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YY Inc (NASDAQ:YY)
Q4 2019 Earnings Call
Mar 17, 2020, 9:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentleman, thank you for standing by and welcome to the JOYY Inc.'s Fourth Quarter and Full Year 2019 Earnings call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will have a question-and-answer session. Please note this event is being recorded.

I'd now like to hand the conference over to your host for today, Mr. Matthew Zhao, IR Director of the company. Please go ahead.

Matthew Zhao -- Investor Relations Director

Thank you, operator. Good morning and good evening, everyone. Welcome to JOYY's fourth quarter and full year 2019 earnings conference call. Joining us today are Mr. David Xueling Li, Chairman and CEO of JOYY; CFO Mr. Bing Jin and COO, Mr. Ting Li. For today's call, management will first provide a review of the quarter and then we will conduct a Q&A session. The fourth quarter and full year 2019 financial results and webcast of this conference call are available at ir.yy.com. A replay of this call will also be available on our website in a few hours.

Before we continue, I will refer you to our safe harbor statement in our earnings press release which applies to this call as we will make forward-looking statements. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in Renminbi.

I will now turn the call over to our Chairman and CEO, Mr. David Xueling Li. Please go ahead, sir.

David Xueling Li -- Chairman and Chief Executive Officer

[Foreign Speech]

Matthew Zhao -- Investor Relations Director

Okay. Let me do the translation. Thank you.

David Xueling Li -- Chairman and Chief Executive Officer

[Foreign Speech] Okay. Thank you, Matthew. Hello, everyone. Welcome to our earnings conference call today. Hope everyone stay safe and sound and healthy in this particular coronavirus period. On December 20, 2019, our shareholders approved the name change of YY to JOYY, which stands for Joyful and Useful. This name change reflects our commitment to being joyful and useful experiences, not only to those inside China, but also to those around the world, as we continue our global expansion, in line with our mission to connect people around the world and enrich their lives through video. We continued to make steady progress on both the domestic and international fronts in the fourth quarter of 2019, expanding our user base, upgrading our products and further advancing our monetization capabilities.

[Foreign Speech] Notably, our better than expected top line performance for the fourth quarter and full year of 2019 has illustrated our success in driving growth both at home and abroad. In addition to the strong financial performance, our video based product and services including Likee, Bigo LIVE, HAGO, YY Live and Huya have all become leaders in their respected markets. Such success is a result of our few engine expansion strategy which enable us to pursue the simultaneous development of both our short-form video and live streaming business segment to construct a truly global video-centric social media ecosystem.

[Foreign Speech] First, let me share with you the progress we have had made in developing our short-form video growth engine, Likee, as we continue to supercharge Likee's growth through geographic expansion, product updates and monetization enhancements. During the quarter, Likee maintained its robust user base expansion momentum which was largely driven by the growing user base throughout Southeast Asia and developed world. It's total mobile MAUs swelled to RMB115.3 million, representing an increase of 208.3% on a year-over-year basis and 15.1% on a sequential basis. In addition, Likee continued to make tight rate in target markets such as Indonesia and Russia, capturing a substantial share of the markets during the period to catch up with the leading player in both countries.

[Foreign Speech] Beyond growing our short-form video coverage to geographic expansion, Likee, in which it's features and content offerings enhanced its user stickiness. For example, we rolled out the FaceMagic function during the fourth quarter to augment Likee's user experience and stickiness. FaceMagic was developed using our proprietary AI technology to provide users with both face swapping and image cropping features. The addition of FaceMagic and other similar features enable millions of Likee users around the world to create and share short-form videos with their friends.

On the monetization front, Likee continue to make progress in the areas of brand partnerships and advertisement campaigns during the fourth quarter. In December, for example, Likee formed a partnership with a top Indian film studio to promote one of this most highly anticipated films. As part of this campaign, Likee utilized its online distribution network to help promote the movie throughout India, garnering over 275 million views across social media. This initiative in a market with high growth potential is very encouraging as it has not only enabled us to establish a unique cultural identity, but also created a valuable monetization case study, which we plan to promote going forward.

In the same way, we have completed the initial development and testing for Likee's advertising system, which we plan to launch in the first quarter of 2020. Leveraging this system, Likee will enable advertisers to place ads within Likee short-form video feeds, allow content creators to promote their fee-based content across the platform and ultimately unleash another stream of monetization in addition to our live streaming virtual gift monetization.

[Foreign Speech] Next please allow me to share how we view overseas live streaming business, the second growth engine by expanding the global footprints of BIGO LIVE and HAGO in the fourth quarter. In addition to our successful short-form videos, we also continued to expand our global live streaming ecosystem through BIGO LIVE, our flagship international live streaming platform outside China. In particular, during the fourth quarter, BIGO LIVE maintained it's remarkable growth trajectory in developed world around the world. As a result, the revenue generated by BIGO LIVE in developed markets, such as the US, Japan, Europe and other regions represented 31% of BIGO LIVE total revenues in the fourth quarter.

Notably, this revenue growth was driven by a 50% increase in BIGO LIVE's paying user base in developed countries in December 2019, as compared to June 2019, resulting from our focus on the cultivation of the platform's operational efficiency, localization capabilities and culture sensitivity in regional markets. In the fourth quarter, BIGO LIVE also focused on promoting social features to enhance user engagement. In particular, our efforts to develop BIGO LIVE's ad [Phonetic] feeds produced encouraging results with 42% of users on BIGO LIVE using that feature in the fourth quarter.

Beyond short-form video and live streaming, HAGO our casual game oriented social media platform also maintained its healthy growth trajectory through the introduction of new games and enhancement of social features. During the fourth quarter, HAGO continued to enhance user stickiness and foster new social interactions between users on its platform. For example, HAGO's interest based user groups have become a key feature for users to initiate social interactions on the platform.

The average daily penetration rate of HAGO's interest group function improved by 22% on a sequential basis in the quarter. Meanwhile, the highly social nature of the platform has enabled us to accelerate the development of our innovative, monetization capabilities as seen in our virtual gifting features for both voice chat rooms and interspace user groups. As a result of these monetization upgrades, HAGO recorded a 20% plus increase in revenues on a sequential basis in the fourth quarter. Importantly, India has become HAGO's second largest market to date. Going forward, we expect that HAGO's monetization capabilities will continue to grow in 2020.

[Foreign Speech] Lastly, while we expand -- while we expanded rapidly overseas, we also maintain our leadership position in the domestic market as YY Live continued to fortify its leadership in China's entertainment live streaming industry. As we closely monitor users constantly evolving demands and preferences for live streaming environment, we further uncovered the growing user preference for variety shows with celebrities. Beyond our partnership with Yixing Zhang, which we mentioned on the previous earnings call. YY Live hosted 28 shows with other celebrities in the fourth quarter.

Additionally, we also hosted our 2019 YY annual awards in Shanghai in January. This event collected more than 24.2 million views with an average user viewing time of 63.9 minutes and a total of 180 million fully comment sense throughout the events, further showcasing the strength and scale of our live streaming social media at the system.

Notably, we utilized our experience from the past seven years and replicated the success of YY Annual Awards in overseas. Bigo Gala awards 2020 in Singapore in January served as a prime example. This event featured the attendance of approximately 1000 of Bigo LIVE's top performance from around the world and successfully attracting more than 1.6 million fans who turned in to watch the event online.

[Foreign Speech] In summary, we continued to focus on the growth and development of our short-form video and live streaming products to fuel our dual engine growth strategy during the fourth quarter and full year of 2019.

Importantly, this expansion strategy has enabled us to transition from a leading live streaming platform in China to a global video based social media platform in domestic and international markets. Moreover, as we continue to cultivate synergies between business segments, upgrade our products through cutting-edge technology and enhance our localization capabilities we are supercharging the network effect of our product metrics.

As such, our ability to attract, create, distribute and monetize content both at home and abroad will continue to blossom, further enabling us to deliver long-term value for our shareholders.

[Foreign Speech]

Bing Jin -- Chief Financial Officer

With that, I will now turn the call to Bing Jin, our CFO to go through the details of our financial results. That concludes David's prepared remarks. Now as Joy, CFO, I will talk about the financial results. We maintain our strong momentum and delivered our robust financial and operating metrics during the fourth quarter of 2019. Our total net revenues for the fourth quarter increased by 64.2% year-over-year to RMB7.62 billion, exceeding both the high-end of our previous guidance [Technical Issues]. In particular, our live streaming revenues for the fourth quarter increased by 62.7% year-over-year to RMB7.15 billion, driven by RMB5.51 billion in live streaming revenues from both our YY and Huya segments and RMB1.64 billion contribution from Bigo. Other revenues in the fourth quarter increased by 89% to RMB471.6 million, driven by higher advertising revenues on Huya and Bigo.

Cost of revenues for the fourth quarter increased by 69.3% year-over-year to RMB5.1 billion. Revenue sharing fees and content costs increased to RMB3.73 billion in the fourth quarter from RMB2.56 billion in the same period of 2018, which was in line with the increase in live streaming revenues. Bandwidth costs increased to RMB505 million from RMB246.5 million in the same period of 2018, mainly reflecting the continued expansion of our global user base.

Gross profit for the fourth quarter increased by 54.6% year-over-year to RMB2.52 billion. Gross margin in the fourth quarter of 2019 decreased to 33% from 35.1% in the same period of 2018. The decrease in gross margin was primarily caused by the fact that Huya and Bigo segments had lower gross margins but contributed significantly greater portion of our net revenues in the fourth quarter of 2019 as compared to the corresponding period of 2018.

Operating expenses for the fourth quarter increased to RMB2.3 billion from RMB931.2 million in the same period of 2018, primarily due to the increase in sales and marketing expenses which reached RMB1.03 billion in the period. The increase in sales, marketing expenses was primarily attributable to our increased efforts in sales marketing activities in overseas markets, as well as the impact of depreciation and amortization related to the consolidation of Bigo. Our R&D expenses for the fourth quarter increased to RMB802.3 million from RMB332.5 million in the same period of 2018, mostly due to the increase in salaries caused primarily by the consolidation of Bigo.

Our GAAP operating income for the fourth quarter was RMB362.2 million compared to RMB718.6 million in the same period of 2018. Operating margin for the fourth quarter decreased to 4.8% from 15.5% in the prior year period, as a result of lower gross margin, the impact of depreciation and amortization related to the Bigo's consolidation and other overseas expansion initiatives. Our non-GAAP operating income for the fourth quarter, which excludes share-based compensation expenses, impairment of goodwill and investments, amortization of intangible asset from business acquisitions, as well as gain on deconsolidation and disposal of subsidiaries was RMB781.3 million compared to RMB888.5 million in the same period of 2018. Our non-GAAP operating margin for the fourth quarter was 10.3% compared to 19.1% in the same period of 2018.

GAAP net income attributable to controlling interest of JOYY Inc. for the fourth quarter of 2019 was RMB172.8 million compared to RMB694.7 million in the same period of 2018. Net margin was 2.3% in the fourth quarter of 2019, compared to 15% in the corresponding period of 2018. Non-GAAP net income attributable to controlling interest of JOYY Inc. was RMB600.8 million compared to RMB846.9 million in the same period of 2018. Non-GAAP net margin in the fourth quarter of 2019 was 7.9% compared to 18.2% in the same period of 2018. Diluted net income per ADS in the fourth quarter of 2019 was RMB1.87 million compared to RMB10.54 in the same period of 2018. Non-GAAP diluted net income per ADS was RMB6.7 compared to RMB13.03 in the same period of 2018.

Now turning to our results for the full year of 2019. Our total net revenues increased by 62.3% year-over-year to RMB25.58 billion, driven by the same factors that led to this quarterly increase. Our net income attributable to controlling interest of JOYY Inc. for the full year of 2019 was RMB3.45 billion compared to RMB2.21 billion in 2018. Our non-GAAP net income attributable to controlling interest of JOYY Inc. for the full year of 2019 was RMB2.25 billion compared to RMB3.27 billion in 2018. Non-GAAP net margin for the full year of 2019 was 8.8% compared to 20.8% in 2018. Diluted net income per ADS for the full year of 2019 increased by 69.5% year-over-year to RMB43.01 from RMB25.38 in 2018 and non-GAAP diluted net income per ADS for the full year of 2019 was RMB27.11 compared to RMB50.07 in 2018.

Looking forward to 2020, we are pleased with immediate challenges of COVID-19 epidemic. In response to the outlook, we announced a cash donation of RMB22 million to procure medical supplies and equipment from all over the world for the hospitals in Hubei and Guangdong provinces that were involved in the treatment of COVID-19 patients. Our heart goes out to all those who have been impacted by this epidemic. Especially in times like this, we remain fully committed to our mission of connecting people and enriching their lives through video. Beyond entertainment many of our users are utilizing our live streaming services for regular, casual and work-related communication purpose during this epidemic. We are formulating a support program to help our hosts and other performers to weather this challenging environment. We plan to continue leveraging our video based social media platform to help mitigate the impact of the disease, rally charitable support, uplifting people's spirits and enrich their lives.

At the current stage, we expect our net revenues in the first quarter of 2020 to be between RMB6.75 billion and RMB6.85 billion, representing a year-over-year increase between 41.2% to 43.3%. We currently have limited visibility surrounding this epidemic's long-term impacts on our business and the markets in which we operate. Therefore, this forecast only reflects our current and preliminary views on the market and operational conditions which are subject to change.

That concludes our prepared remarks. Operator, we would now like to open up the call for questions.

Questions and Answers:

Operator

Thank you so much, presenters. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Thomas Chong from Jefferies. Your line is now open, Thomas.

Thomas Chong -- Jefferies LLC -- Analyst

Hi, good morning management for taking my questions and congratulate a strong --

Matthew Zhao -- Investor Relations Director

Hey, Thomas, could you just, sorry, could you just please ask the question in Chinese firstly, then translate into English. Thank you.

Thomas Chong -- Jefferies LLC -- Analyst

[Foreign Speech] Thanks management for taking my questions and congratulate the strong growth momentum for Bigo. I have a question about the 2020 outlook for Bigo in particular, the revenue and the user trend across different geographies. And also, any expectations in terms of the timeline for narrowing the losses and achieving break even. And how should we think about the spending for Bigo across different geographies during the year? Thank you.

Matthew Zhao -- Investor Relations Director

Thanks, Thomas. Let me address those questions. So first on the trend for monetization under different markets. Bigo has different components. I think let me talk about Bigo LIVE first. Bigo LIVE has enjoyed tremendous user growth monetization in 2019 and expect similar pattern continue in 2020. The key driver coming from the developed markets. As you can see from the fourth quarter number, the developed markets accounts for more than 31% of the total revenue on the Bigo LIVE, that compare with 26% in the third quarter and 22% in the second quarter. You can see, obviously, continuous increase in trend and we expect that trend to continue across different developed markets including US, Europe, Japan, Korea and other parts of the world.

One of the duty for those developed markets is that the e-paying ratio and ARPU tend to be very high. And also we had demonstrated that the paying ratio in the developed world has increased by 50% in December 2019, compared with June 2019. So that itself is very encouraging. So we expect Bigo LIVE will continue to focus on developed world in 2020, that's on Bigo LIVE.

On the Likee business, we have also achieved a balanced approach, meaning, traditionally, we are very strong in South Asia, particularly in India. Starting from last year and also continuously into 2020, we will be more balanced approach, meaning we'll focus more on developing into other non-India market including Russia, Indonesia where we are performing very well and catch-up very quickly with a leading player. And also we continue expanding other parts of -- including developed world as well. So that's on the user growth for Likee.

Now on the monetization of Likee, we also ramped up the live streaming capability as Bigo's live streaming, as I said, it's a middle-end capability, it can be replicated in different parts of the apps. So Likee will benefit from Bigo's LIVE's monetization efforts and ramp up the live streaming capability. On top of live streaming, we have also mentioned just now that Likee has built up its own advertising network and system. So we expect to introduce feed based advertising campaigns within Likee and hopefully advertising will also gradually contribute more and more to Likee's ecosystem.

So I think that's a long answer to your question. In terms of the spending, I think we have to mitigate with the market before that this year, 2020, we're looking at a net loss on the total Bigo segment -- on a total Bigo segment basis is $150 million loss. But as you can see that Bigo's total revenue is growing faster than expected before. Before we are telling market that Bigo will grow, the revenue will grow 50% in 2020. Now, we are forecasting more than 60% year-on-year growth.

So as a result, the net loss margin will be narrowing compared with what we communicated before. In terms of the breakeven point, we expect that total Bigo will be breakeven on a single month basis by end of this year, that remain to be same. But I want to mention that we tend to be focusing more on ROI of the money spent and we tend to focus more on profitability, because I think that's one of the key differentiator for our overseas business compared with some of the leading players, because we know how to monetize the existing and new user base across different parts of the world. Thanks, Thomas.

Thomas Chong -- Jefferies LLC -- Analyst

Thank you.

Operator

[Operator Instructions] Your next question comes from the line of Lei Zhang from Bank of America Securities. Please go ahead, your line is now open, Lei.

Lei Zhang -- Bank of America Securities -- Analyst

[Foreign Speech] I will translate myself. First one to follow-up the overseas effects Xueling, on Likee's user trend. How should we look at user and monetization balance? And what's your target for Likee user in 2020? And secondly on competitive landscape of domestic live streaming, how should we think competitors like short video platform, even future music [Indecipherable] can you give us more color on the updated competition? Thank you.

Matthew Zhao -- Investor Relations Director

All right. Thanks, Zhang Lei. Let me address the question. So on the global expansion strategy for Likee, as I mentioned, we will focus both on in terms of the user growth and monetization. So I don't think your comments is right in a way that if we focus too much on monetization, we will focus less on the user growth. But as said, we focus on ROI. So as long as the user retention, meaning the 30 days user retention rate is good in some of the market, we will continue to spend money. But after we spend money, we also need to make sure that the user we attracted and we converted to live streaming users. So we also pay particular attention in terms of the conversion of live streaming within the shot-form video users in terms of the time spent, in terms of the gifting etc. So that's for sure.

And you also expect in terms of user growth, you would expect similar pattern that we have seen in 2019. If you track our quarterly performance, you can see that Likee adding 15 million to 20 million users on a per-quarter basis and we expect similar pattern will continue. But as I said, we also need to make sure that the ROI makes sense and we will generate decent profitability for Likee business. So that's the answer to the first question.

The answer to the second question, domestic competition is not a new thing. We have been operating under a highly competitive live streaming business in China for several years. However, we still continue to grow. Now if you look at the prospect of 2020 YY Live segment, I will say the revenue will continue to grow at a low single-digit. The reason why it's low single-digit, because when we cut down some of the business including the PC games business which we sold and also we have scaled down the domestic small lending business given the uncertainty, particularly in the online lending business.

So with those three business scaled back and scaled down, the YY Live's revenue will closely will be down a little bit. As we tell people before, it use to be 5% to 8% year-on-year growth, now we're looking at low-single digit growth, reflecting the close down of those two business. But for the main domestic live streaming business, I think it's still solid. We -- YY Live, you can treat it as a traditional kind of PC game where the user base is very sticky and will continue to come back, we have seen a very sticky time spend and user behavior on our platform, both from the tipper perspective and from the broadcasting perspective. So I think domestic -- even amid this domestic competition, YY Live will continue to grow.

Lei Zhang -- Bank of America Securities -- Analyst

Okay. Thank you. Can I have two follow up. First on HAGO side, given you shared more color in the prepared remarks, can you remind us where is the HAGO revenue booked? Is that under YY Live, right? If HAGO grows strong in 2020, so that means that YY Live domestic live stream actually are down year-on-year basis? And also on the HAGO side, what's the key content and -- the top -- of user skill about HAGO. Secondly also on the domestic side, I know that e-commerce live streaming is quite popular right now and even some of your competitors actually ask the host to do e-commerce through LHA the live streaming. I know we have e-commerce related initiative, but can you share more color with us on the e-commerce live streaming side. Thank you.

Matthew Zhao -- Investor Relations Director

Sure. On the HAGO, it is booked under YY Live segment, but given the absolute scale of HAGO's revenues, it will be very small compared with the total YY domestic live streaming. So in terms of absolute dollar is not contributing that much yet. So if you strip out HAGO, YY Live domestic market, I think the business still stable, put it that way.

And then for e-commerce, we have been doing e-commerce live streaming for a while, but again our strategy is different from the others. Our e-commerce is more focused on non-standard products, meaning jewelries, arts, crafts etc, calligraphies. And then we focus on introducing high quality broadcast to help improve the productivity of the traditional product value chain. And hopefully will create legal situation for both the seller and for the users. So that sort of business ramping out very quickly. But at the right time, we would start disclosing the right metric for the absolute investor at this point the two things that gets us relatively early.

Lei Zhang -- Bank of America Securities -- Analyst

Okay, thank you. Thank you so much. Very clear.

Matthew Zhao -- Investor Relations Director

Thank you.

Operator

Your next question comes from the line of Brian Gong of Citigroup. Once again, please ask your question in Chinese first, then immediately translate your question in English. Brain, you may now ask.

Brian Gong -- Citigroup -- Analyst

[Foreign Speech] Okay. I will translate myself. So for Likee wondering, how should we see the competitive dynamics with TikTok in different regions and I think likely probably made very limited contribution to Bigo's revenue into 2019 but and business how much revenue contributions from Likee to Bigo for being in 2020. Thank you.

David Xueling Li -- Chairman and Chief Executive Officer

[Foreign Speech] Yeah, sorry, let me do the translation firstly for David and then I'll answer your question. So the Likee business as well as the short-form we do competition in the global live. So firstly, as a company and a founder of the amendment, we're really looking favor of the shortfall we do with future, right? So if you look at the past few years, we are directly committed to continuing while into the Likee's business. So rather than the profitability, we're seeing as a positioning as well as market share for the short-form video, it's more important for us.

And in the past several years, although we continue to suffer the loss from the Likee business, but after our effort, we're entering already -- the entry tickets for the short form videos, especially in the outside of China. At the beginning times in terms of the -- it's a technology as well as the investment scale, we are much less than our competitors, but after two years effort, currently we actually are in the similar kind of level as our close competitors. So I actually believe, the Likee business will enter to the second stage, which is more healthy and more balanced developed of the stage. So, as we mentioned in the prepared remarks, so this year Likee will focus on the monetization. So, hopefully at the end of this year, the overall people business will achieve the single month break-even. If HAGO could achieve, it means in the future we have become more dynamically to control of the investment cycle especially in terms of the marketing or the user acquisition cost for the Likee business. So that will help us to build out more healthy model, business model compared with our peers and that it can help us for the next five to 10 years long run competition for the short-form video business global like. Thank you.

Brian Gong -- Citigroup -- Analyst

[Foreign Speech]

Matthew Zhao -- Investor Relations Director

Yeah. Let me handle the question. I think we are still observing the progress, but I think at this point it's somewhere around 10% of Bigo's total segment will be coming from Likee and that number can be changed depending on the progress.

Brian Gong -- Citigroup -- Analyst

Okay, got it. Thank you very much.

Operator

Your next question comes from the line of Daniel Chen of JPMorgan. Your line is now open, Daniel.

Daniel Chen -- JPMorgan Chase & Co. -- Analyst

[Foreign Speech] I will translate myself. So I have a housekeeping question regarding cash. So we have a very healthy balance sheet and a very rich net cash of over $1 billion. And so what is our key strategy in cash management in 2020. Thank you.

Matthew Zhao -- Investor Relations Director

Let me address the question. Thanks, Daniel. In terms of cash offshore, we have around $900 million, which we put into different charge of savings and investment. I think it generate decent return and meanwhile we're also observing the latest market turmoil and obviously also, additionally it's very undervalued and particularly the recent turmoil continue to go down. So we will seriously consider share buyback and other methods of returning some of this cash to the shareholders, yeah.

Daniel Chen -- JPMorgan Chase & Co. -- Analyst

Thank you.

Operator

[Operator Instructions] Your next question comes from the line of Li Zhong from Goldman Sachs. Your line is now open, Mr. Zhong?

Li Zhong -- Goldman Sachs -- Analyst

[Foreign Speech] I would translate myself. So thank you management for taking my question. So I have two questions regarding the impact of the COVID-19 in overseas markets for Bigo. So the first question is, have you observed any similar surge in user time spent or engagement in the development markets given the fast spread of the virus?

And the second question is on whether that will give us any refreshed thoughts on user growth strategy or new monetization method. Thank you very much.

David Xueling Li -- Chairman and Chief Executive Officer

[Foreign Speech] This is David. Let me answer your question. So firstly, in terms of the COVID-19 impact outside of China. So we can look at the practice in China for the last quarter. So for YY business in China, we don't see that significant of the negative impact from the COVID-19 outbreak in China. So from the China's practice, we actually forecast the overseas business also won't see the -- any of the significant impact from the COVID-19 in the short-term period.

Bigo LIVE currently in the very healthy growth stage. As I mentioned in the prepared remarks, rather than the monetization, actually Bigo also focused on the social features, especially it's community operation has become one of the key focus for the Bigo Live in the recently stage. 42% of the users have started to use the Bigo's part of the friends' moments of the functions within -- of the platform. So going forward, except for the revenue growth, so Bigo LIVE also will see the -- continuously user growth in the future. And for Likee business, as I mentioned before, so except for the very rapidly user number growth we also will be more focused on the monetization for this year. If the two part can build up a more healthy stake hold for the business, definitely we'll be more confident for the overall overseas business development for the future. Thank you.

Li Zhong -- Goldman Sachs -- Analyst

Thank you very much.

Operator

[Operator Instructions] Your next question comes from the line of Thomas Chong from Jefferies. Your line is now open, Thomas.

Thomas Chong -- Jefferies LLC -- Analyst

[Foreign Speech] Thanks management for taking my follow-up questions. My question is about the domestic market, given a lot of our peers entering into the lower-tier cities and have we thought of developing other applications to penetrate into Tier-3 and Tier-4 cities going into the future? Thank you. Thomas. Thanks. Let me address the question. So you are right that on top of YY Live as a main app, we are also developing different products for something we have audio based licensing product several of them that's focused on third-tier cities and even fifth tier cities. We also have, as I said e-commerce licensing products, we're also developing other social media product, all based around Bigo audio base because that's our competence, but we are trying to penetrate into different demographics and trying to concede some focus on low tier cities and some focus on the first tier city. So -- but many of those products are in initial stage, so we haven't systematically disclosed to the absolute investor about the metrics, but we will do so at the right time. So, you're right, we aspire different products. And by the way, I also mentioned that we have presented to partner with other big traffic platforms such as Xiaomi and we have right now partnered with two -- three additional big traffic platform they call expert our core actually incompetence and then revenue share with those traffic platform. So, with that, we also hope that we can continue to enhance our monetization capabilities through our different platforms. Thank you.

Operator

Next question comes from the line of Yue Ang from CICC. Your line is now open, Yue Ang.

Yue Ang -- CICC -- Analyst

[Foreign Speech] Thanks. Management, I'm on behalf of Natalie Wu. We have two questions, the question -- the first one is that could management share some color on the promotion of Likee, what's your plan for the investment in content and user acquisitions this year? And second question is, could the management share some color on the margin outlook for the domestic live broadcasting business of YY call this year. Thank you.

Matthew Zhao -- Investor Relations Director

Thank you. Let me address those questions. First in terms of the sales we're pushing for the Likee, regarding content, as we said before, Likee focus on UGC, User Generated Content. So by nature we incurr the user to voluntarily create and upload the actual content. As a result, we don't tend to spend that much money to acquire the UGC. But we will do so in some of the key markets through partnering with some celebrities to produce, but I don't think that would call that much money.

We will also partner with some of the song copyright owners to sign kind of a long-term contract, so that live broadcaster can live broadcast the songs etc. So that would cost some money. In terms of the direct use acquisition, again we're very much closely tracking the KPI, meaning User Retention Rate. And then typically in those market they are much lower than in China in terms of the per user acquisition cost. Well, after user traffic [Indecipherable] to realize as we said many times to we'll have monetization for achieving so that will create a closer end group for the [Indecipherable] so that's on Likee.

On the domestic margin, if you look at [Indecipherable] operating margin for domestic YY Live is around 22% -- 20%. 2020, we're looking at somewhere above 20%, there might be some further decrease of the margin for YY Live. But again, it's not only about domestic, but because YY segment also showed the response of [Indecipherable] other expansion. So we will continue to do some of the sales and marketing, plus we will continue to recruit some of the high caliber AI expert technology to the RMB as a percentage of revenue and sales marketing as that will increase a little bit, resulting to somewhere like 20 something percent for the margin -- operating margin domestic for market segment.

Yue Ang -- CICC -- Analyst

Thanks, Li for sharing.

Operator

There are no further questions at this time. Now I hand the call over back to Matthew, you may go ahead.

Matthew Zhao -- Investor Relations Director

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

Operator

[Operator Closing Remarks]

Duration: 61 minutes

Call participants:

Matthew Zhao -- Investor Relations Director

David Xueling Li -- Chairman and Chief Executive Officer

Bing Jin -- Chief Financial Officer

Thomas Chong -- Jefferies LLC -- Analyst

Lei Zhang -- Bank of America Securities -- Analyst

Brian Gong -- Citigroup -- Analyst

Daniel Chen -- JPMorgan Chase & Co. -- Analyst

Li Zhong -- Goldman Sachs -- Analyst

Yue Ang -- CICC -- Analyst

More YY analysis

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