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YY (YY) Q4 2018 Earnings Conference Call Transcript

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YY (NASDAQ: YY)

Q4 2018 Earnings Conference Call

March 4, 2019 9:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to YY Inc.'s fourth-quarter and full-year 2018 earnings call . [Operator instructions] Please note, this event is being recorded. I'd now like to hand the conference over to your speaker host today, Mr. Matthew Zhao, IR director of YY.

Thank you. Sir, please go ahead.

Matthew Zhao -- Investor Relations Director

Thank you, operator. Good morning, and good evening, everyone. Welcome to YY's fourth-quarter and full-year 2018 earnings conference call . Joining us today are Mr.

David Xueling Li, chairman and acting CEO of YY; Mr. Bing Jin, CFO of YY; and Ms. Ting Li, COO of YY. For today's call, management will first provide a review of the quarter, and then we will conduct a Q&A session.

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The fourth-quarter 2018 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 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 Mr. Bing Jin, CFO of YY, to provide you a business update on behalf of our chairman and acting CEO, David Xueling Li. Then he will also go over the details of our financial results of the quarter. Please go ahead, sir.

Bing Jin -- Chief Financial Officer

Thank you, Matthew. Hello, everyone. Welcome to our fourth-quarter and full-year 2018 earnings conference call. At the beginning of my prepared remarks, I want to share the joy with you since a few hours ago we announced the news regarding YY's successful completion of the acquisition of Bigo.

You can find more details from our separate press release. It is an important milestone for YY group, which demonstrated our confidence and commitment to the globalization strategy. Bigo has delivered both rapid user growth and significant monetization progress in 2018, making it one of the fastest-growing Internet companies worldwide. While Bigo Live is consolidating its leadership in entertainment live streaming market outside China, Like, the short-form video app, also experienced tremendous user growth and user time spent increase in short-form video market.

The combination of YY's and Bigo's unparalleled business and services in both China and overseas will enable us to create enhanced live streaming content, expand our global footprint and offer world-class user experiences for our global user community. As a result, we will be well-positioned to become a world-leading video-based social media platform. Next, let's talk about the quarter and the full-year results. We concluded 2018 with another quarter of solid operating and financial results.

Our total revenues increased by 28% year over year to RMB 4.64 billion during the fourth quarter, exceeding the high end of our previous guidance range. Revenue from our live streaming business grew by 30.4% year over year to RMB 4.39 billion. Revenue from our game live streaming subsidiary, Huya, increased by 103.1% year over year to RMB 1.5 billion. During the fourth quarter, we achieved year-over-year sequential increases in both our mobile live streaming MAUs and live streaming paying users.

Our number of mobile live streaming monthly active users increased by 18.1% to 90.4 million. The number of live streaming paying users increased by 36.6% to 8.9 million in the fourth quarter of 2018. Since we own one of the most loyal and engaged live streaming communities throughout the industry, the continuous healthy expansion of our community has enabled us to sustain our strong growth momentum. I would like to share with you more color on three key areas' efforts: Internet expansion, content upgrade and AI technology enhancement.

Firstly, we are actively exploring opportunities globally. In 2018, our initial foray into the global market with several early stage innovative products generated exciting results. One good example is Hago, H-A-G-O, a casual-game-oriented social media platform that we officially launched in the third quarter of 2018. Hago not only provides around 50 casual games but also infuses multiple social features such as live streaming chat rooms, karaoke and others into the app.

As a result, that platform encourage young generations to use these features to establish and maintain social connections while enjoying casual games. Now Hago is available in 33 countries and regions worldwide with a focus on Southeast Asian markets. In the fourth quarter of 2018, Hago consistently topped the charts of the most popular apps on both App Store and Google Play in both Indonesia and Vietnam. Hasgo's monthly active users reached 20.9 million, and on average, its users spent over one hour on the Hago platform on a daily basis.

Looking ahead, we intend to further expand our product portfolio globally to achieve faster user growth and explore more monetization opportunities. With Hago proving to be a smash hit in its targeted markets and the acquisition of Bigo, we're very confident that the successful model of our international operations will be a very important driver for our long-term growth. Secondly, moving to our content upgrades. In the past, through our proven cross-channel promotion strategy, we successfully transformed a number of grassroots performers into social phenomena.

In addition to promoting our hosts online, we have also implemented creative methods to win forth the popularity offline, such as our recent YY annual awards 2018. That event features 20 original performances from 31 of our top hosts, attracting over 20 million video views on our platform. Looking forward, we will continue to build out up our capabilities in packaging, promoting and marketing our talented hosts for entertainment live streaming. We also intend to diversify our content to include more lifestyle and interest-oriented live streaming content.

Thirdly, on the technology front, we have continued to upgrade our proprietary AI algorithms, which resulted in increased average user time spent on our platform. We leveraged our sophisticated machine learning models to enhance the attractiveness of our content tagging. We implemented our AI-powered visual recognition technology into our content distribution engine so that it can automatically tag and accurately recommend the most relevant live streaming shows to our audience. Through these efforts, we can create an optimal experience for our users by ensuring that we distribute the right content to the right audience at the right time.

As a result, our average user time spent on YY Live has increased by 7% sequentially. In summary, during 2018, we made significant progress in upgrading our content operations and enhancing our user engagement through advanced AI technology. As we entered into 2019, we will continue to execute our international expansion strategies while simultaneously enriching and diversifying our live streaming content. We expect these efforts to result in improved traffic to monetization conversion rates on our platform.

We intend to build upon the momentum created this quarter by evaluating potential opportunities in partnerships and merger acquisitions to further expand our operation, user base and influence as a leader in the global live streaming industry. Now that concludes the remarks of our chairman and acting CEO, Mr. David Xueling Li. Now as the CFO of YY, I would like to discuss our financial results in more details.

We continued to deliver solid financial and operating metrics during the fourth quarter of 2018. Our total net revenues for the fourth quarter increased by 28% year over year to RMB 4.64 billion. Specifically, our live streaming revenues increased by 30.4% year over year to RMB 4.39 billion, accounting for 94.6% of our total net revenues this quarter. In the fourth quarter, mobile contributed 64% of our live streaming revenues, while mobile live streaming MAUs increased by 18.1% to 90.4 million in the fourth quarter of 2018.

Live streaming paying users increased by 36.6% to 8.9 million in the fourth quarter of 2018, while mobile paying users constituted 75.7% of overall live streaming paying users. Cost of revenues for the fourth quarter increased by 37.2% year over year to RMB 3.01 billion. Revenue-sharing fees and content costs paid to the performers, guilds and content providers increased to RMB 2.56 billion in the fourth quarter, reflecting the growth of both YY and Huya's live streaming revenues. In addition, bandwidth cost for the fourth quarter increased to RMB 246.5 million, primarily reflecting continued user expansion and live streaming quality improvement.

Gross profit for the fourth quarter increased by 13.8% year over year to RMB 1.63 billion. Gross margin was 35.1% as compared to 39.4% in the prior-year period, primarily due to the increase in revenue-sharing fees and content costs. The decrease in gross margin was attributable to the impact caused by the relatively low gross margin of the Huya segment as its contribution to our total net revenues increased significantly year over year. Our operating expenses were RMB 931.2 million during the fourth quarter of 2018 as compared to RMB 652.9 million in the prior-year period, primarily due to our increased efforts in sales and marketing activities as we continue to expand in domestic and overseas markets.

Sales and marketing expenses for the fourth quarter were RMB 323.7 million or 7% of total revenue, compared to RMB 148.8 million or 4.1% of total revenue in the prior-year period. Our R&D expenses for the fourth quarter was RMB 332.5 million or 7.2% of total revenues, compared to RMB 282.8 million or 7.8% of total revenues in the prior-year period. G&A expenses were RMB 275 million or 5.9% of total revenues in the fourth quarter, compared to RMB 218.8 million or 6% of total revenues in the prior-year period. Our GAAP operating income for the fourth quarter of 2018 was RMB 718.6 million, compared to RMB 821.5 million in the prior-year period.

Our non-GAAP operating income, which excludes share-based compensation expenses, impairment of goodwills and investments, was RMB 888.5 million in the fourth quarter of 2018. GAAP net income attributable to YY was RMB 684 million, compared to RMB 740.4 million in the prior-year period. Our non-GAAP net income attributable to YY was RMB 836.2 million, compared to RMB 932.1 million in the prior-year period. Non-GAAP net margin in the fourth quarter of 2018 was 18%, compared to 25.7% in the prior-year period.

Diluted net income per ADS in the fourth quarter of 2018 was RMB 10.54, compared to RMB 11.53 in the prior-year period. Non-GAAP diluted net income per ADS was RMB 12.86, compared to RMB 14.51 in the prior-year period. Now turning to the results of the full-year 2018, our total net revenues increased by 36% year over year to RMB 15.76 billion, driven by a 39.4% year-over-year increase in live streaming revenues. Our GAAP net income attributable to YY for the full-year 2018 was RMB 1.64 billion, and our non-GAAP net income attributable to YY for the full-year 2018 increased by 18.4% to RMB 3.2 billion.

Diluted net income per ADS for the full-year 2018 was RMB 25.38, compared to RMB 41.33 in the prior-year period, and non-GAAP diluted net income per ADS for the full-year 2018 increased by 9.7% to RMB 49.05 from RMB 44.72 in the prior-year period. Before I provide our guidance, let me first share an update regarding our online game-related business. We entered into a strategic partnership agreement with Shanghai Chuangsi Enterprise Development Co., Ltd. Shanghai Chuangsi owns 9377 Games, one of the leading game platforms in China.

Under that agreement, we will obtain 30% equity interest of Shanghai Chuangsi by injecting our online game business into Shanghai Chuangsi. As a result, the financial results of YY's online gaming business, which contributed to less than 3% of YY's total revenue in the fourth quarter of 2018, will no longer be consolidated upon the completion of that transaction. Currently, that transaction is expected to be completed in the first quarter of 2019. With that said, we expect our net revenues for the first quarter of 2019 to be between RMB 4.01 billion and RMB 4.16 billion, representing a year-over-year increase of 23.4% to 28%, without giving effect to the acquisition of Bigo, Inc.

This forecast 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 the call to questions.

Questions and Answers:

Operator

[Operator instructions] Your first question comes from the line of Thomas Chong from Credit Suisse.

Thomas Chong -- Credit Suisse -- Analyst

[Foreign language] I'll translate my questions into English. First, I congratulate management on the completion of the Bigo deal. I have a question regarding the strategies of our overseas expansion in 2019 and 2020 after the completion of Bigo. Is there any KPIs that you can share how we should think about this year and next year? And also, if any synergies with YY can you share would be great.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

Thank you for all your questions. This is David to answer your questions. So firstly, I would like to say thank you for all of you to join this conference call. This is actually the first conference call after we have completed our acquisition of Bigo.

First, I want to share with you more colors in terms of the current asset condition of Bigo.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

Bigo actually has been established in the year 2014, and at the beginning, YY already became one of the major shareholders for Bigo's business. The initial goal for Bigo is always to be focused on the overseas expansions in terms of the live streaming and other video-based services.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

Overseas, Bigo has two of the major business segments. Firstly, Bigo Live, this is our services focused on entertainment live streaming services.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

Another service is called Like, L-I-K-E. It's another services which is focused on the short-form video platforms.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

Among those two services, we actually have found out lots of synergies. So both of the product actually can promote the traffic, as well as other synergies between the two types of business already.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

So actually, Bigo is another company which has been fully qualified for their own IPO.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

But after our serious considerations for both of the YY's board, as well as Bigo's board, so both of the management teams actually has been fully agreed by integrating the two parts of the business definitely will have better development for future.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

So that also representing a big strategy change for the YY's group. So in the future, while we will bring in more valuable assets or other investee business back to the growth, so in order to achieve the comanagement, as well as to bring more synergies between the different parts of the business into the YY group.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

The success of the Bigo also proven several other factors. Firstly, in overseas market, definitely the live streaming business also has a very promising future. This business is quite different as other people are thinking before. So through the success of Bigo, definitely we see more opportunities to continue to grow the entertainment live streaming business overseas.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

Another thing probably you cannot see from outside from the financial performance is actually for the whole group in the year 2018, we actually have gone through very significant changes internally, which just means we actually transformed the company into a more technical-driven focus of the company. In the year 2018, we actually focused on building out one of the leading AI technology teams in China and we also see very significant progress for the AI development.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

Since both of the Bigo and YY owns two of the leading AI base of the technical teams in China, so we merged that after we complete the acquisition of Bigo. Actually, two of the AI teams can work together, which help us to improve the overall of the AI technology capabilities in the company.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

In conclusion, the year 2018 actually, a lot of our internal management have been changed from the labor force into the AI management.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

Our capabilities for the integration of the AI technology also help the Bigo's short-form video business, which is Like. Huge, successful in overseas market in the year 2018.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

Looking to 2019, definitely we believe the Bigo's team focus is to focus on the short-form video's market expansion, especially for Like user expansion in overseas market.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

Meanwhile, the rich experience from YY's positive user experience in terms of operating live streaming business also will help Bigo to further improve their monetization capabilities for overseas live streaming business.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

And that is our major strategies for the future. Thank you.

Operator

[Operator instructions] Your next question comes from the line of Karen Chan from Jefferies.

Karen Chan -- Jefferies -- Analyst

[Foreign language] My question is about more color on Bigo financials. If we can be able to share the revenue scalability in 2019, the MAU and also paying user ratio. And what's your thoughts on the long-term margin profile over these live streaming if we compare to core YY domestically?

Bing Jin -- Chief Financial Officer

Thanks, Karen. This is Bing. Let me address the question. So for Bigo's financial details, as we just consolidated -- acquired Bigo and we are still in the process of discussing with the auditor to get the numbers streamlined, so I cannot disclose too much financial numbers with you at this stage.

For the MAUs, at the end of last year, the total Bigo MAU is around 30 -- 69 million, and that includes both Bigo Live and includes the short-form video, Like. And actually, it's growing very rapidly. So we expect the MAU growth pattern to continue throughout 2019. For the paying ratio and paying user number, as I said, we're still in the process of internal streamlining.

So we cannot disclose too much information. But I think it's still lower than YY's domestic paying ratio because in a lot of these Southeast Asia market, the live streaming business is still in early stage. And then regarding the margin profile, obviously, Bigo's current margin is lower than YY. And that's why I told many investor that for Bigo, there's a clear path to profitability coming from several values.

One is on the cost side. In overseas market, because of the underdevelopment of the payment channels, a big chunk of cost go into the payment. So with the provision of the mobile payment infrastructure in overseas market, getting better and better. Secondly, Bigo's revenue scale is still small than YY.

So as Bigo increase the revenue, the operational efficiency, both in terms of R&D spending, in terms of sales and marketing as a percent of revenue, were also getting better and better. So I think, in general, Bigo's margin will improve gradually down the road.

Operator

Your next question comes from the line of Natalie Wu from CICC.

Natalie Wu -- CICC -- Analyst

[Foreign language] I will translate myself. Firstly, congratulations on the consolidation of Bigo. And my question is related on the AI investment. You mentioned that you will be owning AI.

You put your efforts in the AI development. And so the investment scale, how should we anticipate related investments there for that initiative? Should we expect an uptick in the R&D expenses in 2019 for YY? Also, you mentioned that you will have a major strategy change, which is that you will bring other investee back to the group on the comanagement to create synergy among the different parts of the YY group. Just wondering what other major investees we can expect. Or if it is not convenient for you to touch that topic at current stage, it would be great if you can help us understand when the latest build time will be?

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

This is David. Let me address your questions. So firstly, you're right, since we actually focus on the AI technology development, so that is why looking to the year 2019 in terms of the R&D expenses as a percentage of revenue, it probably goes up from about 5% to 7%. So the major spending is labor-related cost and expenses related to the AI technology teams.

And then to address your second question, so generally speaking, the artificial intelligence is a very big topic. But combined with the nature of our company, we will be focused on the several of the fields. So firstly, definitely we'll be focused on the content understanding through the AI technologies. For example, like the pictorial or the video-based content, how we can better understand two of the AI technology for those kind of different types of contents, and which we believe it goes through a quite long period of procedures.

Through our accumulation of our better understanding into the content, definitely we will build up more comprehensive models, AI models to understand and identify the content. And for those part which we believe there is no limitation, definitely the technology will continue to become more advanced.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

The second part, for the AI technology, we will focus on the content recommendation and related results of the sales. So as to the question in the China domestic market, we will be the leading technology company for the content recommendation in the past two years. But in the meanwhile, for YY, in the past two years, we also see a very significant progress in terms of our content recommendation AI technology development. So going forward, through our continued effort to improve our content recommendation technology capabilities, definitely we have the better capability to match our content into our users.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

The third sales, definitely we will focus on the product's artificial visualization. So our ultimate goal will be for each of our major product, it has hundreds of the different kind of versions and maybe thousands of the different kind of switch on the backside of the platforms, and through the AI technology, we can -- using the AI to choose of the best of the -- the most ideal and the best of the versions among hundreds of the different kind of versions. So our ultimate goal will be achieved. So each ending year, everybody can upgrade a new version into the platforms.

And through the test, we can easily find out that the best of the version for this product, and we also can using the -- automatically the investments for the traffic acquisition based on those kind of decisions through the AI technology.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

The fourth part for the AI technology will be the evolution of the internal management. So for the live -- the AI capability into the internal management. So the traditional Internet company will be the business unit structure focus, but going forward, I actually believe the new structures for the Internet company will be the technology centralized management. For example, like the Facebook in the past few years, practice will be the company has one big united technology teams.

And through the technology capabilities, we can allocate the technical thoughts into the different kind of units or the different kind of products. So we truly believe they will be the future. And definitely, they will bring structural changes for the internal management going forward.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

So in conclusion, the competitive edge for the AI technology going forward definitely will be the internal technical management, as well as data management platforms. And so for us, definitely we'll be focused on the -- improve our capabilities for both of the platforms.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

So in simple words, there will be four major parts. So firstly, the content understanding; the second is content recommendation; the third part will be the united technical teams; and the fourth will be the internal technical management. So this two part -- four parts will be our key focus going forward in terms of the AI development.

Operator

Your next question comes from the line of Eileen Deng from Deutsche Bank.

Eileen Deng -- Deutsche Bank -- Analyst

[Foreign language] My question is mainly focusing on the outlook. David, the first quarter's guidance seems to be nice. And I'm wondering what is the full-year core business growth will be. And for the traffic acquisition plan, is there any difference you see this year versus last year and the paying user growth trajectory behind that?

Bing Jin -- Chief Financial Officer

Eileen, thanks. Let me address the questions. So domestic, even though we put internationalization as our key strategy, but we also put a lot of effort domestically, particularly on the traffic acquisition, as you asked. So in the new year, in 2019, we are doing following things to attract new traffic in China.

One is on our new product launch and new product features within YY Live and also secondly through the shopping wheel. As we said, we'll be showing other examples how we promote our popular hosts to become all-channel star. And they attract friends from other short-form video or social media platform, and they get other friends back to YY to watch live streaming. Thirdly, we are actively exploring partnership with other traffic platform.

We successfully did a partnership with Xiaomi. We are also in active dialogue stage with other similar platforms, which we will take over the back end of their live streaming business and then we share revenue with them. So if all of those happen, then obviously our user can accelerate. Now as we guided toward The Street before, we are assuming that the status quo then, YY Live's core business, meaning, the revenue will grow in the high single-digit kind of range in 2019.

But as I said, if one of those initiative become fruitful, then our users can accelerate. For the paying ratio, again, we are the best in industry. Once we get the users, we always know how to cultivate them, how to have them pay more. And as I explained to investors before that our paying ratio compared with gaming still has room for improvement.

So again, I think for paying ratio, in the new year, we definitely have room for growth as well.

Operator

Your next question comes from the line of Daniel Chen from JP Morgan.

Daniel Chen -- J.P. Morgan -- Analyst

[Foreign language] I will translate myself. So I have two questions related to Bigo. So for the first is on the Like show video app. I know that the current focus for the app is still the user acquisition.

But how should we look at the long-term monetization model for the app? That's for the first. The second one is wondering what's the overseas market user demographics for the live broadcasting. Is it mainly driven by the top spend like in the domestic China market? Or it's more longtail driven?

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

This is David. Let me address your question. So firstly, in terms of the Like's future revenue source, it will be coming from two major source. One will be the direct paying services, for example, such as live streaming game or web TV services, etc.

Then another part will be the advertisement models. We truly believe that one of the major advantage for the China companies is, compared with other major peers in overseas, which is majorly focused on advertisement models, so Chinese companies always have better capabilities to generate revenues through the paying model or other user base services such as live streaming game or web TV services. So while we build up the channel for the user paying model, definitely we can continuously attract similar-type market. And meanwhile two of the Bigo's successful model in the overseas, definitely the live streaming or other paying model has been proven.

It is also another efficient monetization model in the overseas market. So generally speaking, in conclusion, for Bigo's future monetization plans, definitely we'll be focused on the live -- directly paying services or other value-add services and meanwhile to supplement by what has been revenues. Whilst we can build up very healthy models, we have established that to increase our advertisement models, which has also helped us to avoid the direct pressure or direct competition from other peers in the overseas market. Thank you.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

In terms of the live streaming monetization models, we actually see the very different trends in the different countries or the different market. So the overall market actually is quite balanced. For some of the country or regions, well, we actually see similar kind of trends, similar to China, which just means that the core part of the paying users are dominant of the models. But for other countries, very interestingly, the major paying model is the small paying users in the small room social features or other types of the services.

Thank you.

Bing Jin -- Chief Financial Officer

Another quick point. I think just now, we mentioned that the R&D as a percentage of revenue will increase from 5% to 7%. Actually, it already has increased in the past few quarters from 5% to 7%. So going forward, it might be even a little bit higher because we need to continue to add more AI technology expert.

I just want to clarify that.

Operator

Your last question comes from the line of Wendy Huang from Macquarie.

Wendy Huang -- Macquarie Research -- Analyst

So given that TikTok is already doing quite well in overseas market in short-form video, can you talk about the potential competition against the Chinese companies in the overseas market? And secondly, in Huya's call earlier, they talked about to diversify the content offering. I just wonder if you can share some color in terms of the content overlapping with Huya.

Bing Jin -- Chief Financial Officer

Wendy, can you translate the question in Chinese?

Wendy Huang -- Macquarie Research -- Analyst

Oh, sorry. [Foreign language]

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

This is David. Let me address your questions. So firstly, in terms of the competition landscape for Like in the overseas market, we actually look at it. Firstly, we agree.

So TikTok actually see very fast the user growth in the overseas market. But very interesting, at the same time, to monitor for Like in some of the country and regions, we also -- even TikTok has been experienced rapid user growth. But for Like, we've also seen rapid user growth as well in the same kind of region of the market. That's because of the, firstly, Like has a relatively very competitive team, which is especially focused on algorithm, as well as AI capabilities.

And also, Like has better -- comparably, the better user experience. That will be the first reason. The second reason, it seems Like actually entered the market through the two base of the video functionalities. And they also have the big -- they also had a good experience in terms of how they have better user communities.

So considering the two part of the factors that going forward, we truly believe for Like competition, we'll continue to keep Like in a good competitive position into the market. And we are not afraid of the competition in the overseas market as well. Thank you.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

In terms of your question related to YY Live and Huya's competition in the overseas market in terms of the game live streaming services, our judgment is firstly the overlap between YY and Huya's overseas users is very limited. It's very low. And meanwhile, since both of the business units just started to explore the overseas game live streaming services, so it's too early to talk about the competition between the two type of business.

David Li -- Chairman and Co-Founder

[Foreign language]

Matthew Zhao -- Investor Relations Director

So in the future, if you look at our major focus on the operation in overseas such as Bigo Live, Like and then Hago, which is various overseas products, so now it's focused on the game live streaming. So we truly believe we will now see the direct competition with Huya in overseas market in the future. Thank you.

Operator

Your next question comes from the line of Wai Wong from Bank of America.

Wai Wong -- Bank of America Merrill Lynch -- Analyst

[Foreign language] Can you just give us more color on the macro impact? Do you think that will continue to impact our domestic business? And do you see domestic ARPUs have room to improve? And my second question is about your new usage. Can you mention any color about this? And any plan to have a similar feature like Bigo Live you should do in the domestic market?

Bing Jin -- Chief Financial Officer

Thank you. Let me address the first question, and I'll leave the second question to our COO, Mr. Ting Li. So regarding macroeconomy, obviously, slowing down of China economy will have an impact across multiple industries.

But for live streaming as entertainment industry is relatively less impacted because people still need time or kill the time for better quality content. As I've mentioned many times, live streaming represent one of the best quality content because it's immersive, it's impacting, it's engaging. And so that's why our users' stickiness continue to increase. If you look at the daily time spent, the number, no matter from third-party data or from an internal source, continue to increase.

That indicate even in economic downturn, many more audience continue to come back. In terms of ARPU, it can fluctuate. As I've said many times, APRU is a result, not a driver. So it depends on the user growth and revenue growth.

So we track more importantly on the MAU, DAU growth and paying ratio. ARPU can fluctuate from time to time.

Ting Li -- Chief Operating Officer

[Foreign language]

Matthew Zhao -- Investor Relations Director

This is Ting. Let me address your question. So for the overall YY growth, we actually look at the different metrics of the product allocations to continue boom our growth for the future. Firstly, starting from the last year, the whole growth actually start to the globalization of the strategies.

So you can see -- so very obvious example is the huge success from our newly initiative product, Hago, in the Southeast Asia market. And secondly, in the domestic market, we actually launched the latest version of YY Live last year, which is focused on the lower tier of the user expansion in China. And thirdly is our partnership with Xiaomi and other ecosystem of the traffic in China potentially in the future. So through those kind of strategic partnerships, we also can improve our acquisition capability in the domestic market.

Ting Li -- Chief Operating Officer

[Foreign language]

Matthew Zhao -- Investor Relations Director

Secondly, the successful experience which is being accumulated from Live overseas operation in the past definitely will help us for the further domestic expansion in the future, especially in terms of the short-form video management, data management, as well as AI capabilities. So those capabilities definitely will help us to continue to expand the domestic market in the future. Yes. Thank you for the question.

Bing Jin -- Chief Financial Officer

OK. I think we're running out of time, operator. So yes.

Operator

I would now like to hand the call back to today's presenters. Please continue.

Bing Jin -- Chief Financial Officer

Thank you, operator. Thank you all for joining us today. We look forward to speaking with you in the coming quarters. Thank you.

Matthew Zhao -- Investor Relations Director

Thank you, everyone.

Operator

[Operator signoff]

Duration: 63 minutes

Call Participants:

Matthew Zhao -- Investor Relations Director

Bing Jin -- Chief Financial Officer

Thomas Chong -- Credit Suisse -- Analyst

David Li -- Chairman and Co-Founder

Karen Chan -- Jefferies -- Analyst

Natalie Wu -- CICC -- Analyst

Eileen Deng -- Deutsche Bank -- Analyst

Daniel Chen -- J.P. Morgan -- Analyst

Wendy Huang -- Macquarie Research -- Analyst

Wai Wong -- Bank of America Merrill Lynch -- Analyst

Ting Li -- Chief Operating Officer

More YY analysis

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