Earnings Call Transcript - DOYU Q4 2022

Operator, Operator

Good morning and good evening, everyone. Thank you for joining DouYu International Holdings Limited's Fourth Quarter and Full Year 2022 Earnings Conference Call. I will now hand the call over to Ms. Lingling Kong, the IR Director at DouYu. Please proceed, ma'am.

Lingling Kong, IR Director

Thank you. Hello, everyone. Welcome to our fourth quarter and full year 2022 earnings call. Joining us today are Mr. Shaojie Chen, Chairman and Chief Executive Officer; Mr. Mingming Su, Chief Strategy Officer; and Mr. Hao Cao, Vice President of Finance. You can refer to our fourth quarter and full year 2022 financial results on our IR website at ir.douyu.com. You can also check a replay of this call when it becomes available in a few hours on our IR website. Before we start, please note that this call may contain forward-looking statements made pursuant to safe harbor provision for the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectations implied by these forward-looking statements. All forward-looking statements are expressly qualified in their entirety by the cautionary statements, risk factors and details of the company's filings with the SEC. The company undertakes no duty to revise or update any forward-looking statements for selected events or circumstances after the date of this conference call. I will now speak on behalf of our Chairman and CEO, Mr. Shaojie Chen. Throughout 2022, against the backdrop of a complex and volatile macro environment, we remained committed to our long-term growth strategy of fostering a vibrant game-centric content ecosystem. We ended the year with a stable business performance achieved through a mix of operational adaptation and innovation that included optimizing our revenue structure, streamlining our operations, creating new services and enhancing monetization capabilities. In the fourth quarter, we continued to produce premium gaming content, upgrade our content operating model adding to the interactive features on our platform to further enhance user engagement. Our mobile MAUs grew slightly on a sequential basis to 57.4 million during the quarter, with the total number of paying users of 5.6 million, and our adjusted net loss was RMB4.3 million. Due to a couple of strategic adjustments over the past few quarters, our ecosystem has been shown to be healthier, which we believe it will empower us to deliver long-term sustainable growth. As we progress further into 2023, we are continuing to enrich our content with community interaction playing a pivotal role in our ecosystem. We are shifting the focus of our user growth strategy from increasing scale to improving quality without being overly concerned about the short-term growth of our business. Furthermore, we will optimize our marketing strategy to strengthen partnerships with game developers, coupled with our interactive gaming content community to enhance user engagement. In addition, with the price level of corporate deployments gradually returning to a reasonable range, we believe that prudently purchasing some co-copyrighted tournaments will help us strengthen our competitiveness in the industry. This investment will also foster the ecosystem of our game-centric community and enhance our core user engagement and retention rate, thereby facilitating the company's long-term development. Next, I'd like to share with you our business updates from the fourth quarter in more detail. For Q4, our average mobile MAUs for the quarter were 57.4 million, a slight sequential increase despite the year-over-year decline of 8 points. The main reason for the year-over-year and quarter-over-quarter MAU changes include: First, due to the implementation of our selective corporate procurement strategy in early 2022, we experienced a decline in all MAUs since the fourth quarter of the year. Nevertheless, in the fourth quarter, despite the negative impact on user traffic from the absence of the LoL World Championship Tournament, our creative user campaigns and operations on existing copyright tournament events effectively attracted and engaged our core users. As a result, mobile MAUs on our platform achieved growth for the third consecutive quarter. Second, we continue to advance our innovative membership business, extending our game-specific membership services to broader game segment. By combining game features with users' needs, this initiative has gained traction among both new and existing users. Moving on to our content ecosystem. Capitalizing on the widespread popularity of eSports, we continue to sharpen our products and operations, including the consistent upgrades of our game content. Based on gaming features, we continuously created an even broader selection of more interactive and engaging premium content. On top of that, we built a healthy and vibrant interactive ecosystem for users through innovative services, providing them with the community-based platform and a novel membership business. These efforts not only ensure long-term retention by meeting certain gamers' needs for upgraded game content, but also increase overall user engagement and stickiness on our platform, driving user growth in the long run. In the fourth quarter, we continued to improve our diversified self-produced tournament system and organized more than 90 eSports tournaments. Leveraging our top-tier streamer resources, we focused on promoting IP content in partnership with star game streamers. In this effort, we created a series of premium gaming content combined with entertainment-oriented activities in our game segment, such as League of Legends and Honor of Kings. This content in general, coupled with the joining parties, has proven to increase users' motivation to engage and the line-up of our game communities, appealing to both new and existing users. Self-produced tournaments have become one of our main avenues to promote eSports popularity across the board. For example, based on Honor of Kings large gamer base, we housed Honor of Kings user cup national challenge. This competition opened enrollment to all Honor of Kings players, demonstrating easy access to rewards and stronger user participation. Specifically, we integrated the tournament's content with our user community. Users were able to enroll, participate and advance in rank within our community channel, while other users could take part in a series of fun activities such as solo player competitions and interactive rewards. Combining game content with our user communities captivated like-minded gamers, and at the same time, it has tightened bonds with heavy users. As we improved our self-produced tournament system and further enhanced its value, we launched a series of eSports partner selection mechanisms based on these tournaments. In the user cup mentioned earlier, we unveiled the eSports project. We've seen growth opportunities to discover high potential streamers and fortify user segments. In the fourth quarter, we launched all-new eSports school team selection season for colleges. The competition covered three mainstream eSports games and attracted more than 2,000 college teams from 11 provinces, providing more college students with the platform to showcase their skills. It has also helped us to discover potential eSports talent and enhanced our appeal and brand influence among colleges and universities. In terms of corporate tournaments, we reinforced user engagement and stickiness to reach derivative content and diverse operational activities. In the Honor of Kings Champions Cup KIC, we added auxiliary functions such as home team support and watching reminders to further elevate our user experience. Moreover, the team, Wuhan.eStar, which we signed and invested in, maintained its excellent performance throughout the year and became the champion of the Champions Cup. With the purchase of some co-copyrighted content, we continue to deepen cooperation with game developers, fully integrating tournament content with our platform's operational characteristics to provide differentiated tournament-derived content and customized user services. Meanwhile, aligning with the tournament’s content, we will explore more commercialization channels to improve the ROI of tournament copyrights. Moving on to our monetization strategy. Our total number of paying users in the fourth quarter was 5.6 million, with a quarterly average ARPU of RMB293. We continued our paying user segmentation strategy from the last quarters, which included canceling marketing activities for new paying users with low rates of return, maintaining our core users' readiness to pay, and promoting more consumption among mid-range payment users. We also made progress in generating revenue from non-virtual gifting. For Q4, we continued to refine and promote our platform-wide membership service system, strengthened the companionship and interaction between streamers and platform members and consistently iterated membership features. In the fourth quarter, we launched sound effects and privilege gifts for members, leading to a sustained, steady increase in member renewal rates compared with the third quarter, demonstrating high user stickiness among our fans. Furthermore, we extended our game-specific membership service to multiple segments. Based on the characteristics of each game, we launched customized game membership services to meet users' needs for in-game items. Going forward, we will strengthen our cooperation with game developers that fit into users' gaming needs and explore more commercialization channels. In terms of our product R&D and function innovation, we continue to deepen cooperation with game developers. In compliance with laws and regulations and based on our partial game-based sharing partnership with game developers, we integrated gaming data, content and functions with DouYu’s content and gameplay, making live streaming content closely fit with these games. For example, the Honor of Kings live streaming channel, users can easily team up with streamers and other users to play the game through the join with one-click function, making user-streamer interactions significantly simpler than before. In the past, users had to manually add friends into the game to form teams. In addition, with this strategy, more game-related data and gaming strategies were generated through partial game data sharing in games such as PUBG and Peacekeeper Elite, further optimizing our user experience and stimulating live streaming engagement. Overall, in a challenging year of 2022, we created a healthy and vital gaming content ecosystem through various operational strategies, including adjusting revenue-generating activities and increasing investments in self-produced content, thereby maintaining stability in the company's overall business and financial performance. Going forward, we will continue to execute on our diversified game-centric content strategy and focus on maintaining both the scale and quality of our core users, further improving game content and strengthening our connections with core users while enhancing our user segments on our platform and solidifying our status in the gaming content ecosystem. Meanwhile, we will continue to explore more commercialization channels and new growth avenues to maintain our leading position in the domestic game live streaming industry. With that, I will now turn the call over to our Vice President of Finance, Mr. Hao Cao, to go through the details of our financial performance in the quarter.

Hao Cao, Vice President of Finance

Thank you, Lingling. Hello, everyone. For the full year 2022, we focused on optimizing cost and developing revenue quality in order to improve financial performance. As we continue to invest in high-quality self-produced content and improve our revenue structure, we enhanced operating efficiency through adjusting our live streaming business, together with effective cost and expense controls. For the full year 2022, our gross margin expanded to 13.9% and adjusted net loss narrowed significantly to RMB7.6 million. Let's now look at our financial performance for the fourth quarter in more detail. Total net revenues in the fourth quarter of 2022 decreased by 27.8% year-over-year to RMB1.68 billion. Live streaming revenues were RMB1.6 billion, a decrease of 27.7% from RMB2.21 billion in the same period of 2021. The decrease was mainly attributable to two factors: our continued implementation of prudent operating strategies and the one-off impact of a decline in streamers' activities following the end of COVID-19 restrictions. As a result, virtual gifting interactions were partially impaired, which caused a year-over-year decrease in quarterly ARPU. Our quarterly ARPU was RMB293, down 4% from RMB305 in the same period last year. Advertising and other revenues were RMB84.3 million compared with RMB118.5 million in the same period of 2021. The year-over-year decrease was primarily attributable to the soft demand for brand advertising amid the challenging microeconomic environment. The decline was partially offset by an increase in other revenues contributed by game-specific membership services. Cost of revenues in the fourth quarter of 2022 was RMB1.5 billion, a decrease of 28.2% compared with RMB2.08 billion in the same period of 2021. Revenue sharing fees and content costs decreased by 31.2% to RMB1.27 billion from RMB1.85 billion in the same period of 2021. The decline was primarily driven by the following two factors: First, the decrease in revenue sharing fees was mainly in accordance with the decrease in live streaming revenues. In addition, the lower revenue sharing ratio, which was achieved through the implementation of our prudent operating strategies, led to a further reduction in revenue sharing fees. Second, the copyright cost decreased significantly as a result of our selective copyright procurement strategy, whereby we avoided acquiring overpriced content rights for eSports tournaments. The decrease was partially offset by an increase in self-produced content costs, driven by additional year-end events launched during the quarter. Bandwidth costs in the fourth quarter of 2022 decreased by 17.6% to RMB138.4 million from RMB167.9 million in the same period of 2021. The decrease was mainly due to the year-over-year reduction in peak bandwidth usage in the absence of the purchased copyright of major eSports tournaments. Gross profit in the fourth quarter of 2022 was RMB186.1 million compared with RMB244.7 million in the same period of 2021. Gross margin in the fourth quarter of 2022 was 11.1% compared with 10.5% in the same period of 2021. This margin improvement was mainly driven by the decrease in both revenue sharing fees and copyright costs as a percentage of revenues. The improvement was partially diluted by the rising percentage of revenues attributed to self-produced content costs. Sales and marketing expenses in the fourth quarter of 2022 were RMB123.9 million, a significant decrease of 45.9% from RMB229.2 million in the same period of 2021. This was mainly attributable to a decrease in both marketing expenses for user acquisition and branding expenses. Research and development expenses in the fourth quarter of 2022 were RMB80.6 million, representing a 39.2% decrease from RMB132.6 million in the same period of 2021. This decrease was primarily due to a reduction in personnel-related expenses. General and administrative expenses in the fourth quarter of 2022 were RMB55.2 million, a drop of 44.1% from RMB98.8 million in the same period of 2021. The decrease was primarily due to decreased share-based compensation expenses as the vast majority of shares in our share incentive plans were fully vested as well as decreased professional service fees. Adjusted operating loss, which adds back share-based compensation expenses, was RMB56 million in the fourth quarter of 2022 compared with RMB168.7 million in the same period of 2021. Net income in the fourth quarter of 2022 was RMB41.8 million compared with net loss of RMB193.2 million in the same period of 2021. Adjusted net loss, which excludes share-based compensation expenses, share of loss or income in equity method investments and impairment loss of investments, was RMB4.3 million in the fourth quarter of 2022 compared with RMB150.7 million in the same period of 2021. For the fourth quarter of 2022, basic and diluted net income per ADS were RMB0.14 and RMB0.14, respectively, while adjusted basic and diluted net loss per ADS were RMB0.003 and RMB0.003, respectively. As of December 31, 2022, the company had cash and cash equivalents, restricted cash, and short-term and long-term bank deposits of RMB6.81 billion compared with RMB6.64 billion as of December 31, 2021. Moving forward, as part of our strategic focus on healthy long-term growth, our revenue may experience some immediate impact, which we believe is critical to our balanced growth. We will also strive to explore more commercialization channels and fine-tune our operations, supporting the sustainable long-term development of our platform while also delivering greater value for our shareholders. This concludes our prepared remarks for today. Operator, we are now ready to take questions.

Operator, Operator

And our first question today will come from Lei Zhang of Bank of America Securities.

Lei Zhang, Analyst

Thank you to management for taking my question. My first question is about your strategy. We noticed your investments in eSports contracts this year. Can you explain your strategy for 2023? Also, how should we consider operating efficiency alongside additional in-content costs? Secondly, we observed some attraction this year; can you update us on its performance in live streaming? Furthermore, we know that there are several new games set to launch this year. Will these games contribute to our user growth and engagement in game streaming?

Shaojie Chen, Chairman and CEO

As a leading game live streaming platform in China, we remain committed to our long-term growth strategy of fostering a vibrant game-centric content ecosystem. We continue to establish a diversified gaming platform by streamlining our operations and creating new services, propelling a vibrant game content ecosystem. Facing the ever-changing macro environment in the past two years, we've made some adjustments to pursue long-term sustainable development. Those adjustments include us actively modifying our operating strategy to optimize our revenue structure and controlling business spending through fine-tuned operations. All the measures we've taken have not only stabilized the overall company's business but also improved our financial performance and significantly narrowed our adjusted net loss for the full year 2022. Looking ahead to 2023, we will continue to execute prudent operational strategies and focus on the long-term business process. We will reduce our investment in traditional business lines with low ROI and focus on exploring new growth avenues. While pursuing growth in user scale, we will target improving user quality. By delivering high-quality content, upgrading our product structures and strengthening our interactive features, we are able to enrich our platform's ecosystem so that we can enhance our user experience and retention rate. In terms of cost allocation, we conducted a detailed evaluation of the ROI of each of our expenses in allocated company resources rationally and dynamically, dedicating limited resources to business lines with greater potential. For example, in terms of our user acquisition strategy when we compare it with content-driven user acquisition, we noticed that channel promotions drove user growth in the short term, but with lower retention rate and conversion rate. As users' needs have become more diversified, focusing on channel promotion is no longer a sustainable user acquisition strategy. Therefore, we have adjusted our overall marketing strategy in 2023, adhering to a content-driven approach to growth by continuously investing in high-quality content and cooperating with game developers to attract and engage users. Although investing in content is a more long-term process than channel promotion, we believe it’s beneficial for our platform's sustainable development. In terms of our co-copyrighted procurement, as we mentioned before, our copyright tournaments are still of great value, and we would repurchase some co-copyrighted tournaments if the price level returns to a reasonable range. On that basis, we repurchased some co-copyrighted events in 2023, such as the LPL and the LoL World Championship Tournament. High-quality streamer content and diversified self-produced game-centric content along with copyrighted tournament content enable us to enrich our content ecosystem and foster our game-centric community, thereby solidifying our overall competitiveness in the industry. Meanwhile, in terms of revenue, we will focus on ensuring that our users' willingness to pay on our platform is on a sustainable basis. Such focus shift will have a short-term impact on our revenue. However, our operating leverage is expected to improve in the long run, which, in turn, supports the company's long-term profitability. At the same time, we are continuously exploring more innovative commercialization avenues.

Hao Cao, Vice President of Finance

Let me address your second question regarding our casual interactive mobile game. This game is straightforward to use and features high interactivity. We prepared experienced streamers in advance and implemented a charity incentive to encourage more players to engage in the game’s livestream. Additionally, we utilized our user community to organize various interactive teaming activities within our community channels. We also offered plenty of in-game items as rewards to boost player engagement and interaction. This strategy has effectively promoted the game’s popularity and improved user retention on our platform. The live streaming volume for this game has ranked at the top of the industry, with over half of the segment's users participating in community channel activities during the promotional event. Looking ahead, we expect to launch more blockbuster games. For content platforms like DouYu, high-quality games and their users are crucial for content generation and user growth. We will continue to develop premium gaming content that offers greater interactivity and a diverse selection based on game features. While we can't specify the launch schedule for these games, we will collaborate with game developers to promote them during the pre-launch phase. We will choose experienced streamers, enhance game content for viewers to watch and discuss, and offer interactive content like game tutorials and tournament events to boost user engagement, improve user experience, and increase user retention.

Operator, Operator

Okay. And our next question today will come from Thomas Chong of Jefferies.

Thomas Chong, Analyst

Thanks management for taking my questions. My first question is regarding our strategic direction. Given that the company has made a number of strategic assessments in the past two years, how should we think about the industry trend? Or may I put it this way, how should I think about the management's thoughts regarding the game live broadcasting overall industry environment? And my second question is about the user scale for this year, if there's any qualitative color?

Shaojie Chen, Chairman and CEO

As we mentioned before, the competition we face in our industry has already transitioned from gaming live streaming to gaming content. Gaming content is a much larger market with a broader user base expanding beyond hardcore gamers to include those watching video game live streaming. This means users' needs are evolving, which is both an opportunity and challenge for us. Given the large scale of our existing user base and revenue base, the challenge is how to adjust our products and operations to acquire new users and explore new commercialization channels. We insist on achieving success with premium game content. Specifically, we leverage high-quality game content to acquire new users and build a diversified product system to meet users' diverse needs and improve user stickiness. Attracted by wide-ranging content, high-quality users can also generate content through interacting and self-producing, fostering a virtuous cycle on our platform of content production and user development that we have emphasized to build a healthy and sustainable platform. It's what we've done in the past and what we'll continue to do in the future. Furthermore, for a long time, we paid considerable attention to our revenue scale based on our live streaming platform's monetization features. However, we think this may harm our platform's ecosystem and healthy development in the long run. Therefore, we have recently reduced our marketing activities that target revenue growth. Instead, we provided diversified products to cater to different users' paying habits and demands while also emphasizing our product’s sustainability. In addition, we are exploring new initiatives, such as a membership business. It took time to make these changes. Therefore, we focus on refining our operations and improving our cost and expense control. In this way, while making the above adjustments, we still managed to maintain our platform's long-term profitability.

Hao Cao, Vice President of Finance

Let me answer your second question about MAU. As we have consistently communicated before, DouYu is a game-centric content platform that attracts and retains users by providing high-quality game-centric content and adopting user acquisition strategies to face different business environments. In 2023, to navigate the volatile macro environment with agility, we prioritized our long-term business profile, reducing our investment in traditional business lines with low ROI. Focusing on our user growth strategy of improving user quality, we strive to strengthen our content operations as well as explore commercialization avenues. Our total revenues are mainly contributed by our content-driven users with strong engagement habits. We plan to largely cut our promotional expenses this year, which will directly affect our platform’s MAU in the short term. Nevertheless, since most of these lower MAUs are short-term users on the platform, this strategy won’t affect our content operations or our monetization efficiency. In addition, with the purchase of copyrighted content, we expect to gain some tournament users. By observing traffic on our LoL game segment, we found that the increase in traffic it brought, couldn't offset the decline in user scale resulting from sustainability, decreased our promotional expenses. We believe that operational adjustments will enable us to increase our resource allocation in order to build a more sustainable content ecosystem. Although the return on this investment takes time, we will ultimately enhance our overall competitiveness and support our platform’s long-term development. Thank you.

Operator, Operator

Our next question today will come from Yiwen Zhang of China Renaissance.

Yiwen Zhang, Analyst

So I have a couple of questions. First question is regarding our DouYu’s content procurement. Can you assure our plan on how we plan to improve ROI on game content? Secondly, can you give us an update on the 2022 whole year cash flow? Have we achieved positive operating cash inflow?

Hao Cao, Vice President of Finance

Thank you for your questions. As to the first question on copyright procurement, copyrighted tournaments played an important role in stabilizing our platform's traffic and improving our user engagement. In the past year, we adopted a selective copyright procurement strategy due to the overpricing of some copyrighted tournaments. With the price level of copyrighted tournaments gradually returning to a reasonable range, we have increased our investments in purchasing co-copyrights in 2023. Major copyrighted tournaments we have purchased so far include League of Legends, Honor of Kings, Peacekeeper Elite, Crossfire, and DOTA2. For the tournament copyrights we purchased, we will improve our return on investment through innovative operations. In terms of enhancing user engagement, we will continue to upgrade interactive features on our platform to meet users' diversified needs by building on our accumulated experience in live streaming and operating copyrighted tournaments. For example, in LPL, by leveraging our top-tier streamer resources, we selected 12 streamers to do a co-streaming of the tournament events. These streamers included both official tournament commentary and top-tier streamers with a massive fan base in these tournaments and on our platform. This co-streaming initiative achieved good results. The DAU of the live streaming channel is on par with that of our official channel. In addition, the number of buddy chats is several times higher than that of our official channel. Furthermore, we featured more user-friendly access to videos and community channels, our live streaming channel, thereby gaining more exposure for our diverse gaming content and attracting more users to join. In terms of commercialization, we continue to integrate our copyrighted tournament content with more refined operations. For example, we promote our game-specific membership services to tournament viewers. Meanwhile, we will explore more direct monetization opportunities based on copyrighted tournament content. In addition to discussing the copyright price with copyright owners, we will communicate more proactively with them to explore reasonable long-term cooperation. So on the second question of cash flows, as of December 31, 2022, our overall cash balance, including cash and cash equivalents, restricted cash and deposits amounted to RMB6.81 billion, an increase of RMB170 million compared with RMB6.64 billion in the same period of 2021. This is mainly due to two factors: First, the increase in our cash balance is primarily a result of reporting currency translation as the appreciation of the U.S. dollar increased the value of the large amount of U.S. dollar-denominated cash assets we hold, totaling RMB480 million. Second, in terms of cash outflow, we used a total of RMB110 million in cash for share repurchases. Other total cash outflow was RMB210 million, of which the operating cash outflow was RMB77.8 million. Thank you.

Operator, Operator

Our next question today will come from Raphael Chen of BOCI.

Raphael Chen, Analyst

Thanks for taking my question. My question is regarding the paying user trend. Could management elaborate on how the current operations strategy will impact the paying users going forward? It would be great if management could share more insight on the paying user trend, especially in the year of 2022?

Hao Cao, Vice President of Finance

Thank you for your question. As mentioned previously, improving user quality is our key focus this year. In the second half of last year, we canceled some marketing activities for new paying users with low rates of return. That reflects the high quality of our current paying users with consistent paying behaviors for our services. In 2023, we plan to further reduce our marketing expenses and acquisition expenses for paying user acquisition, which will have an impact on the paying user base. In 2023, we will continue to improve revenue quality and maintain our core paying users business and also their willingness to pay, shifting the focus of revenue generation to the following two areas: First of all, we will put more emphasis on maintaining core paying users to ensure core business stability. We launched various tiers of paying products based on our users' different abilities to pay in order to sustain and improve their willingness to do so. Meanwhile, we rolled out more companionship-oriented functions and activities for our fans, maintaining the day-to-day interactions between streamers and the fans and enhancing the fans' willingness to pay. Last year, we upgraded our user benefits and strengthened our interactive functions, substantially improving fan stickiness and steadily increasing member renewal rates. Second, we will explore new non-virtual gifting business models based on game characteristics to improve our revenue mix. The game-specific membership service that we launched in the second half of 2022 is progressing smoothly. Despite its relatively small revenue currently, we believe this business can satisfy some gamers' demands for the games themselves. It not only attracts a large number of game fans, thereby adding new users to our platform, but also appeals to existing users. Thus promoting a virtuous cycle in our game content ecosystem. In short, developing our membership business will be a priority for 2023. Specifically, we will continue strengthening our platform-wide membership service while reinforcing our close cooperation with game developers to delve deep into users' gaming needs and extend our game-specific membership service to multiple segments. Thank you.

Operator, 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, IR Director

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

Operator, Operator

The conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.