Good day, and welcome to the Bilibili 2020 Third Quarter 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 performance, and are intended to qualify for the Safe Harbor from liability, as established by the U.S. Private Securities Litigation Reform Act.

Such statements are not guarantees of future performance 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 this forward-looking information, except as required by law.

During today's call, management will also discuss certain non-GAAP financial measures, for comparison purpose only. For a definition of non-GAAP financial measures, and a reconciliation of GAAP to non-GAAP financial results, please see the 2020 third quarter 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 Lee, Vice Chairwoman of the Board and Chief Operating Officer; and Mr. Sam Fan, Chief Financial Officer. And I'll now turn the call over to Mr. Fan, who will read prepared remarks on behalf of Mr. Chen..

Thank you, Juliet. And thank you everyone for participating in our 2020 third quarter conference call. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen.

We see a golden opportunity to expand our reach in today's market to see this window we step up our post user growth, with a focus on further growing our content, expanding our brand awareness and the targeted channel acquisition. This will especially fit for our third quarter pre-season. And as a result, our user base hit a record high.

In August, our MAUs exceeded 200 million milestone, marking a new monthly record. Total revenue for the third quarter was up 54% to 197 million, and the DAU were up 42% to 53 million, both on a year-over-year basis. Mobile users also continue to grow at a faster pace. Mobile MAUs were up 61% year-over-year to 184 million in the third quarter.

Our users are highly engaged, spending an average of 81 minutes per day on our platform making Bilibili one of the biggest video communities in China. The quality growth of our users is not only reflecting the high engagement levels, but also in the paying user conversions. MPUs were up 89% year-over-year, which is 15 million in the first quarter.

And our paying ratio improved to 7.6% from 6.2% in the same period last year. We've included trade volume of our topline expansion. And in the first quarter revenue reached another record high of RMB3.2 billion up 74% year-over-year. While we grow our topline, we also improved our gross margin.

Gross Margin was 23.6% in the third quarter up from 18.9% in Q3 last year. And we are gaining even more operating leverage. While Bilibili has become a household name among young generations, there are large groups of potential users who are just beginning to learn about us.

The Gen Z community acts as our anchor, and will begin to cut an even wider net. Today, we are getting traction with more diverse demographics than ever before. Marketing campaigns such as our newly introduced the slogan, Bilibili all the videos you like has helped us to define and promote our appeal to mass audience.

During the third quarter, we launched a series of online and offline campaigns to promote our brand proposition to an even broader audience across different demographics. This strategy is working and we are carrying these efforts into the fourth quarter. Our industry partnerships are also strengthening our content offering and brand.

In August, we entered into a five-year business cooperation agreement with Huanxi Media through a strategic equity investment, in which we can exclude the broadcasting rights to Huanxi existing and upcoming high-quality movies and TV drama theaters.

We have also entered into a three-year exclusive partnership with Riot Games for the exclusive live broadcasting rights of League of Legends World Championship. We have significantly enhanced our position and brand in the important E-Sports genre, especially during the F10 this year.

And in October, we deepen our partnership with Sony by signing a strategic agreement with a subsidiary Aniplex, to bring more premium anime content and mobile games to our users.

These expanding alliances not only enrich our company offering, but also demonstrate that those domestic and international industrial leaders have common recognition of our unique value in China's entertainment market.

While we are working to build our brand and attract more users, increasing demand for high quality video content power us well for capitalize on the growth perspective. China represents the largest online video publishing in the world.

According to the Phoenix Report, by the end of first-half of 2020, we have 819 million users in China consumed online content in video format. Faster networks and a smarter hardware enable more accessible content creation and consumption. Our experience over the past decade has made us a pioneer of video-lization movement.

We are committed to capture in this market opportunity by further execution our growth strategy, which Bilibili will yield people return in the long run. With that overview, I would now like to provide some more color on our content, community and commercialization activities. I will begin with a review of our content.

Our PUGV content ecosystem is the cornerstone of our business and the main engine that powers our growth vehicle. For the third quarter, we had approximately 1.7 million content creators uploading 5.6 million videos per month, representing increases of 51% and 79% respectively, both year-over-year.

We continue to cultivate a notion soil to allow content creators to grow and flourish. By promoting originality and ingenuity, our algorithms enable the highest quality of original content to quickly gain traction and expand fan base.

In the third quarter, the number of videos that achieved 1 million video views increased 73% and the number of content creators with over 10,000 followers grow 75% both year-over-year. Meanwhile, we continue to help our content creators' impact monetary rewards through our cash incentive program and our newly launched advertising platform Sparkle.

The matchmaking platform that designed to better connect advertisers and content creators and bring more commercial opportunities, while creators are providing a safe and scalable portfolio for native app. Each of these components help us maintain and grow this important PUGV ecosystem.

Our top five verticals in terms of video views in the third quarter were lifestyle, game, entertainment, animate and tech & knowledge. Among these, tech & knowledge is emerging and one of the fastest growing sectors.

Learning on Bilibili is also trending, so as many tourists [ph] are attract to our platform looking for informative and educational content. In the past 12 months, there were nearly 100 million users across different age groups watch knowledge related videos on Bilibili, making us one of the top learning platforms in China.

While we enhance our content offering in our leading verticals, we are actively expanding our content reach in new categories. The automotive sector was one of them. In Q3 video views in this area grow roughly at 177% year-over-year. This reflects our longevity and the staying power with users as they mature.

In this case, our content users have come to a life stage for an auto consumption. This condition also helps us attract wide demographics and open new advertising opportunities across border industry groups. Turning to our OGV, our investment in IP content is paying off.

With our stronghold in this genre, Bilibili produced Chinese enemy not only attract massive new users, but also become the most effective driver of premium memberships. This is especially true for our self-produced Chinese anime, generating 260 million views in just the three months since its launch.

In September, we were excited to welcome the thrilling TV drama, Run for Young, Feng Quan Shao Nian De Tian Kong to our platform, marking the first TV drama to form our collaboration with Huanxi Media. This show was an immediate hit of the release and trended number one on Bilibili most searched list four weeks.

This show has generated 410 million video views set a new record in this category. We are also reaching new heights for our documentary and a variety show department.

Our very first self-produced music variety show Rap for Youth [indiscernible] received the outstanding reviews beyond our typical community, generating approximately 410 million video views and 8.2 million bullet-chats. The success not only enrich our music category, but also attracted and inspired a growing number of musicians and music lovers.

Looking at documentaries. We believe our recent agreement with BBC Studio is a strong endorsement our documentary quality and will further enhance our content library. Also, building on the success of last Eve gala will be arriving another smashing New Year's Eve gala event. We expect this year will bring our community more excitement and joy.

Turning to our Community. While user growth continued to thrive, we set a number of new records across our key community metrics. In the third quarter, our Bilibili views reached 1.3 billion, up 77% year-over-year. Our users generated 5.5 billion monthly inductions through bullet-chats, comments, likes and Bilibili moment posts, up 117% year-over-year.

The number of official members is also on the rise. At the end of the quarter we have 97 million official members who pass our 100-question exam, up 56% year-over-year, retention levels also remain strong well above 80%.

With a decade of experience under our belt, we believe our community remains one of our biggest competitive advantages and most in the evolving online entertainment industry. Turning to our commercialization progress, the growing topic on our platform for each our business line well.

We rollout more premium content and services to meet our users' diverse entertainment needs. Our games business, revenue for our mobile game business were RMB1.3 billion up to 37% year-over-year, accounting for 40% of our total revenues.

During our massive game lever base, we continue to expand our game offering in diverse genre that we've maintained the popularity of our existing titles. Our new blockbuster game, Princess Connect continue to resonate with our fans and attract new users.

It was another strong testament that our logos to distribution and operating capabilities in the APG genre. In October, we renewed our exclusive FGO license with Aniplex and celebrated again fourth anniversary.

Additionally, we launched a few new titles during the first quarter, which include Animistic, [indiscernible] of which have been well received by our users. And for our game topline, we have 10 titles in diverse genres that have acquired approvals, and are ready to be released in the coming quarter.

Next in queue is Sword Art Online planned for lunch at the beginning of 2021. Looking at our jointly operated games, we continue to work with the leading game developer to bring our user premium titles.

Our solid reputation, strong game operation capabilities and high destiny gamers demographic have made Bilibili the go to platform for 20 operating partners.

In September, as the main Android partner in China, we began jointly operating the highly anticipated Genshin impact [Indiscernible] the massive success of Genshin on our operation yet another feeder in our path. Our near-term joint titles include a plan to distribute NetEase's Harry Potter. Turning to our VAS business.

Revenue from VAS increased by 116% year-over-year reaching RMB980 million in the third quarter. Our growth was mainly driven by increased contribution from premium memberships, live broadcasting, and other value-added services.

As our brand name continues to spread, we are attracting business partners and live broadcasting host and adding new and diverse content to our growing library. E-Sports is a prime example.

Our League of Legends World Championship live broadcasting right has an important place for Bilibili, including E-Sports genre, and we showcase our capabilities more E-Sports host and another turning to Bilibili in more live broadcasting experience.

For the entire F10 championship season total live broadcasting page views related to the game increased by over 300% compared with [indiscernible] last year. We're pleased to see our user growing in this paid for advanced or exclusive access to our OTT content.

By the end of the first quarter, we had 12.8 million permanent members up 110% year-over-year. As we rollout more excellent, exciting new content, we are confident we can continue converting more paying subscribers.

Finally, our advertising business, despite challenging macroeconomic environment, we delivered another accelerated growth in our advertising business. Revenue from the segment reached RMB558 million up 126% year-over-year. Our efforts to spread our brand name not only attract a wider user group, but also impress many new business partners.

Our titles across different industry are turning to Bilibili to tap into the converted young demographic. Our top five leading verticals in the third quarter were e-commerce, food and beverage, game, exclusive product and automotive. In summarize, we are on excellent growth trajectories.

With solid execution of our user growth initiative, we continue to improve our brand equity and reach new heights across key user metrics. The industry trend towards video-lization is working strongly in our favor and we provide the most unique community experience for both content creators and the users.

Capitalizing on this momentum, we aim to further grow our brand, enrich our content offering and unleash the great potential of our expanding online entertainment ecosystem. This conclude Mr. Chen's remarks, I will now provide a brief overview of our financial results for the third quarter of 2020.

Our total net revenues increased by 74% year-over-year to RMB3.2 billion exceeding the high end of our guidance. With our learning games accounted for 50% of the revenues we're pleased with the commercialization progress of our main game offerings and our ability to convert our online traffic into paying users.

The average number of monthly paying users increased by 89% year-over-year, which is 50 million in the third quarter. Cost of revenue increased by 63% year-over-year to RMB2.5 million. Revenue selling costs, a key component of total revenues were RMB1.2 billion, a 77% increase on same period in 2019.

Gross profit increased by 170% year-over-year from RMB762 million. We are seeing more optionality for diversified longer screen, with more granular contributions for our higher margin business, as well as additional income from paying users, our gross profit margin continued to improve, reaching 23.6% in the third quarter.

Total operating expenses increased to RMB1.8 billion, up 138% from the same period of 2019. Total marketing expenses RMB1.2 billion, representing a 227% increase year-over-year.

The increase were mainly attribute to the increased channel and the marketing expenses associated with our app and brand, as well as increased expenses for our mobile games and sales and marketing personnel. Building our brand appeal among the broader audience, it will offer key initiative in 2020.

This strategy is affording as far reaching market gains that we think will have long-term effort. We plan to continue to build on this momentum to further strengthen and expand our virtuous growth cycle. G&A expenses were RMB253 million, representing a 55% increase year-over-year.

The increase was primarily due to increased headcount in general and administrative personnel and increased share-based compensation expenses. R&D expenses were RMB401 million, representing a 62% increase year-over-year. The increase was primarily due to increased headcount in research and development personnel.

Net loss were RMB1.1 billion for the third quarter of 2020, compared to RMB406 million in the same period 2019.

Adjusted net loss, which is a non-GAAP measure that excludes the share-based compensation expenses, amortization expense related to intangible assets acquired through business acquisitions was RMB990 million compared to RMB343 million in the same period of 2019. Basic and diluted net loss per share were RMB3.08.

Adjusted basic and diluted net loss per share were RMB2.76. As of September 30, 2020, we had cash and cash equivalents, time deposits, as well as short-term investments of RMB14.1 billion or US$2.1 billion, compared to RMB8.1 billion as of December 31, 2019.

Our monetization capabilities continue to improve as we leverage our growing traffic base of new users across an increasing broader spectrum of demographics. We will also continue to go out to more premium content services to convert more paying users.

We believe that over the longer-term with monetization efforts high paying user conversion rate and scale will yield and improved bottom-line. With that in mind, we are currently projecting net revenue for the fourth quarter of 2020 to be between RMB3.6 billion and RMB3.7 billion. Thank you for your attention.

We would like now to open the call to your questions. Operator, please go ahead..

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question on queue comes from the line of Daniel Chen from JP Morgan. Daniel, please ask your question. Your line is now open..

Hi, this is Alex from JP Morgan. I have a question regarding the user growth and the user profile of the newly added users. So you guys have been continuing delivering very strong user growth in the past several quarters.

Can you talk about the typical new user profile that you guys have acquired in the recent quarters? And why exactly is the value that you offer to these guys to drive the user growth? Also, lastly, what's the user growth outlook into the next one to two quarters?.

Mr. Chen said that the profile of the new users actually hasn't changed much compared to historical data. The average age of our users is about 21 years old. And the average age for the newcomers is about 20 years old. We see a very balanced geographic mix with about 50% of the users coming from 30 years and below.

And notably, we've seen that the users above 30 is actually gradually increasing its contribution year-over-year. We've always been attracting our users from our content. The reason why user come to Bilibili is that they can find what they like, what type of content they like on a Bilibili.

For example, animation, music, games, digital content et cetera. So based on the data as we have been experienced a very fast user growth. On the quality side we also maintained a very high quality of growth based on the users' retention, their engagement also the paying conversion rate. We are quite happy and satisfied with our high-quality growth.

Because we have a very healthy self-sustaining ecosystem, which is our mass content creators continuously creating high quality content, we are quite optimistic about the user growth trend as we look into the future.

And also video-lization as an inevitable trend that Bilibili as a pioneer in the video community industry, we are quite confident will continue to deliver high quality growth.

So, mid-last year we have set a new user target which is to reach 180 million for 2020 and 220 million for 2021, as you have already achieved this year's user targets, and we are also confident to achieve next year's user targets in advance. And we are likely to set up a refresh our new user target beginning of next year..

Your next question comes from the line of Yiwen Zhang from Citi. Yiwen, please ask your question. Your line is now open..

So, thanks management for taking my question. So I have two questions regarding content ecosystems. So, historically, Bilibili has a focus on documentary on access to genre series and the movie.

Now increasingly, we see some premium content coming out, for example, [Indiscernible] variety show and also in [Indiscernible] the drama series, also F tournament for the E-sports contents.

Can you share your thoughts on premium OTT on a non-media under what law do they play [Indiscernible] our ecosystem? And secondly, so if we take a step back, let's say the broad industry, for short video is 100% compute you see where [Indiscernible] media the majority productivity are coming from licensed content.

So how do you see the [middle media] if we expand our user base to a much bigger level in terms of Bilibili? What ratio to think that would be between QTV and OTV? And what are the implications for content? Thank you..

So before we get into the strategy of our OGV business, I want to re-emphasize video as Bilibili's core business, which includes PGV, OGV, and live broadcasting.

And the brand upgrade that we've been focusing on this year is proposing all the videos you like, which actually includes short form video, long form video and mid form video, and will continue to cultivate and reinforce content offering new video services based on users' needs and we'll also continue to invest in our OGV content.

So I would also like to emphasize that our PUGV content creator ecosystem remains the core of our business. And from the engagement level and our active content creator and content submission, all this key data continues to show that we have a very strong position in the PUGV ecosystem.

And the PUGV component will be Bilibili's unique advantage in running our OGV business and as we look into the future more further to integrate our OGV content ecosystem with our PUGV content ecosystem.

So for the OGV strategy, going forward, we'll continue to focus on self-produced self-publishing, and will be on quality driven, IP driven and will also serve our content ecosystem. We hope that Bilibili produced will be a label for high quality content. And at the same time, we'll be focusing on improving our ROI and paying conversion.

So Bilibili started to get into the self-produced Chinese anime back in 2017. And in 2018, we started getting to the documentary self-production, in 2019 into variety show self-production and for this year, we are making a few attempts into the real person TV and movies for the internet users.

And we have already formed a very integrated methodology to how to get into certain verticals. As for now Bilibili has already become the go-to platform for animation and documentary and user already have the perception that visibility has the best in those categories.

And for this year our attempt in the TV movie and variety shows for example, Run for Young and Rap for Youth has generated a very good feedback among our users and received very high ratings across all platforms. And this has been show marked for our attempt in tap into new content categories.

For those content, the revenue from the premium membership as well as the revenue from sponsorship and advertisement, and actually, the revenue has already exceeded our expectation. We are quite confident to continue to try out more new content offerings in those categories. The value for OGV for Bilibili, I believe that there are several factors.

One is premium memberships, advertising revenue, new user attraction, and the add-on value for our PUGV ecosystem as well as IP generation. And in the short-term, we think we have already formed a virtuous cycle where the premium membership revenue and ad revenue has pretty much covered OGV content cost.

And our first three quarters this year, operating cash flow for the first three quarters for this year is positive. And as for our membership we have achieved outstanding results. In the third quarter we have 12.8 million paying member premium membership, which grow 110% year-over-year and the quality of those members are also high.

About 80% of them have signed at the end new membership or automatic renewal membership. As for the sponsorship and advertising revenue associated with our OGV business grew 230% year-over-year. All of our key project has become a very valuable advertising outlet source for all advertisers.

So in summary, we believe the OGV has very important strategic role in our business. So the OGVs high quality content actually served very, very well for our user growth. And for example, the Carp Reborn the Chinese anime, and Run for Young of this latest high quality OGV content has been attracted a lot of new user coming onto Bilibili.

And once they join Bilibili, the majority of them say on Bilibili to consume more PUGV content. And actually the new users that were attracted by those OGV their retention is quite good.

As for the variety shows Rap for Youth has been quite successful attempt for Bilibili, despite music variety shows, or specifically Rap related variety show have been around the industry and there seem precedents but we are still to make a new breakthrough in this verticals.

And our PUGV content ecosystem continue to reinforce the effect and influences because you show a lot of the derivative content were produced by our content creator.

The overall video views related to the derivative content has reached a mere 300 million, which also helped us to further expand into the music category by attracting a lot of music lover or musician to join Bilibili. And also for this show, we also generated quite decent sponsorship revenue and advertising revenue.

And because we have an integrated product chain on Bilibili, we continue to extend the IP's value by launching new music label waves and long chain series of offline concerts relating to the show. So on Bilibili we're able to further extend and enhance the value of the IP.

So to summarize, we believe the value of the IP can be further enlarged on Bilibili's ecosystem, which includes game, anime, TV movies, merchandise and multiple offline events. And going forward, we are looking to further integrate our PUGV and OGV content ecosystem..

Your next question in queue comes from the line of Binnie Wong from HSBC. Binnie, please ask your question. Your line is now open..

First of all, congrats on the amazing set of result and also strong outlook. It was, I think the midpoint is ahead by 12%. Wondering, if you can comment a bit on the competitive landscape. We impressive to see on amortization, advertising, live streaming or continue triple digit growth. And if we look at engagement here, it seems to retreat a bit.

If you look at the time spent, 3Q is a slight decline, but videos usually is the strongest in the past years and DAU, MAU ratio also come down to 27%.

So anything that we should be aware of structurally and how do we see the competitive landscape among the different entertainment platform evolves? And especially as we see some of your short video and live streaming players are also very aggressive in growing the advertising business in particular.

So how do you see that evolve? I understand that we have a very strong ecosystem here, I just want to hear a bit more into how you see as these players getting more aggressive, more capital and then how will you see it? Thank you so much..

So as for the user engagement metrics, we are actually seeing a quite positive metrics from the time spent, which is 81 minutes in Q3 compared to 79 minutes in Q2 this year. And overall community engagement improved to 5.4 billion times versus 5.2 billion in Q2. And also the metrics from video use per user per daily is also improving.

So, in general, we are still carrying out this high-quality user growth momentum in the third quarter. As for the competitive landscape, in the video business, the competitive landscape has always been fierce, whether as competition between A, B, C or TV app. Bilibili has announced for many years we have witnessed many player come and go.

And most importantly, we believe the trend of utilization represents a huge market opportunity for the entire internet services industry. And as a pioneer in this space, Bilibili is well positioned to capturing this market opportunity.

As for the advertising business, we believe the advertising value for certain platform actually is a reflection of the user's value. So on Bilibili, we have captured the best set of users in terms of time spent in terms of user engagement, as well as the user cohort. So, that's been backing up our advertising revenue growth.

At the same time, we continue to improve our advertising efficiencies, launching innovative ad product that's also helping to re-accelerate our ad revenue. And as our brand perception and brand power continue to increase Bilibili has now became a must invest platform across many advertisers..

Your next question comes from the line of Alex Poon from Morgan Stanley. Alex, please ask your question. Your line is now open..

Hi, Rui, Carly and Juliet. I translate my question. So my question is regarding advertising business. We have seen year-over-year acceleration for a couple of quarters already. Can you share the drivers behind the strong growth and what's the outlook for Q4 and 2021? Thank you very much..

As Rui mentioned earlier, there are a lot of fundamental changes behind our advertising revenue. So first of all, Bilibili's user continue to deliver a high-quality growth. On Bilibili there are about half of the young generation in China has been active on Bilibili, which is the golden cohort for brand advertisers.

And also the brand advertisers are able to be their brand production and influence user buying decision on Bilibili. And we have more and more high-quality content continue to reaching mass market audiences, which allows Bilibili to become the must invest the go-to-platform for advertisers.

And we continue to improve our advertising efficiencies as we continue to enhance our data center platform to better support our commercialization efforts. And we'll continue to roll out more innovative ad formats and ad products.

So despite the challenging macro environment as more people think it's getting more and more tougher in the advertisement business Bilibili are able to deliver accelerated advertisement revenue for five consecutive quarters.

As we look into 2021, we will continue to improve our overall integrated marketing capability to launch standardized and scalable integrated marketing solutions.

And we'll continue to improve our ad efficiency on single users and focusing on improving the ad efficiencies for vertical players continue to improve our services service quality for different advertisement verticals.

And we'll also continue to launch innovative scenario-based commercialization method which includes multi-scenario multi-screen solution. So as for the 2020, we believe our advertising value has been widely recognized by our advertisers. As we look into 2021, we're quite confident to continue to carry out this positive growth momentum..

Your next question comes from the line of Lei Zhang of Bank of America Securities. Lei, please go ahead and ask your question..

Thanks, management and congrats on strong results. Two questions, first on sales and marketing. Can you give us some breakdown on for sales and marketing in Q3? And what are the trends in the next one to two quarters? And secondly, I want to follow-up on the competitive landscape.

Do you observe the short video platform actually allocate relatively higher percentage on mini video parts and any updates you can share with us? Thank you..

Okay. Let me take your first question. First of all we have RMB14 billion on the cash reserves. And we also achieved like positive operating cash flow in the first nine months of 2020. So we have very sufficient cash reserves that will support our investment in the different areas.

As we mentioned before, we pay close attention to the ROI, our investment in selling marketing, in terms of the - for example, the cost per activation, and their conversion and retention. When the time is more ripe, we will keep doing investments.

In Q3 everyone knows that the season to acquire users, so we targeted to invest in user acquisition through different channels including the App Store, the video app channel and the OTT channels. We are also investing in grand advertisement to promote our new Bilibili videos live.

And we also attend and organize an offline ACG related events in different cities during this summer. As a result, you all recall that MAU grow like 25 million quarter-over-quarter and also MAUs surpassed 200 million.

As mentioned by Carly, we see very good return on the membership conversion and advertising [Indiscernible], generally feeling for the MAU addition. But we will not spend that much. So, in terms of the total selling and marketing percentage of total revenues will be lower than compared with Q3 this year.

And we are really stay focused on user retention and the paying user conversion in Q4..

So as for your second question, I wonder the concept of mid-form video because we don't believe user choose to consume video content based on the content of the video, but rather on quality of the video. It's very easy to change the length of the video, it's difficult to create the high-quality content that users like.

So whether it's long form or short form is probably a scenario base. But it shouldn't be a format or product concept. So as for Bilibili, we offer video length range from dozen seconds to few hours and each type of video has different audiences. And for different content categories, the length also varies.

For example, the music categories majority of the video is less than 10 minutes. And for games and lifestyle, it could up to hours. So we don't think it's a concept of the length, it's actually the concept of the content. And at Bilibili, we are a more comprehensive general content platform.

So in the past couple of years, we've seen products that's focusing on providing maturity short form videos. And they've experienced quite decent growth rates, but at the same time Bilibili is also continue to deliver high quality fast growth.

So we believe any product that provides the content that fits users' needs that caters to users' interests, and preferences can win over their time. In the past 11 years, Bilibili has always been focused on the content ecosystem driven business model and to satisfy users' interests and need for high quality content.

And this model is proven successful for us. So as a comprehensive video community, Bilibili, actually, we believe represents the future of video product, which we believe will be only scenario and multi-screen..

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

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 the U.S. can be found on today's press release. Have a great day..