For Q4 2019, Xiaomi achieved the highest year-over-year growth in smartphone shipments among the top five smartphone companies, according to Canalys.

In December 2019, monthly active users (“MAU”) of MIUI increased by 27.9% year-over-year to 309.6 million. As of December 31, 2019, the number of connected IoT devices (excluding smartphones and laptops) on its IoT platform reached 234.8 million, an increase of 55.6% year-over-year.

Xiaomi’s AI assistant had 60.4 million MAU in December 2019, an increase of 55.7% year-over-year. Xiaomi further expanded its global footprint with overseas revenue growing significantly, accounting for 44.3% of its total revenue in 2019.

Overseas revenue was RMB91.2 billion, an increase of 30.4% year-over-year. As of December 31, 2019, its products were sold in more than 90 countries and regions. According to Canalys, its smartphone shipments ranked the top five in 45 countries and regions in 2019.

In 2019, Xiaomi’s research and development expenses increased by 29.7% year-over-year to RMB7.5 billion. As of December 31, 2019, its total cash resources amounted to RMB66.0 billion.

Xiaomi Smartphone

In 2019, revenue from its smartphone segment reached RMB122.1 billion, an increase of 7.3% year-over-year. In Q4 2019, revenue from its smartphone segment was RMB30.8 billion, an increase of 22.8% year-over-year.

Xiaomi captured over 9% of the global smartphone market share in Feb 2020. Find out more here.

For 2019, Xiaomi shipped approximately 124.6 million units of smartphones, while in Q4 2019, shipments were approximately 32.6 million, an increase of 30.5% year-over-year.

In 2019, its dual-brand strategy showed encouraging results.

The Xiaomi brand focused on pioneering advanced technologies and successfully established a solid foothold in the premium smartphones segment.

The Redmi brand, on the other hand, continued to pursue the ultimate price-performance ratio across different price points and make innovative technologies readily accessible to the mass market.

With the launch of Mi 9 Pro, Mi CC9 Pro and the world’s first smartphone featuring surround display, Mi MIX Alpha, Xiaomi developed strong technological fundamentals in wireless charging, imaging, 5G technology, and next-generation smartphone design and are well poised to capture opportunities brought about by 5G technology in 2020.

In February 2020, Xiaomi launched its flagship 5G smartphone models the Mi 10 and Mi 10 Pro.

According to Canalys, the Redmi Note 7 was the best-selling smartphone model among all models made by Chinese companies in terms of global shipments in 2019.

In December 2019, Redmi launched its first 5G smartphone, the Redmi K30 5G, with pricing starting from RMB1,999, making it the first 5G smartphone priced below RMB2,000. Xiaomi believes the competitive pricing will accelerate the adoption of 5G smartphones by a larger population, enabling more people to enjoy leading technologies.

In 2019, the average selling price of its smartphones increased by 2.2% compared to 2018 and the gross margin of the smartphone segment increased to 7.2% from 6.2% in 2018.

In 2020, Xiaomi will continue to focus on 5G smartphones development and strengthen its presence in the premium smartphones segment, which will lead to further ASP expansion.

IoT and lifestyle products

In 2019, revenue from its IoT and lifestyle products segment was RMB62.1 billion, an increase of 41.7% year-over-year.

In Q4 2019, revenue from its IoT and lifestyle products segment was RMB19.5 billion, an increase of 30.5% year-over-year.

AIoT market in China has reached 380.8 billion yuan in 2019, with an increase of over 47%; check out the forecast for 2020-2022 here.

Xiaomi achieved leading positions in key IoT products that are controlling hubs for its AIoT platform, including TVs, wearable devices and smart speakers.

In 2019, its global TV shipments reached 12.8 million units, an increase of 51.9% year-over-year. In mainland China, its annual smart TV shipments exceeded 10 million units, which Xiaomi believe set an unprecedented record in China’s TV industry.

According to AVC, its TV shipments ranked first in mainland China and fifth globally in 2019. Xiaomi also ranked first in India in terms of smart TV shipments for seven consecutive quarters as of Q4 2019 according to IDC.

According to Canalys, Xiaomi is the world’s largest smart wearable device (including smartwatch and wristband) brand in 2019 by shipments. Xiaomi also ranked the top three in terms of smart speaker shipments in mainland China in 2019 according to IDC. Check out China’s wearable device in 2019.

Xiaomi also continued to expand its product portfolio in key smart home products by launching new products including washing machines and refrigerators.

In 2019, its IoT products won over 50 renowned design awards around the world. Recently, its Mijia Smart Baseboard Heater won the 2020 Red Dot: Best of the Best Award and Mijia Handheld Wireless Vacuum Cleaner won the 2020 iF Design Gold Award.

Xiaomi Internet services

In 2019, revenue from internet services reached RMB19.8 billion, an increase of 24.4% year-over-year. For the fourth quarter, revenue was RMB5.7 billion, an increase of 41.1% year-over-year.

In December 2019, MAU of MIUI increased by 27.9% year-over-year to 309.6 million with mainland China’s MAU of MIUI standing at 109.0 million.

In Q4 2019, advertising revenue was RMB3.0 billion, an increase of 17.8% year-over-year.

The MAU of its news feed service increased by 32.6% year-over-year to 78.7 million in December 2019. This was further bolstered by its efforts in increasing monetization through the optimization of its recommendation algorithms and diversification of its advertising customer base by expanding into more vertical industries.

In Q4 2019, online gaming revenue increased by 44.4% year-over-year to RMB874.4 million, mainly due to the strong performance of many popular games operating on its platform.

Diversification of its internet services has become a key growth driver of its internet services revenue.

In Q4 2019, its internet services revenue outside of advertising and gaming from mainland China smartphones, including those generated from the Youpin e-commerce platform, fintech business, TV internet services and overseas internet services, increased by 112.6% year-over-year and accounted for 43.0% of its total internet services revenue.

In 2019, the GMV of its Youpin e-commerce business grew rapidly, with annual GMV surpassing RMB10.0 billion. During the year, Xiaomi has enlarged its merchandise portfolio, insisted on selecting high-quality goods that appeal to its customers and increased its efforts in new customer acquisition.

As a result, the number of active buyers on Youpin showed strong growth momentum.

In Q4 2019, its fintech business delivered strong revenue growth, mainly driven by the growth in its consumer finance business. In January 2020, Xiaomi Finance successfully obtained a consumer-financing license from the China Banking and Insurance Regulatory Commission.

Xiaomi will continue to strengthen risk controls and strictly follow regulatory rules to maintain the healthy growth of its fintech business.

In Q4 2019, its TV internet services grew quickly primarily driven by the growth of its subscription business. In December 2019, MAU of its smart TVs and Mi Box were approximately 27.7 million, an increase of 49.1% year-over-year.

As of December 31, 2019, Xiaomi had 3.7 million paying subscribers, an increase of 62.9% year-over-year. Lastly, its overseas internet services business also witnessed rapid growth.

In India, 10 of its mobile apps recorded MAU of over 50 million in December 2019, including its Mi Browser, Mi Video and GetApps (an overseas version of Mi App Store).

Overseas markets

In 2019, overseas revenue was RMB91.2 billion, an increase of 30.4% year-over-year.

In Q4 2019, overseas revenue increased by 40.7% year-over-year to RMB26.4 billion, accounting for 46.8% of total revenue for the period. In Q4 2019, Xiaomi was the largest smartphone brand in India by shipments for the tenth consecutive quarter, capturing a market share of approximately 28.7%, according to IDC.

In Western Europe, Xiaomi continued to expand its market share.

According to Canalys, its smartphone shipments in the region grew 115.4% year-over-year in Q4 2019. In Spain, Xiaomi was the second-largest smartphone maker by shipments, achieving 65.7% year-over-year growth with a 22.8% market share.

Xiaomi ranked fourth in both France and Italy, with its smartphone shipments increasing by 69.9% and 206.2% year-over-year, respectively.

In 2019, its overseas IoT revenue grew rapidly, driven by the robust sales of its best-selling IoT products in overseas markets, including its smart TVs, wristbands, TWS earphones, and electric scooters.

In 2020, Xiaomi plans to step up its efforts in promoting its popular IoT products to more countries and regions.

Impact of the COVID-19 outbreak

In terms of the supply chain, Xiaomi experienced a temporary disruption in production in February and March 2020, due to the extended shutdown of Chinese factories.

However, its production capacity has recovered to 80%–90% of normal levels as of the date of this announcement. For its mainland China market, during the peak of the outbreak, its offline sales were affected as most of its stores were closed or operated at shortened hours with significantly lower customer traffic.

However, Xiaomi was comparatively less impacted due to its strength in online channels.

Xiaomi has seen smartphone shipments rebounding quickly in late March 2020, showing the resilience of smartphone demand.

For its overseas market, given that the epidemic is still affecting countries and regions around the world as of the date of this announcement, Xiaomi is closely monitoring and assessing its impact, which will likely defer the overall consumption in the affected countries.

While its overseas demand will undoubtedly be affected, particularly in the second quarter of 2020, Xiaomi believes the overall impact is currently manageable.

Investments

As of December 31, 2019, Xiaomi had invested in more than 290 companies with an aggregated book value of approximately RMB30.0 billion.

Xiaomi expanded its investment into supply chain companies to strengthen its partnership with key component suppliers, enhance its sourcing and manufacturing abilities in advanced technology and facilitate the development of the industries, in particular around 5G, IoT, AI, integrated circuits, advanced manufacturing, and industrial internet.

An increasing number of its investee companies have gone public.

In February 2020, Roborock, one of its investee companies, was successfully listed on the Science and Technology Innovation Board of Shanghai Stock Exchange (“STAR Market”) in China, becoming its first ecosystem investee company to list on the STAR Market.

In Q4 2019, net gains on disposal of investments (after tax) were RMB869.0 million.

Latest on China Cloud Computing Market

Alibaba Cloud remained the leading cloud service provider in Q4 2019, accounting for 46.4% of total spending. Tencent Cloud and Baidu AI Cloud both increased their shares to 18.0% and 8.8% respectively.

China’s top 3 accounted for 73% of the cloud infrastructure services by total spending in China in Q4 2019.

Read how some industries in China benefiting from the novel coronavirus outbreak

Alibaba Cloud offered credits to organizations to buy its Elastic Compute Service, cybersecurity and other services. It made its AI-powered platform available for free to research institutions to accelerate gene sequencing, protein screening and related work in treating and preventing coronavirus.

Tencent Cloud also made its platform available to research teams from universities across the country. It launched the Cloud Office Portfolio to support remote working, which includes Tencent Meeting and WeChat Work.

Baidu AI Cloud made its online doctor consultation platform free for any medical queries, which handled over 15 million interactions. And, it also opened its platform and AI algorithm for free to research institutions.

For full-year 2019, cloud infrastructure services spend in China increased by 63.7% to exceed US$10.7 billion.

Alibaba Cloud was the market leader, accounting for 46.1% of the market. Tencent Cloud was ranked second, with a 17.3% share. Amazon’s AWS was the third, followed by Baidu AI Cloud.

Coronavirus outbreak’s impact on China’s consumption

Tongcheng-eLong’s average MPUs increased by 21.5% year-to-year from 22.3 million in Q4 2018 to 27.1 million in Q4 2019.

Its revenue increased by 24.4% year-to-year to RMB1,956.5 million in Q4 2019. And, the adjusted EBITDA increased by 47.7% year-to-year to RMB415.1 million. Adjusted EBITDA margin increased from 17.9% YoY to 21.2%.

The adjusted profit for Q4 2019 increased by 67.7% year-to-year to RMB 331.1 million in Q4 2019. The adjusted net margin increased from 12.6% in Q4 2018 to 16.9%.

In 2019, the average MAUs of Tongcheng-eLong increased by 17.1% year-to-year from 175.2 million in 2018 to 205.2 million. And, the average MPUs increased by 34.5% year-to-year from 20.0 million in 2018 to 26.9 million.

The total GMV grew by 26.3% to 166.1 billion yuan in 2019. eLong’s paying ratios also increased from 11.4% in 2018 to 13.1% in 2019.

In 2019, Tongcheng-eLong’s total revenue increased by 21.4% from RMB 6,090.8 million in 2018 to RMB7,392.9 million in 2019.

Adjusted profit for the year increased by 35.4% from RMB1,140.7 million in 2018 to RMB1,544.3 million in 2019 and adjusted net margin for the year was 20.9% in 2019, representing an increase from 18.7% in 2018.

As of December 31, 2019, approximately 85.6% of its registered users resided in non-first-tier cities in China. About 62.4% of newly acquired paying users in WeChat were from tier-3 or lower-tier cities in China, which increased from 61.1% over the same period of 2018.

Currently, WeChat users can access its mini program within the WeChat ecosystem through:

1. WeChat Pay (Wallet) portal and a drop-down list of users’ favorite or most frequently used mini programs, which generated an average MAUs of 113.6 million in 2019, accounting for 65.7% of the total average MAUs of its Tencent-based platforms.

2. Interactive advertisements placed on the Tencent-based platforms, which generated an average MAUs of 37.7 million in 2019, accounting for 21.9% of the total average MAUs of its Tencent-based platforms.

3. The sharing and search functions in WeChat, which generated an average MAUs of 21.5 million in 2019, accounting for 12.4% of the total average MAUs of its Tencent-based platforms.

In addition, the average MAUs in its native apps recorded a faster growth than that in WeChat channel in the second half of 2019, mainly due to the expanding investments in marketing and R&D resources.

As of December 31, 2019, Tongcheng-eLong online platforms offered over 6,800 domestic routes and around 1.4 million international routes operated by more than 400 domestic and international airlines, over 2.0 million hotels selections and alternative accommodation options, approximately 346,000 bus routes, over 500 ferry routes and approximately 8,000 domestic tourist attractions ticketing services.

It has launched an accommodation upgrade service “WeChat Payment Point” with Tencent and an online seat selection service for international flights with China Southern Airlines with the implementation of NDC technology.

For the first quarter of 2020, it expects net revenue to decrease by about 42% to 47% year over year due to COVID-19.

In the first quarter and the whole year of 2020, the number of domestic tourists will decrease by 56% and 15.5% respectively according to China Tourism Academy. 2020 will see a decrease of 932 million person-trips. See the forecast here.

Douyu’s quarterly average paying user count in the fourth quarter of 2019 increased by 70.8% to 7.3 million from 4.2 million in the same period of 2018.

Fourth Quarter 2019 Highlights

• Total net revenues for Q4 2019 increased by 77.8% to RMB2,062.9 million (US$294.9 million) from RMB1,160.2 million in Q4 2018.
  • Live streaming revenues increased by 84.1% to RMB1,892.5 million (US$270.5 million) from RMB1,028.1 million in Q4 2018, primarily driven by the increase in both the number of paying users and ARPPU
• Gross profit increased by 934.6% to RMB375.2 million (US$53.6 million) from RMB36.3 million in the same period of 2018, implying a gross margin of 18.2% in Q4 2019, compared with 3.1% in Q4 2018.
• Net income was RMB157.4 million (US$22.5 million), compared with a loss of RMB271.4 million in Q4 2018, implying a net margin of 7.6% in Q4 2019.
• Adjusted net income was RMB186.4 million (US$26.6 million), implying an adjusted net margin of 9.0%, compared with an adjusted net loss of RMB232.5 million in the same period of 2018.

Full Year 2019 Highlights

• Total net revenues in the full year of 2019 increased by 99.3% to RMB7,283.2 million (US$1,041.1 million) from RMB3,654.4 million in the same period of 2018.
• Gross profit in the full year of 2019 increased by 692.0% to RMB1,196.2 million (US$171.0 million) from RMB151.0 million in the same period of 2018, implying a gross margin of 16.4% in the full year of 2019, compared with 4.1% in the same period of 2018.
• Net income in the full year of 2019 was RMB33.3 million (US$4.8 million), compared with a net loss of RMB876.3 million in the same period of 2018, implying a net margin of 0.5% in the full year of 2019.
• Adjusted net income in the full year of 2019 was RMB346.4 million (US$49.5 million), implying an adjusted net margin of 4.8%, as compared with an adjusted net loss of RMB818.5 million in the same period of 2018.

Huya expects its total net revenues to be in the range of RMB2,100 million to RMB2,160 million in the first quarter of 2020, representing year-over-year growth between 41.0% and 45.0%.

Check out its competitor Huya’s Q4 performance here.

The average mobile MAUs of Likee (formerly known as Like) increased by 208.3% to 115.3 million in Q4 2019 from 37.4 million in Q4 2018.

The average mobile MAUs of JOYY’s global live streaming services increased by 21.5% to 158.9 million from 130.8 million in Q4 2018, 102.8 million of which were from China, including 41.2 million from YY, which increased by 3.8% year over year, and 61.6 million from Huya, which increased by 21.5% year over year.

56.1 million live streaming MAUs were from outside of China, including 23.1 million from BIGO LIVE, which increased by 18.6% year over year, and 33.0 million from HAGO (casual-game-oriented social media platform), which increased by 57.9% year over year.

Average mobile MAUs of imo was 211.0 million.

The total number of paying users of YY increased by 9.8% to 4.5 million from 4.1 million in Q4 2018. Total number of paying users of Huya increased by 5.9% to 5.1 million from 4.8 million in Q4 2018. See Huya’s competitor Douyu here.

YY’s financial highlights in Q4 2019:

• YY’s net revenues increased by 64.2% to RMB7,618.2 million (US$1,094.3 million) from RMB4,640.9 million in Q4 2018.
• Net income attributable to controlling interest of JOYY Inc.1 was RMB172.8 million (US$24.8 million), compared to RMB694.7 million in Q4 2018.
• Non-GAAP net income attributable to controlling interest of JOYY was RMB600.8 million (US$86.3 million), compared to RMB846.9 million in Q4 2018, primarily due to the impact of the consolidation of Bigo Inc (“Bigo”)

YY’s net revenues increased by 62.2% to RMB25,576.2 million (US$3,673.8 million) from RMB15,763.6 million in 2018. Net income attributable to controlling interest of JOYY Inc. was RMB3,445.2 million (US$494.9 million), compared to RMB2,209.0 million in 2018.

Non-GAAP net income attributable to controlling interest of JOYY was RMB2,252.6 million (US$323.6 million), compared to RMB3,274.1 million in 2018.

9 Brands’ great results from WeChat Mini Program live streaming campaigns

Total paying users of Momo’s live streaming service and value-added service, without double counting the overlap and including 4.5 million paying users of Tantan, were 13.8 million for Q4 2019, compared to 13.0 million for Q4 2018, which included 3.9 million paying users of Tantan.

Momo Highlights for Q4 2019

• Net revenues increased by 22% year over year to RMB4,687.9 million (US$673.4 million)
• Net income attributable to Momo Inc. increased to RMB1,055.9 million (US$151.7 million) from RMB660.8 million in Q4 2018.
• Non-GAAP net income attributable to Momo increased to RMB1,252.5 million (US$179.9 million), from RMB887.4 million in Q4 2018.
• Diluted net income per American Depositary Share (“ADS”) was RMB4.74 (US$0.68), compared to RMB3.04 in Q4 2018.
• Non-GAAP diluted net income per ADS was RMB5.61 (US$0.81), compared to RMB4.05 in Q4 2018.

Momo Highlights for Full Year 2019

• Net revenues increased 27% year over year to RMB17,015.1 million (US$2,444.1 million) for the full year of 2019.
• Net income attributable to Momo was RMB2,970.9 million (US$426.7 million), compared with RMB2,815.8 million for 2018.
• Non-GAAP net income attributable to Momo was RMB4,493.3 million (US$645.4 million), compared with RMB3,462.1 million for 2018.
• Diluted net income per ADS was RMB13.52 (US$1.94), compared with RMB13.18 for 2018.
• Non-GAAP diluted net income per ADS was RMB20.26 (US$2.91), compared with RMB16.17 for 2018

Check out Tencent’s social platforms here.

Pinduoduo Q4 2019 Highlights

• GMV in the 12-month period ended December 31, 2019, was RMB1,006.6 billion (US$144.6 billion), an increase of 113% YoY from RMB471.6 billion
• Total revenues in the quarter were RMB10,792.7 million (US$1,550.3 million), an increase of 91% from RMB5,653.9 million in Q4 2018.
• Average monthly active users in the quarter were 481.5 million, an increase of 77% YoY from 272.6 million
• Active buyers in the twelve-month period ended December 31, 2019, were 585.2 million, an increase of 40% YoY from 418.5 million
• Annual spending per active buyer in the twelve-month period ended December 31, 2019, was RMB1,720.1 (US$247.1), an increase of 53% from RMB1,126.9 in the twelve-month period ended December 31, 2018.

In comparison:

• Jingdong (JD) annual active customers increased by 18.6% to 362.0 million in 2019
• Annual active consumers on Alibaba’s China retail marketplaces reached 711 million

Continue to read: Pinduoduo testing short videos with product searches

Or check out Pinduoduo and Taobao’s manufacturing strategies

Pinduoduo Financial Results

Unaudited Financial Results for Q4 2019

Total revenues were RMB10,792.7 million (US$1,550.3 million), an increase of 91% from RMB5,653.9 million in the same quarter of 2018. The increase was primarily due to an increase in revenues from online marketing services.

• Revenues from online marketing services were RMB9,686.7 million (US$1,391.4 million), an increase of 91% from RMB5,062.4 million in the same quarter of 2018.
• Revenues from transaction services were RMB1,106.0 million (US$158.9 million), an increase of 87% from RMB591.5 million in the same quarter of 2018.

Total costs of revenues were RMB2,037.4 million (US$292.7 million), an increase of 43% from RMB1,424.0 million in the same quarter of 2018. The increase was mainly due to higher costs for cloud services, call centers, and merchant support services.

Total operating expenses were RMB10,890.6 million (US$1,564.3 million), compared with RMB6,870.8 million in the same quarter of 2018.

• Sales and marketing expenses were RMB9,272.5 million (US$1,331.9 million), an increase of 54% from RMB6,024.0 million in the same quarter of 2018, mainly due to an increase in online and offline advertisement and promotions.
• General and administrative expenses were RMB345.7 million (US$49.7 million), an increase of 7% from RMB321.6 million in the same quarter of 2018, primarily due to an increase in headcount.
• Research and development expenses were RMB1,272.4 million (US$182.8 million), an increase of 142% from RMB525.2 million in the same quarter of 2018. The increase was primarily due to an increase in headcount and the recruitment of more experienced R&D personnel and an increase in R&D-related cloud services expenses.

Operating loss was RMB2,135.3 million (US$306.7 million), compared with operating loss of RMB2,640.9 million in the same quarter of 2018. Non-GAAP operating loss was RMB1,336.6 million (US$192.0 million), compared with operating loss of RMB2,112.9 million in the same quarter of 2018.

Net loss attributable to ordinary shareholders was RMB1,751.6 million (US$251.6 million), compared with RMB2,423.9 million in the same quarter of 2018. Non-GAAP net loss attributable to ordinary shareholders was RMB815.0 million (US$117.1 million), compared with RMB1,895.9 million in the same quarter of 2018.

Basic and diluted net loss per ADS were RMB1.52 (US$0.20), compared with RMB2.16 in the same quarter of 2018. Non-GAAP basic and diluted net loss per ADS were RMB0.72 (US$0.12), compared with RMB1.72 in the same quarter of 2018.

Net cash flow from operating activities was RMB9,598.0 million (US$1,378.7 million), compared with RMB5,732.4 million in the same quarter of 2018, primarily due to an increase in online marketing services revenues.

Cash, cash equivalents and restricted cash were RMB33.3 billion (US$4.8 billion) as of December 31, 2019, compared with RMB30.5 billion as of December 31, 2018.

Financial Results for Fiscal Year 2019

Total revenues were RMB30,141.9 million (US$4,329.6 million), representing an increase of 130% from RMB13,120.0 million in 2018. The increase was primarily due to an increase in revenues from online marketing services.su

• Revenues from online marketing services were RMB26,813.6 million (US$3,851.5 million), representing an increase of 133% from RMB11,515.6 million in 2018.
• Revenues from transaction services were RMB3,328.2 million (US$478.1 million), representing an increase of 107% from RMB1,604.4 million in 2018.

Total costs of revenues were RMB6,338.8 million (US$910.5 million), representing an increase of 118% from RMB2,905.2 million in 2018. The increase from last year is mainly due to higher costs for cloud services, call centers, and merchant support services.

Total operating expenses were RMB32,341.3 million (US$4,645.5 million), compared with RMB21,014.5 million in 2018.

• Sales and marketing expenses were RMB27,174.2 million (US$3,903.3 million), an increase of 102% from RMB13,441.8 million in 2018 as we invested in cultivating greater user recognition and engagement through online and offline advertising campaigns and promotions.
• General and administrative expenses were RMB1,296.7 million (US$186.3 million), a significant decrease from RMB6,456.6 million in 2018, primarily due to a one-time share-based compensation expense recorded in April 2018.
• Research and development expenses were RMB3,870.4 million (US$555.9 million), an increase of 247% from RMB1,116.1 million in 2018. The increase was primarily due to an increase in headcount and the recruitment of more experienced R&D personnel and an increase in R&D-related cloud services expenses.

Operating loss was RMB8,538.2 million (US$1,226.4 million), compared with operating loss of RMB10,799.7 million in 2018. Non-GAAP operating loss was RMB5,980.5 million (US$859.0 million), compared with RMB3,958.2 million in 2018.

Net loss attributable to ordinary shareholders was RMB6,967.6 million (US$1,000.8 million), compared with RMB10,297.6 million in 2018. Non-GAAP net loss attributable to ordinary shareholders was RMB4,265.8 million (US$612.7 million), compared with RMB3,456.0 million in 2018.

Basic and diluted net loss per ADS was RMB6.04 (US$0.88), compared with RMB13.88 in 2018. Non-GAAP basic and diluted net loss per ADS were RMB3.68 (US$0.52), compared with RMB4.64 in 2018.

Net cash provided by operating activities was RMB14,821.0 million (US$2,128.9 million), compared with RMB7,767.9 million in 2018, primarily due to an increase in online marketing services revenues.

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Sogou Financial Results in Q4 2019

Total revenues were $301.0 million, a 1% increase year-over-year.

• Search and search-related revenues were $274.6 million, down 1% year-over-year. However, auction-based pay-for-click services continued to increase year-over-year, accounting for 88.2% of search and search-related revenues, compared to 84.8% in the corresponding period in 2018.
• Other revenues were $26.4 million, a 26% increase year-over-year. The increase was primarily due to increased revenues from sales of smart hardware products.

Cost of revenues was $168.7 million, a 9% decrease year-over-year. Traffic acquisition cost, a primary driver of cost of revenues, was $129.0 million, a 14% decrease year-over-year, representing 42.8% of total revenues, compared to 50.3% in the corresponding period in 2018.

Gross profit was $132.4 million, an 18% increase year-over-year. Non-GAAP gross profit was $132.6 million, a 19% increase year-over-year.

Total operating expenses were $95.0 million, a 4% decrease year-over-year.

• Research and development expenses were $48.7 million, a 1% increase year-over-year, representing 16.2% of total revenues, largely flat with the corresponding period in 2018.
• Sales and marketing expenses were $34.9 million, a 16% decrease year-over-year, representing 11.6% of total revenues, compared to 14.0% in the corresponding period in 2018. The decrease was primarily attributable to a decrease in marketing and promotional spending.
• General and administrative expenses were $11.3 million, a 21% increase year-over-year, representing 3.8% of total revenues, compared to 3.1% in the corresponding period in 2018. The increase was primarily due to an increase in professional fees.

Operating income was $37.4 million, a 202% increase year-over-year, compared to $12.4 million in the corresponding period in 2018. Non-GAAP operating income was $41.5 million, a 216% increase year-over-year, compared to $13.1 million in the corresponding period in 2018.

Other income, net was $0.5 million, compared to $9.6 million in the corresponding period in 2018. The decrease was primarily due to a $9.1 million impairment loss on certain equity investments of Sogou in 2019.

Income tax expense was $2.0 million, compared to an income tax benefit of $3.6 million in the corresponding period of 2018.

Net income attributable to Sogou Inc. was $35.0 million, a 33% increase year-over-year, compared to net income of $26.4 million in the corresponding period in 2018. Non-GAAP net income attributable to Sogou Inc. was $39.0 million, a 44% increase year-over-year, compared to net income of $27.1 million in the corresponding period in 2018.

Basic and diluted earnings per ADS were $0.09. Non-GAAP basic and diluted earnings per ADS were $0.10.

As of December 31, 2019, it had cash and cash equivalents and short-term investments of $1.1 billion, compared to $1.0 billion as of December 31, 2018.

Net operating cash inflow for the fourth quarter of 2019 was $52.0 million. Capital expenditures for the fourth quarter of 2019 were $9.1 million.

Sogou Financial Results for Full Year 2019

Total revenues were $1.17 billion, a 4% increase from 2018.

• Search and search-related revenues were $1.07 billion, a 5% increase from 2018. The increase was primarily due to growth in auction-based pay-for-click services. Auction-based pay-for-click services accounted for 88.1% of search and search-related revenues, compared to 83.8% in 2018.
• Other revenues were $99.1 million, compared to $101.0 million in 2018.

Cost of revenues was $738.5 million, a 6% increase from 2018. Traffic acquisition cost, a primary driver of cost of revenues, was $562.2 million, a 6% increase from 2018, representing 48.0% of total revenues, compared to 47.4% in 2018.

Gross profit was $433.8 million, a 1% increase from 2018. Non-GAAP gross profit was $434.3 million, a 1% increase from 2018.

Total operating expenses were $369.4 million, a 4% decrease from 2018.

• Research and development expenses were $190.4 million, a 6% decrease from 2018, representing 16.2% of total revenues, compared to 17.9% in 2018.
• Sales and marketing expenses were $138.3 million, a 5% decrease from 2018, representing 11.8% of total revenues, compared to 13.0% in 2018.
• General and administrative expenses were $40.7 million, a 7% increase from 2018, representing 3.5% of total revenues, compared to 3.4% in 2018.

Operating income was $64.4 million, a 44% increase from 2018. Non-GAAP operating income was $80.3 million, a 36% increase from 2018.

Other income, net was $21.1 million, compared to $41.5 million in 2018. The decrease was primarily due to a $17.8 million gain from one of Sogou’s equity investments recognized in the third quarter of 2018.

Income tax expense was $2.7 million, compared to $1.2 million in 2018.

Net income attributable to Sogou Inc. was $89.1 million, compared to $98.8 million in 2018. Non-GAAP net income attributable to Sogou Inc. was $105.0 million, compared to $113.0 million in 2018.

Basic and diluted earnings per ADS were $0.23. Non-GAAP basic and diluted earnings per ADS were $0.27.

Sogou Outlook for Q1 2020

For the first quarter of 2020, Sogou expects total revenues to be in the range of $240 million to $260 million, representing a 5% decrease to 3% increase year-over-year, or a 1% decrease to 7% increase year-over-year in RMB terms.

In developing this guidance, Sogou has considered the potential impact of the COVID-19 outbreak, as well as other challenges in the macro-environment and the online advertising industry.

Given its Search business has navigated the situation relatively well, Sogou expects Search to remain resilient in the first quarter. The guidance represents its current and preliminary view, which is subject to substantial uncertainty, particularly as to the development and potential impact of the COVID-19 virus in China and elsewhere.

For the first quarter 2020 guidance, the Company has adopted a presumed exchange rate of RMB7.00 = $1.00, as compared with the actual exchange rate of approximately RMB6.74 = $1.00 for the first quarter of 2019, and RMB7.03 = $1.00 for the fourth quarter of 2019.

Netease Operation Highlights for Q4 2019

Expanded user base and diversified portfolio with new games launched in China including:

• Fantasy Westward Journey 3D, released in December, topped China’s iOS download chart soon after its launch, capturing wide interest from game players.
• Introduced other thrilling new titles including Xuan Yuan Sword: Dragon Upon the Cloud, Bloom & Blade, Onmyoji: The Card Game, Champion of the Fields, The Ninth Institute and Astracraft.

Deepened international brand recognition with popular games:

• Knives Out remained popular in Japan and topped the iOS grossing chart several times in the fourth quarter.
• Identity V ranked third on Japan’s top iOS grossing chart several times in November and December
• Marvel Super War, released in December in several Southeast Asian markets, gained popularity and topped many iOS download charts.

The continued popularity of Blizzard Entertainment’s World of Warcraft^® in China, bolstered by the release of World of Warcraft Classic, achieving a record number of total monthly subscribers in the fourth quarter, with increased revenue quarter-over-quarter.

The advanced exciting game pipeline, including Onmyoji: Yokai Koya, Harry Potter: Magic Awakened，EVE Echoes, Ghost World Chronicle, Revelation mobile game, Diablo^® Immortal^™ and Pokémon Quest.

Net revenues from Youdao’s learning services and products were RMB311.9 million (US$44.8 million) for the fourth quarter of 2019, a 128.6% increase from the same period in 2018.

Advanced NetEase Cloud Music with strong revenue growth, expanding the Company’s community of independent musicians to more than 100,000 and over 270 billion playbacks of their songs in 2019.

Netease Q4 2019 Financial Highlights

Net revenues were RMB15,734.8 million (US$2,260.2 million), an increase of 9.2% compared with Q4 2018.

• Online game services net revenues were RMB11,604.3 million (US$1,666.9 million), an increase of 5.3% YoY.
• Youdao net revenues were RMB410.4 million (US$59.0 million), an increase of 78.4% YoY
• Innovative businesses and others net revenues were RMB3,720.0 million (US$534.4 million), an increase of 17.9% YoY

Gross profit was RMB8,210.4 million (US$1,179.4 million), an increase of 9.0% YoY.

Total operating expenses were RMB5,234.0 million (US$751.8 million), an increase of 17.5% YoY.

Net income from continuing operations attributable to Netease’s shareholders was RMB3,053.7 million (US$438.6 million). Non-GAAP net income from continuing operations attributable to the Company’s shareholders was RMB3,662.3 million (US$526.1 million).

Basic net income per ADS from continuing operations was US$3.40. Non-GAAP basic net income per ADS from continuing operations was US$4.07.

Netease Financial Results for The Fiscal Year 2019

Net Revenues

Net revenues for the fiscal year 2019 were RMB59,241.1 million (US$8,509.5 million), compared to RMB51,178.6 million for the fiscal year 2018.

• Net revenues from online game services were RMB46,422.6 million (US$6,668.2 million) for fiscal year 2019, compared to RMB40,190.1 million for fiscal year 2018. Mobile games accounted for approximately 71.4% of net revenues from online game services for fiscal year 2019, compared to 71.0% for fiscal year 2018.
• Net revenues from Youdao were RMB1,304.9 million (US$187.4 million) for fiscal year 2019, compared to RMB731.6 million for fiscal year 2018.
• Net revenues from innovative businesses and others were RMB11,513.6 million (US$1,653.8 million) for fiscal year 2019, compared to RMB10,256.9 million for fiscal year 2018.

Gross Profit

Gross profit for the fiscal year 2019 was RMB31,555.3 million (US$4,532.6 million), compared to RMB27,346.1 million for the fiscal year 2018.

• The year-over-year increase in online game services gross profit for fiscal year 2019 was primarily attributable to increased revenue contribution from mobile games such as Life-After, Invincible and Identity V.
• The year-over-year increase in Youdao gross profit for fiscal year 2019 was primarily attributable to the rapid development of its learning services and products.
• The year-over-year increase in innovative businesses and others gross profit for fiscal year 2019 was primarily due to increased net revenues from NetEase Cloud Music, CC live-streaming and Yanxuan, as well as improved cost control.

Operating Expenses

Total operating expenses for fiscal year 2019 were RMB17,764.6 million (US$2,551.7 million), compared to RMB17,368.8 million for fiscal year 2018. The year-over-year increase in total operating expenses for fiscal year 2019 was primarily due to increased research and development investments and staff-related costs, partially offset by decreased selling and marketing expenditures.

Other Income

Other income consisted of investment income/ (loss), interest income, foreign exchange gains and losses and others. The year-over-year increase in other income for fiscal year 2019 was mainly due to fair value changes of equity investments in publicly traded companies.

Income Taxes

The Company recorded a net income tax charge of RMB2,914.7 million (US$418.7 million) and RMB2,460.7 million for fiscal years 2019 and 2018, respectively. The effective tax rate was 17.8% for fiscal year 2019, compared to 22.2% for fiscal year 2018. The lower effective tax rate for fiscal year 2019 was mainly due to reduced losses from certain subsidiaries of the Company.

Net Income and Non-GAAP Net Income

Net income from continuing operations attributable to the Company’s shareholders for fiscal year 2019 totaled RMB13,275.0 million (US$1,906.8 million), compared to RMB8,291.1 million for fiscal year 2018.

Non-GAAP net income from continuing operations attributable to the Company’s shareholders for fiscal year 2019 totaled RMB15,662.7 million (US$2,249.8 million), compared to RMB10,761.3 million for fiscal year 2018.

NetEase reported basic and diluted net income from continuing operations per ADS of US$14.80 and US$14.67, respectively, for fiscal year 2019, and basic and diluted net income from continuing operations per ADS of US$9.20 and US$9.15, respectively, for fiscal year 2018.

Non-GAAP basic and diluted net income from continuing operations per ADS were US$17.46 and US$17.31, respectively, for fiscal year 2019, compared to non-GAAP basic and diluted net income from continuing operations per ADS of US$11.94 and US$11.87, respectively, for fiscal year 2018.

Weibo’s average daily active users reached 222 million in December 2019, a net addition of approximately 22 million users year-over-year.

Weibo Financial Results in Q4 2019

Weibo’s total net revenues were $468.1 million in Q4 2019, a decrease of 3% compared to $481.9 million in Q4 2018.

Advertising and marketing revenues for the fourth quarter of 2019 were $405.9 million, a decrease of 3% compared to $417.0 million in Q4 2018.

Advertising and marketing revenues from key accounts (“KAs”) and small & medium-sized enterprises (“SMEs”) were $368.1 million, a decrease of 5% compared to $385.5 million for the same period last year.

VAS revenues for Q4 2019 were $62.2 million, a decrease of 4% year-over-year compared to $64.9 million in Q4 2018.

Costs and expenses for Q4 2019 totaled $317.4 million, an increase of 6% compared to $298.8 million for the same period last year. Non-GAAP costs and expenses were $299.2 million, an increase of 1% compared to $295.5 million for the same period last year.

Income from operations for Q4 2019 was $150.7 million, compared to $183.0 million for the same period last year. Non-GAAP income from operations was $168.9 million, compared to $186.4 million for the same period last year.

Non-operating loss for the fourth quarter of 2019 was $25.1 million, compared to a loss of $1.9 million for the same period last year.

Non-operating loss for the fourth quarter of 2019 mainly included

• a $176.5 million net gain from fair value change of investments, which is excluded under non-GAAP measures;
• a $214.7 million impairment on the Company’s investment in Yixia Tech Co., Ltd., which is excluded under non-GAAP measures;
• a $13.3 million net interest and other income.

Income tax expenses were $31.1 million, compared to $14.9 million for the same period last year, largely attributable to the deferred tax charges recognized from the fair value change of investment in the fourth quarter of 2019.

Net income attributable to Weibo for Q4 2019 was $95.1 million, compared to $166.5 million for the same period last year.

Diluted net income per share attributable to Weibo for the fourth quarter of 2019 was $0.42, compared to $0.73 for the same period last year. Non-GAAP net income attributable to Weibo for the fourth quarter of 2019 was $176.5 million, compared to $183.6 million for the same period last year. Non-GAAP diluted net income per share attributable to Weibo for the fourth quarter of 2019 was $0.77, compared to $0.80 for the same period last year.

As of December 31, 2019, Weibo’s cash, cash equivalents and short-term investments totaled $2.40 billion. For the fourth quarter of 2019, cash provided by operating activities was $253.2 million, capital expenditures totaled $6.5 million, and depreciation and amortization expenses amounted to $6.5 million.

Weibo Financial Results in 2019

For the fiscal year 2019, Weibo’s total net revenues were $1.77 billion, an increase of 3% compared to $1.72 billion in 2018.

Advertising and marketing revenues for 2019 were $1.53 billion, an increase of 2% compared to $1.50 billion in 2018. Advertising and marketing revenues from KAs and SMEs were $1.43 billion, an increase of 4% compared to $1.38 billion for 2018.

VAS revenues for 2019 were $236.7 million, representing an increase of 8% compared to $219.3 million for 2018. The increase was mainly attributable to the revenues derived from the live streaming business acquired in the fourth quarter of 2018.

Costs and expenses for 2019 totaled $1.17 billion, compared to $1.11 billion for 2018. Non-GAAP costs and expenses were $1.10 billion, compared to $1.06 billion for 2018.

Income from operations for 2019 was $597.6 million, compared to $609.3 million for 2018. Non-GAAP income from operations was $662.2 million, at similar level compared to 2018.

Non-operating income for 2019 was $4.8 million, compared to a non-operating income of $59.6 million for 2018. Non-operating income in 2019 mainly included

• a $207.4 million net gain from fair value change of investments, which is excluded under non-GAAP measures;
• a $249.9 million impairment on the Company’s certain investments, which is excluded under non-GAAP measures;
• a $46.7 million net interest and other income.

Income tax expenses were $109.6 million, compared to $96.2 million for 2018. The increase was primarily attributable to higher deferred tax charges recognized from fair value change of investment in 2019.

Net income attributable to Weibo for 2019 was $494.7 million, compared to $571.8 million for 2018. Diluted net income per share attributable to Weibo for 2019 was $2.18, compared to $2.52 for 2018. Non-GAAP net income attributable to Weibo for 2019 was $637.5 million, compared to $624.2 million for 2018. Non-GAAP diluted net income per share attributable to Weibo for 2019 was $2.78, compared to $2.73 for 2018.

Weibo anticipates its first quarter of 2020 net revenues to decrease by 15% to 20% year-over-year on a constant currency basis. This forecast reflects Weibo’s current and preliminary view, which is subject to change.