DouYu International Holdings Limited (NASDAQ:DOYU) Q3 2022 Earnings Call Transcript

Hao Cao: Thank you for your question. The slight quarter-over-quarter increase in cost of revenues was mainly due to three factor: First, we managed to stabilize ratio sequentially, thanks to our adoption of our long-term and steady development strategy for our virtual gifting business. We also reduced those revenue streams with lower ROI while improving our revenue quality. We expect that our overall revenue share ratio will remain at the current healthy level with only slight fluctuations between quarters as we further adjust and fine tune our revenue generating operations. Second, our content costs increased sequentially during the quarter. This was mainly due to increases in copyright and self-produced content costs, which were partially offset by a reduction in streamer payroll.

In terms of copyright costs, we purchased copyright of regarding a slight increase in copyright costs, compared to the previous quarter. Our self-produced content front, we continue to explore innovative content formats. During the quarter, we launched content updates for new versions of games and promoted our platform new initiatives leading to a sequential increase in content costs. We have also been continuously optimizing our streamer resources of overseas business leading to a quarter-over-quarter decrease in streamer payroll. Looking forward, we will prudently evaluate our procurement decisions for large scale tournaments and optimize our streamer payroll structure. At the same time, we will continue to increase our investment in high quality self-produced content.

In summary, we expect our gross margin for 2022 to improve slightly on a year-over-year basis. Thank you.

Operator: Thank you. That’s all the time we have for questions. I will now turn the call back over to management for closing remarks.

Lingling Kong: On behalf of the management team, thank you for joining our call. We look forward to speaking with everyone next quarter.

Operator: Thank you. That concludes the call today. Thank you everyone for attending and you may now disconnect.