Tencent Music Entertainment Group (TME) Q1 2020 Earnings Call Transcript

Tencent Music Entertainment Group (TME -1.90%)
Q1 2020 Earnings Call
May 11, 2020, 8:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, good evening, and good morning, and thank you for standing by. Welcome to the Tencent Music Entertainment Group 2020 first-quarter earnings conference call. Today, you will hear discussions from the management team of Tencent Music Entertainment Group, followed by a question-and-answer session. Please be advised that this conference is being recorded today.

Now I will turn the conference over to your speaker host today, Ms. Millicent T. Please go ahead, ma'am.

Millicent T. -- Vice General Manager

Thank you, operator. Hello, everyone, and thank you all for joining us on today's call. Tencent Music announced its quarterly financial results today after the market close. An earnings release is now available on our IR website at ir.tencentmusic.com as well as via Newswire services.

Today, you'll hear from Mr. Cussion Pang, our CEO, who will start the call with an overview of our recent achievements and growth strategies. He will be followed by Mr. Tony Yip, our CSO, who will offer more details on our operations and business development.

Lastly, Ms. Shirley Hu, our CFO, will address our financial results before we open the call for questions. Before we proceed, please note that this call may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectations implied by these forward-looking statements.

All forward-looking statements are expressly qualified in their entirety by the cautionary statements, risk factors and details of the company's filings with the SEC. The company does not assume any obligation to revise or update any forward-looking statements as a result of new information, future events, changes in market conditions or otherwise, except as required by law. Please also note that the company will discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under the international financial reporting standard in the company's earnings release and filings with the SEC. You are reminded that such non-IFRS measures should not be viewed in isolation or as an alternative to the equivalent IFRS measure, and other non-IFRS measures are not uniformly defined by all companies, including those in the same industry.

With that, I'm now very pleased to turn over the call to Mr. Cussion Pang, our CEO. Cussion?

Cussion Pang -- Chief Executive Officer

Thank you, Millicent. Hello, everyone, and thank you for joining our call today. I'm glad to meeting every one of you again after we released our 2019 annual results two months ago. Even though I'm still wearing a mask like last time, but we still have a smiling face under the mask, and every one of us at TME remain very positive.

It is because we truly believe that we have been -- what we have been doing is very valuable to our users and society. Music is really the medicine that can heal and accompany the people no matter what the situation is. I hope to see every one of you well during the pandemic period, and we are altogether. In the first quarter of 2020, our online music subscription revenues further accelerated its growth, increasing 70% year over year, compared with 60% and 48% in the fourth and third quarter of 2019.

Online music paying users reached 42.7 million, up 50% year over year. Paying ratio expanded to 6.5%, up from 4.3% for the same quarter of 2019. ARPPU for our online music services increased 13% year over year, primarily benefiting from users increasing willingness to pay for premium subscription package. Our outstanding online music subscription revenues growth mitigated the softness in other non-subscription revenues, primarily arising from the COVID-19 pandemic, resulting 27% overall year-over-year revenue growth for our online music services.

Some of our key strategic focus during the first quarter include further enriching our leading content offering, softening our capabilities in content discovery and promotion and supporting indie musicians. In terms of further enriching content, to begin with, we have made significant progress in long-form audio and under penetrated the fast-growing market in China that we are committed to serve. Recently, through the strategic partnership with China Literature and others, we have gained quick access to an extensive library of high-quality IPs and exclusive licenses for some page-turning online literature series with a tremendous fan base in China. Now we have obtained the audio application right of the majority of China Literature's top 100 most favorite online books.

In addition to audio books, we will also produce high-quality audio drama to help super IPs to realize more to drive the value. Such fast progress is starting to position us at the forefront of the game. As we aggressively scale our content offering, the development of our podcast ecosystem has also achieved initial success. By the end of April 2020, our platform attracted approximately 10,000 new podcasters and many established KOLs, including well-known artists, writers and online broadcasters to produce more premium UGC audio work.

Our self-produced audio programs, our audio books from one year ago has achieved over 1 billion total streams by the end of last month and become a very popular audio show, particularly for the young demographic. On April 21, we launched a new application or long-form audio, [Foreign language], taking another important step to provide dedicated audio entertainment services to our users. We also began to roll out a separate long-form audio membership package. All of these developments will help us build a solid foundation for our future development and realize more valuable synergies between online usage and long-form audio business.

Second, we continue to solidify our content leadership with popular genres enjoyed by the younger demographic. The cooperation with Bing Group, one of Japan's largest -- one of Japan's highest selling record companies in the 20th century, enable us to seek more opportunities, and we build a closer relationship. Apart from offering highly popular content by renowned Japanese artists, we also actively explored new interactive game plays, such as the J-pop singing contest, to bring an interactive and comprehensive news experience of listening, watching, singing and socializing. As a result, our platform has become a popular destination for J-pop fans in China.

Third, on supporting our original content creation, time and again, we demonstrated our unique capability and know-how in talent discovery, cultivation and promotion. Thanks to our fast-growing indie musician program, the number of participating musicians and original songs produced doubled year over year in the first quarter of 2020. We rolled out an attractive financial incentive plan earlier this year. This has leaded to impressive growth in the number of indie musicians' songs that are exclusively licensed to us, which increased by more than 800% year over year.

We went an extra mile to promote indie music. We launched a program [Inaudible], targeting emerging musicians and also formed a strategic alliance with Bilibili through the launch of program [Foreign language] to further enhance the cooperation with independent musicians and KOLs. Additionally, we continuously leverage our profound user insights and powerful promotional capabilities to support indie musicians to reach hundreds of millions of music lovers. Last quarter, we shared the success story of Hai Lun, a grassroot singer and his song, Girl by the Bridge, Qiao Bian Gu Niang.

This quarter, I am pleased to share two more successful stories. The World Is So Big To Meet You, [Foreign language], a song from Chen Xiang; and Youth, [Foreign language], a song produced by [Foreign language]. Both songs were released during the first quarter and have already achieved almost 5 billion cumulative streams on our platform. Their success is our success.

As a fast-growing and leading indie musicians program with the largest music user base, we are very pleased to say as of March 31, 2020, we have successfully promoted indie musicians' content to hundreds of millions of users on our platform. While the COVID-19 global pandemic has changed the businesses and the ways of life in different aspects, it has also brought emerging opportunities in the digital era. We have seen some behavioral changes during the lockdown and observed an increasing number of users listening to music with home appearance, especially TVs and smart devices. As a result, in the first quarter of 2020, our online music MAU for mobile devices and in-home appearances increased by 3.5% on the year-over-year basis.

Such behavioral patterns could persist even after the life returns to normal post the COVID-19 pandemic and potentially provide additional avenues for our paying user growth. The launch of TME Live is a great example of how we quickly and innovatively deploy technology to bring off-line concert experience online through live streaming. Within five weeks after its launch in March 2020, we successfully held five online concerts. This included one for established artists like as JJ Lin, Lín Jùnjié; and Rene Liu, Liu Jo-ying, and special themes, such as an OST concert for the popular web drama series, Someday Or One Day, [Foreign language], leveraging our solid partnership with labels and artists.

We are very excited to have built a strong and diversified pipeline to anchor our events. We are also pleased that the user response TME Live exceeded our expectations and affirmed the virtuous value-creation cycle between online music and social entertainment services. This concludes my prepared remarks, and now Tony will discuss the first-quarter results of our social entertainment services as well as our other focus area. Tony, please go ahead.

Tony Yip -- Chief Strategy Officer

Thank you, Cussion. Hello, everyone. Apart from what Cussion just mentioned, there are a few other exciting areas that we want to highlight for both our online music and social entertainment services. For online music services, first, we kept stepping up our efforts to promote video enrichment.

We emphasized short videos through upgraded version of Kugou Music. This provides our users an additional dimension of entertainment while increasing the exposure of video content creators on our platform. It has also contributed to improved user engagement, leading to Kugou Music's increased DAU penetration rate and daily average user time spent on video content after the upgrade. Second, while music streaming used to be a less socially interactive experience, we continued to push boundaries by building and promoting an engaging user community through our fan-based programs.

We invited many artists to personally interact with their fans on our platform. Their engagement in online discussions and participation in song reviews, in turn, have contributed to better promotion results and increased stream volumes of certain songs on a daily basis. Thirdly, we kept sharpening our data analytics capability and refining our personalized recommendation. In particular, the personalized playlist continues to receive positive user response.

In the first quarter, the DAU penetration rate, an average daily streams of personalized playlists, more than doubled on a year-over-year basis. Now turning to social entertainment services. While its revenue growth moderated due to the impact from COVID-19, our mobile MAU and paying user growth remained robust, up 13% and 19% year over year, respectively, benefiting from the growth initiatives we took to improve user engagement and positive impact from users spending more time on our online karaoke platform during COVID-19. With respect to online karaoke services, first, we continue to strengthen WeSing's core karaoke features to make it more user-friendly for users to interact through singing.

As such, both MAU penetration rate and average daily user time spent of the song-recording function achieved healthy sequential growth in the first quarter. In addition, to meet the evolving and expanding user demand, we incubated Kugou Changchang, an online karaoke app designed to better serve Kugou Music users with deeper integration between music streaming and online singing across the two apps. Despite its relatively early stage, we are pleased to see Kugou Changchang achieving initial success with MAU growing 800% year over year to reach 9 million. Second, we focused on strengthening WeSing's social attributes.

We continue to grow the number of online singing rooms based on diversified, music-centric themes. In the first quarter of 2020, we are happy to see the unique real-time social attributes and interactive features built in the online singing rooms resulted in sequential increase in singing room MAU penetration rate and user time spend. Third, we further strengthened video enrichment within WeSing with more types of video content now dynamically integrated and more video tools deployed to make sharing easier and more eye catching. This has boosted the amount of video content and average daily video users on WeSing.

Now for our live streaming services. Against the impact caused by the COVID-19 pandemic, we worked tirelessly on many fronts to pave the way for faster recovery in the second half of 2020. We continue to expand content categories such as games, ACG and matchmaking. In the first quarter of 2020, over 30,000 gaming hosts joined Kugou Live and its DAU penetration rate of game live streaming has been increasingly -- has been increasing consistently, in particular, Kugou Live recently launched Rich and Kuwo in cooperation agreement with Tencent Games, obtaining the right to live broadcast the full range of Tencent Games.

We'll also add more interactive activities and privileges to further incentivize user spending and continue broadening our live streaming content categories to attract more new users. And finally, to boost our promotional capabilities off-line, in April 2020, we acquired an equity stake in Radio Music Warehouse, RMW in short, a leading provider of licensed music streaming service to public venues in China. From system design and integration to content curation and support, RMW is an integrated solution provider of licensed music in public venues, including hotels, restaurants, supermarkets, convenience stores and more. Compared with Europe and the U.S., this market in China is still at a nascent stage with promising long-term prospects.

For TME, this investment serves as another important step to expand our comprehensive music entertainment platform from online to off-line. And with that, I would like to turn it over to our CFO, Shirley Hu, for a closer review of our financials.

Shirley Hu -- Chief Financial Officer

Thank you, Tony. Hello, everyone. In the first quarter of 2020, our revenues were RMB 6.3 billion, up 10% year over year, driven by 27% growth in online music services revenues and a 3% growth in social entertainment service revenues. Online music services revenues were RMB 2 billion, up 27% year over year.

The increase was mainly driven by sustained outstanding performance from music subscriptions, supplemented by strong growth in advertising services despite impact from COVID-19, partially offset by decrease in sublicensing revenues. Music subscription revenues were RMB 1.2 billion, up 70% year over year, driven by continued growth of subscribers and improvement in ARPPU. Basically, number of subscribers increased 50%, and the subscriber ARPPU grew 13% year over year, reflecting continued success of paying users retention and the content paywall strategy. Social entertainment service and other revenues were RMB 4.3 billion, up 3% year over year, primarily driven by growth in online karaoke and the live streaming services despite negative impact from COVID-19 adjustments to interactive features in live streaming and the change in timing of WeSing annual gala.

Our year-over-year basis, paying users grew 19%, demonstrating the strength of our products. ARPPU decreased 13%, which was primarily due to impact from COVID-19, as users reduced spending to manage the uncertainties. Adjustments to interactive features also had a short-term impact on ARPPU in live streaming. Costs of revenue were RMB 4.3 billion, up 17% year over year, driven by higher revenue-sharing fees and content expenses.

Our gross margin was 31.3% in Q1 2020 and decreased 4.1% from 35.4% in Q1 2019. It was mainly attributable to higher revenue-sharing fees, resulting from additional promotions to live streaming paying users to mitigate the impact from COVID-19 and adjustments to interactive features in live streaming, as well as increased revenue-sharing ratio to online karaoke performers to strengthen our platform's competitiveness. Gross margin for online music business has improved in Q1 2020 and is expected to keep improving over time as our music subscription revenue grow. Total operating expenses were RMB 1.2 billion, up 12% year over year.

Total operating expenses as a percentage of total revenue was 18.4% in Q1 2020, increased slightly from 18.1% in Q1 2019. The increase was mainly due to increase in R&D employees related to costs as we continue to invest in R&D to expand our product competitive advantages and technology innovations. Our sales and marketing expenses as a percentage of total revenues remain relatively unchanged from Q1 2019 as a result of our ongoing focus on operating efficiency. Our effective tax rate was 12.8% in Q1 2020.

Our net profit attributable to equity holders of the company was RMB 0.9 billion. Nonoperating net profit attributable to equity holders of the company was RMB 1.1 billion, and the non-IFRS net profit margin was 17.5%. As of March 31, 2020, our combined balances of cash and cash equivalents, term deposits were RMB 21.9 billion, representing a decrease of RMB 1 billion from RMB 22.9 billion as of December 31, 2019. The decrease in the balances was primarily due to investment in consortium to purchase an equity interest of Universal Music Group during the quarter.

Overall, despite the impacts from COVID-19, we achieved strong growth in online music services, partially in music subscriptions as well as healthy growth in social entertainment business in the first quarter of 2020. We expect to see accelerating year-over-year growth in the next few quarters as the COVID-19 pandemic is under control, and the business started getting back to normal in China. From long-term perspective, we continue to be optimistic about the future of the broader music industry and are confident in the overall ecosystem and the product pipeline that we are building. We will continue to focus on enhancing and expanding our products and the service offerings, including long-form audio while maintaining core content investments.

This concludes our prepared remarks. Operator, we are ready to open the call for questions.

Questions & Answers:

Operator

[Operator instructions] Our first question today is from Eddie Leung of Bank of America. Please go ahead.

Eddie Leung -- Bank of America Merrill Lynch -- Analyst

Can we ask two questions? The first one is about the progress in moving more songs over to paywall. So could you talk a little bit about the recent progress as well as the outlook for that? And then secondly, any more detail on the potential launch of live streaming within QQ Music in terms of expanding the coverage of users?

Tony Yip -- Chief Strategy Officer

Sure. Thanks for your question. In terms of paywall, we have said that as of the end of 2019, our content behind the paywall is approximately 10% of the streaming volume on our platform. And internally, we estimate that by the end of this year, the paywall should account for approximately 20% of our streaming volume.

And as of the end of Q1, we're on track to hit that 20% target. Now, however, I think we want to highlight that, number one, we're obviously very pleased with the online music subscription revenue growth, growing 70% year over year, which is actually the fastest reported growth ever in our reported history. And we had suffered from a little bit of COVID-19 impact during the first quarter. But -- so without the impact from COVID-19, we would have grown even faster because music, from an MAU perspective as well as from a resulting paying user perspective, saw some users tend to consume more karaoke or games or video when they spend an unusually long time at home, right? So -- but on the other hand, if we were to include music MAU from in-home IoT devices, such as smart speakers and Smart TV, which is not currently included in our reported MAU data.

If we were to include those, our MAU would actually have grown 3.5% on a year-over-year basis. So we saw that -- those in-home device consumption on our platform actually mitigated some of the weaker mobile MAU. And like we said before, I think given we already have a very large user base in terms of music MAU, our focus continues to be driving user conversion from free to pay. And we continue, as you could see, to make excellent progress in the current quarter's results.

Cussion Pang -- Chief Executive Officer

Your second question is about when are we going to launch the QQ Music Live business. In our plan, we are going to launch it in the second half of this year, which is targeting to be in June to July. All the team is working so hard and getting it ready for the launch, so we are positive in this area. And this year, we are going to test water.

And after we have prepared everything, I think that it would provide further contribution on the social entertainment revenue from the year to come. One more point that I would like to add is even though the pandemic situation will bring some of the negative impact on the online music MAU, but we are still seeing that in this quarter, we are still having a 2% quarter-to-quarter growth in our online mobile music MAU. So we are doing pretty good. And we are also expecting a better recovery after the pandemic situation was under control in Chinese -- in China.

Eddie Leung -- Bank of America Merrill Lynch -- Analyst

Understood. Thank you.

Operator

Our next question will come from John Egbert of Stifel. Please go ahead.

John Egbert -- Stifel Financial Corp. -- Analyst

Great. On the social entertainment side, obviously, the MAU growth is very strong despite the COVID-19 impact and paid user growth as well. I'm wondering if you're seeing any signs of ARPPU stabilizing at all through May as things have gotten a little bit more normal. And on the Kugou Changchang, curious what the strategy is there, separate apps versus an integrated app approach and how you think subscription and overall monetization for the long-form content on the spoken word side might differ from music as you take the strategy of separating an app.

Cussion Pang -- Chief Executive Officer

OK. Thanks for your questions. And when we're talking about the social entertainment MAU, yes, we are having a really good result this year, especially during the pandemic situations, more people spending more time at home, and they need certain forms of entertainment. So we are seeing a very positive result that our active users being more active, and even some of the less active users reactivate their accounts and started to sing karaoke and do social networking with their friends at home.

We are seeing that the overall users' behavior actually is changing. But even though, after the pandemic situations, people start getting back to their normal life, we still want to hope that our overall -- the user -- activeness of our users will remain in relatively good level and can persist in the coming months. What we are thinking about is, right now, since -- during the pandemic situations, even though it helps our total active users, but we are seeing that it do have some impact on the revenue side. So it impacts the growth of the revenue because, first of all, some of our live broadcasters, they are not doing -- they are maybe being quarantined or stayed at home.

So it impacts the total number of on-air time during the pandemic period. And also, the pandemic period also bring some negative impact to the overall economy. So maybe our number of users' intention for spending on the live broadcasting services will be impacted as well. But after the pandemic area -- the period, we are seeing that we are actually experience a recovery right now.

So we are expecting to seeing that the revenue for the rest of the year will continue in a healthy growth. And also, the ARPPU that you mentioned will also be improved as well.

Tony Yip -- Chief Strategy Officer

And so in terms of Kugou Changchang, starting from this quarter, we have started to include the Kugou Changchang data into our MAU. And the data that you see in our reporting -- reported filing have been adjusted retrospectively so that they are apples-to-apples comparison. And as you could see, Kugou Changchang, despite the very early stage, saw phenomenal growth, growing from 1 million MAU last year to -- by over 800% to about 9 million MAU this quarter. And the strategy there is that TME has a very good track record of executing on multi-brand product strategy to more effectively cover different user segments.

And Kugou Changchang is a perfect -- is another perfect example, similar to a multi-brand product strategy that we follow on online music. And that's because Kugou Changchang allow us to better serve specifically the use of demographics that are more closely aligned with Kugou Music than WeSing or QQ. So overall, social MAU grew very strongly this quarter, but I'd like to add that during the COVID-19 pandemic, as people tend to stay home and spend time more on karaoke during that period, our MAUs and paying users did enjoy a little bit of a boost during Q1. And so it would be very normal and reasonable that in Q2, as users return to work and they have less time to spend, it will be healthy to see our MAU in Q2 normalize back down to a level that is slightly below Q1.

And paying users would probably be around a similar level in Q2 as in Q1. But overall, from a revenue perspective, we do expect -- as Cussion mentioned, we do expect our Q2 year-over-year revenue growth for our social entertainment revenue to be stronger in Q1.

Cussion Pang -- Chief Executive Officer

And also, you also mentioned about the long-form audio strategies, the core accounting apps that we are -- just launched, I would like to add a little bit more comment on that just because, first of all, we are seeing that long-form audio is a strategic area that we want to really focusing on. First of all, because our users, we have a strong user base, they get used to listening to music and enjoy all other related content on our platform. It will be very natural for them to spend more time to listen to some audio -- long-form audio format. We have tried in China six months ago, and we have achieved a very good result.

And it also laid a good foundation for us to be more encouraged and started to roll out not just like new features or functions on our music platform, but we tried to launch our independent long-form audio apps as well, which is a cool Changting. The result is even though we just launched it at the end of April, less than a month, but we have already received very good feedback by users. We are fine-tuning our product, and at the same time, besides launching all the new applications, we're also rolling out some of our new monthly subscription plan with marketing promotions and really good price pack. And I think it also encouraged the market, and we are -- we see very positive feedback.

So we would like to share with you more in the future once we got any more updates regarding the long-form audio strategies.

John Egbert -- Stifel Financial Corp. -- Analyst

Great, thank you.

Operator

Our next question today will come from Binnie Wong of HSBC. Please go ahead.

Binnie Wong -- HSBC -- Analyst

My first question is that I understand the company is exploring many new initiatives, new opportunities. And then also like the Changting and also the TME Live targeting like the UGC content, PGC content, how do you see our -- this have -- like our monetization plans in terms of like how you plan to monetize these new opportunities and whether you see any cannibalization to our existing app users? And following up on this question is whether you think that we'll be -- because we'll be stepping up our sales and marketing or maybe product development expense this year. With all these new initiatives we are launching, how will that impact our margin trend this year, please?

Cussion Pang -- Chief Executive Officer

OK. Very good questions. We are always focusing on trying to encourage -- besides the professional content, we are also encouraging our users to create more user-generated content and share with their friends on our platform. Let me give you an example.

We just launched all the new version of WeSing, which is version 7.0, just a couple of weeks ago. The major focus of this version is we are more focusing on the videolizations of the apps. So which means that in the past, when people is using the WeSing app with single song, we call it -- which is in audio format, and then we share it out to our friend. But right now, besides this, we are also encouraging our users to create video-based content.

So by very wonderful, powerful tool that we created, lower the entry barrier of our user to create content, and it's very easy for them to make up their own short-form music videos. So it is what we are doing, and we have received a very good result, and we are seeing that many people started to create this kind of content. And once this kind of content was being displayed to the users, especially they are from a friend, you will be giving a like or you'll be watching it, consuming the content and if you encourage the interaction among our users, which have the social networking effect. So this is a very important direction that we are working on.

And so that's the reason why I'm talking about. We are working on the videolization of our applications. So for this kind of product design, we will encourage the interaction among the users, and users can also sending virtual gifts or maybe if this is going to be a KOL, sending out the short-form videos, and you can also follow the live broadcast of these KOLs. And then we can have monetization method in order to create a virtuous cycle.

So this is something that we are working on. In terms of the questions, I think that we are not going to jeopardize our professional content because we understand that our users still have different needs. People need professional content, but at the same time, they also need the content from their friends. And this is also the beauty of TME.

We are a social network, not just platform-based digitizing professional content.

Binnie Wong -- HSBC -- Analyst

OK. Thank you, Cussion.

Shirley Hu -- Chief Financial Officer

About margin -- yes, I will answer the question, too. Yes. About margin, at the gross margin level, we think -- we expect the gross margin will be stable in this -- will be stable in this year around -- that in the Q1, yes, because even with the COVID-19 pandemic recovery, our gross margin about our old business will be increased. But we needed to invest in long-form audio.

That product strategy is to focus on VIP, so the content is needed to invest. So we expect the gross margin will be stable this year. And about operational -- operation on net margin, we think our -- we'll manage our promotion fees, manage our marketing expenses. So we think the ratio of this expense to revenue will be around the same rate at Q1.

And we -- about the administrative expenses, because we need to invest in more new product and new technologies, so we will invest more on R&D expenses and employee costs. So the operation -- the G&A expenses will increase. So we expect, naturally, the margin level, our net margin will be a little decrease compared to the Q1 and around the reasonable level in this year.

Operator

Our next question will come from Alex Yao of JP Morgan. Please go ahead.

Alex Yao -- J.P. Morgan -- Analyst

I have two questions. One is regarding the introduction of audio book function into the product portfolio. Usually, the industry peers use audio book as an engagement driver and then monetize the engagement and the usage from audio book of their live streaming business. Does audio book serve the same role in your product portfolio, i.e., it's more of an engagement driver and less of monetization driver? And secondly, regarding the social entertainment.

The revenue growth rate slowed down to 3%, which you guys attributed to the outbreak of COVID-19. So my question is what does it take for the revenue growth rate to recover to teens, if not 20s, into the next couple of quarters? Is it just because of the COVID-19, does it mean you guys don't need to do anything once the impact from the COVID-19 is over, the business go back to the normal growth trend? Or do you need to do something to maybe change the way the consumer behaves post the COVID-19 outbreak? The relevant question is can you show us with the user behavior trends of the social entertainment business in April versus February and March.

Tony Yip -- Chief Strategy Officer

I'll address the second part of the question on social entertainment. Again, perhaps, Shirley can talk a little bit more about the audio books segment afterwards. So look, while social entertainment revenue grew only 3% year over year, primarily as a result of COVID, we strongly believe the worst is behind us, and we do expect growth rate will recover in Q2. And so like we said, we expect the Q2 year-over-year growth rate for revenues to be stronger than Q1.

And most of that is driven by just organic growth of users, paying users, being more willing to send virtual gift with the economy reopening back up and the content supply reopening back up, given what Cussion mentioned earlier, having some of our large streaming performance being back to work on a more normal level in Q2. And so most of the growth is just going to be driven by organically from our Kugou Live, Kuwo Live and, to some extent, WeSing as well. Like we mentioned, we do think our social entertainment business remain healthy and solid, but it doesn't stop us from continuing to broaden and expand our social entertainment business beyond that to include the launch of QQ Music live streaming. And I just want to just be clear that we plan to launch the QQ Music live streaming service in June, right, in June.

And the -- we'll continue to expand the live streaming content category that I talked a little bit about into gaming and the likes of ACG or other categories such as matchmaking. And in fact, it's been -- we've made tremendous progress in April by announcing the strategic cooperation with Tencent Games, allowing Kugou Live to live stream all of Tencent's popular games. So all these are initiatives -- growth initiatives that would help us drive further growth beyond our organic growth, and more of that will probably shine through in the numbers toward the second half of next year rather than second quarter.

Cussion Pang -- Chief Executive Officer

Alex, thanks for your questions, and let me address the first question you mentioned about the audio books functions. You're absolutely right that the audio books function or maybe I call it the long-form audios, it's really an engagement driver to us because, I think, as I mentioned it before, it's very natural for our users because they listen to music, they get used to it on our platform, and it's very easy for them to listen to more other format of content like a long-form audio. So it's very natural for them, and when we are going to offer this kind of content, and we will help us to increase the time spent of our users, which has been proven during the past six months that we launched our -- soft launched the service already. So I think that this is very healthy to our platform because even though we have already got a huge amount of MAU.

So we are not relying on this long-form audio features to get additional new users. Definitely, we will get some. But if we can use them to let our users to get more engagement and increase their time spent is going to be the No. 1 objective that we would like to achieve.

So once we got our users to be more active, there's many ways for us to do the monetization. Like I mentioned before, we have the monthly subscription VIP plan, which is we offer a very attractive price tag for the moment to encourage people to spend more besides the normal music monthly subscription. We also have the a la carte model that they can also spend on a particular long-form audio content. We can also drive more advertising revenue in the future as well because as everyone of you knowing that on the TME platform, there's a lot of potential for us to drive for the advertising dollars.

Besides this, we are also seeing that, just as you mentioned, we can also let the KOLs who provide the long-form audio content to us to even have some live broadcast. We are also showing this very good result and feedback by the audio-based live webcast as well. So it is on the QQ Music platform. It's on the Kuwo platform.

We are seeing that the trend is coming. And this is also another potential area that we can even drive further business development. So there's a many way for us to do the monetization in the long-form audio base. So I think that this is the reason why we are so emphasizing it, and we will continue to pull in more resources in this area.

Shirley Hu -- Chief Financial Officer

And this new -- monetization-wise, we think we need time to training the users. So we expect the meaningful revenue will be come from next year. That's all.

Operator

[Operator Instructions] Our next question is from Alex Poon of Morgan Stanley. Please go ahead.

Alex Poon -- Morgan Stanley -- Analyst

You touched on overall gross margin of the company going to be stable. If I want to split between the music services and the social entertainment margin, how would the trend be look like? And for music margin, I understand that the last agreement with one of the top three labels is expiring. Can you give us some update about that? And what are you hoping to achieve from that negotiation? And how would that impact your cost structure? And also, will that new agreement have any implication on other domestic labels, other music labels' cost structure in the future?

Tony Yip -- Chief Strategy Officer

Sure, Alex. I'll address the question about the licensing, and then Shirley can address the question about the margin going forward. Look, we are in the middle of the negotiation with one of the three major. And like we said in the past, our focus is on getting to an outcome where it's no longer going to be a master license.

It would be a nonexclusive arrangement. And in terms of the cost structure, in the past, obviously, there is primarily a fixed cost minimum guarantee-driven cost structure. What we're striving toward is ensuring that the components of the cost that our revenue share base are more than in the previous contract, and the components of the contract and our fixed cost base in terms of BMG are less compared to the last contract. So overall, that would be an improvement compared to where we were previously.

And in the long run, we believe that, obviously, from an absolute dollar perspective, if you look at the licensing cost, it's fair that it should go up over time. But relative to the growth rate of our music revenue growth for music -- subscription revenue growth, we're confident that we'll be able to see operating leverage kicking in, in our music business despite the growth in the licensing costs. I also want to remind everybody that I know there's a lot of focus on our three majors, but the biggest five labels account for only less than 30% of our streaming volume on our platform. It's actually even less than that now.

So we have a very diversified set of content supplies and which is very, very different than in the west. And importantly, we're investing and very are committed to building independent musician ecosystem, the Tencent musician platform, because -- and you could see the results coming through, as Cussion mentioned, with the number of songs being uploaded or the number of people that are signing up to the platform doubling. And increasingly, even some of those content are being licensed to us through the Tencent musician platform on an exclusive basis to us. That's growing even faster.

So overall, I think we -- and we're helping many of these independent musicians grow very fast and promote their songs very successfully, as the examples that Cussion talked about. So overall, I think our content portfolio will be very broad and comprehensive. It will have the top labels such as the three major and will continue to be the partner of choice there, and we're confident that we will be able to get to an outcome that is reasonable and profitable for both parties. But at the same time, we're also very -- working very closely and investing heavily on broadening our content ecosystem to include all these indie musicians as well, which is very good for us in the long run.

Shirley Hu -- Chief Financial Officer

About the gross margin on online music, we expect the gross margin will be improving in the long run better and better, and there are two reasons. One, at this moment, the monetization rates at the music side is at the very early stage. We expect our revenue on music will be -- increased rapidly, including subscriber revenues, digital sales and advertising revenues. So this is one reason.

The second, we will manage the cost of license. We hope we can -- more part of the cost will be revenue sharing sales and reduce the minimum guarantee. But I think this needed time. It's a long strategy.

It needed time to get the goal. So we believe that the gross margin on online music will be increased in the long run. And about the social entertainment gross margin, we believe in the next quarters, this part will be recovery because the epidemic pandemic will be over. But revenue-sharing ratio will be a little increased on online music -- I'm sorry, on karaoke.

So that will be a little increase in gross margin in social entertainment. But overall, compared to the Q1, the gross margin will be increased, yes.

Operator

Our next question will come from Wendy Chen of Goldman Sachs. Please go ahead.

Wendy Chen -- Goldman Sachs -- Analyst

My question is about the change on the music industry amid the COVID-19 and the subsequent work-from-home trend, as we've seen the way of user consuming music might change and some upstream player might suffer amid the lockdown. So I'm just wondering what's the management strategy to further drive music monetization post the pandemic war. For instance, are we looking at to monetize those live concerts streaming product or the IoT product?

Cussion Pang -- Chief Executive Officer

OK. Thanks for your questions. And actually, you're absolutely right that during the COVID-19 pandemic period, more people are staying home, and they consume it -- The pattern of consuming music is also different than in the past. I think that we are seeing positive impact, frankly speaking, because it's not just doing it right now but around a year or two years before.

We started to extend our footprint in providing music service through IoTs and other home appliances like the smart TVs, et cetera. This really help us to lay a good foundation for us to help our users to enjoy music at any time, at anywhere in their convenience. So I think that we have already laid a good foundation. So during the COVID-19, even though the patterns of the daily life of our users have changed, which will have some negative impact to the overall activeness of our users, but we are still doing a pretty good job in this quarter, the Q1 of 2020, which we still have a quarter-to-quarter improvement in the total MAUs.

So I think that in the future, I think that since that people have started to try get tried on using music through the IoTs or other platforms, I think that you will also help this kind of user activeness to be -- persist in the future. So I think this is going to be another potential growing area of us. So we will continue to have a strong partnership, not just by ourselves, but also with other IoTs, manufacturers and also other platform as well. We will continue to strengthen our business in this area.

In terms of the monetization, I think that there's two ways. In terms of the music, I think that we have been continue showing very good, encouraging feedback in our growing of our subscription base, which is a 70% growth, which is a record high. And I think that this is very important for us to -- it's proven that the way that we are doing is a correct way to go. So right now, we have the paying ratio at just 6.5%.

We are seeing that it's going to continue to grow in a healthy manner, and the inflection will be reached in the future. And then we are going to maybe, one day, we can achieve even a lot higher paying ratio, which is going on the time we were coming. The second part is we are also seeing that we started to have some kind of online entertainment format, new form of online entertainment for our users when they are staying at home. So that's the reason why we roll out the TME Live program during the pandemic area.

We have successfully launched five online concerts with top-tier artists. Frankly speaking, it's not an easy work because we are not just letting the top-tier artists to record a song at their home and just simply just broadcast it, but we are arranging online concerts, which is around one-and-a-half hour full-length concerts. This is very -- not that easy to arrange, but we have already tried it out. We're getting a lot of really good feedback from the users.

And also, the top-tier artists like JJ Lin and also like Rene Liu, they're also thinking that is very positive, not just the format of it, but also sending a really positive message to society that we are staying together during the pandemic situations. But I think that after gaining this kind of experience, we will be going to continue to fine-tune our TME Live online concerts. It's not just simply broadcast online event and let them to become an offline event. We need to have new formats, something that is more suitable to the younger generation, something that's more suitable for the behavior of our online users.

So we are working on that. And also, in the future, we will be adding more and more monetization method for these online concerts as well. It's not just for online ticketing, where we can encourage more virtual gifting. We can encourage more real-time interaction among the artists and also the audience.

We can arrange a fans-based events. We can arrange a lot of fans base activities doing the online concert period as well. So there's many ways to come. So I'm so encouraged by, even though the COVID-19 is not a good situation for the entire world, many people have suffered, but we are also seeing that we can use all these kind of innovative ways to provide some of the new services, which can help our users to be positive and also having many ways of entertainment even they are staying at home.

So I'm seeing there's a lot of new business opportunity out there.

Operator

Our next question will come from Thomas Chong of Jefferies. Please go ahead.

Thomas Chong -- Jefferies -- Analyst

I have a question relating to competition and revenue-sharing with forecasters. Given the fact that we are having more content in our social ecosystem, can you comment about how we think on short-form video and game broadcasting competition with other peers in the future? And with that, how should we think about our revenue-sharing ratio with the broadcasters, given that we are thinking about the GP margin to be relatively stable on a year-on-year basis for the full year?

Tony Yip -- Chief Strategy Officer

OK. I'll take the competition question. Look, I talked a lot about video enrichment across a number of our apps on music as well as on WeSing. And we are not trying to become a short video platform.

Let me just be clear. What we are trying to do is enrich the video content format so that we can better serve the user needs because users, they want to consume music. They also have a desire to consume video, content related to music. And in the past, we haven't been able to fulfill that need.

But going forward, we want to enrich the video content category so that we could actually fulfill their needs and thereby increase engagement and time spent on the platform. In addition to that, I would say that in terms of video, it's not just short video. For example, we have a show, like a mini-variety show called MR RADIO, on QQ Music. It is now into -- we just finished the second season, a highly successful show.

Since the total stream for the two seasons combined is almost 600 million streams. And that's on our platform, right? This is not streamed externally by video-based platform. And we had attracted -- like that's basically a radio talk show-type show, but it's a video content. And the two seasons attracted over 100 groups of artists, right? And actually, that's on season two alone, which is 70% higher than season one.

And we promoted like hundreds and hundreds of songs through that. And there's a lot of -- have very good positive user feedback on that. So that's another form of video enrichment on our platform. That is not just short video, but those are sort of 20 minutes in length.

And then at the same time, we are also broadening -- so we are talking a little bit about PGC. We're also broadening our UGC. So in Kugou Music app, for example, in the music streaming page, increasingly, you'll be able to see, while you're listening to a song, the system will automatically recommend a background video, a background short video for you to consume. And those videos, some of that are part of the whole slate of variety shows that we have either invested in or we participated.

We have some of the -- our partner labels participated in. So we have access to those content. Some are purely UGC provided. So I think we're trying to -- but all of that are music centric.

So again, it all comes back to enriching our engagement and time spent by allowing users to who consume music-centric video on the platform. And so they don't have to leave our platform to go to an external platform for this regard. Outside of music-centric content, that's something for an external platform to do.

Operator

Our next question will come from Ellie Jiang of Macquarie. Please go ahead.

Ellie Jiang -- Macquarie Research -- Analyst

so management, so how do we think about the balance between sort of like user growth and ARPPU under the current social segment if we look beyond second half? Since we're gradually recovering from COVID-19 and normalizing all the metrics, how the new features like games and QQ live streaming would impact ARPPU in longer term? Thank you.

Tony Yip -- Chief Strategy Officer

Sure. So I think it's important to recap the Q1 metrics because that is important to understand that to understand the future. I mean we saw the paying user increase and the ARPPU slightly decreased on a year-over-year basis, and that's primarily because of the COVID impact. We saw an increase in time spent on online karaoke, which drove the MAU and drove the paying users.

However, many of these paying users tends to be lower ARPPU, right, compared to the live streaming paying users and, as a result, obviously, dragged down the overall ARPPU. And at the same time, the live streaming paying users who are economically impacted by COVID also has a less willingness to spend. And so we have those two impacts. And then going into next quarter and beyond, obviously, with the economy reopening, we -- and people returning to, work.

From an online karaoke perspective, the paying user growth won't be obviously as high in Q2 than it is in Q1. So from a total paying user perspective, it'll probably be at a similar absolute level, maybe just a little bit of growth compared to Q1. But that's completely normal. If we're talking about one quarter, obviously, we'll grow beyond that from Q3 into Q4.

And from an ARPPU perspective, with the reopening of the economy and the live streaming paying users returning, the ARPPU would obviously increase sequentially compared to Q1. So I think we see that trend continuing, which is a very healthy trend. And also, I want to stress that the MAU would also normalize a little bit in Q2 from -- that would be at a lower -- that would be at a level that will be slightly below Q1. But again, that will be completely normal because of the COVID impact that boosted the karaoke MAU in Q1.

It will still be at a very healthy and strong level.

Operator

Our next question will come from Zhijing Liu of UBS. Please go ahead.

Zhijing Liu -- UBS -- Analyst

I have just one question. It was great to see continued acceleration of music subs revenue in past two quarters. So how sustainable is this round of strong traction, especially considering that subs addition had a slight deceleration in 1Q?

Tony Yip -- Chief Strategy Officer

Yes. I'll take that. I think in Q1, obviously, I talked about the impact of COVID on music MAU and, as a result, paying users as well because when users spend an unusually long amount of time at home, they tend to consume more in terms of karaoke or online games or online videos, right? But despite that, right, we were able to grow subscription revenue at 70% year-over-year basis, which is actually our fastest reported growth. And so going forward into Q2 with the reopening kicking in, we actually expect our Q2 year-over-year growth rate for our overall online music revenue to be even stronger than Q1, right? And that's again going to be driven by subscription revenue continuing to grow at a very rapid pace.

And in terms of net adds, you talked a little bit about net adds. We expect the net adds of music paying users in Q2 to be higher than Q1, obviously. And hence, the music paying user year-over-year growth rate would also be at a very high level, similar to that of Q1. And from an ARPPU perspective, we -- it will -- let me touch a little bit on music ARPPU because in the -- what we're seeing is a very strong growth on a year-over-year basis in terms of ARPPU is the result of many previous quarters of investment that we made like last year, right, and in the form of, for example, promotional efforts around auto renewal subscription plans.

Now the impact of those auto-renewal subscription plan is that we provide a first month discount if a user sign up so that they check the auto-renewal option. But then after the first month discount, it actually goes back to the normal pricing. So it has an impact of slightly decreasing the near-term ARPPU but increasing the long-term ARPPU. Now we're enjoying the benefit of those promotional efforts a few quarters ago now.

And like we said, in the past, we are still at a very early stage of monetization with only 6.5% of our paying users. So if we could grow our subscribers more by keeping our ARPPU flat, we would prioritize on our subscriber growth over ARPPU. So I wouldn't be surprised if in the next quarter or two, we see a more flattish sequential ARPPU but still growing on a year-over-year basis. If that happens, that's basically us spending again promotional efforts to invest in growing long-term market.

And that's actually a very good thing for us that we'll see.

Cussion Pang -- Chief Executive Officer

Yes. One more point that I would like to add, which is the retention rate of our monthly subscription. We have been continue growing. So we are still seeing that we are in a really healthy manner.

And once the retention rates continue to improve, it will further help us drive up our paying ratio as well.

Zhijing Liu -- UBS -- Analyst

Thank you.

Operator

Our next question will come from Tian Hou of T.H. Capital. Please go ahead.

Tian Hou -- T.H. Capital -- Analyst

So I have a question regarding to TME Live broadcast, the TME Live. So after I've seen the concert, I -- actually, my team watched all five concerts. I feel pretty excited about your business since you're actually step out what's existing, like broadcasting or music services, and enter into a new territory of a music area. So I wonder if that is your ongoing plan, if you have an ongoing pipeline for that and also how to monetize it.

Each concert, you can have, like, hundred, tens of audience -- or millions of audience. I think if you don't monetize it, it's really waste of resources. I can imagine Tencent will have a lot of those kind of advertisement requirements or resources if they can actually put some in it, you can actually monetize a great deal. So I wonder what's the strategy going forward.

If there's a pipeline, how do you monetize it?

Cussion Pang -- Chief Executive Officer

OK. Yes. Thank you so much for your questions. And we also feel exciting about the TME Live activities that we are organizing for the moment.

And yes, you're absolutely right that we are not just providing music service through the mobile apps, but we have already extended our footprint and really aimed to build a total music entertainment ecosystem, which means that we need to go upstream and also downstream as well. And I think the TME Live event really demonstrating that we are putting in a lot of efforts and also creating wonderful new experience for our users from the performance area. I think that for the TME Live events that we are organizing, first of all, there's many things for us to learn. It's not simply making our off-line concert and directly broadcast it and name it an online concert.

I think that we can have many new formats, which is also some of the strength of TME, like the socializing, OK? How we can let our users when they are enjoying their online concert, and they can also socializing with each other. So the fans-based economy can actually kick in. We can lot of -- we can do a lot of things. For example, if you are the fans of JJ Lin, OK, maybe before the concert is going to start, you can get involved in some voting on which songs that JJ Lin is going to perform for their online concert.

And also, during the online concert, you can also have a lot of interactions as well. You can have many kind of checking or sending virtual gifting to your beloved idols or maybe we can arrange some gamifying ways for our users to enjoy the online concerts as well. So all this, I think, will be the monetization methods that we can putting in. So I think that, as I mentioned, the five top-tier artist concert -- online concerts we arranged during the pandemic situations is really a good start for us.

And we learned a lot of experience, we're accumulating more experience, and we are fine-tuning our business model. And the most encouraging is not just our users really like this concert but also the artists also feel that there's a lot of potential. And they also want to go with TME and arrange more online concept in new format online concert together in the future. So I think as I mentioned before, we are truly the preferred partners, not just by the music label, but also the preferred partners by our artists because we are growing up together.

We work for better industries, and we work out better music and better music experience for our users. So just wait for us to go, and we'll continue to explore. And I'm definitely seeing that TME Live and this kind of performance space activities, we will have in a good hand to work on more positive results in the future. Please go ahead.

Operator

Our next question is from Alex Liu of China Ren.

Alex Liu -- China Renaissance Securities Limited -- Analyst

I have one question. Given the user demographic is different between QQ Music and Kugou, how does the management of WeSing, QQ Music live streaming different from the current Kugou Live streaming in terms of product design, content vertical and user-paying pattern?

Tony Yip -- Chief Strategy Officer

Sure. I think we'll be able to talk a lot more about it without giving too much away until we've launched the service that, broadly speaking, what we try to achieve, like we said, is continuation of the multi-brand product strategy across music that you saw we have multi-brand, across karaoke that you see that we have embarked upon the incubation of Kugou Changchang and also in live streaming, multi-brand. And I think each brand and each product will have slightly different targets of user segment. Needless to say, I think our -- the live streaming business within QQ Music would be more complementary to the user segment for QQ Music.

It would have -- you'll have more focus on independent musicians, which QQ Music is working very closely with. And it will have more features to work with these musicians to promote the music in a more live and interactive manner. And all of this is very complementary like we saw in music. Multiproduct doesn't cannibalize.

It actually help us broaden our reach and help us better cover the entire population in China. China is very big with different segments. So through this multi-brand and multi-product strategy, we can actually extend our existing business into more and more user segment and thereby broadening our revenue growth potential.

Cussion Pang -- Chief Executive Officer

And also the user overlapping among QQ Music and Kugou Music is also very minimal, OK? So that's the reason why I think that when we are going to roll out the live broadcast service on QQ Music platform, which will help us to serve our users better, to serve the QQ Music users better and is not going to cannibalizing the Kugou Music live business as well.

Alex Liu -- China Renaissance Securities Limited -- Analyst

Thank you.

Operator

Our next question will come from Hans Chung of KeyBanc. Please go ahead.

Hans Chung -- KeyBanc Capital Markets -- Analyst

I have a quick couple of questions. The first one, just following up the QQ Music live streaming question above. Just wonder what's our initial thoughts, the potential real addressable user, the scale and paying user potentially. Is that going to be similar to what we have now for the Kugou Music live streaming and -- or could be even the bigger or less? And then second question would be still regarding the social entertainment business.

Just wonder can management team just elaborate more the progress of a recovery. I think you guys mentioned there is some recovery, I mean, in this quarter. And then what's the trajectory, like, say, in the end of March in April into early May? What do we see the year like year-over-year growth trajectory, I mean, over time here? And then what's the -- what do we expect the revenue run rate level to be -- to add what level compared to the pre-COVID-19 level?

Tony Yip -- Chief Strategy Officer

OK. Look, I think, obviously, by us, with all the -- subject to all the disclaimer related to forward-looking statements, by virtue of us saying that we expect the second quarter revenue growth for social entertainment to be stronger than Q1. We're seeing this because we are already seeing a recovery in the numbers in April and parts of May that we are in. So it's in line.

The reality of what we're seeing happening is in line with what we're seeing. And then in terms of the addressable market, look, I think live streaming is a multi-hundreds of millions -- billions, multi-hundreds of billions in renminbi terms in market size, right? I mean live streaming business is huge. And I think we have, obviously, a very strong foothold in the music-centric live streaming that we're already in. Nobody is in this space.

And this is still just a small percentage of the overall live-streaming pie. And we actually think we could continue to grow that pie of music-centric live streaming, alongside the growth of the overall live streaming, which is enormous market. As to whether it could one day reach the size of Kugou Live, look, I think it will be not in the near term, I think it's fair to say. Given Kugou Live has done this for many, many years, it would take many years for us to reach that level, but I think the potential is definitely there.

So look, I think that's the last question. Overall, just to close things out, like we said, I think in terms of online music, we're seeing very positive momentum continuing. We expect the second quarter revenue growth to be stronger than Q1, driven by continuous record growth in subscription revenue. In terms of social and entertainment revenue, we again also expect Q2 to be growing faster than Q1.

And so combining all of the above, we expect our total revenue growth next quarter to be stronger than Q1. And so let's put the COVID impact behind us, and we think the worst is over, and we have better results ahead of us starting Q2 and into second half. OK. Thank you, everyone.

Cussion Pang -- Chief Executive Officer

Thank you so much for your time. OK. Thank you.

Operator

[Operator signoff]

Duration: 88 minutes

Call participants:

Millicent T. -- Vice General Manager

Cussion Pang -- Chief Executive Officer

Tony Yip -- Chief Strategy Officer

Shirley Hu -- Chief Financial Officer

Eddie Leung -- Bank of America Merrill Lynch -- Analyst

John Egbert -- Stifel Financial Corp. -- Analyst

Binnie Wong -- HSBC -- Analyst

Alex Yao -- J.P. Morgan -- Analyst

Alex Poon -- Morgan Stanley -- Analyst

Wendy Chen -- Goldman Sachs -- Analyst

Thomas Chong -- Jefferies -- Analyst

Ellie Jiang -- Macquarie Research -- Analyst

Zhijing Liu -- UBS -- Analyst

Tian Hou -- T.H. Capital -- Analyst

Alex Liu -- China Renaissance Securities Limited -- Analyst

Hans Chung -- KeyBanc Capital Markets -- Analyst

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