Ladies and gentlemen, thank you for standing by, and welcome to Second Quarter 2021 Hello Group Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please note this conference is being recorded today.

I would now like to hand the conference over to your first speaker today, Ms. Ashley Jing, Head of Investor Relations. Thank you. Please go ahead, ma'am..

Thank you, operator. Good morning and good evening, everyone. Thank you for joining us today for Hello Group's second quarter 2021 earnings conference call. The Company's results were released earlier today and are available on the Company's IR website. On the call today are Mr. Wang Li, CEO of the Company; Mr. Jonathan Zhang, CFO of the Company.

They will discuss the Company's business operations and highlights as well as the financials and guidance. They'll both be available to answer your questions during the Q&A session that follows.

Before I begin, I would like to remind you that this call may contain forward-looking statements made under the safe harbor provision of the Private Securities Litigation Reform Act of 1995.

Such statements are based on management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance and achievements to differ materially from those in the forward-looking statements.

Further information regarding this and other risks, uncertainties and factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statements as a result of new information due to events or otherwise, except as required under law.

I will now pass the call to Mr. Wang. I will translate for him. Mr. Wang, please..

number one, further grow the core user base with limited marketing budget and improved ROI versus last year; number two, bring the business back on growth track; and number three, continue to enrich our product portfolio and push the boundaries beyond Momo and Tantan.

On the Tantan side, the single most important goal for the year is to deliver solid user growth by substantially improving the marketing efficiency and the core dating experience. Now let me walk you through what we've done in the past quarter in order to push forward to each of the priorities.

First, regarding the progress we've made in better serving the users' need and driving user growth. During the past few months, we've taken a major step in renovating the way we help our users to discover new relationships and build interactions around our nearby features and functionalities.

As many of you know, nearby people and our signature features that have been around for many years. They have been playing a pivotal role in how we connect people.

Over the past few years, nearby people and nearby post, had evolved from connecting people based on a single dimension of physical proximity to a much more sophisticated algorithm, incorporating a wide diversity of connecting elements.

In terms of presentation, we've also been adding more personal information so that users could find more funding elements right on the nearby people list. Data has shown that these changes have played very positive growth in driving the efficiency of recommendation and improving the basic experience of Momo users.

In Q2, we pushed further on that front by experimenting our new recommendation system, which replaces the nearby people list with a sequence of full-screen single-user profile card.

The new system and display format allows more comprehensive user profile information to be presented to other viewers in a much more prominent way so that they can focus on each individual from multiple aspects rather than just quickly, and in many cases, slow down the list with numerous profile pictures.

More importantly, the new system also gives the recommendation engine more leverage to allocate higher exposure to the users who potentially can be a good match, but are not necessarily accessible or eye catching enough on the crowded nearby people list.

Such mechanism gives us much more room to decentralize the attentions received by a relatively small portion of female users to a wider range of female users, which can further improve the rate of response and the quality of interactions. We've been two months into the AB testing, and the results are consistent with our expectations.

We will continue to optimize this new version and gradually make it available to users in Q3. In addition to the core Momo, our team has also been making solid progress with enriching our brand portfolio for the Company. Pandaily, our video match making application targeting lower-tier cities almost doubled its DAU and paying user from Q1.

Socio, a social product overseas market also made impressive progress in user growth during the second quarter. These new experiences such as and are still at relatively early stage of development. On each individual basis, they may not grow up to be something as ubiquitous as Momo or Tantan.

However, it can help the Company expand our market share in specific niche markets and collectively can also make meaningful bottom line contribution to the group. Next, let me review the progress that we've made against our priority of bringing the cash cow business back on to the growth track. Firstly, on live broadcasting.

Momo live broadcasting revenue totaled RMB1.88 billion for the second quarter, down 22% from the same period last year, up 10% from last quarter. Live streaming revenue came in better than our original expectation. The year-over-year decrease continued to narrow from the previous quarter.

The better-than-expected spending recovery can be attributable to three factors. Number one, the steady improvement in the overall content ecosystem; number two, introduction of long-tail oriented features and operational events; and number three, revival of the supply side boosted by the new incentive program. Now turning to VAS.

Driven by the team's resilient focus on product innovation and operational efforts, value-added service maintained its strong momentum in Q2, growing 38% from the same period last year to RMB1.21 billion. Tantan continues to be the most significant growth driver for VAS.

In Q2, the team introduced some new experiences to the chat room to keep it fresh and engaging for the users. For example, we brought in my experience where each grass root talents are concurrently available on open line and users can send virtual gifts to request performances ranging from singing to scrip reading.

Users can always join in the talent for play or participate in other kinds of dignified activities as they wish. This experience lowers the entry barrier for long-tail users to enjoy high-quality interactions and gained immediate popularity.

Virtual gifting within the traditional use case, in particular, the interest group grew meaningfully in Q2 driven by operational events such as the battle by the On the product side, the newly launched customized gifts were well received by users, driving growth in the number of paying users and ARPU In addition to the established experiences, the matchmaking experience [Foreign Language], continued to gain traction.

We have adjusted our operational policies to provide better training opportunities for the entry-level matchmakers. As a result, total number of quality matchmakers increased significantly, which in turn drives revenue growth from this experience.

We expect the matchmaking experience to accelerate its growth and contribute in a more meaningful way heading into the second half of the year. Now briefly on the new endeavors. Revenue from the new apps showed robust growth momentum in Q2. Collectively, the new bucket was the second biggest incremental revenue contributor to the VAS top line.

The organic revenue growth was driven by user base expansion instead of pulling up ARPU. Our team has been operating this app at a controlled pace on the ARPU front, focusing primarily on building better user experience to drive the growth of DAU and retention ratio.

Heading into the second half, such approach will continue to be guiding our execution in the new bucket. All in all, I'm glad to see that the team has been doing a good job in executing against all of our strategic priorities. The fundamentals of the core Momo as a social platform continued strengthening.

At the same time, the revenue performance and structure are seeing solid improvement follows the target set at the beginning of the year. These give us the confidence that the core platform will continue to be healthy and productive cash which gives us important leverage to plan new grounds and build longer-term drivers for the group.

Now turning to Tantan. Firstly, on user trend and overall financials. We made adjustments to Tantan's management team and started making deployment on various product and operational fronts in mid-May. It took us some time to lock down the key issues. We the back-end system and put together a functioning team.

The transition has caused some temporary disruptions, which have put some pressure on average DAU in the second quarter. As a result, average DAU in domestic market for Q2 was slightly lower than that for Q1.

However, total DAU remained flattish on the sequential basis due to the growth in other markets in Asia, as we resumed our efforts in overseas development. Financing accounts came in RMB3.1 million end of Q2 2021, down from RMB3.5 million from last quarter. The RMB400,000 net decrease was due to the combination of three factors.

Number one, the spin-off of certain business in May had around RMB400,000 negative impact on paying user accounts; number two, the improvement in the female percentage in new users acquired in the recent months, adversely impacted paying conversion as women are much less likely to pay for VAS in comparison with men; number three, the lower average DAU in Q2 caused by the transition and related operational disruption was translated into the paying user account.

We're happy to see that both DAU and the number of paying users has started ramping up since early July as we move forward with our efforts in reforming the use appreciation approach. Now let me briefly review Tantan's financial performance. Total revenue for the second quarter was RMB514 million, down 1% year-on-year and 10% quarter-on-quarter.

VAS revenue decreased to 6% sequentially to RMB297 million. The sequential decrease was due to the decrease in paying user count, reason of which are already explained in the previous part. ARPU of VAS, on the other hand, increased slightly quarter-over-quarter as users shifted towards higher-priced membership service.

Live streaming revenue decreased 14% sequentially to RMB270 million. The decrease in ARPPU was due to our strategic decision to deemphasize live streaming as a supplementary experience to dating. Now turning to the most important part of my speech today.

our plan and respective execution on how to drive Tantan's user growth and unleash its full potential going forward. Tantan encountered many challenges in the past couple of years. The single most important goal for Tantan this year is to deliver solid user growth by substantially improving the marketing efficiency and quality experience.

We spent the rest of Q2 coping through the key areas of focus and coming up with an execution plan for that goal. There are three pillars supporting the plan. Number one, improving marketing efficiency; number two, making the top core dating experience more appealing; and number three, having an effective recommendation engine.

On the marketing front, one of the key broken windows was identified in the new user structure. What happened here was that in order to control the unit acquisition cost and improving paying conversion to meet quarterly numbers in revenue and paying user account, Tantan has been compromising the quality of new users acquired through channels.

It has led to a gradual deterioration in the user structure, evidenced by disproportional gender ratio and a rapidly increasing average age of the new users. Having a balanced the demographic is crucial for user experience and the long-term healthiness of the dating ecosystem.

Therefore, we have to fix the structure in new registration before we can even talk about user growth and made it the key focus for the team in Q2. I'm glad to see that we've had some initial, but fairly impressive progress during the past few months. Female ratio in the newly acquired users increased to 45% in August from around 20% last year.

The average age of new female users has dropped seven years from the period before we took over. However, because it's relatively expensive to acquire female and younger users, the average user acquisition cost went up to a pretty high level during June.

Our main goal in Q3 is to bring down the unit acquisition cost based on the current user structure. Of course, this goal should be achieved through continuous optimization of app material and data management system. After we reached a reasonable level of the cost run, we will increase the marketing spend to drive top of the funnel activities.

So far into Q3, we've been progressing well against that goal and the domestic DAU account also seeing gradual and healthy ramp-up since July. Another thing on the marketing front that can contribute to overall user growth is brand advertising.

We believe that Tantan as a relatively young brand has huge opportunity to improve user awareness and enhance brand equity. If we can spread the core value of Tantan to those who potentially need our service, we will start looking at branding options once we complete our next major product upgrade.

The second area we need to improve is to enhance the quality experience. In the second quarter, our product team conducted a thorough walk-through of Tantan's product experience and made an in-depth study of user behavior. The study brought two things to our attention. Number one, Asian women tend to be quite passive when it comes to dating.

For example, a considerable portion of female users on Tantan likewise in an extremely selective way, and some may not write swipe at all, resulting in a large number of female users getting no matches or interactions based on the current product mechanism.

This is one of the key reasons why female users retention ratio is significantly lower than that of man on Tantan. And the second issue is, about 30% of newly acquired users are marked as fake users by Tantan. Fake users refers to those who fail to provide qualified profile photo and are therefore, denied full access to the swipe and match system.

The retention of fake users tend to be extremely low because of the inability to get any matches or interactions. The most important near-term priority for our product team is to improve female user and users experience so that we can better retain them because the current product mechanism tends to be less effective for these two groups of users.

We realize that we need to get more innovative and just making minor tweaks or adding patches to the current swipe and match system. In fact, we need to build supplementary experience around it, providing additional ways for people to bond.

The goal is that through this additional more subtle funding elements more integrated slow to act users can get attracted to each other and gradually open up to others with their real identities and ultimately build offline relationships based on authentic information. You will see our first step into this problem unfolding at our next upgrade.

The third area we need to improve in order to drive user growth is a recommendation algorithm. In the open social space for more than 10 years, I believe the causing that makes a social product stand out is its ability to make this recommendation more relevant.

Users need to feel that this is a product that understands or at least is trying to understand what kind of people they're looking for. Obviously, Tantan is not doing a good enough job in this area. We are getting the great team so we can move faster on that front. This is a road block that we are determined to crack down as soon as possible.

Beyond the China opportunities, we are also getting prepared to resume the pursuit of Tantan's overseas expansion. We believe there is still a lot of growth opportunity by penetrating deeper into overseas Chinese, Southeast Asia as well as expanding our reach to East Asia and other countries.

Our team has rich experience in social product innovation, membership business and non-membership value-added services. Very few teams have a comprehensive experience on all those three fronts as we do. We believe that in Asia, such experience is very crucial in building up a scalable social platform that can ultimately reap profit.

This is an important competitive advantage that we are going to leverage. We would like to see Tantan becoming an indispensable part of people dating life in Asia. It is a very important constituent of our growth strategy for the Company. These are the things I'd like to cover on this call. Now let me pass the call over to Mr.

Jonathan Zhang for financial review. Jon, please..

number one, higher payout ratio from core Momo's live broadcasting business on a year-over-year basis. The lower gross margin from Tantan as its live broadcasting business has become sizable compared to a year ago.

Number three, certain fixed nature cost items such as headcount impacted the gross margin negatively as total revenue declined, and this item represents a higher percentage of total revenue. On a sequential basis, non-GAAP gross margin was down by 0.6%. Gross margin for Momo core remained flattish compared to the previous quarter.

The slight decrease in the group's non-GAAP gross margin was due to 2% GP margin decline on Tantan as certain fixed costs having a negative impact on Tantan's gross margin due to a sequential decrease in revenue.

It's worth mentioning here, our wholly-owned subsidiaries Qool Media and Momo Pictures produced a variety show Honorable Chef; and a film, Like a Friend, respectively. A small portion of the related product cost was recorded in Q2, and the vast majority of the cost is going to be recognized in Q3.

We expect the cost incurred in connection with this media product productions to have a close to two percentage drag on the GP margin in Q3. Non-GAAP R&D expenses for the second quarter was RMB232.9 million compared to RMB226.6 million for the same period last year, representing 6.3% and 5.9% of total revenue, respectively.

The increase is mainly due to the increase in employee salary and social welfare. We ended the quarter with 2,092 total employees, of which 617 are from Tantan. R&D personnel as a percentage of total employees for the group was 57% compared to 60% of Q2 last year.

Non-GAAP sales and marketing expenses for the second quarter was RMB619.5 million or 16.9% of total revenue compared to RMB590.7 million or 15.3% of total revenue for the same period last year.

The year-over-year increase in sales and marketing expense, both in terms of renminbi amount and in terms of as a percentage of total revenue, was primarily due to higher marketing spending in association with our live streaming Bella party which was delayed from Q1 to Q2 due to the pandemic.

The increase was partially offset by lower user acquisition investment for Tantan during the management transition period, while our team focused on fixed infrastructure issues on Tantan's user acquisition system.

Non-GAAP G&A expenses was RMB78.8 million for the second quarter 2021 compared to RMB91.9 million for the same quarter last year, representing 2.1% and 2.4% of total net revenue, respectively. The decrease was largely due to a recovery of net debt previously written off.

Non-GAAP operating income was RMB781.9 million, a decrease of 24.5% from Q2 2020, representing 21.3% non-GAAP operating margin for the quarter, down 5.5% from the same period last year. Non-GAAP OpEx as a percentage of total revenue was 25.4%, an increase of 23.5% from Q2 2020.

The increase was mainly due to negative operating leverage as a result of a decrease in revenue. Now briefly on income tax expenses. The Company repatriated RMB1.3 billion from our in China to our offshore entity in Q2 in order to replenish our U.S. dollar funding.

In accordance with the respective taxation law of China, the Company paid 10% or RMB130 million withholding tax to Chinese tax authorities. This tax payment was recorded as income tax expenses for the Company for the second quarter 2021. Excluding this withholding tax payment, our non-GAAP effective tax rate was around 20% in Q2 2021.

Turning to the balance sheet and cash flow items, as of June 30, 2021, our cash, cash equivalents, short-term deposits, long-term deposits, restricted cash and long-term restricted cash totaled RMB15.45 billion compared to RMB16.48 billion as of December 31, 2020. In Q2, we paid an equivalent of RMB853 million cash dividends to our shareholders.

Excluding an equivalent of RMB678.2 million cash payment to Tantan founders to redeem vested share options upon their departures in Q2, the net cash provided by operating activities in the second quarter was RMB510.4 million.

Lastly, on business outlook, we estimated our third quarter revenue to come in the range from RMB3.65 billion to RMB3.75 billion, representing a decrease of 3.1% to 0.4% year-on-year or a decrease of 0.6% to an increase of 2.1% quarter-over-quarter.

For the third quarter of 2021, we expect the total revenue from core Momo to return positive and an increase of mid-single-digit percentage year-on-year were up low single percent -- low single-digit percentage sequentially. On the Tantan side, we expect the user recovery to drive organic revenue growth.

But as Wang Li mentioned earlier, in pursuit to our strategic goal and user growth, we are planning to remove some of the extremely short-term oriented efforts to deemphasize live streaming to take care of our user experience and the dating ecosystem.

We expect ARPU to decrease while we step down -- we step back in terms of how deep we monetize Tantan. Overall, we expect Tantan revenue in Q3, a slight advantage on a sequential basis. Please be mindful that this forecast represents the Company's current and preliminary view on the market and operational conditions, which are subject to change.

That concluded our prepared remarks. With that, let me turn the call back to Cathy to start the Q&A. Cathy, please..

Yes. Just a quick reminder, for those who can speak Chinese, can you please ask the question in Chinese first followed by English translation by yourself and also if you can limit the number of questions to two. Operator, ready for questions..

[Operator Instructions] The first question comes from the line of Thomas Chong from Jefferies. Please go ahead..

I have two questions. The first question is on Tantan. Can management comment about Tantan's user growth target? And also in the second half, can management share about the Tantan revenue as well as earnings expectation? My second question is on core Momo.

Can management share any updates about the user and the monetization trend as we come to the second half. In particular, on the live streaming side, can management share about the outlook as well as the strategies for VAS in the next couple of years? Thank you..

I remember that on our June earnings conference call, I said that we expected Tantan's user base to grow from 20% to 35% by the end of the year, that's against the June number. That expectation remains unchanged. And as you guys can see, since July, we've already gotten on to the right track to achieve that target at a steady pace.

On the revenue side, like I said before, the single most important goal for this year for Tantan team is to grow the users and improve product experience. Everything else, anything else should be subservient to that key goal. So we actually haven't set a rigid revenue target for the second half of the year.

But I can see two things happening down the path, which should have different sorts of impact on revenue. One is user growth that is obviously going to have a positive effect on revenues.

And given that there is a time lag between user growth and the translation into membership revenue, I feel that, that positive impact should be felt in a bigger way in Q4 this year.

And the second factor is that starting from Q3, we are already taking -- trying to take a few steps back in terms of how deep we monetize in order to protect user experience.

That would involve unwinding some of the extremely short-term oriented measures to drive the paying conversion and that would also involve continuing to deemphasize live streaming in terms of product design, that will be an ongoing process as we move deeper into the year.

And actually, for Tantan's monetization, I have some longer-term thoughts that maybe we're sharing here. Number one is we absolutely have no doubt in the long-term monetization potential of Tantan. Based on our understanding of the users -- of our users, Tantan's users actually have stronger willingness as well as ability to pay for the service.

That's why I believe that ARPU of Tantan should actually be higher than Momo's. But in terms of monetization approach, we need to break through the single membership model and try to add in the second pillar. And that second pillar, in my opinion, should be the pay-per-use model.

And by having that dual-pillar sort of structure, we can take better advantage of the user segmentation. That should be the right kind of monetization approach that fit better into the Asian culture that is also the right kind of monetization approach that could fully unleash Tantan's monetization value.

So starting from the second half of the year, we're going to start some product experiments on that front, continuing to explore the non-value-added service that non-membership value-added service is going to be the most important priority that we have on the revenue side in the near future.

Now here is Jonathan to talk about the bottom line for Tantan in the second half..

Yes. As I remember, during the last earnings conference call, I provided an update on the revised outlook the Tantan's bottom line. Actually, that picture remains unchanged, still the same. Let me just repeat it again.

Because we are going to focus on Tantan's user growth, particularly during the second half of the year, with a lower revenue target, we're going to continue to invest in the paid marketing channels to acquire new users to help us to achieve our targeted DAU with growth target, as Wang Li just mentioned, 20% to 35% growth annually.

So with that, we expect the Tantan's net loss will widen sequentially, particularly starting from Q3 and Q4. The total annual net loss probably will be in the range of RMB350 million to RMB450 million. So that still is our target right now..

For the Momo core business, I think what we are pursuing here is moderate growth on top of a stable and healthy user base. That principle applies to both user growth and revenue growth.

For live streaming, I think it's pretty clear that since the beginning of the year, it's already in a state of steady recovery stage, and the future growth of the Company will be primarily driven by the added services and the growth will be coming from several key areas.

And the first area of growth is the continuous development of the audio/video social entertainment category. On that front the chat room experience as well as the video matchmaking experience on the core, are still seeing plenty of growth opportunities. The second area of growth is going to be the continuous innovation on the interactive gifts.

In the past, we had not focused too much on being inventive on the skins of the virtual gifts themselves because we didn't realize that there could be a lot of revenue potential in doing so.

But actually, during the past few quarters, we've been seeing pretty considerable incremental revenue coming from the introduction of new creative interactive gifts. So I think there is going to be a lot of potential that we can in this area.

And so I think another key growth of -- another key area of growth will be the continued user growth from the stand-alone new applications that we're working on. The new buckets, as a whole, are going to see pretty decent growth both in terms of users and in terms of revenues.

Next year, we're hoping that we could see more of these stand-alone new apps coming into fruition. With regards to the revenue expectation for second half, we had a previous target that we're going to turn that the revenue on the Momo core, it's going to turn Y-o-Y positive in the second half.

I think in Q3, we're guiding core Momo's revenue to grow 5% year-over-year. In the fourth quarter, we're looking to further accelerate the Y-o-Y growth rate from that level. More importantly, I think revenue structure wise, we're going to be increasingly leaning toward value-added services, which is much more flattish in terms of structure.

I hope that address all of your questions, Thomas. With that, operator, we are ready for next..

The next question comes from the line of Tian Hou from T.H. Capital. Please go ahead..

I noticed that recently the Company's name has been changed from Momo to Hello Group. I would like to know more about the thinking behind the change, and also if company can share any strategic thinking behind the name change? That's number one. Number two is Momo has been in the marketplace for long time.

So what is the new growth driver the management think can be in the next several years to drive companies to drive Momo growth? Thank you..

Name change from Momo to Hello Group is a reflection of our multi-application product portfolio approach. Momo as a company is already 10 years old, and we've developed from a single function application to a company that has Momo and Tantan to pretty big social platforms.

At the same time, revolving around the social and entertainment services, we've also incubated a few other stand-alone applications. So if you view the Momo application as the first growth engine, the Company, and Tantan is the second, and the new stuff that we're working on are going to be the third engine.

The growth of the Company in the coming decade will be driven by these three different engines in a way. So going back to the reason why we need this new name. I think we need this new company name as a carrier for the Company's strategy to continue to diversify into new products and services.

More specifically, I think in the coming three years, the biggest and also the most definitive growth opportunity is definitely going to be Tantan.

Other than Momo and Tantan, now within our product portfolio, we also have some other newer brands such as Things like these applications on an individual basis may not, like you said, has the potential to grow up to be something as big as Tantan, ubiquitous as Tantan is, but collectively, they can still make sizable contribution to the bottom line of the Company.

We're hoping that in the coming three to five years, we could incubate more of such applications in order to cover a broader range of people on the user spectrum. Lastly, I wanted to take this opportunity to share some of the longer-term thinking that I have on the strategic side.

I think that in the social and entertainment space, the coming decade will inevitably be seeing the emergence of new ubiquitous platforms or products that can build huge DAU base. Such kind of opportunity could either be driven technological advances or it could be driven by the behavioral changes in user behavior.

For example, we are now seeing some pretty big stuff happening in AR, VR, smart devices space. The technological advances in this space will inevitably bring phenomenal changes in terms of how people socialize in the future. And this is the kind of change that opportunity that we need to make sure we stay vigilant about and get prepared for.

So that when time comes, we have the capability of seizing these opportunities to grow to be something bigger. Our team has proven capabilities of product innovation in the social space. And our vision and decisiveness to seize the right kind of investment opportunity to grow the business is also proven by time.

At the same time, the Company is also sitting on huge cash balance and a very strong operating cash flow. So I think investors can rest assure that we will continue to push very hard into new areas and growth opportunities, either via our self-development or through investment opportunities.

This is the area where we have full confidence as well as enough tenacity to carry through..

Operator, I think we have time for one last question, if there are so other people in the queue..

Certainly, the next question comes from the line of Daniel Chen from JPMorgan. Please go ahead..

My question is on the regulatory environment of live streaming industry in China. So we have been seeing that since last year. There has been several new regulations on the large main industry.

So the latest one is the July 1, targeting the online live streaming agencies, so I want to know how should we look at the regulatory environment for the live streaming inventory the future and what's the implication to our live streaming revenue trend?.

Thank you for your question. I think as the -- as China's mobile Internet space becomes increasingly important, it's inevitable that the policymakers and regulators are going to take it more and more seriously to make sure that the industry develops in an orderly and regulated fashion.

That's in a sense of a very good thing for us because it's leveling the playing field. And it's also going to make sure that the whole space move forward in a healthy environment. So as always, we are going to be cooperating with various regulatory bodies to make sure that we stay in full compliance.

More specifically with regards to the policy changes you mentioned in the live streaming space, as a matter of fact, that's something that we've been closely monitoring since the beginning of last year, since the beginning of 2020.

And you guys can see during the second half of last year, we've actually made very, very important and significant structural reform to make sure that we -- to make sure that our company stays healthy and to reduce the reliance on the top spenders.

And since the beginning of the year, such structural reform has already been showing a positive effect to our ecosystem as well as our business. We believe that it is going to help our live streaming business to continue to develop in a healthy and steady way in the new policy environment..

Operator, I think that concludes our conference call today. We are ready to close. Thanks, everyone, for joining our conference call today. We'll see you next quarter..

Thank you. That concludes the conference for today. Thank you for your participation. You may all disconnect your lines now. Thank you..