HUYA Inc. (NYSE: HUYA) Q4 2019 Earnings Conference Call
March 16, 2020
Corporate participants:
Dana Cheng — Investor Relations
Rongjie Dong — Director, Chief Executive Officer
Catherine Xiaozheng Liu — Chief Financial Officer
Analysts:
Thomas Chong — Jefferies Hong Kong Limited — Analyst
Lei Zhang — Bank of America Securities — Analyst
Daniel Chen — JPMorgan Chase & Co. — Analyst
Alex Liu — China Renaissance — Analyst
Binnie Wong — HSBC — Analyst
Presentation:
Operator
Hello, ladies and gentlemen, thank you for standing by for the Fourth Quarter 2019 Earnings Conference Call for HUYA Incorporated. [Operator Instructions].
I will now turn the call over to Ms. Dana Cheng, Company Investor Relations. Please go ahead.
Dana Cheng — Investor Relations
Hello, everyone, and welcome to HUYA’s fourth quarter 2019 earnings conference. The Company’s financial and operational results were issued earlier today and are posted online. You can also view the earnings press release by visiting the IR website at ir.huya.com. A replay of the call will be available on the IR website in a few hours.
Participants on today’s call will be Mr. Rongjie Dong, Chief Executive Officer of HUYA; and Ms. Catherine Liu, Chief Financial Officer. Management will begin with prepared remarks, and the call will conclude with a Q&A session. Before we continue, please note that today’s discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties.
As such, the Company’s results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the Company’s prospectus and other public filings as filed with the US SEC. The Company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that HUYA’s earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. HUYA’s press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.
I will now turn the call over to our CEO, Mr. Rongjie Dong. Please go ahead.
Rongjie Dong — Director, Chief Executive Officer
Hello, everyone. Thank you for joining our earnings call today. We are happy to speak with you today, following the completion of our great year with a strong end. 2019 was a year where we further strengthened our leadership position and increased our market share in China’s booming game live streaming industry by leveraging and strengthening our comprehensive and self-reinforcing ecosystem.
During this year, we continued to enrich and diversify our content offerings by proactively investing in high-quality broadcasters, expanding our e-sports tournaments coverage and creating new self-generated content. As a result, our user community continued to expand. Our Huya Live MAUs increased by 28.8% year-over-year to RMB150.2 million in quarter four in line with our previous target.
Among our Huya Live users, mobile MAUs grew 21.5% year-over-year to RMB51.6 [Phonetic] million driven by our effective mobile strategy. There is seasonal volatility for our users as more mobile users come to our platform during the summer vacation in quarter three, and there is a winter vacation in quarter one, and more PC users come to our platform during the quarter with big e-sports tournaments.
In quarter one, 2020, our mobile MAUs are expected to reach historical high of over 17 million, due to the winter vacation seasonality and the recent lockdown policies during the coronavirus outbreak. Non-mobile MAUs increased 34.5% year-over-year mainly due to the big e-sports tournaments in the quarter.
The in-game pop-up streaming windows promoted by our game developer partners under the cooperating with offline Internet cafes during the quarter. Our monetization capabilities also continued to improve, resulting in better cooperation with our broadcasters and talent agency partners. Our revenue grew by 64% year-over-year to approximately RMB2.5 billion in the fourth quarter, which is the seventh consecutive quarter that we exceeded our management guidance since our IPO.
2019 full year revenues reached RMB8.37 billion, an increase of 79.6% year-over-year. Our revenue growth also come along with gross margin and operating margin improvement, once again demonstrating our outstanding the acute stream capabilities. These are accomplishments in 2019 positioning us for a strong start as we head into the new year of 2020. And we’re really pleased with the achievements on all business fronts so far in 2020.
Our primary objectives for the year are to strengthen our leadership position in China and overseas. For the domestic market, we will continue to bring more high-quality content to our users and accelerate our new product and service development efforts. Some of the new products will be embedded within our core Huya Live app, while some will become stand-alone apps separately. We will also continue to increase our influence in overseas markets.
Our strategic initiatives are designed to capture the tremendous growth potential we believe our platform can achieve. As we continued — as we continue to improve and diversify our content, we expect to further grow our user base, improve our monetization and increase the value we bring to all our constituencies, our Company, our users, our partners and our investors.
In addition to the business achievements, we made during the quarter, I’d like to take a moment to talk about the ongoing novel coronavirus outbreak. During the outbreak, we prioritized the health of our employees by taking necessary precaution measures and offering flexibility to work from home. So far, none of our employees was infected.
In addition, we have always being committed to maintaining high standards of corporate social responsibility. We provided pro bono services for the public audience including online tutorial streaming for Coronavirus prevention, charity music shows and streaming services for education institutions. And in addition to the donations made up by our Company and our broadcasters, and the talent agency partners. Admittedly, the COVID-19 has increased our users’ mobile usage and as a result, our mobile MAUs reached record high in quarter one, so did some mobile users’ time spent.
But we will continue to closely monitor the evolving situation and assess its impact accordingly. We believe that coronavirus outbreak will be overcome eventually and our path toward the future growth prospects will remain intact. With that, I will now turn the call over to our new CFO, Catherine Liu, who has been with us for several months now. In that time, her swift and active engagement has been pretty impressive, and we deeply value her strategic insights and extensive experience in the Chinese TMT sector.
She will now provide you with operating measures in more detail and our assessment of the financials. So Catherine, please go ahead.
Catherine Xiaozheng Liu — Chief Financial Officer
Thank you, Mr. Dong. I appreciate the warm welcome and it has been a pleasure to join Huya’s management team. Now following Mr. Dong’s remarks and moving specifically onto our content enrichment and diversification efforts, an important growth pillar that has supported our ability to meet the evolving preferences of our users. In the fourth quarter of 2019, our broadcasters live-streamed 45.6 million hours of both game and other entertainment content on our platform, representing an increase of 37% from the same period last year.
We will continue to partner with talent agencies and recruit more broadcasters to ensure we are providing high-quality content that remains relevant and interesting to our users. As another important content source, e-sports tournaments remained vibrant and prosperous on our platform.
During the fourth quarter, we broadcasted 117 third-party e-sports tournaments, including world’s 2019 PGC, PEL, HoK Winter and KPL Fall. In Q4, our e-sports viewership exceeded 530 million, representing more than a 30% year-over-year increase. For the full year of 2019, we broadcasted over 400 third-party e-sports tournaments with a total viewership of over 2 billion, representing a 25% year-over-year increase. Here we have some exciting updates about LoL tournament’s broadcasting rights for 2020.
Following the strategic partnership that we signed with Riot Games and a three-year exclusive Chinese broadcasting rights of LCK between 2020 and 2021 — ’22. We also locked down the exclusive broadcasting rights of LCS and LEC for 2020. These exclusivities will make HUYA the only live streaming platform for all four major LoL regional leagues in China, as we also have broadcasting rights of LPL. We also continued to proactively produce our self-organized e-sports tournaments that further compliment the viewing experiences of game enthusiasts. During the fourth quarter, we successfully produced a 30 HUYA branded tournaments, generating total viewership of over 70 million, representing an increase of more than 20% year-over-year.
In November, 2019, Huya Live and NIMO TV co-hosted Asia Influencer E-Sports Festival with Africa TV in Korea, inviting gaming broadcasters from these three platforms to compete in PUBG and PUBG Mobile. This is the first time that a Company has organized a multi-national events abroad with an overseas partner, demonstrating HUYA’s deep immersion in the e-sports value chain and growing recognition on the global stage.
For the full-year of 2019, we produced 120 HUYA branded tournaments, generating total viewership of over 280 million, representing a 79% year-over-year increase. Content diversification is a long-term strategy for HUYA. In addition to bringing more games and e-sports tournaments to our growing user base, we also cultivate non-gaming content, such as anime and comics, outdoor and traditional sports, food, online theater and education.
In the fourth quarter, over 55% of our users watch the non-gaming content on our platform, and non-gaming content generated around 45% of our streaming gross revenues. A series of initiatives to further enrich our non-gaming content has been made to capture the growth opportunities. Let me share with you some recent examples, such as Huya Electronic Night, an ACG event, featured performances from virtual broadcasters together with actual broadcasters and their digital figures making a meaningful step toward our ACG aspiration.
On the outdoor and traditional sports content front, we organized Huya Kung Fu Carnival, a mixed martial arts competition that invited HUYA celebrity outdoor broadcasters to join the stage and compete with professional fighters. The live event generated even more viewership than the average daily viewership of LoL all stars. All that being said, we continue to see tremendous opportunities to serve the gaming population with comprehensive coverage of different content categories and we are on the right track to seize the rising potential.
Looking at the advertising side of HUYA’s business, 2019 was a landmark year for HUYA’s advertising and other business with full-year revenue growing at approximately 80.6%, despite the macro headwinds in advertising sector. In 2019, we put up a more experienced team, expanded our advertiser portfolio, diversified our ad product offerings and launched an ad distribution platform. Reflecting on the work we have done, we have made great strides in gaining more recognition across advertisers of both gaming and non-gaming brands.
Internationally, we have gained a significant overseas presence in less than two years with our overseas MAUs, reaching approximately 20 million in the fourth quarter, capitalizing on the growth opportunities in the emerging markets. Our overseas presence will continue to serve as a core differentiator for us in the game livestream landscape and we will persist in our global expansion efforts as the year progresses.
In addition, investments in our technology capabilities was immediately evident and positively received by our growing user base. It improved the video quality of our live streaming content, enhanced the interaction between our users and broadcasters, and increased the efficiency of our bandwidth usage. We believe our high-definition streaming capabilities on mobile devices and our cutting-edge AI technology are among the best in the industry.
In the fourth quarter, we signed a strategic partnership and established a joint innovative center with Huawei [Phonetic] to explore more opportunities in 5G, cloud services, and game live streaming. We still believe 5G will serve as an inspiring catalyst for a thriving era of cloud gaming. This could especially be the case for driving live streaming to be more relevant in the game industries upstream market and we are continuously updating supporting technology to best prepare ourselves and leverage this exciting moment.
Now let me walk you through our financial highlights. Our fourth quarter financial results reflect HUYA’s focus on both the driving user and revenue growth and improving operational efficiencies and margins. In the fourth quarter, our total net revenues grew by 64% year-over-year to RMB2.47 billion. Our non-GAAP gross margin improved to 19.5% compared with 18.3% in Q3 2019 and 16.1% in Q4 2018. And our non-GAAP operating margin improved to 7.4% compared with 6.5% in Q3 2019 and 5.5% in Q4 2018.
Our live streaming revenues increased by 62.7% to RMB2.3 billion in the fourth quarter of 2019. The increase was primarily due to the increase in average spending per paying user i.e. ARPU as well as a larger number of paying users on Huya Live. Our live streaming ARPU increased about 53% year-over-year and 13% quarter-over-quarter due to our year-end promotional activities as well as our enhanced content and user experience.
The year-end promotional activities were focused more on improving existing paying users ARPU than acquiring new paying users. Correspondingly, the total number of paying users was 5.1 million, representing year-over-year growth of 5.9% with some sequential fluctuation. Here I would like to add that we typically look at these two metrics together, both the number of paying users and the ARPU to determine the engagement level of our users. If the business team were to take the strategic priority between the two measures depending on the quarterly lineup of activities they organize and then the seasonal circumstances they have.
In the first quarter of 2020 driven by the strong mobile MAU growth resulted from school holidays and the recent lock down policies, we expect the total pay users will reach a historical high of over 5.5 million. Advertising and other revenues increased to 92.1% to RMB121.3 million in the fourth quarter of 2019, primarily due to higher demand from more advertisers, more diversity, our new advertising distribution platform that we launched in Q3, and the strengthened recognition of our brand name.
As we continue our innovative product development to offer more diverse forms of advertisements on our platform, we can create more value for our advertisers.
Cost of revenues increased by 58% to RMB2.0 billion in the fourth quarter. The increase was primarily attributable to the increase in revenue sharing fees and the content costs, bandwidth costs and personnel-related costs. Revenue sharing fees and content costs increased by 51% to RMB1.6 billion in the fourth quarter. The increase was primarily due to the increase in virtual item revenue sharing fees in relation to higher live streaming revenues, continued spending in content creators and e-sports content in both domestic and overseas markets and was partially offset by benefits from economies of scale.
Bandwidth costs increased by 39.6% to RMB225.6 million in the fourth quarter. The increase was primarily due to an increase in bandwidth usage as a result of our larger user base and enhanced live streaming video quality, partially offset by improved efficiency in bandwidth utilization through continued technology enhancement efforts.
Gross profit increased by 95.5% to RMB466.6 million in the fourth quarter. Gross margin increased to 18.9% in the fourth quarter from 15.9% in the same period of 2018. Non-GAAP gross profit, which excludes share-based compensation expenses increased by 98.7% to RMB481.4 million in the fourth quarter, and non-GAAP gross margin increased to 19.5% in the fourth quarter from 16.1% in the same period of 2018.
Gross margin improvement was primarily due to economy of scale and improved efficiencies. R&D expenses increased by 125.4% to RMB178.3 million for the fourth quarter, mainly attributable to increased personnel-related expenses. Sales and marketing expenses increased by 97.6% to RMB118.3 million for the fourth quarter. The increase was primarily attributable to the increased marketing expenses associated with the promotions for HUYA’s products and branding in both domestic and overseas markets, as well as increased personnel-related expenses.
General and administrative expenses increased by 4.5% to RMB96.4 million for the fourth quarter, mainly due to increased personnel-related expenses. Operating income increased by 448.7% to RMB101.6 million for the fourth quarter of 2019. Operating margin increased to 4.1% in the fourth quarter from 1.2% in the same period of 2018.
Non-GAAP operating income, which excludes share-based compensation expenses, increased by 122.8% to RMB183.8 million for the fourth quarter and non-GAAP operating margin increased to 7.4% in the fourth quarter from 5.5% in the same period of 2018. Operating margin improvement was primarily due to the improvement in gross margin.
Income tax expenses were RMB27.6 million for the fourth quarter compared with income tax benefits of RMB31.8 million in the same period of 2018. Net income attributable to HUYA in the fourth quarter increased by 60.3% to RMB159.7 million from RMB99.6 million in the same period of 2018. Non-GAAP net income attributable to HUYA in the fourth quarter, which excludes share-based compensation expenses, increased by 44.9% to RMB241.9 million. Net income increase was primarily due to the increase in revenues, the improvement in gross margins and partially offset by income tax expenses.
Diluted net income per ADS was RMB0.68 for the fourth quarter compared with RMB0.45 for the same period of 2018. Non-GAAP diluted net income per ADS was RMB1.02 for the fourth quarter compared with RMB0.76 for the same period of 2018. Now turning to the full-year of 2019. Our total net revenues grew by 79.6% to RMB8.37 billion. Our live streaming revenues increased by 79.5% to RMB8 billion due to both the increasing ARPU and then the number of paying users.
Our advertising and other revenues increased by 80.6% to RMB398.3 million primarily driven by rising demand from an increasing number of advertisers, more diversity in advertising clients, the new advertising distribution platform and further recognition of HUYA’s brand name in China’s online advertising market.
And for the full-year of 2019, our gross profit increased by 103.1% to RMB1.48 billion and gross margin increased to 17.7% in 2019 from 15.6% in 2018. Our non-GAAP gross profit, which excludes share-based compensation expenses increased by 104.5% to RMB1.51 billion in 2019, and non-GAAP gross margin increased to 18.1% in 2019 from 15.9% in 2018.
Gross margin improvement was primarily driven to economy of scale and improved efficiencies. In 2019, our operating income increased by 880.3% to RMB261.4 million. Operating margin increased to 3.1% in 2019 from 0.6% in 2018. And the non-GAAP operating income, which excludes share-based compensation expenses, increased by 114.4% to RMB543.1 million in 2019, and non-GAAP operating margin increased to 6.5% in 2019 from 5.4% in 2018.
Operating margin improvement was primarily due to the improvement in gross margins and operation efficiencies. Net income attributable to HUYA Inc. in 2019 was RMB468.2 million compared with a net loss of RMB1.9 billion in 2018. Non-GAAP net income attributable to HUYA in 2019, which excludes share-based compensation expenses, fair value loss on derivative liabilities and gain on fair value change of investments and equity investee’s investments, increased by 62.7% to RMB749.9 million.
Diluted net income per ADS was RMB2.02 in 2019 compared with diluted net loss per ADS of RMB15.02 in 2018. Non-GAAP diluted net income per ADS was RMB3.23 in 2019 compared with RMB2.06 in 2018. As of December 31st, 2019, the Company had cash and cash equivalents, short-term deposits and short-term investments of total RMB10.1 billion compared with RMB6 billion as of December 31st, 2018.
And net cash provided by operating activities was RMB571.6 million for the fourth quarter compared with net cash provided by operating activities of RMB191 million in the same period of 2018. For the full-year of 2019 net cash provided by operating activities was RMB1.9 billion compared with net cash provided by operating activities of RMB717.5 million in 2018.
To be remindful of the length of our earnings call for the other full-year 2019 financial results, I will encourage listeners to refer to our earnings release for further details. Turning to our guidance for the first quarter of 2020, we currently expect total net revenues to be in the range of RMB2,360 million to RMB2,400 million, representing a year-over-year growth of between 44.7% and 47.1%.
This forecast considers the potential impact of COVID-19 outbreak and reflects our current and preliminary views on the market and operational conditions, which are subject to change, particularly to the potential impact of the coronavirus on the economy in China and elsewhere.
With that, I would now turn the — open the call for questions.
Questions and Answers:
Operator
Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. Your first question comes from the line of Thomas Chong from Jefferies. Please ask your question.
Thomas Chong — Jefferies Hong Kong Limited — Analyst
[Foreign Speech]. Thanks management for taking my questions. And my question is about the long-time strategies for HUYA. First, can management comment about our strategies in cloud gaming distribution and opportunities that we are embracing? And secondly is about the long game broadcasting apps strategies. And then my second question is about our investment plan in overseas expansion. Can management talk about our investment focus, our KPI as we go into overseas market? Thank you.
Rongjie Dong — Director, Chief Executive Officer
[Foreign Speech]. All right, for your first question regarding the cloud gaming. Actually, we have being — closely paying attention to this — in the year for 2019. And earlier this year, we started to review this specific sector and we have noticed that the revenue per user and the cost per user, the gap between the revenue per user and the cost per user is actually narrowing down. And we think the economy of cloud gaming, currently we think is probably ready.
And we will take this time for us to enter this specific sector. And as I said earlier in previous calls, we look closely paying attention to this cloud gaming. But let’s just — that is still early stage for this whole industry to grow. So for the user growth influence, we wouldn’t think — at least for this year, we wouldn’t think cloud gaming is going to impact a lot on the user growth. That’s for your question for the cloud gaming.
For your question regarding the non-gaming — non-game live streaming, as we disclosed previously, non-gaming live streaming users is actually taking up to — half of the users of the platform is actually watching the non-gaming live streaming. And we think in the year of 2019, the growth rate of the non-gaming streaming users is actually faster than the growth rates of the gaming users.
With the rising content categories, such as ACG, outdoor, foody and traditional sports, and these are the fastest growing content categories. As we will keep our content in general, specifically focused on the e-sports as we always do, we will put non-game streaming as a strategic priority. And that strategic priority does not only include live streaming, but also to include short — to include videos. So for the non-gaming, we will just try and invest to explore more opportunities whether in the form of a live streaming and videos.
For your last question regarding the HUYA’s business. We think for the performance of HUYA’s business is actually being within management expectation. As we said earlier, we’ve achieved 20 million MAU in the fourth quarter of 2019, and we think we will keep that growth momentum in the year of 2020 and maybe to 50% year-over-year growth for our overseas MAU. That’s it.
Operator
Thank you. Your next question comes from the line of Lei Zhang from Bank of America. Please ask your questions.
Lei Zhang — Bank of America Securities — Analyst
[Foreign Speech]. I will translate myself. Thank you management for taking my questions. First question is about user growth in 2020. What’s our target and do you see any change around the coronavirus outbreak? Especially, we mentioned that we reached a historical user — historical high in the fourth quarter, but we all do see any slowdown after people come back to work. And the second, I want to follow-up on overseas strategy. What is our target counter in 2020? Are we still focusing on the emerging market or any plan to go to the developed market? And what is our plan in monetization of overseas in 2020? Thank you so much.
Rongjie Dong — Director, Chief Executive Officer
[Foreign Speech]. For your first question regarding the user growth, there are several dimensions to answer this question. I mean, firstly is that we will keep on our growth efforts in the game live streaming sector, especially in expectation for the new growth opportunities coming in the year for 2020.
For example like Dungeon-Fighters mobile version in the first half and League of Legends mobile version probably later this year. And we think [Indecipherable] is actually will help HUYA’s user growth. And as the second growth driver could be the e-sports tournaments. As we have seen in year of ’19, game developers has been inviting a lot to deploy the e-sports tournaments and we think that will further help us to maintain our growth momentum in the users.
And the third one is the product diversification. For the year of 2020, we have some product pipelines lining up, like for example, the first one is the e-sports community and secondly is the [Indecipherable] stand-alone app. And apart from the live streaming business that we have always been doing, we will also spend some efforts in the realm of video services, especially in the entertainment sector and also cloud gaming product will be another product diversification effort for this year. And we will closely monitor the industry involvement.
And for the fourth growth driver for the users is that we have — overall, we think there is a great growth potential for the non-gaming sector whether in the form of live streaming or in the form of video services. It’s a greater market year and it’s going to be a strategic priority for us in the year of 2020. So that’s the answer for you, first question regarding the user growth.
And secondly, whether people are getting back to work will impact our growth after the lockdown policy and the extended holidays of people because of the COVID-19. And we think the impact is not so big based on the statistics that we saw and because there’s a group of users, especially the students. They’re still getting classes at home and we can consider this specific time of the year as similar to winter holidays, or summer holidays. Historically these two kinds of school holidays are the times that we experience a user growth a lot.
And for your third question regarding our overseas strategy and whether we will only do the emerging markets. We think for the developed markets, Japan and Korea is going to be our next target. As we see, there is a lot of growth potential there. And for the European countries and United States, we don’t really think these two regions will be the focus because it’s going to be a long shot.
So now for — now for European countries and United States. And monetization is going to be a focus for the Company in the overseas market because only if we have a mature mechanism of monetization that we will keep our content ecosystem vibrant. So that’s all. Let’s open for the next question.
Operator
Thank you. Your next question comes from the line of Daniel Chen from JPMorgan. Please ask your question.
Daniel Chen — JPMorgan Chase & Co. — Analyst
[Foreign Speech]. I will translate myself. My first question is a follow-up on the user growth. So can management maybe talk a little bit on your user growth strategy, especially in lower-tier city? And second one is on the monetization front. So we have a very good run in revenue growth in 2019. So what’s the key strategy to strengthen the monetization in both gaming and in non-gaming segment in 2020? Thank you.
Rongjie Dong — Director, Chief Executive Officer
[Foreign Speech]. For your first question regarding, our deployment strategy in terms of the Tier 3 and Tier 4 users. We think as we observed that since Kuaishou has entered into the game live streaming factor and with their special penetration into the Tier 3 and Tier 4 cities, we have observed — there is a positive impact on the user growth on our end. So in other words, because of the Kuaishou’s entrants we see that we are penetrating deeper into the Tier 3 and the Tier 4 cities.
And also another observation from the Company side is that, we think the students — the type of the students, users are taking a larger proportion of the overall user base. And these are — so penetration into Tier 3 and Tier 4 cities and keep on to serve these rising users growth for students will be the two strategic focus for us in the year of 2020.
And for your second question of monetization, we think that first that we will still trying to attract more new users and then keep converting, the new users and existing users to paying users. And then second to increase our ARPU, we will continue to one is to improve our current product offerings such as enriched and diversifying content. And also we were trying to develop some of the innovative new products to offer to our users to help monetize. Thank you for your question, and then please move to the next.
Operator
Your next question comes from the line of Alex Liu from China Renaissance. Please ask your question.
Alex Liu — China Renaissance — Analyst
[Foreign Speech]. I will translate myself. So on the new product side, what’s the — could management share more color on the new product, for example Pei-Wan, play together and the potential expansion into new verticals, what’s our advantages on these new initiatives over existing platforms? And the second question is on a cash allocation and usage. How does the management think about the current net cash balance? Thanks.
Catherine Xiaozheng Liu — Chief Financial Officer
For your first question for our new product Pei-Wan is one of the categories that were growing pretty fast and it reached a pretty significant scale in terms of the growth billings. So currently we plan to have a standalone product that probably will be launched in the second quarter. We will have more metrics to share with user channels and investors in probably the second quarter.
And in terms of your second question of net cash, we will — we are still actively looking at the opportunities of potential investment and acquisition targets and the cash were mainly reserved for the potential investments and acquisitions. We will update the investors on the investments and or the acquisitions that we do — when this happens. Thank you for the question.
Alex Liu — China Renaissance — Analyst
Okay. Thank you.
Catherine Xiaozheng Liu — Chief Financial Officer
Operator, can we move on to the next question please?
Operator
Thank you. Our last question comes from the line of Binnie Wong from HSBC. Please ask your question.
Binnie Wong — HSBC — Analyst
[Foreign Speech]. I’ll quickly translate myself. So the question here is on the revenue sharing fees and content costs. Given that our competitors have been entering the market and they have also been emphasizing that in 2020. They will be lowering their revenue share — increasing their revenue sharing to make it more attractive to incentivize the streamers to go to on their platform.
So in the 2020, what is our expectations on our revenue sharing in terms of directionally? And then also whether there will be any changes in terms of competitive strategies to hopefully thinking for this year? Thank you.
Rongjie Dong — Director, Chief Executive Officer
[Foreign Speech]. Historically, we have been kept a tri-party structure, including the platform, which is HUYA and also the talent agencies and the broadcasters. We have been captured that structure for long. So the revenue sharing among the third-parties has been stable over the past few years.
And we think in the long run, the main direction for the revenue sharing will be stable as well. But since we have been keeping a medium broadcaster strategy, we have and we will be providing subsidies to those median up and coming broadcasters. So as a conclusion, we will invest more in the — keeping up the broadcaster, content macro system. So that we can better serve the broadcasters and talent agencies to generate more quality content.
Catherine Xiaozheng Liu — Chief Financial Officer
I think it’s about time. Is there any further questions? No. Okay. Thank you. Thank you for joining today’s conference call. And if you have further questions, please feel free to contact us at ir@huya.com and we’ll look forward to speaking with you in the next quarter. Thank you.
Operator
[Operator Closing Remarks].