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HUYA Inc (NYSE:HUYA)
Q4 2018 Earnings Conference Call
March 4, 2019, 8:00 p.m. ET

Contents:

Prepared Remarks:

Operator

Hello, ladies and gentlemen. Thank you for standing by for the Fourth Quarter and Fiscal Year 2018 Earnings Conference Call for Huya Inc. At this time, all participants are in listen-only mode. Today's conference call is being recorded. And I would now like to turn the call over the Ms. Hanya Lu, Company Investor Relations. Please go ahead.

Hanya Lu -- Company Investor Relations

Hello, everyone, and welcome to the Fourth Quarter and Full-Year 2018 Earnings Conference Call of Huya Inc. The company's financial and operating results were issues earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com.

A replay of the call will be available on the IR website in a few hours. Participants on today's call will be Mr. Rongjie Dong, Chief Executive Officer of Huya, and Mr. Henry Sha, Chief Financial Officer. Management will begin with the prepared remarks, and the call will conclude with a Q&A session.

Before we continue, please know that today's discussion will contain forward-looking statements made under the safe harbor provision of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the view expressed today. Further information regarding this and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the US Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law.

Please also know that Huya's earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Huya's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited, most directly comparable GAAP measures. I will now turn the call over to our CEO, Mr. Rongjie Dong. Please go ahead.

Rongjie Dong -- Chief Executive Officer

Hello, everyone. Thank you for joining us today. We are pleased to have completed 2018 on a strong note. 2018 was a very important for Huya. In May, we became the first Chinese game live streaming company listed in the US. And throughout the year, we continued to increase our market share by seizing the opportunity of industry consolidation and leveraging our first-mover advantage in the capital market.

In the first quarter, we continued delivering solid financial and operational results including revenue growth of 103% year-over-year. That exceeded our expectations. We are also pleased to have exceeded our financial guidance in every quarter [inaudible] ever-encouraging milestone. [Inaudible] the annual [inaudible] for the first time with our non-GAAP net income of full-year 2018 [inaudible] RMB460 million.

Our revenue streams were boasted by strong MAU growth due to the 116.6 million users in the quarter, a 34.5% increase year-over-year. User growth was driven by our focus on major e-sports events for all the broadcasted on Huya's website and the mobile app. We believe that borrowing factors resulted in MAU growth which was beyond our own expectation for the period.

Firstly, we made significant improvements in Huya's website viewing experience such as reducing the load time of entering streaming channels, which promoted user growth on our [inaudible] mobile front. Secondly, our few notable e-sports tournaments broadcasted by Huya attracted [inaudible] gamers' attention in this quarter. Thirdly, when a Chinese e-sports team named IG won the world championship in the final of League of Legends World Championship, Season 8. In November, the peak concurrent user and viewership number on Huya's platform hit a record high. Lastly, we continue the [inaudible] efforts in content monitoring, enhancing our presence in major [inaudible]. [Inaudible] Chinese national holidays in October 2018 are key competitors. Mobile app was suspended by iOS X store and mainstream Android downloading channels in China, which was observed to strengthen our overall competitive positioning.

Our mobile strategy continues to be a strategic focus for us. Our mobile user experience, supported by cutting-edge technology and early mover advantage in mobile development, further reinforces our leading competitive edge and differentiates our content and service offerings in the market place. As such, mobile MAU grew to over 50 million. And we continue the maintaining the one-month retention rate of Huya mobile app users to be about 70%. We have seen stronger monetization of [inaudible] with mobile users presenting higher conversion rates for both the fourth quarter and the full year. Mobile users drove more than 80% of our live streaming revenue. Meanwhile, we are happy to share that Huya continues to be ranked the number one game live streaming platform in China in terms of total MAU, mobile MAU, and average daily time spent on mobile app, mobile active user in the fourth quarter 2018.

We are proud of our performance in 2018 and view the year as a important step in our growth. In addition to our successful IPO, we worked through the year to further build our content ecosystem in addition to strengthening our partnerships with gaming companies, broadcasters, and talent agents. We also worked diligently to enhance user interaction experience, our content distribution technology, and advantageous platform, providing smooth viewing experience and bolstering the creation of professional generated content will further broaden our content offerings.

Huya's content was also broadcasted and shared through external links, including WeChat game live streaming mini-program, Weibo, [inaudible] platform and [inaudible]. While viewership numbers and use behavior [inaudible] third-party platforms are not included in our operating measures, according to our status ticker. Total monthly active users watching or live stream content from these external links was reaching over 40 million in December 2018.

Our strategic focus on e-sports continues to deliver encouraging results as the popularity of e-sports grow both in China and globally. During the fourth quarter, we broadcasted over 110 e-sports tournaments with the viewership of over 380 million, including LoL S8, KPL [inaudible], PCPI-S2, and All-Star LoL. That's brought our 2018 total number of e-sports events to approximately 400, which drove over 1.6 in total viewership.

In the year, going forward, we will increase the investment in high-quality e-sports tournaments by supporting for all major professional leagues, like LPL, KPL, and OWL, to name a few. We will be the exclusive live broadcasting platform for a series of important e-sports events, such as LCK, [inaudible], WESG Grand Final, during the year. Besides these e-sports tournaments organized by gaming companies, Huya also provided e-sports tournament services and hosted approximately 20 events in Q4, which generated [inaudible] of over 58 million in the period.

Self-organized e-sports tournaments have become one important of our e-sports strategy, which is [inaudible] our competitive position in live stream content and both Huya's own [inaudible] e-sports tournament and branding. Our efforts have not only generated user traffic, but there was also little growth and showcase popular [inaudible] on our platform. In general, we announced that we are establishing a e-sports [inaudible] and Huya group. We are also evaluating and aggregating all our e-sports efforts with the goal of establishing an efficient and effective bridging management. Going forward in this year, we will continue to place great emphasis on self-organized events, including the Huya [inaudible] and the Huya mobile gaming arena. And we'll derive additional professionally generated content based on the current lineup of e-sports tournaments.

Finally, as announced in September of last year, we launched our Chengdu-based team participating in the Overwatch League 2019 season. We are pleased to share the Chengdu Hunters gained victory for [inaudible] in February of this year as the only team composed of all Chinese professionals among the [inaudible] teams in the whole year this season. We believe the team will be received well with the [inaudible].

As we look forward, our primary objectives for 2019 and beyond are to strengthen our leadership position in China and [inaudible] expand into overseas markets. To strengthen our position in China, we will provide more services for our content ecosystem and then continue investing to enhance our content differentiators. We have been seeing fast-growing trends in terms of MAU and user content in both outdoor activities and amazing content, genres, since the second half of 2018. We will build up non-game professionally generated content meant to improve user [inaudible], leading to enhance monetization in 2019.

Our gaming content side, we will improve. Visibility will improve the new game pipeline by establishing more partnerships with gaming companies going for work. These efforts will get us prepared to push out content as soon as the game approval process resumes. As we evaluate our growth opportunities, we view our overseas presence as a core differentiator in the competitive game live streaming landscape. Our recent entry in Latin America has shown great potential with Latin-user growth and is viewed as a potentially lucrative opportunity for us.

In addition, we saw the total MAU of Nimo TV, our major content platform for overseas expansion surpass 10 million in December 2018, which was not included in our quarterly MAU status ticker as reported. We believe that the overseas user base of Nimo TV has shown sizable advantages as compared to its peers. Our unique business model [inaudible] with capital and operating strength will drive our success in the overseas market with sustainable return in the long run.

In summary, 2018 was a momentous year for Huya. In addition to sustaining [inaudible] growth our domestic business and overseas extension, we have been encouraging broadcasters on the Huya platform to create more content advocating social responsibility. During the past year, over 600 live streaming events broadcasted on the Huya platform promoted a healthy and more positive social environment, covering topics such as public welfare and cultural heritage, to name a few. We intend to work tirelessly to maintain our position as the leading game live streaming platform in China, while leveraging our technology to capture the tremendous growth opportunities both domestically and around the world.

With that, I will now turn the call over to our CFO, Henry, to share the financial details.

Henry Sha -- Chief Financial Officer

Thank you, Mr. Dong. Hello, everyone. We delivered strong top-line performance with fourth quarter revenue growing by 103% year-over-year to RMB1.5 billion and 2018 two-year revenue growing by 113% to over RMB4.6 billion. This was driven by solid growth in both live streaming and our advertising business. As a result of our continued revenue increase and margin expansion, we were able to deliver fourth quarter positive operating net income on a GAAP basis. We also achieved non-GAAP net profit for the sixth consecutive quarter, reaching a record high of RMB166.9 million, while net margin increased by 160 basis points quarter-over-quarter to 11.1% in the fourth quarter 2018.

Live streaming revenue was support by MAU growth and year-over-year increasing commission rates of paying users with notable improvement in gaming content and monetization. The paying user conversion rate rose to 4.2% in the fourth quarter of 2018, from 3.2% in the same period last year. As a result, our paying users grow to 4.8 million in the fourth quarter of 2018, up 73% from prior year period, with mobile users making up about 80% of that total. In the quarter, revenue from gaming-related content contributed more than 65% of total live streaming value. Our advertising business benefited from our strategy of providing value-added services, enhance the partnerships between Huya and the broadcasters, and our efforts in balancing advertisement slot and user experience.

While we experience the robust growth momentum, we have also worked prudently to enhance our operating efficiency and made significant strides in improving gross margin for both the quarter and the year. That improvement resulted from our continued technology development in order to lower bandwidth consumption and costs, while distributing high-quality streaming and video content in the top-tier resolution.

We also benefited from our growing scale, as content costs were leveraged across a larger user base. Our first quarter, non-GAAP gross margin increased by 60 basis points quarter-over-quarter to 16.1%, despite the fact our overseas expansion requires continued investment to nurture up growth. As we enter 2019, we expect our fast-growing user base to count on the value that we have created. And our strategic focus on business diversification will remain as our driver of strong revenue growth. We see tremendous opportunity to expand our user base in both domestic and overseas markets. And our efforts to efficiently manage costs, while leveraging our growing scale, will continue to generate positive cash flow. We are confident our strong competitive position and compelling strategy for growth will allow us to deliver solid returns to shareholders.

Now let me briefly go over the financial results for the fourth quarter of 2018 increased by 103.1% to RMB1,504.9 million, from RMB741 million in the same period of 2017. Live streaming revenues increased by 108.1% to RMB1,441.8 million in fourth quarter of 2018, from RMB692.7 million in the same period of 2017, primarily due to the increase in both the number of paying users on our platform and spending per paying user. The increase in the number of paying users was primarily driven by our mobile strategy, diversification of content offerings, and continued efforts in converting active users into paying users. Advertising and other revenues increased by 30.7% to RMB 63.1 million in the fourth quarter of 2018, from RMB48.3 million in the same period of 2017. This increase was primarily driven by increased demand from gaming advertisers and further recognition of Huya's brand name in China's online advertising market.

Cost of revenues increased by 100.1% to RMB1,266.3 million in the fourth quart of 2018, from RMB632.9 million in the same period of 2017, primarily attributable to the increase in revenue sharing fees and content costs, as well as bandwidth costs. Revenue sharing fees and content costs increased by 112.8% to RMB1,042.1 million in the fourth quarter of 2018, from RMB489.7 million in the same period of 2017, primarily due to the increase in virtual item revenue sharing, which was in line with the company's live streaming revenue growth and continued expanding in e-sports content and content creators, in both domestic and overseas markets.

Bandwidth costs increased by 42.1 % to RMB161.6 million in the fourth quarter of 2018, from RMB113.8 million in the same period of 2017, primarily due to an increase in bandwidth usage as a result of increase in user base around Huya's platform and enhanced live streaming video quality improvement, partially offset by improved efficiency in bandwidth utilization as a result of deployment new technologies in content distribution.

Gross profit increased by 120.7% to RMB238.6 million in the fourth quarter of 2018, from RMB108.1 million in the same period of 2017, excluding share-based compensation expenses. Non-GAAP gross margin increased to 16.1% in the fourth quarter of 2018, from 14.6% in the same period of 2017, and from 15.5% in third quarter of 2018, primarily due to our enhanced monetization efforts, technology innovation on bandwidth utilization, and continued leverage of economies of scale.

Research and development expenses increased by 80.9% to RMB79.1 million for the fourth quarter of 2018, from RMB43.7 million for the fourth quarter of 2017, mainly attributable to increased headcount and the wage inflation in R&D personnel and share-based compensation expenses related to the share awards newly granted in 2018.

Sales and marketing expenses increased by 102.4% to RMB69.9 million for the fourth quarter of 2018, from RMB29.6 million for the fourth quarter of 2017, mainly attributable to the increase of marketing and promotion expenses as a result of intense efforts in promoting Huya's brand awareness and e-sports content, as well as cooperating with various marketing channels in both domestic and overseas markets.

General and administrative expenses increase by 163% to RMB92.6 million for the fourth quarter of 2018, from RMB63 -- sorry -- RMB36.6 million for the fourth quarter of 2017, mainly due to the increase in share-based compensation expenses related to the share awards newly granted in the first quarter of 2018, professional fees, and salaries, and the welfare of management personnel.

Operating income was RMB18.5 million for the fourth quarter of 2018, compared with operating loss of RMB1.8 million in the same period of 2017. Non-GAAP operating income, which excludes share-based compensation expenses, increased by 280.9% to RMB82.5 million for the fourth quarter, from RMB21.7 million in the same period of 2017. Non-GAAP operating margin was 5.5% in the fourth quarter of 2018, compared with 4.8% in the third quarter of 2018 and 2.9% in the fourth quarter 2017.

Net income attributable to Huya Inc. was RMB99.6 million for the fourth quarter of 2018 and 19-fold increase from RMB5.0 million in the same period of 2017. Non-GAAP net income attributable to Huya Inc. in the fourth quarter of 2018, which includes loss on fair value change of investments and equity investee's investments and share-based compensation expenses, increased by 486.8% to RMB166.9 million, from RMB28.4 million in the same period of 2017. Non-GAAP net margin was 11.1% in the fourth quarter of 2018, significantly improved by 3.8% in the fourth quarter of 2017.

Diluted net income per ADS was RMB0.45 for the fourth quarter of 2018, compared with diluted net loss per ADS of RMB0.05 for the same period of 2017. Each ADS represents one Class A ordinary share. Non-GAAP diluted net income per ADS was RMB0.76 for the fourth quarter of 2018 compared with RMB0.19 for the same period of 2017.

Let me turn into our balance sheet and cash flows. As of December 31st, 2018, the company had cash and cash equivalents, short-term deposits and short-term investments of RMB5,993 million. Net cash provided by operating activities was RMB717.5 million in 2018, compared with RMB242.4 million in 2017. Be mindful of the lens of our earnings call. For the other full year 2018 financial results, I will encourage listeners to refer to our earnings press release for further details. Now, let's come up to the business outlook.

For the first quarter of 2019, we are currently expecting total net revenues to be in the range of RMB1,510 million to RMB 1,550 million, representing a year-over-year growth of between 79% and 83.7%. These forecasts reflect our current and preliminary views on the market and operational conditions, which are subject to change.

This concludes our prepared remarks we will now open the call to questions. Operator, please go ahead.

Questions and Answers:

Operator

Thank you. And we will now begin the question and answer session. To ask a question you may press * then 1 on your touchtone phone. If you are using speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press * then 2. We also ask that you please limit yourself to two questions. For the benefit of all participants on today's call, if you would wish to ask your question to management in Chinese, please immediately repeat your question in English.

And we will now pause for a moment to assemble our roster. And our first questioner today will be Hillman Chan with Citi Group. Please go ahead.

Hillman Chan -- Citi Group -- Analyst

[Speaking Mandarin]. Thank you, management for taking my question, and congrats on a solid quarter result. My first question is on Apex Legends. Could management share more on your [inaudible] of the initial user attraction of this title on Huya in China, in terms of the user popularity? And how does it compare to other titles in terms of Overnight and Fortnite? And could you also share more on your efforts in building up quickly the streamer and e-sport ecosystem for this title in China, please? And my second question's on competition. Could management share more on how we think about the competition [inaudible] in terms of user popularity, execution of new game launches, recruiting of streamers, and also tournament IPs? And how do we think about differentiate growth competitive strategy [inaudible] 2019, please? Thank you very much.

Rongjie Dong -- Chief Executive Officer

Hanya Lu -- Company Investor Relations

Thank --

Hillman Chan -- Citi Group -- Analyst

Please go ahead.

Hanya Lu -- Company Investor Relations

Thanks. I will help translate the answer into English. So, in terms of the type of coverage on Huya's platform, we basically cover over 3000 game titles, which means we have a broad coverage of long-held games to attract users. That's number, firstly. And secondly, we, Huya, is a live streaming platform. We welcome new, popular game titles. But speaking of Apex Legends, it's too early stage. But we see in the viewers that Twitch has made a successful marketing experience for this game title. And that's a good example to say that the game live streaming platforms provide a really effective channel for games to become a new broadcast blockbuster. So, that's Apex Legends from what we observed in overseas markets.

Speaking of Huya, how we want to prepare those game titles, obviously, we have been keeping a close attention on new games in the market and make timely investment. We have provided incentives in the support timeline for the broadcasters and recruitment for this game title. And we also invited popular broadcasters to attend Huya's self-organized Apex Legends online tournament.

Rongjie Dong -- Chief Executive Officer

[Speaking Mandarin]

Hanya Lu -- Company Investor Relations

Thanks. I will help translate the answers into English. So, in terms of our comparison [inaudible] I think, overall, we need to consider game live streaming platform as a content provider content platform, so ultimately providing high-quality content. That's on top of our priority. And we're able to provide that content on the platform. Secondly, is that we are able to provide the right incentive, financial support to the broadcasters to make sure that they can grow together with our platform. Since we have those two things, we can share that our mobile MAU makes sure we are the largest game live streaming platform in China. And, also, we have achieved really good monetization if we look at the game live streaming platforms in China.

And also, speaking of the business model, we are not hugely dependent on recruiting the top broadcasters. We think the mid-tier, smaller broadcasters are also the core strength of our platform, provides a variety of content. We have also maintained a quite strong with the talent agencies as we have been working with them for a long time. We work together to support and promote the broadcasters.

Lastly, from a technology perspective, we are also a leading player in the game live streaming platforms. We are able to provide high streaming quality for the users, at the same time, really manage our bandwidth cost to achieve a cost efficiency for the whole platform. And when looking into the future, I think, first of all, we still wanna maintain the [inaudible] and to train promote the broadcasters, grow the broadcasters with Huya, and also achieve better monetization and maintain all monetization capabilities going forward. Secondly, looking to 2019 overseas is a focus for us. We want to keep the overseas expansion and achieve certain scale for 2019. And I think our MAUs, if we look at the data last year, December, we have already achieved over 10 million MAUs. Lastly, I think we wanna create a platform that also have a variety of content besides gaming, so we wanna diversify our content offerings going forward as well. Thank you.

Henry Sha -- Chief Financial Officer

Hi, this is Henry. I will add one more point to compensate the answers provided by Mr. Dong. So, Huya's user base is more fragmented, which is distributed to all the [inaudible] in China, especially for the [inaudible]. And the iOS users is around 10%. So, we believe that we also have the cost advantage and the user base advantage from this perspective. That's the answers to Hillman.

Operator

And our next questioner today will be Thomas Chong with Credit Suisse. Please go ahead.

Thomas Chong -- Credit Suisse -- Analyst

[Speaking Mandarin]. Thanks, management, for taking my questions. My first question is about our trend in terms of MAU forecasts, income in quarters in 2019. And my second question is about our thoughts on our KPI for our overseas expansion strategy in the future. Thank you.

Rongjie Dong -- Chief Executive Officer

[Speaking Mandarin]

Hanya Lu -- Company Investor Relations

Thanks. Our target for MAU for 2019 is to about the range about 140 to 150 million total MAU, and all overseas user growth will be faster than the domestic user growth.

Operator

And our next questioner today will be Jerry Liu with UBS. Please go ahead.

Hanya Lu -- Company Investor Relations

Hi. Hello. Hi. Hi. Sorry, we did not finish the question for Thomas. Management will go ahead.

Henry Sha -- Chief Financial Officer

Yeah. Sorry. Apologies. This is Henry. So, I will compensate the answers of Mr. Dong. So, in our overseas for now -- so our major platform is Nimo TV, as we briefly introduced in our scripts. Now, the Nimo TV has entered into Indonesia, Vietnam, Thailand, also, as well as into the Latin American market because we believe the user behavior in those regional markets is quite similar to the North American users' behaviors with a very great potential. And as Mr. Dong mentioned earlier, the MAU of the Nimo TV exceeded in December 2018 -- the MAU exceeded [inaudible]. And now it's at a 100%-owned unit in Huya, and which is operated by the CEO and our VP in charge of the overseas business. Thanks. That's the answer to Thomas. Operator, please go ahead. Thanks.

Operator

And the next questioner will be Jerry Liu with UBS. Please go ahead.

Jerry Liu -- UBS -- Analyst

[Speaking Mandarin]. So, first, just a follow-up on the 140 to 150 million MAU number for 2019. It does not include users outside of China. And then, secondarily, my question is on some of the new, recent broadcaster policies that Tencent discussed in recent weeks. And one of the -- especially one of the things is on limiting the bidding process between top-tier broadcaster between the different platforms. So, I just want to understand how do you think about this, what kind of impact it can have potentially on our content costs in 2019. Thank you.

Rongjie Dong -- Chief Executive Officer

[Speaking Mandarin]

Hanya Lu -- Company Investor Relations

Thanks. I will help translate. First of all, the MAU target includes overseas market as well. Secondly, on the new rules introduced by Tencent, I think this they're just trying to show that the industry is going to be better regulated, become healthier. And that's also something we'd be happy to see. And we can also contribute to building a healthy and stable game live streaming industry. In speaking of the impact of the sign-up bonus and also the pay to the broadcasters, I think it's too early to speak firmly on this point. We still want to monitor how the market will play out over the next two quarters to make a meaningful comment on the cost. Thanks.

Henry Sha -- Chief Financial Officer

Jerry, I will help to add one more point to CEO's to you. So, from the perspective of the content cost and sign-up bonus fees were paid to the broadcasters, we believe that we do a very excellent execution on the cost management in considering the results of the last year. So, going forward we believe that we will still do the same level of execution and make sure -- and trying to improve the margin in the coming year. Yeah. Thank you.

Jerry Liu -- UBS -- Analyst

Xiexie, Dong. Xiexie, Henry.

Operator

And our next questioner will be Daniel Chen with JPMorgan. Please go ahead.

Daniel Chen -- JPMorgan -- Analyst

[Speaking Mandarin]. I will translate myself. My question is related to the content costs. So, these costs are content costs as a percentage of revenue has upped by 3% this quarter. So, what's the reason behind. And, also, how should we look at the ratio into 2019? And, also, Henry just mentioned that in 2019, Huya will have a margin expansion year-over-year basis, so where should we see the operating leverage to come from? Thank you.

Henry Sha -- Chief Financial Officer

Thanks, Daniel. I will help answer your questions. For your first question about the Q4, the content cost and revenue shares percentage as a percentage of revenue has a slight increase in comparison with Q3, I believe that was caused by the seasonal -- the ceremony, the year-end ceremony, the ceremony and the increasing number of the broadcasters we signed up to the platform. And by the year-end, regularly, we'll pay one of the bonuses to those broadcasters who performed really well, including their personal performance, content complies to everything good with the platform for the whole year. So, we will pay them for the bonus fee at year-end. So, I think that's a major driver behind it.

For the forecast of '19, we believe that -- for the margin expansion, we believe that we have the huge advantage on the distribution technology. As I mentioned earlier last quarter, we have great progress in the P2P technology to help to lower the bandwidth consumption under the same tier of the very high-quality resolutions. So, actually, this technology has been deployed since December last year in Q3 and Q4. So, since the technology has been deployed to more and more users on our platform, so the result of bandwidth utilization has been improved gradually. So, we believe that's one of the drivers for the margin expansion.

Another is because we are growing very fast in the user base in terms of the MAU. So, the content cost, we have the economies of scale of the content costs. We have leverage on that. So, we paid one of the content fee, which will be shared by all the users on a platform, the growing user base. So, that's how we call the elaboration on that. So, that's, I believe, the major drivers for the next year.

Daniel Chen -- JPMorgan -- Analyst

All right. Thank you.

Operator

And our next questioner today will be Lei Sheng with Bank of America. Please go ahead.

Lei Sheng -- Bank of America -- Analyst

[Speaking Mandarin]. My first question is about your investments in e-sports in 2019 and any large tournament we can expect. And my second question is follow-up on overseas strategy. Noticed that we also have some entertain-related app in overseas. How should we look at the competition in overseas markets? And how to drive the scalability in oversea? And do you have any target MAU in oversea? And also want to know our major investments in overseas markets in content creator talent agency or maybe the local team. Thank you.

Rongjie Dong -- Chief Executive Officer

[Speaking Mandarin]

Hanya Lu -- Company Investor Relations

Thanks. I'll help translate our CEO's answer. So, certainly, we want to just talk about the overseas expansion strategy at a high level. So, as we can already see from the wider market, a lot of game companies are also expanding to the overseas market. So, it's a natural trend for game live streaming companies to go overseas as well. And we have started doing that since 2018. But then, speaking of the overseas market, we think there are opportunities for us to explore, and not just on game live streaming, but other media content venues, and whether it's short-form videos or other inter-payment content. I think there are just generally more opportunities for us to explore in overseas market. And our CFO, Henry, will supplement more concrete details.

Henry Sha -- Chief Financial Officer

Hi, Lei. Let me add some points to Mr. Dong's answers for you. First, our spending in the overseas market will be sent into the user acquisition costs. So, we call this the code launch program. So, we need to acquire new users from the channels, from the Android or maybe the Google Play, the channels doing marketing to acquire new users from the overseas market in the regional market. Second, our strategy has always become the -- we use the local player, local broadcaster to set the local users by playing the local games. So, that's a part of the cost that we need to pay to fund the new talents in the regional market because of the language problems.

So, according to your question about the target, so we believe that the overseas business for 2019 are still to prioritize the user growth instead of the monetization. But we are looking at the opportunity to monetize our overseas business in the second half of the year. So, the user growth, we are looking at more than 100% user growth in terms of the MAU. Thanks. That's the answer to Lei's questions.

Operator

And our next questioner today will be Wendy Chen with Goldman Sachs. Please go ahead.

Wendy Chen -- Goldman Sachs -- Analyst

[Speaking Mandarin]. Thanks a lot for taking my question. So, my question is about the Alpha trend that we're seeing, that in the fourth quarter that the year-over-year growth has reaching a rapidly a slower level. So, just wondering how should we foresee the alpha growth in 2018. And, also, for the newly added PCMAU we see in this quarter, which was [inaudible], how is the paying ratio and alpha trending for this new PC user? Thank you.

Henry Sha -- Chief Financial Officer

Hello. Hi, Wendy, this is Henry. Let me answer your first question about the alpha trend. So, as you can see from Q3 to Q4, our alpha has shown the trend of more stabilized. So, this was because a lot of the new users become our payers on our platform. So, at their first time to pay, their ticket size is relatively small. So, I think that's why, as you can see, the alpha is more stable. And going looking forward for 2019, the management team do stay very optimistic on this alpha growth. So, that's the answer to your first question.

As you can see, our paying users come up from 4.2 million paying users into 4.8 million in Q4 quarter-over-quarter. So, I think that's a very encouraging number to explain the expansion of the paying user base. So, to your second question about PCMAU growth, so actually in Q4, we improved a lot about our user experience, the viewing experience, as Mr. Dong introduced earlier in his remarks. So, the viewing experience and the website has been hugely improved, especially for the loading time. We shortened the loading time period. And as you may know, in Q3 and Q4, there are quite a lot of the top-tier final of the e-sports tournaments happen. So, this bring a lot of new users to our platform on the PC end. And we still stay very optimistic to convert them into the mobile end user.

And now, at this stage mobile is still our key focus on the strategy, which contributed more than 80% of the total paying users. The paying ratio of the mobile site is relatively high. So, we will still stick with the mobile strategy. Thank you.

Rongjie Dong -- Chief Executive Officer

[Speaking Mandarin]

Hanya Lu -- Company Investor Relations

I will help translate the answer. So, speaking of the PC, the growth of the PCMAU for Q4, we think it's more of a one-off instead of a trend, the way you should look at going forward. The reason is because, well, from a group level, we always think the value of the PC venue wouldn't be that high because -- and there's limited interactions available for the users. And the paying behavior is not as good as the mobile-end use. Thank you.

Operator

Now, I'd like to turn the call back over to the company for any closing remarks.

Hanya Lu -- Company Investor Relations

Thank you once again for joining us today. If you have further questions, please feel free to contact Huya Investor Relations through the contact information provided on our website or the TPG Investor Relations. Thank you.

Rongjie Dong -- Chief Executive Officer

Xiexie.

Operator

This concludes this conference call. You may now disconnect your lines. Thank you.

Duration: 63 minutes

Call participants:

Hanya Lu -- Company Investor Relations

Rongjie Dong -- Chief Executive Officer

Henry Sha -- Chief Financial Officer

Hillman Chan -- Citi Group -- Analyst

Thomas Chong -- Credit Suisse -- Analyst

Jerry Liu -- UBS -- Analyst

Daniel Chen -- JPMorgan -- Analyst

Lei Sheng -- Bank of America -- Analyst

Wendy Chen -- Goldman Sachs -- Analyst

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