indiscernible] start Bilibili's New Year's Gala event.

The gala's wide success far exceeds [Indiscernible] expectations, highlighting our deep understanding of our users and increasing awareness of Bilibili brand as primary platform for advertisers. We look forward to further collaborating with Baba and other industry leaders that showcase the strength of our far-reaching platform.

In summary, we have reached an exciting inflection point. We have moved into the realm of mass market appeal. For 2020, our strategy relies on key expansion initiatives that broaden our content offering, grow our user base, and improve our commercialization capabilities.

At the same time, we are dedicated to putting our community first by representing and varying our users and content creators. We will continue on this strategy with goals of creating sustainable growth and long-term value for our community and our shareholders..

That concludes Mr. Chen's remarks and I will now provide a brief overview of our financial results for the 2019 fourth quarter and full year. Our total net revenue increased by 74% year-over-year to RMB2 billion, exceeding the high end of our guidance.

Our non-GAAP revenue made up nearly 57% of our total revenue in the fourth quarter, up from 38% in the same period of 2018. With more than half of our revenues coming from multiple sources, we are pleased with our commercialization progress and the implications of this diversity. We are also converting more and more online traffic to paying users.

The average number of monthly paying users increased by 100% year-over-year, reaching 8.8 million in the fourth quarter. Cost of revenue increased by 68% year-over-year to RMB 1.6 billion. Revenue sharing cost, a key component of cost of revenues, was RMB 705 million, a 63% increase from the same period in 2018.

Gross profit increased by 102% year-over-year to RMB 398 million. We are also starting to see operating leverage from our diversified revenue streams.

With more revenue contribution from our higher-margin business, including advertising and cooperated games as well as additional income from premium users, our gross profit margin steady improved throughout 2019, reaching 19.8% in the fourth quarter. Total operating expenses increased to RMB 818 million, up 68% from the same period in 2018.

Selling and marketing expenses were RMB 413 million, representing a 127% increase year-over-year.

The increase was primarily attributable to the increased channel and marketing expenses associated with Bilibili ad and brand, including promotional activities for offline events, the 2020 New Year's Eve Gala event, for example, as well as promotional expenses for our mobile games.

The increase was also attributed to the increased headcount in sales and marketing personnel and the increasing fulfillment costs associated with our e-commerce program. G&A expenses were RMB 160 million, representing a 6% increase year-over-year. R&D expenses were RMB 245 million, representing a 60% increase year-over-year.

The increase was primarily due to increased headcount in R&R personnel and increased share-based competition costs. Net loss was RMB 387 million for the fourth quarter of 2019 compared with RMB 191 million in the same period of 2018.

Adjusted net loss, which are non-GAAP measures that exclude share-based compensation expenses and amortization expenses related to intangible assets acquired through business acquisitions, was RMB 337 million compared with RMB 152 million in the same period of 2018. Basic and diluted net loss per share were RMB 1.17.

Adjusted basic and diluted net loss per share were RMB 1.01. For the full year of 2019, total revenue increased by 64% to RMB 6.8 billion. Revenue from mobile games increased 23% to RMB 3.6 billion. Revenue from live broadcasting and VAS increased 180% to RMB 1.6 billion. Revenues from advertising increased 76% to RMB 817 million.

Revenue from e-commerce and other increased 403% to RMB 722 million. Gross profit increased 39% to RMB 1.2 billion. Net loss for 2019 was RMB 1.3 billion compared to RMB 565 million in 2018. Adjusted net loss for 2019 was RMB 1.1 billion compared to RMB 377 million in 2018.

Basic diluted net loss per share for 2019 was RMB 3.99 or US$0.57 compared to RMB 2.64 in 2018. Adjusted basic diluted net loss per share were RMB 3.30 or US$0.47 compared to RMB 1.84 in 2018.

As of December 31, 2019 with a cash and cash equivalents, term deposits as well as short-term investments of RMB 8.1 billion compared to RMB 5.2 billion as of December 31, 2018. To further grow our business, we plan to improve our monetization by leveraging our considerable and growing traffic.

We also see benefit in further expanding our diverse revenue streams and continue to improve revenue contribution per MAU. Longer term, we believe our monetization efforts, high-paying user scale and the conversion rate will yield an improved bottom line.

With that in mind, we are currently projecting net revenues for the first quarter of 2020 to be between RMB 2.15 billion and RMB 2.2 billion.

The above outlook is based on the current market conditions and reflects the company's preliminary estimates, which are all subject to change, particularly in light of the uncertainties related to how coronavirus developments. Thank you for your attention. We would like now to open the call to your questions. Operator, please go ahead..

Certainly. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question today comes from the line of Lei Zhang from Bank of America. Please go ahead..

[Foreign Language] My first question is about recent Coronavirus outbreak.

Wondering whether management could share your thoughts on how the outbreak may impact our business? Related to that, can you give us more color on the user trend in fourth quarter, especially after people are back to work and if any user slowing down? And how should we look at our full year user target? Thank you..

[Foreign Language].

So, taking the virus situation under consideration, we are currently projecting our Q1 total net revenue to be between CNY 2.15 billion to CNY 2.2 billion and which has considerable growth quarter-over-quarter and year-over-year.

And given that we have multiple business lines -- different business lines, e-commerce because due to the logistic delays, there will be some impact related to the -- how much we can book the e-commerce revenue in the first quarter.

However, compared to other business that's more related to our traffic growth such as live broadcasting and games and -- we do see some positive impacts of the extended traffic. Overall, in general, we don't see much of an impact to our overall business..

[Foreign Language].

So given the extended holiday, people are staying at home for over a month, and Bilibili has become many people's first choice for online entertainment consumption, and we've seen so far either it is user traffic, user engagement, as well as time spent has been beyond our expectation. So overall, this trend is quite positive..

[Foreign Language].

So, regarding your question about whether we see a decline in users after people are now going back to work, the answer is that user growth is our primary business focus for 2020, and we don’t rely on incidence or occasions like the Coronavirus outbreak.

We do have a designated -- through -- thorough plan throughout the years to help us to achieve a steady user growth..

[Foreign Language].

So, after people are going back to work for sure, the growth rate won't be as high as when people are staying at home, but it won't be a drastic up and down..

Okay. Thank you. Congrats on the results today..

Your next question comes from the line of Wendy Chen from Goldman Sachs. Please go ahead..

[Foreign Language] Thanks management for taking my questions. And my question is about the user growth outlook. As we have achieved the 130 million MAU target this year, I'm wondering what's management's updated view on our user growth target for the full year 2020.

And as we are targeting with mass market appeal this year, what is our outlook for our user growth addressable market for the longer term? Thanks very much..

[Foreign Language].

So, as we communicated with the market before that, we have setup our user growth goal for 2020 to be 180 million and 220 million for 2021. And we have done a lot of – we have conducted a lot of efforts to help us to achieve this goal. And so far, it all looks like the progress is well on track..

[Foreign Language].

So while we are quite optimistic about our user growth plans, at the same time, we also really value the quality of that growth. And the past historical data also suggests even though that we are on a very fast track of user growth, we have maintained a high-quality of user growth as well as a very tight community environment.

Our users' time spent retention rate as well as the interaction levels have all been quite positive, sometimes all faster than our MAU growth, indicating the high quality of our user growth. So, this is the standard we are hoping to continue to maintain throughout the year..

[Foreign Language].

So at the same time, we are also focusing on improving our commercialization capabilities. So there are several metrics that we've seen -- very positive trends from the paying user conversion rate, as well as our traffic related business such as our advertisement revenue growth.

They are all quite very clearer positive are paying user growth more than doubled our advertisement revenue grew, 81% year-on-year. So all this metrics are suggesting, we're also making a very good progress on improving our commercialization capability..

[Foreign Language].

So in summary that we are quite confident that too, while maintaining fast user growth trend, we'll continue to maintain a high quality of that growth, maintain a very friendly and tight community environment while simultaneously improve our commercialization capability..

Your next question comes from the line of Alex Liu from China Renaissance. Please go ahead..

[Foreign Language] So, my question is on advertising business. We note that fourth quarter advertising growth is very robust and also the first quarter guidance is also very solid.

Could the management share some color on our advertising business performance in first quarter? And also for full year 2020, could you share some updates on advertising business new initiative?.

[Foreign Language].

So historically, Bilibili has been very strong in terms of converting customer -- converting to be related business. And we've seen a very strong conversion in terms of many consumptions including our games, live broadcasting and advertisement business.

So we do achieve very solid growth across all business lines in 2029 and we feel quite confident that will -- this business has great potential. And during the fourth quarter, even under this challenging -- very challenging macro environment, we were still able to deliver 81% year-on-year advertisement growth..

[Foreign Language].

So, as our brand awareness continues to grow, we have made quite big of impression among our advertisers from vertical content platform to a must-invest, must-have channels to reach young audiences.

For example, this year, we've seen some very clear trends that Bilibili has become the first choice for audiences, for example, a lot of new product launches plus online conferences. And all of that is -- we've seen that the advertisement -- advertisers' budget is shifting with the movement of our users..

[Foreign Language].

So, starting from Q1, we will adjust and continue to improve our advertisement overall strategy as well as pricing and efficiencies to achieve sustainable growth..

[Foreign Language].

So, third and quite importantly is on the technology front, we'll continue to invest to improve and revolutionize our algorithms efficiencies to improve our performance-based advertisement effectiveness and improve our click-through ratio..

[Foreign Language].

So, your question regarding our collaboration with Alibaba. So in 2019, we have established quite a lot of new projects and collaborations during Double 11 and Double 12 shopping and [Indiscernible] also exclusively sponsored Bilibili's New Year's gala, which the overall effect has exceeded more or so our expectation.

So, so far, we think that partnership between Alibaba has met or even exceeded our previous expectations, and we really look forward to deepen our relationship with Alibaba's overall e-commerce ecosystem in 2020..

[Foreign Language].

So, we actually have developed a whole strategy of how we can better collaborate Bilibili's ecosystem with Alibaba's ecosystem in terms of integrated marketing campaign that includes the brand campaign, that increase the brand awareness and to influence users' purchasing decision through native ads and complete the transaction through performance-based ads.

In this strategy, we can copy and paste and replicate that with many new advertisers in 2020. And we believe we have a lot of potentials to further replicate the success stories between Alibaba and Bilibili to many other new advertisers..

[Foreign Language].

So, as Rui Chen mentioned earlier that 2020's primary focus of our business as to grow our users. And while we do so, they will -- the increased traffic will also serve as fuels for our advertisement business. So we are quite confident that in Q1 and 2020, our overall advertisement business will have a very good growth trajectory..

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

[Foreign Language] Thanks management for taking my questions. I have two questions. My first question is about the GP margin trend.

Given the solid GP margin over the past three quarters, can management comment about how we should think about the GP margin outlook in 2020? And my second question is about the gala event that we host very successful earlier this year. Can management comment about the positive impact to our platform after the success? Thank you..

Okay, Thomas. I will take your first question and Rui will take – will comment on your second question. Yeah, you're right. Our gross profit margin has recorded steady improvements throughout 2019 from like 13.8% in Q1 to like 18.1% in Q4.

In the future, we still see some room to further leverage between our high-paying ratio and to increase the revenue per MAU to further improve the gross profit margin that leverage will come from the cost component, like brand awareness cost as well as the revenue sharing cost. So we will work on that, and you will see that in the coming quarters..

[Foreign Language].

So the success of the gala, well, the gala itself is part of our user growth plan as well as part of our brand campaign. And we don't think this is an isolated event that Bilibili New Year's Gala is a success. It actually is a testimony of how Bilibili understand young people's interest.

And as we accumulate our understanding for the past 10 years, this has made a material impact in the mainstream IPOs ideas..

[Foreign Language].

So Bilibili this – this gala is a landmark event as Bilibili moved into the realms of mass market appeal.

And the success of the gala actually attract -- the content of the gala actually attract many users from different background and different generations and make them get to know Bilibili from their perspective from what they have – the perspective or content verticals that they are familiar with.

And this is quite – we would think this is a quite eventful campaign that made the Bilibili brand accessible, much accessible to wider generations and audiences..

[Foreign Language].

So far, the playback of the event has been viewed over 90 million times. And we have accumulated 5 billion media exposures and that we think it has four major points that will impact our business..

[Foreign Language].

So first of all, it definitely laid a very solid foundation for our 2020 overall user growth plans. And second of all is, further increased our brand awareness among users and make them to perceive a little bit more clear about what Bilibili is and what Bilibili has to offer.

And thirdly, as we mentioned earlier on the advertisement front it definitely also has a very positive impact. Like we said Tencent sponsorship, the overall effect has exceeded their expectations and also made a very good example of how Bilibili's events and campaigns can influence and reach much wide audiences groups.

And last but not least is, once again, it's a strong testament of how Bilibili has the determination and ability to produce high-quality content and will continue -- and well committed to continue to produce more high-quality content..

The next question comes from the line of Jialong Shi from Nomura. Please go ahead..

Hi good morning Rui, Sam and Carly. Thanks for taking my question. [Foreign Language]. My question for management is about the competition landscape. We saw some of Bilibili's peers, Chinese Internet peers are talking about ramping up investments this year in either anime or PUGV content.

We understand these peers – this move by peers may show the huge potential in this market. But the entry of these newcomers may also fewer the competition in this segment. So my questions are two.

First of all, I just wonder how management think of the potential impacts it may have on the company's assets to retain talented content creators and the audience? Will Bilibili at certain point be forced to pay more to some of the top content creators in order to retain them? And secondly, what are the company's strategies to maintain fast user growth in a more competitive environment? Is there any risk that Bilibili may have to spend more in marketing dollars to hit the user growth target?.

[Foreign Language].

So as regards, the overall video industry, actually it's a fast-growing and a very big market.

According to third-party research data that the current video user has already reached 750 million in China, and we think as the adoption of 5G technology and the revolution of hardware and infrastructure, I'm projecting that overall 1 billion users can grow to 800 million or 900 million in the next few years..

[Foreign Language].

So as a matter of fact, video as an industry vertical on the Internet space is actually one of the largest verticals. And for the past few years, you can – you must have witnessed many new players – many players in the video industry grow quite significantly, and that has also a very direct relation to the expansion of the market.

And we don't believe one or two new additional players entering this market will make a material impact or difference from this growth trajectory..

[Foreign Language].

Okay. So a lot of people have asked that for the past two years, how do impact the overall industry? But as a matter of fact, we are able to maintain a fast growth while gaining there market share.

Many people would probably argue that it's the different -- there's a different lens in terms of short video and long-form video, but we believe we are actually the player who gives definition of PUGVs, and we have the most experience in terms of PUGVs..

[Foreign Language].

So we are -- we have been putting PUGC as our primary business model for at least five years. And for the past five years, we have gained a lot of experience. And actually, we kind of feel alone in this track, and now we have more players starting to pay more attention on this business model.

We believe this is another test -- a different perspective on another side of the story, which means this track has great potential to grow..

[Foreign Language].

And this business model requires unique expertise in terms of operation as well as running a platform. So for the newcomers, I think there's going to be a learning -- at least a learning curve for them and won't yield result in short terms..

[Foreign Language].

So, as for your question about the competitive cost related to more player joining in these verticals, we believe for this industry, we have long passed the phase that people have to burn cash to fiber content or KOLs.

This is -- we have already entered a phase that that we compete with each other in terms of the overall industry layout, the business operation capabilities, as well as whether content creators are able to achieve their career goals on our platform to able to grow their traffic on our platform.

So, it won't have a significant impact in terms of single cost, whether it's content or sales and marketing..

And that concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing remarks..

Well, thank you once again for joining us today. If you have any further questions, please contact myself, Juliet Yang, Bilibili's Senior IR Director or TPG Investor Relations. Our contact information for IR in both China and U.S. can be found we are able to in today's press release. Have a great day..