Q1 2020 Earnings Call

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Ladies and gentlemen, thank you for standing by and welcome to Dai Ichi first quarter 2020 earnings Conference call. At this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer recession at which time, if you wish to ask a question.

You will need to press star one on your telephone please be advised that today's conference is being recorded.

No like they had the conference over to your first speaker today Dahlia Wei. Thank you and please go ahead.

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And that you watch as well there.

As a leading energy.

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Mike who want.

Oh membership.

Well pleased to see robust world.

Both the number.

On the membership.

During the first call.

Total subscriber.

118, Ponson aren't moving Apple Mark.

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Walter.

Subscription revenues grew 35% year over year.

For the feeling.

This was driven by all continuing efforts to introduce more premium.

Surge in demand for people and her team, but during that Chinese new year holiday.

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During the first of all premium comes from the continued to climb subscriber growth.

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Richard drama among subscriber included.

All right happens even fly actually moving.

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We Oh the Euro we are testament, even flat.

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So far.

I mean subscribers beefing up our speed.

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Popularity of.

About blockbuster.

Once again demonstrated strong appeal overall trimming counters to ardent Oh.

Perfect World.

Subscriber growth was also driven by a increasing where I feel confident we also.

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Over the past a year or membership business has been primarily driven by growth in that number of subscribers.

Oh subscriber number which is critical mass where on while approach new.

Well both.

Quite where a number and the are.

We ask growth engine, we further optimize our membership system during the quarter such as they do the membership youve comps and the other major league.

Last you Vsan bundled membership yeah, Lisa we also continue to overcome spot worse or access to additional I suppose well a premium charge.

Which is becoming the move along for the industry.

So far or excess auction have applied to over and major problem.

Including our pacman evil plot.

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The last two Myers Yorkshire plant and the we'd.

The Gonyer, Indiana, which right now.

Which have been well received by subscribers overall no problem upgrade.

Got it even the wider adoption of shelter in place.

And the other rigid the.

I will start of users are not happen if we were.

Hang habits big recalled it faster than you had it upside or growth as people while.

Five at home during the Oh, hi damage.

Nevertheless, they hope the Dominic called absolutely. It's part of the effect of that all membership growth may be salaries.

Great.

Had a market had I'm it.

Luckily under our control in China on the more people coming back well with Bulkers no chance to enhance membership retention.

However, due to Jim baseball of as being though have online.

Are you being goal for mining agriculture.

Which youre right, there and important role membership signups.

Oh, all retention ever make the adversely impacted mynba.

And a Japanese M&A I really have suspended relief in your absolute since late April.

I had important okay, all right assuming our.

As a color.

Pardon me, if and preseason page six Asia.

We're currently like 10 large.

Got it if overall impact and candles provider filtering that addition for all the look of subscribers.

On the other has the AR increased during the call center.

This was mainly driven by the aforementioned outdoors in offering or at the school.

Oh, I'm, sorry, I'm, the pruning tires, and that's happening promotion activities as well I stopped after that I'll give that number.

Number peaked in the middle stuff was called her maybe well we planned to launch our more crowded package call it as Dan.

Memberships so.

The at Stendal membership membership well.

Entitled members number a wide range of Upregulation net premiums are with it.

Including what well there are.

The most of Jamere Apple.

As we Oprah and.

Right well, we do on the multitude edge without additional chaps.

Tool.

Our class of dealer suing multiple terminals, including the mobile devices Hamblett.

Internet TV so on the other gives players on the sweet.

Integrity to content offerings over that action Golden membership.

Fun membership.

Sure sure membership.

Our membership and that's part of membership.

Moving onto all advertising business.

Well I worked typing industry if it appeal.

How do we.

Hi, dynamic cost of feedback in mining industries, which in turn at workplace.

Impacted the all other we're happy with it as a result, our overall I'd love to tighten granules softened.

Got past call her.

Looking ahead, given the challenging by call it.

You called them now and the ongoing growing up or impact.

We expect to that fuel to and the full year well.

Well still be and their prashant he'll tool.

Revenues for the <unk>.

Lastly sequential recovery.

Yes.

Well you some year over year.

Partially I love that some of our variety shows will likely be pushed out to tools, we all human fuel for actually our protection program.

What's delayed due to the permit.

Not worse as we remain cautiously.

Opt in Midstates fall out of our pricing business as we saw advertiser gradually with all their accompany this and that is building out as funding.

Well continue to extracting all advertising protests.

Our diversified content offerings.

In the market outdoor has inclusive optimized arc was done incorporation.

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Potential Korea bonds at all.

Now turning to the content.

During the fourth called her we continue to broker or do you think there on the or north hunton by enhancing all im not work.

Section popular here, we launched.

Oh population popular content titles, so capture of the logic.

In entertainment demand during the offerings.

Which allow us to maintain our leading market position on the began 2010 here I'm a strong routine.

Our call to you to you like to your question would you after a more scenarios.

And the early shop both.

Dominated the market you in terms of whats called her in terms of we do deals apply in seating peers.

For drama Aerials, we launched several blockbuster titles as well.

Either or is not part of that hurt deal on the out equal.

Our platform, we kicked off pure wannabes, who is really as all.

No. It's on a final either of our Parliament, which was a tremendous I started.

This highly popular comedies.

Perceived threat.

Right of China.

Built by over 100 or on the fixed pay nearly Pete user.

By the time, it and now what our among base over some pick for me.

Well subscribers.

We also launched a number of or no drama, so rough gildan Hawker, including the pack table tennis.

R&D of hot.

Oh subside.

Look rich ruler.

Our young custom cereals.

The last two mines.

Our goal in mind.

Almost since Thats, our laws on the Winkler begonia I liked and materials.

Which are all quite popular among others.

Well why you show we continue to lead the industry. We are highly innovative so do the confidence lumps that you made much all highly anticipated or local world haven't show ideal producers Threed shoot me on your arm.

Attends ought to be another multi it isn't it.

It broke the nice all the ally.

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The night Garden bar in all come to know popularity in that I missed that I knew that part of high well, where I pay shows.

Overall for the first time, we added international Labor will all show by Weightlifting leaves us a membership of the global and that session pop or black peaks.

While I'm sure.

So what's the semi option years relates the in China and not worth it.

Oh worth it.

Well it tends to.

I have become a hot topic on whereas the social media afore twice offensive in reality show, including at the airports is them during the quarter well, it's ramped among the top or if you scroll through out it okay downstream, though.

In addition to professionally.

Deals content, we are also leveraging our strong platform and the collaborative.

It's also to enhance our content ecosystem.

All comes into like away continue to grow as we empower all content creators.

Integrating them into our ecosystem.

Driven by the holiday season and watch that.

Right shelter in place policy into while a number of internet's drummers performed quite well and they're all revenue sharing program.

For example, I have fallen for you.

So what you might see internet gamma adaptive trial.

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Ikea literature, a novel become very popular under both the.

2000 bar in the popularity index that they after its launch.

Historical high.

In as password.

Other internet job last week goal.

Sean Sean shop on do you have also adapted from Hobbs Ikea later, which are Norwalk quickly generates over arm to solve them, meaning in revenue and that one meal.

RMB 220 meeting in revenues under the revenue sharing.

Yeah.

Okay.

The parallels that sets of blockbuster alone I'm lumps Youre confident.

Demonstrates our strong cover our view of content distribution and monetize leisha that enable all kinds of content to reach targeted audit an agenda or does it.

Our platform also our clubs.

Switch a model as having a increase insulet positive impact on upstream content creators and that.

It help people from.

No its work to us what's your cycle that.

You can see wise and better content production.

For the second called her.

We have a very strong hunton the pipeline, including matriarch Thomas aerials.

I think we've seen all tax shield for tools property.

And the being true love your content.

The eight means two children and the love.

Lifetime.

Actual as well as our multi generational whitish so.

They are seasoned tool water together.

That.

Built it on April 15th.

New.

I'm trying to the lifestyle outages, so somewhere so stop shoppers want it turned out here.

Others.

With content production back out and that.

That means into late March.

Gradually recovering worse than normal that war and the short term uncertainty.

Future pipeline coughed up either.

That make it speaking Ali.

On April.

Fit that cannot television drama production industry Association and Yup capital, we do on the TV program producers Association.

John today.

The owed to us element.

In DRAM or a movie comes in the producers to carefully controlled production costs under challenging environment caused by the from the world.

Fanatic this follow.

The arch is not yours or regulation.

Even with no that's not a reliable actors I'm actually it is built in 2000 and the 18th we believe this rule that lagoon.

Later it impossible.

Our government authorities as well.

Industry Association, well sell rociletinib older.

Active awful continent production industry and the brotherly deals comes into production costs.

Moving onto a knowledge.

As a public technology based entertainment company, we are committed to providing yields are you also speed in rich content on the pruning Bill.

If parents, that's when you'll technologies are the water technologies et cetera.

Hi, its are driving force behind all use.

Thank you the entertainment.

While enabling us to wall not working farms.

For comes into play Ace and if you should model.

Monetization.

We recently introduced a multi perspective watching low in all self produced over RFP. So I hope it's hard to pursue.

This new feature empowered to buy I see if they are under those reaching technology.

Allow users to for milk senior slate watched about performance of the overall 100 opinions from a view of the whole stage.

And our separate deal that focuses on the our favorite screening.

Creates a more critical milestones on the immersive wheel, we own inspiring.

And that can deliver more treatment.

Performance and Ohio mid to low devices as we optimize the however, given his of IP video player for Pandora adoption.

Leveraging our long term flourish and everything.

At retired in.

Interactive video.

Acknowledging we also released a barrels branching plot.

And for our each arm I Huffman see them fly.

Based on the entire actually we do guidance, we introduced last year.

With 16 branch all realize that at least.

Two numerals deeper understanding.

The entire active now portion of this comedies are.

Uh huh.

Well come out.

Audience.

During its right.

Over.

Nearly yours watched of interactive content with over 100, there are no water Neely.

Interaction taking place in total.

In the Ings, our active with your content what are strong.

In addition to our innovative almost no content offerings and that greatly enhanced user engagement and the signal.

In conclusion.

They have with solid progress being made during the fourth quarter if prices are challenging environment.

On April 22.

Celebrities that Tencent and they worse array of off on the.

In the first and.

Decades of our history.

We have pro.

Also as we started from.

That's correct and nickel into our leading entertainment.

Tom.

Among.

Amongst ourselves.

Competition.

Absolutely unfold all that can do that hit well continue to solidify our leadership position.

In the online entertainment and industrial by leveraging our.

Tyrer Lyle.

I already know comes in the production on the knowledge in.

Innovation.

We are expanding subscriber base.

That worst acquired monetization better control the content costs and a more.

Mission lines to commit comfort relative environment, we believe we well well position to capture the appeal to our growth opportunities on the continue to build our entertainment and you'll numerous we'll use ours.

With that I will now part of heart, which I don't know goal of naturals.

Good morning, everyone. Let me go through all financial highlights for the first quarter of 2000 Fund Archie total revenue were RMB 7.6 billion up not some year over year membership service revenue for the first quarter, what RMB 4.6 billion up 35% year over year. The increase was primarily attributed to the growth.

I think the number of bargaining member driven by all appropriately on content and increase under tremendous demand during the Chinese new year under the current lighting Botanic.

Paula Underpaid and service revenue for the fourth quarter over the RMB 1.5 billion down on a 7% year over year, primarily due to the churn your macro economic environment in China related to the about refrigeration content distribution revenue for the first quarter was RMB 602.8 million are falling arpatepe.

Yeah, well year, driven by the increase of high quality content, which you would have distribution cool several platform during the quarter other revenue for the first quarter one.

The 875.

9 million down 9% year over year, primarily due to a soft performance doesn't behave like partially offset by the growth in game business moving onto the cost of revenue our cost of revenue for the first quarter was RMB 7.9 billion up 9% year over year permanent due to the increased content cost this quarter.

Content cost for the first quarter, well RMB 5.5 billion up 11% year over year, turning to the operating expenses as DNA expenses in the fourth quarter or what RMB 1.3 billion up 15% year over year, this or permanent due to the high marketing spending for the Archie apps and the increase allowance for doubtful.

Due to the carbon lighting pandemic.

Oh are expected in the first quarter was RMB.

607 to 8.1 billion up 13% year over year. The inquiries were primarily due to our continued investment in R&D thought operating loss in the first quarter was RMB 2.2 billion compared with an operating loss of RMB 2 billion. The same period of 2000 lighting the opening a lot of margin for the first quarter one.

Well in life and compare to opening lost margin of funding our selling the same period last year total other expenses in the first quarter, well RMB 628.5 million compared with a total other income of RMB 211.1 million during that period last year the year over year.

Our various were combined result of surrender rate fluctuate UK RMB on the U.S. dollar.

And the increased interest expense associated with our financing activities loss before income taxes for the first quarter will be 2.9 billion compared with a lot of RMB 1.8 billion during that same care. The last year income tax expenses before the first quarter was RMB 4.8 million compared to.

Income tax expense expensive of RMB 7.4 million.

Okay. The last year net loss attributable to achieve for the first quarter was RMB 2.9 billion compared with a loss of RMB 1.8 billion. During the same carried off to the lighting diluted loss attributed to achieve ideas for the first quarter was RMB 3.92, compared to our diluted net loss attributable RG ideas.

Of RMB two point.

2.5 to investing period last year as of March.

Sorry for a total finally, the company had to cash cash equivalents restrict cash and short term investment of RMB 9.9 billion turning to the second quarter 2020 guidance, we expect.

Total revenue to repeating RMB 7.25, billing and RMB 7.7 billion to present, the increase of 2% to 8% year over year. This forecast reflects arches current no preliminary view subject to change. This conclude our prepared remarks, I will not come to the telecom operator open Tokyo net thanks.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session.

If you wish to ask a question. Please press star one on your telephone keypad and wait for your name to be announced if you wish to cancel your request. Please press the pound or has ski piece ask questions in Chinese first and then translate the questions into English and please ask one question each time.

And if you have more than one question you may go back to the Q.

Your first question comes from the line of Wendy Chen from Goldman Sachs. Please ask your question.

Oh, Okay, my condolences relatively easy penetration.

Well now what that leaves you should come to Delcam complaining.

No I appreciate it and Jim.

Great. Thanks, let you could.

Great. Thank you guys how good the only thing and I can tell the chicken can you talk about it. She she can you tell that exactly what he does happen achieve your tongue in cheek actually show you take that can lead to.

Oh, Hi, Jamie. Thanks, Nice you for taking my question is congratulations on the way out and that's actually back at the cotton cotton moderation and so we haven't CCEP allowed us back election, and Oh from both national level in the country level PX.

Moderator for its accountants.

Well I see our compensation blackjack treated collections share some color on whether we had per apoquel price of content to creating this year, so far and in particular, which trauma. We have launched Oh I thought salons apparatus benefited from the attach car moderation thanks very much.

Oh sure Yeah.

Well help we always Arnie Tanya.

Sunday actually one time charter school.

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Hi, Conjure BOP control.

Can I made a commitment.

You may.

Jim what looks you haven't yet we are expanding I have nothing or some general not a thoughtful that you portal yeah sure that.

Union.

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I'm sure churn through open Jan you Bluetooth Jamaat, maybe you would you shop and Jim that go to that you too.

Trigger.

Particularly in January.

We cannot count goes the calc on our no you shop, yes.

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Jason Giambi.

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Yeah random nonpolitical control to on the injunction come up a bunch and you that John mentioned, you bunches, who either giancola industry opinion Beijing.

Jim I didn't call. It you got event.

Good luck.

You shop Ginger.

Hi, Wendy. Thank you for your question, let me refer to reveal the it's hard to 2000.

I change it back in.

Late 2018.

Three.

Enabling us and six major production companies have issued a joint statement and we Uh huh.

Let me to be top.

After after salary to a maximum sandeep I I think 2 million aren't deeper title previously that could go as high as to a.

150 million R&D title, so that has helped to the per episode costs.

Because of the.

Production cycle those impact we will gradually be seen.

Ladies 20, Nike and I also.

Now it's already taking place.

Yes, I caught and most recently the new regulatory enforcement it kind of regulates make further involvement detailed not only to the first tier actual accurate, but also to the second tier.

Got Ya.

Actually it as well as gold production companies, all candle vendor to ask them to control costs.

We believe this will further hop to reduce costs.

Again, because of the production cycle that new glommed of regulation they have impact.

The impact will be seen maybe not.

Good afternoon.

I also want to highlight another factor is up before I previously on the major.

Sometimes it licensed copyright and now more and more comps actually for the top rated content.

Hi, or even more than half.

Content come from ourselves.

A variety shows drama series so the.

Like the price has played a little a lot.

Go in on content costs, more and more of the coffee costs will be impacted by the salary level.

Which I believe.

We will gradually reduce going forward. Thank you.

Your next question comes from the line of Abbey Life from Bank of America Merrill Lynch. Please ask your question.

Good morning.

Sure.

So when you.

Yes, thank everybody forgets and.

Okay, well Mannkind Chen or no.

Screech, how can we take great.

Cool legal try me again.

Got you may have some again they fail.

So my question is about the use of time span.

All right the subscriber retention rate trend.

When we get into the second quarter Vietnam, a pull at me. Thank you.

Partially or fully open.

You are performing available for being cautious around too much on on should help to measure.

You should have shut down the bookings yet.

You got we want to champion.

Downhole trigger Yahoo.

Lets users for full but you will fuel.

Take a future useful tool I shall yeah.

You can do not all right. So that no I know you sharqiya.

How do you think your final question, yes, you're correct that entry into April and May we have.

Type basketball free.

Hi.

Hi.

Although average per capita level the.

Declined that much not totaled.

A declining arqule for our membership.

The retention rate has some impact as well and as a result the.

Not number or did not ask lumber Oh. It also has some.

Not to impact.

Thank you.

Got it thank you.

Your next question comes from.

Sure Yeah seats degree that kept Chen.

Hi, Thank you I'm not going to them. So I don't know valley I definitely see they didn't show what if he was Oh well then what do you should lead to shorten until they are you kidding.

Sure sure. So yeah, I can talk about how should they see it all sure yes sure Oh My God, usually does two key it sounds like you say just short stay warm and that's okay, Oh Gee two system Chemokines Uh huh.

I guess is treated the entry shorts and that took us through he quit might be more consumer do follow what should I find yourself. Your meal short same day, you see Ocwen College, what do you didn't seem to should be tell a little quite tight suky.

My question is given that the late.

And the shorten a school summer holiday this year and overall travel sentiment.

Also in that the directly impact that Oh, my God I called it my team. So how has that changed of overall variety shows that the TV drama launch timing.

Any difference this year versus a pre this summer.

Any traction for the advertising sponsorship on this show thank you.

Sure Okay.

Well, let you want to and hunting you're not going for sure.

Yeah, Yeah, no sure familiar food young large here she Paul Bahar, two harsher Hall number I know one cultural hall from Josh its unions you control Yeah, B one how many.

That's true.

The way, we see what should.

Sometimes I enjoy anyhow I sure Sweet Junior I'm not sure he will be on uniform. She thought you should yeah.

That's true when they're driven by.

So you got Penguin.

Hi, Josh we wish him the ideal for general Yuletide, Johnny shutdown radiant.

Please check some yoga health it warmer than they would be banja come challenging Asher should you have weakened.

She has yet.

How does your thank you for your questions I feel like we understand the this year a university entrance exam was delayed for I'm not a delay to the getting on July and the practice in China. It the other good dude.

Summer holiday will come after that.

And that does not sure enacted the master will still be gains.

September 1st so that.

We think the summer holiday will be somewhat stronger than previous years.

Occasion, but.

At the time due to the pandemic impact.

He asked me that people will last time traveling at more time for online Entertainment I live is are we think this year or so.

Summer vacation performance.

Industry will be a stronger than previous years, not the impact will be shorter. Thank you.

Your next question comes from line of Ella Ji from China Renaissance. Please ask your question.

Hi, Thank you.

Oh, that's not how can you flesh it out I'm talking about it.

Oh.

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I see data should come off I hope I'm guessing hotel in New York one Okay I'm in a them then it's only she actually in order to really get moved off but it doesn't want to open in order to among other things I see you before that showed that well get.

Okay.

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Okay. Okay.

Yes, they did I catch up on the other she choke yep Yep, Yeah. They don't get me down incrementally in Washington <unk>.

So nice clinical questions relating to the membership.

Growth Oh actually doing virus and then job afterwards, I guess the wonder what's left in the company has learned that's still a big opportunity and they're going forward in order to Greenspan Mall, you ask Dan that increase more members.

What are the man that's again on the election that the company would like to follow and then secondarily relating to the other revenue I think I'm a combination of back Oh for multinational Brent there's some weakness in sponsorship at a at global pandemic.

Hi, I'm Crazy I, just wonder if you are.

Situation here. Thank you good day.

How about just yet or channel.

Sure. So I don't know you pull up younger sure of Oh, Yeah. When you are familiar with RG 100 onward, and Oh wait I know that lump sum hotline.

Oh right Jamie.

Following up on that may or for her shopping.

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Hi.

Hi, Thank you for your question I will answer the question for you. There are times, then I don't have you first and I will defer pattern for membership to our SVP of necessity.

Uh huh.

Got later for all the users including free users.

Our paid member we'd have the dots in Uh huh.

Two years, though.

He was a talent has stabilized and or into a table development stage. So there aren't behavior, it's a pot.

You know it's quite stable. So they usually they are the consumption there are times that will easily.

Chinese holidays.

It's actually wanted a pandemic outbreaks out increased as well, but because they use our topic how.

It's not a savvy so we think we.

Predict those views our patent will gradually come back novel after not Pandemics Ah was contained.

Got to your second question for advertising, we Hot Oh, I recently on a dramatic decline the sell for axles for multi clients how quickly being recovering.

The cells for especially sponsorship <unk> advertising has quickly coming back to a level that close to.

Our pre packed not.

But for.

International clients, because because of their decision making costs out longer than domestic client we.

I think we actually they are a pattern will come back.

To normal maybe two three months later that dramatic line.

Thank you.

But I don't know where nexus.

What I was also exactly freedom that he should didn't want to huh.

And since you should do you share you know, what's your view on IC grades I shouldn't that whether 2000 question. So you'd have will be so this is Dan that's even when you put the easiest I'm not sure Sun life Sciences actions on one hand de Minimis typically when you move them can you just who have been wishes into sending money or will you know what thats another option.

So I couldn't agree to respond to.

To this a woman that you didn't you Jim song of the whole door, you and I see like engine for tool that losses on zero sum on that what were they should be disorder.

Oh got some hot and it's not a we also have that's up some of our member they are transferring the our offline.

And of human consumption such hot there.

Go to movies to watch difficult theoretical field, but.

Pandemic operate the switch to online to watch this.

Especially during the outbreak Fury, we launched actually a lot of.

Online movies like good online content I think some of those portion of user they may say they might be.

Switching more to online consumption for this.

In content.

Thank you.

Your next question.

Thank you. The next question comes from the line of Binnie Wong from HSBC. Please ask your question.

Uh huh.

[laughter] 20 times on somehow she there's a lot appealing eight cents you guys kind of catching on what kind out like you can be as I'm sure you'll actually see <unk>, because I guess I'm on my not wish I won't you should taper shuffle in wages should take a each in that Michelle hi, She shorter she joined takeover seems just a woman doesn't make a pension monetization nationally.

Ill hop physical call here, what keeps you become not yeah, what kinda argument that gets a press release woman Dolce occasionally it that John Deysher went away I get machine and she wants to diversify what might the judge attention to make a monetization streams and then that can help so what that sounds like a shortage of what they heard it you get used to.

I just didn't you were talking about you see a tissue just your job title for the coming out my notch, what I, just think Jason Shandell Szabo, well my pleasure to export even assuming you can't isn't the content.

Yeah, what went into interest you're going to show that we're making am <unk>. We can you got your sort of moving out the answer is yes.

Okay.

Okay.

Oh, sorry, let me translate my question in terms of the monetization here, we saw that make it comes out the total revenue folks it's too early because they are solid and then is that.

Related to me because of the advertising growth slowed down due to the corporate 19 or is that essentially some structural reasons that we should be aware off.

Then I think the press release, you also mentioned Oh youre niche that came about the fact rationalization of our monetization schemes I just wanted to understand I'm more in terms of Holly acquisition in that and in terms of given that the subscriber number has also been going nicely I think all they still relatively soft.

Thank you and also with Debbie or any color in terms of our subscriber target as well. Thank you.

But what will you that Oh, when I started my personal.

John.

You can drill hole GE learned.

You know for sure.

There's no doubt onetime smaller young talent pool, which means you bought.

Tangential bunker I'm sure Tom unknown, Gigi Jim kind of.

I should just yes, hi, Tom.

Oh, so when you just because I know you jump you what's wrong with drill Hall English.

Yes, sure contribution of hydrological only to John.

Yeah, just you got.

John enough for.

Number one.

When you trade unions, which entropic jump that don't yard. So what do you do it will be crucial that your shop magician.

Regional drill hole, you can change out Oh God bless you at each of these young in Taiwan golf.

No problem that you.

You want me and whatnot.

Oh on all that you fly shut off Weve actually jentsch awesome.

Okay, our sure.

She digital media I sure Donald.

Oh no formal from your engine.

Colonialism aren't you do a multiple leisure geometry, and she loves and you go where some people. So we got yet you Jim that you've seen the engine.

I should yet.

Hobbies entry for your question I will comment on day on the Oh.

Membership first and also the advertising and then we'll.

His comments I think it's a normal patterns that you know during the pandemic operate people what too much entertainment So I hope.

For cheap if that people had somewhat hard I'll say a too much Alliance entertainment. We observed is also a in previous years when Youre Olympic games. After the Didnt look over people, we all the time.

What she.

Consumption will decline so that that that's the first thing I want to match.

Our novel pageant, especially when people, graduating tying back to work and kinda back to school I think it's really very natural for people to video online.

As a result.

Got our membership happiness.

Oh fluctuation in terms of the retention.

And secondly, I wish I actually for brand advertising.

Our revenue.

Clients a major reason is because oh the.

I would highlight willingly.

Two.

For outstanding I Love your budget for I had an allocation has been had some impact because of the.

Michael E com because of the.

Hi, and another reason if some of our major account has played a bigger content.

I have been pushed out to Q3 two to four from Q2 Ah that's understandable because of that pandemic <unk>.

So you know because of the content like that we will also have some negative impact on our advertising.

Thank you.

Total.

Morning.

Oh I taught also cuts to through a different angle.

No I'm always talking about the supply demand they use a key and to understand is a business trend up for <unk> for the same caught a definite because of this like say probably nitin new situation, you will see challenger all like decreasing demand though.

Second quarter.

Also.

I think if you're talking about like structure issues. We are facing the next few quarters beside us it's like see onetime Javier situation, yes, there'll be some CIJ factors, we haven't talking about for very long time in the past few quarters, we chase I can tell itself, which actually dependent.

The supply.

And of our platform actually I think even in the previous question Ela asks about like through the profile of the paying subscribers steering the Elizabeth I too would require like the decrease in pure right.

And I think more even pardon if not the profile for those acquired worth is because.

And most of the case the free because they have the payment.

Decide to the balance of subscribers, so ciber and similar situation here I think if we continue to you bet that you are already into contact continued to improve the quality of our human content.

Definitely you were trying to do the pattern here, so lets back to the normal let's back up to the basis of our business. We were still both on the go to go we have been.

Focusing the past few years, we will continue.

And technology reinvesting tech larger the Oregon content like my view for these like see what are your call like structure or onetime case factors. Thank you.

Thank you. Thank you that's very helpful.

The final question comes from the line of Thomas Chong from Jefferies. Please ask your question.

Hi, Good morning expense management for taking my questions I'm I've a question regarding our the timing on profitability.

That E content cost, we are seeing benefits coming from.

D. cap on the I test compensation and in Q1, Oh, we have seen that deep was Oh divorced loss is actually are less than 300 median allenby given the fact that more and more.

Benefits on the content cost will come in China, Taiwan, and trying to 22, Oh can management give us some color about a in terms of the so it was probably try and all the timing of profitability, especially if one each functional what does he went well they're going to issue equity.

A woman so much a whole waste about breakeven cogent she didn't need I suggest you make handball automation, but probably in that kind of the industry, but you didn't say oh, sorry about that holiday you got Tricia. Its you know how a woman GP that Q1.

No we didn't see us I wish I eat or they get all patients. So do you find yourself reliable than say the most Chicago commodity Hi, O US unless you can you talk about Oh, yeah, I didn't need us agenda, I, especially want to jump.

Okay. That's all them US access it's in line you question. It's a it's a very frequently asked the question a six also.

Well be exactly the same or the way we provided before because nothing actually challenges for the top foundation of there's been is.

If we can I just mentioned, we can still improving the quality of our within the compound we have thea inquiries of all of them off already content. The in for the mix authority in content.

By by doing that definitely will extract more paying subscriber on our platform increasing the margin increasing the revenue.

And no even measuring the tablet fun monetization models so basically.

[music].

What do we should the folks I'll is not a timing a timetable, but again, we should focus on the quality of hours in contact and bye bye.

I mentioned before by decrease the content costs as percentage of revenue and talk about like 50% to 55% a U.S.C. I definitely a a acceptable profit margin in the next few years. So.

If you still want to know what exact time table at what I can tell you. The I would exterior maintain though are going to it appears you over this year's margin level or the operating loss level. So give you some sense either way they like the we called probably Nike mm.

Situation the management Ostia keep the old you know all log off the long term development I was hoping is well still confident on our path to profitability. Thank you.

Thank you.

There are no further questions at this time I would now like to handle conference back to today's presenters see may continue.

Hi, Thank you all again for joining today's call you have.

See you break.

Thank you.

Thank you, ladies and gentlemen that does conclude their kind of friends for today. Thank you for participating you may all disconnect.

[music].

[music].

[music].

Ladies and gentlemen, thank you for standing by and welcome to Dai Ichi first quarter 2020, <unk> earnings Conference call. At this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session at which time, if you wish to ask a question.

You will need to press star one on your telephone. Please be advised that today's conference is being recorded I would know like they had the conference over to your first speaker today Dahlia Wei. Thank you at least go ahead.

Thank you.

Hello, everyone. Thank you all for joining.

Core.

The cost is resolved.

Oh available.

Yes.

I see dot com.

All the costs of the on Dr. <unk>.

Okay.

Just a delta.

At least.

Okay.

Well good overview.

Hi, like Oh, My Celgar will go through the financials and guidance.

After their prepared remarks, John Walsh John comfortable.

Okay.

Before we see please note that this capacity will kind of people.

I'm going to be probably.

<unk>.

<unk>.

Well.

John.

Well it appears that may cause actual results to devote majority.

Potential that.

Yes.

That's not limited to the awful lot public funding.

I guess I'm, not I know peak obligations.

Except as required.

With that I would not have to go over to Doxil. Please go ahead.

Hello.

<unk>.

Well I'll call her problem.

We do you live or fall into the involved.

You are.

I would try to engine on though like is it anymore.

Well I mean.

On the world.

Q1 revenue.

My first year over year <unk> on <unk>.

On the feeling.

Well first of all users.

On the numbers.

Oh, sorry.

I was wrong.

So called.

I would like to respond so all of <unk> for their dedication.

All right well swaps people fun.

I'll be happy.

I bet you watch us for their when she was football.

As a leading and her team at the company we've continued to appeal.

Our strategy that focuses on older Invokana and production.

I have knowledge.

Lisa.

And the in the meantime for.

Social responsibility on that contribute to all of.

I mean on pending outwards why inquiry.

By introducing lumber.

I'm not human.

That's it for two years.

The Oh hundreds of millions of yours.

Oh.

Our Mike who want to fuel our membership isn't it.

Well placed to the robot world.

Both the number of crops progress on the membership revenue Jordan's off what's called.

Total subscriber.

118 on not nearly as much.

Your first of all than on the time here.

Oh, I'm, just 3% year over year I'm not a d.. So we all neely along pretty well.

Walter.

Subscription revenues grew 35% year over year on <unk> for.

Really.

This was driven by all continuing efforts to introduce more premium content as well.

Sorry.

Well, it's useful and her team, but during that Chinese new year holiday on that problem.

All right.

During the first part of premium culture, and the continued to drive a vibrant growth.

Okay.

Richard Drama Mockups Congress included five Toughmet the season fly actionable.

Under the par another par uterus, yeah on the junior Amar there.

Oh, the yard I haven't even flat or how the dog what spotlight, okay I merely however leasing to go first being.

On the over.

At 74 million subscribers by that really offer.

Oh the meal.

Let me elaborate open door lock box blockbuster.

Well again demonstrated strong up your overall premium content to ardent Oh.

Demographic groups.

Oh, Hi broke world.

Overall, driven by increased Thingworx deal comes into the overall.

You've routing relatively low guardius yet.

Yes.

Yeah cuisines drama that.

A lot minutes from <unk> <unk>, you say on the pump then it's far.

Well I hoped for movies and Lisa.

Over the past the year on membership isn't it.

Primarily driven by growth in the number of subscriber.

Awesome spot work on rich.

Nicole.

We are involved approach new.

Well both.

Bicuar number and the arm.

We ask growth engine, we further optimize all memberships. It then.

Called her back.

Do you see membership you'd call.

On the other milici.

Last you piece and bundled membership yeah. Lisa we also continue to overcome spot worse or access to additional I suppose well a premium challenge.

Which is becoming the move along for the industry.

So far RV assets auction I'd.

Lots to over a major problem.

In closing I happen to be those line.

The words ruler.

<unk>.

The last two miles extra plant and they'll be Terra gonyer.

Yes, well sure at home.

Which has been well if device subscribers.

Overall no problem upgrade.

With volumes, even the wireless adults oh shelter in place.

On the upside relative to the.

I will start of yields on the time that if we want.

Hang Hobbit Big recorded Baxter has that you've had it subscriber growth people while.

On slide at home Joan.

Hi damage.

Nevertheless, they hoped the dynamic called absolute.

The fact that all membership growth may be accelerated.

With a pipe the market.

Hi, I'm it.

Luckily under our control in China on the more people coming back well.

Of course voluntarily tool in half membership pension.

However, due to delays as well as we will have on line.

I'll be though for mining.

Okay.

Which you overlay layer and important goal membership Signups, Oh, all retention Abra maybe.

Play impact it maybe Bob.

Yes, I haven't me.

Upended releasing youre absolutely.

Late April.

And important okay, all right fueling our.

As Uh huh.

Pardon me if I.

Please see page six Asia.

With parents and like $10 a gauge it overall impact has handled provided filtered by the addition of.

Subscribers.

On the other has the ARPU increased absorbing the calls her.

This was mainly driven by though.

Oh, what bench.

My first offering our asset.

Well I just thoughts on the Permian tires, and that's happening promotion activity as well I stopped after that I'll, let him address number.

Number two.

In the legal stuff, what's called her. Meanwhile, we planned to launch a more privilege package call it as Dan.

Memberships so.

And then the membership membership well.

Hi holds members number a wide range of up regulations on their premiums or red.

Including what.

<unk>.

Amongst our general and so.

Last week Oprah and.

Well.

We do on the multitude edge with additional.

Yeah.

Tool.

Okay last of the learning through multiple terminals, including the mobile devices handle it.

He talked about TV sat on the other displays.

And that sweet.

It would have Richard content offering over that action gold membership.

Fun membership, which are membership we are numbers on that popped membership.

Moving onto <unk> advertising business.

I think that's if it heal.

We are.

Hi, Dundee coughed up feedbacks, even by the industries.

In terms of workplace.

Impacted at all either work has to do that.

Resolved all overall I'd watch I think from Boston.

Got Fox called her.

Looking ahead, given the challenging Michael.

You called them back on the ongoing Arlo wire.

Impaired.

We expect to that.

Yeah, well well still be I wonder archrock.

Tool revenues.

Lastly, sequential with hot spot.

Well, you're all year.

That's right now that some of all righty shows will likely be pushed out.

We own eventual for actually our production profile was delayed deals with a permit.

That works that we remain cautious or lack.

Opt in Midstates fall out of our pricing.

As we saw outdoor cats are gradually.

Are they are accompany this.

It's still being out of the spending.

Well continue to extracting all the work in progress.

I work the father content offerings.

In the larger otherwise I seem to Osha optimized okaloosa incorporation.

Hurt pent up potential.

How rare Thunder, though.

Now.

So the content.

John what's called her we continue to focus on.

I think there on the or no countered by enhanced all.

In the large production problem. It we launched Oh population popular content titles, so capture of though.

In our team and what the moms during the offerings.

Which allow us to maintain our leading market position on that began 2000.

I'm a strong 14.

I'll call teams, who you'd like to your question would you opt out more scenarios.

Our initial both.

Well I mean acreage the market you during the past color in terms, so we do deals.

Why do you see nprs.

For drama Aerials, we launched several blockbuster.

Wow.

Either orders not part of that Brookfield on the out equal.

Our platform.

Picked all pure wannabes, who really Oh.

It's on the final Oh I Toughmet.

Which works out there.

This highly popular comedy.

For the App.

China.

The old by over 500 on the fixed pay nearly Pete.

By the pot.

And now what our among based over 70 walk me really.

Well subscribers.

We also launched a number of or drama. So Rob you open the call, including the pack table tennis.

R&D of hot.

Oh subsided.

Fair.

Upwards ruler.

Yes Hello.

Yes.

The last two mines.

All my.

Drama.

On the wings are gone you liked.

Which oh, hi, popular among all of it.

Well you show, we continue to leave the next week or highly.

So I feel confident lumps that you made much all highly anticipated or no go.

Haven't show ideal for fuel source.

To be ONEOK.

Tends to be another multi its isn't it.

It broke the nice all that lie.

No.

The night called the bar in all comes in the popularity in depth.

I knew that part of high well, where I pay shows.

Okay.

The first we added international Labor all show by you wait the if you leave a membership of the global.

Session pop or.

Pete will be while I'm curious.

So what's the semi opinions relates that you trying to I know worth it.

Okay.

Well it tends to.

Become a hot topic on.

Social media.

Fourk Twok all fashion.

Thank you show, including its worth 50 them during the call there well it's ranked among the top or if you scroll through out at oak upstream though.

In addition to professionally.

For deals content, we are also leveraging our strong platform and the caliber it yet.

To enhance all content ecosystem.

All companies like away I mean, you will grow at the park all content creators.

Integrated into our ecosystem.

Even by the holidays.

And what's that.

Brad shelter implies policy into what a number of.

Thats drum rose for the pie as well as they're all revenue sharing program.

Paul I have fallen for you.

So what you might see you cannot adapt to the problem.

Ikea literature on all will be called by Republic or on the books.

They solve them bar in the popularity in that that day after its launch.

Historically high.

It's passport.

Other Internet John.

We go.

Sean Sean Sean do you have also adapted from Hobbs Ikea leads which are norwalk could generate over RMB, two fold and moving in revenue and that one meal.

R&D to today's topic, neither in revenue on the revenue sharing.

Okay.

The parallel efforts or lock them up to alone.

He will continue.

It's all strong.

Of content its fuel.

It has the ship that enable all kinds of concepts will rips targeted audit Adam that Daimler will determine our platform.

So I'll stop that subscription model as having increased insulin pumps to impact on upstream comes in the craters.

Yeah.

It help from.

Work to us what's your cycle that.

In sum wise.

That's where content production.

For the second culture.

We have a very strong pumps in the pipeline, including make sure Tom what stereos happening.

We all tax shield pools.

And the being a lot different.

The eight new tools.

And the lobby.

Lifetime.

Hey, Michael as well as our multi generational whitish goal.

They are seasoned tool water together.

Back to build it on April 15th.

Neil.

How did they like the outages so far more the shop shuttered, Colombia among others.

With content production back out and that.

Right and you see late March.

Gradually recovering worse than normal level on the shop term uncertainty it.

Our future like cost up by though.

At that mix it speaking away.

On April.

The channel penetration drama production industry Association and.

Capital review on the TV program producer of filtration.

Drawn to it.

Uh huh.

Watching a movie comes in the producers, who carefully and total production costs under.

I haven't engine in warm up the Atlanta from nowhere.

Yeah.

Fanatic.

Hello.

The arc is not is rapidly.

You mentioned, all a salary liable for actors and actually if you field in 2000.

He we believe the rocky all that.

Later it impossible.

Back arm and apart.

Well as industry Association Ralph sale.

Third hedge older.

Practice of comes into production industry and the flow there'll be a deals comes into production costs.

Moving onto our knowledge.

As a public technology Beth I am looking them company well make it took for widened yields are you'll theres a bit in rich content that pruning deal.

A parent.

You'll kind all other water technologies et cetera.

And if that's driving for the high the all good.

Emerging that.

In April.

Well not work.

But for content creation.

On the monetization.

We recently introduced a multi perspective watching load in all self produced over RFP. So I go towards refers to.

This feature empowered to buy cheap.

I'm going to reach and technology.

Allow users to famille team here, what's the outperformance of the overall.

Opinions from a view of the whole stage.

And the appropriate the deal that focuses on the are they rates between.

Creates a more critical milestones and immersive built Wheeling power.

On the labor.

Treatment.

Performance on Ohio.

Hello device.

We optimize the hover derivative of IP video player for Pandora adoption.

Leveraging our long term loan ratio.

I have to prototypes in.

Interact to be too.

Acknowledging we also really.

Branching flopped content, all each arm I pacman season plot.

On the entire to be dual guidance.

We introduced last year.

With 16 branch all realize that they.

Two numerals deeper.

The entire active.

A portion of this comment it's our.

I have few well come by and audits.

During its run.

Over time.

We are us watched of interactive content.

Okay, and I know, what nearly half of that interaction taking hold off.

In the into the active regional content, what our strong additions will all in low risk to our original content offerings and that rich.

User engagement and uptick in it.

In the group.

They have with solid progress being made during the fourth quarter despite challenging environment.

On April 22.

We had solid routines that tencent and they were right on the.

The first.

Decades of off history, we have pro.

As we got it wrong.

That's patch and that go into a leading on entertainment platform.

Among.

Amongst ourselves.

Competition.

Absolutely unfold all that can do that hit well continue to follow the apply our leadership.

They shut.

In the online timber industry it by leveraging our.

Tyrer lives order no comes into production on the public knowledge.

Innovation with all pending.

[music].

Got worse the clock, but it has the ship tighten are controlled the continent hopped on a more recent lives to combat comfort that tip environment. We believe we well well position will capture of the appeal to our growth opportunities on the continue to build Oh and the team.

And you'll numerous for users.

With that I will melt shop, they'll call two shots on goal were often actuals.

Good morning, everyone. Let me go through all financial highlights for the fourth quarter of 2000 fund.

Total revenue.

The 7.6 billion up last Sunday already a membership service revenue for the quarter, what RMB 4.6 billion up 35% of yet where you have the increase was primarily attributed to the growth of being a number of Barbecuing member driven by all appropriately on content an increase on determined that the material.

The Chinese new year under the current light dynamics.

Oh, and the tightened Soviets revenue for the fourth quarter was RMB 1.5 billion down on the 7% year over year, primarily due to the trying to your macro economic environment in China related to the virus figure issue content distribution revenue for the first photo was RMB 602.8 million are pulling arpus.

Yes, yes, driven by the increase of high quality content, which will fuel distribution.

Several platform during the quarter other revenue for the first quarter.

The 800, a 75.9 million down 9% year over year, primarily due to a soft.

I've been his life, partially offset by the growth in game business moving onto the cost of revenue our cost of revenue for the first quarter was RMB 7.9 billion up 9% year over year permanent due to the increased content costs. This quarter call can cause for the first quarter well on the 5.9 billion up 11.

Some year over year, turning to the operating expenses SGN. They expanded in the fourth quarter was RMB 1.3 billion up 15% year over year, if were primarily due to the high marketing spending pause that the iPad apps and the increase a lower as a pull it off all costs due to the carbon liking that dynamic.

Well the expanded in the first quarter was RMB.

607 to 8.1 billion up 13% year over year. The inquiries were primarily due to our continued investment in R&D thought operating loss in the first quarter, what RMB 2.2 billion compared with operating loss of RMB tubular business Im curious ups with on lighting, the awful lot of margin for the fourth quarter.

Funding lifetime to compare to our operating loss margin of funding selling the same period last year total are the expenses in the first quarter.

RMB 628.5 million compared to where the total other income of RMB 211.1 million during that period thoughts should the year over year batteries were combined result of Schengen fluctuate UK RMB on the U.S. dollar.

And the increased interest expense associated with our financing activities loss before income taxes for the first quarter will be 4.9 billion compared with a lot of RMB 1.8 billion. During the same cared the last year income tax expense is before the first auto was RMB 4.8 million compared to.

Thanks.

Expenses of RMB 7.4 million do the same here the last year net loss attributable to achieve for the first quarter was RMB two point not been and compare with a loss of RMB 1.8 billion given some carried off to a lighting diluted loss attributed to achieve ideas for the first quarter was RMB 3.2.

Hello to a diluted net loss attributable RG ideas of RMB two point.

Two point by two investing period last year as of March.

So the first total funding of the company had cash cash equivalents restrict cash in the short term investment of RMB 9.9 billion turning to the second quarter puts on Sunday guidance, we expect.

Total revenue to repeating RMB 7.25, billing and RMB 7.7 billion Zmanda increase of 2% to 8% year over year. This forecast reflects our no premium or view subject to change. This conclude our prepared remarks, our north Korea Telecom operator open procuring that thanks.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session.

If you wish to ask a question. Please press star one on your telephone keypad and wait for your name to be announced if you wish to cancel your request. Please press the pound or hash key piece asks questions in Chinese first and then translate the questions into English and please ask one question each time.

And if you have more than one question you may go back to the Q.

Your first question comes from the line of Wendy Chen from Goldman Sachs. Please ask your question.

Oh, okay.

Turning to play into Canada, you know what that at least attempt to delco go by email.

No no beginning to see it in some geographies.

Great. Thanks for your question.

Toplitzky they wait secondary telco don't continue consolidating can you talk about it she should.

Well, that's exactly what do you don't talk with it you get drunk drilling activity actually show you take out can wait till now.

Great. Thanks, Thanks for taking my question of the congratulations on the right now.

Actually back at the content cost moderation and so we had to see several rounds of recollection and from both national level in the country level that PX.

Moderated unfortunate content as well at sea computation actually good collections share some color on whether we had seemed to per apoquel price accountant decreasing.

So far and in particular, which trauma, we have launched or thoughts around apparatus that effective from such cotton moderation. Thanks very much.

Oh sure yes.

Well help we always are on yet.

And Josh review on time Charter school.

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Yes.

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Jumped our home yet we all know.

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Thanks for the year on year.

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Yeah, you ended on vertical control do when they use.

Venture into that John Blanchard, you bunch of junk industry opinion based on.

And we call that you got your balance sheet.

Good luck.

You shop, just yet.

Hi, Thank you for your question, let me first to reveal the it's hard to 2000.

I'll turn it back in.

Late 2018.

Three.

Including and six major production companies have issued a joint statement and we.

Half.

Let me to be top.

Add to accelerate to a maximum sandy bye.

50 million R&D per title previously that could go at higher too.

150 million R&D title, so that has helped to the per episode caught.

Because of the.

Production cycle, those impact we will gradually being seen.

Late 29.

Also.

Now it's already taking place.

Cops and most recently the new regulatory enforcement it kind of regulation.

Our involvement detailed not only to the first year.

Actually it but also to the second tier.

Oh I to act as well as gold production companies, all candle vendor to ask them to control costs.

We believe it will further hop to reduce costs.

Again, because of the production cycle that new long of regulation may have impact.

Hey, Matt will be seen maybe not.

The year after that.

But I also want to highlight another factor is.

Before I previously on the major.

Its license copyright and now more and more content actually for the top rated content.

Uh huh.

More than half.

Contract comes from ourselves.

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A variety shows drama series so the.

Hi has played a little.

Like.

Our goal in oncology and cost more and more the content costs will be impacted by the salary level.

Which as we.

We will gradually reduce going forward. Thank you.

Your next question comes from the line of Abby Long from Bank of America Merrill Lynch. Please ask your question.

Good morning.

Sure.

No one niche.

Senior thing Kevin will we get fan.

Okay, well Mannkind Shannon you could kind of heat leach how can we take great.

Thank you want to legal try me again.

Okay give me some young.

So my question is about E use a time span.

Whereas the subscriber retention rate trend.

When we get into the second quarter, Vietnam, Paul Let me. Thank you.

Partially or fully open.

For me available.

Hi, John on Chicago measure.

Good news for Tom shutdown the buildings yet.

You got we watch out yet.

Downhole drilling.

Lets user sure we'll pay you will rule.

Good future useful tool.

We also need not aren't.

Well you shop user.

How do you think your final question, yes, you're correct that Andrei into April and May we have.

Time for both free.

Hi.

China is it although average per capita level the.

Decline that much not total.

A declining.

Also for our membership.

The retention rate has some impact as well as a result the.

Not number or did not ask number how it also uh huh.

Not to impact.

Okay.

Thank you.

Yes. Thanks question comes from feature Yep seats degree ask your question.

Hi, Thank you.

So I don't know I'd.

In addition, what he was.

What are what are you sure why need to shorten and because they need team taking hold your sure sure. So yes. Thank God how sure appreciate all sure yes sure.

Got it usually does who can't push out why you'll see chart that no. It's okay Oh.

Oh, Gee juices, Tony Chemokines OCA.

Okay.

This is GTN terrestrial TV and just keep quibbling.

Good.

Well, what should the quad yourself your meal shortened Daiichi cultural to even think your should be job look why not.

Keith.

My question, please given that the late.

And to shorten a school summer holiday this year and overall travel sentiment.

Also negatively impact that FICA Colgate my team. So how has that changed of overall variety shows that the TV drama launch timing.

Any difference this year versus a pre this summer.

Any traction for the appetite sponsorship on this shelf. Thank you.

Our future.

I don't want you want to enhance our goal for sure.

Yeah, no sure familiar to you entered large here she Paul Follicular harsh real Hot number one the cultural hall from Josh It she ran into cash.

The long companion.

Sure.

Good morning wish.

Sure.

And Tom gradually Hawkeye G.

Please junior Nash, which you wait you on your refers you thought you should yet.

That's true.

Hey.

You got.

Cardiac solution, though.

Yes, John reduction again.

Please check on you look at shelf it warmer than may be banja come challenging fractured should hopefully come.

Sure Jeff.

How does your thank you for your questions I feel like we understand the this year University entrance exam was delayed for a month.

To.

Getting on July and the packages in China is the other good do it.

Summer holiday will come after that.

And the but does not sure Mexican master will do begin.

Our first so that.

We think the summer holiday will be somewhat stronger than previous years.

Occasion.

At the time due to the pandemic.

Yeah.

We estimate that people will last time travelling more time for online entertainment as a result, we think this year.

The summer vacation performance.

In that we will be a stronger than previous years, but the impact will be shorter.

Thank you.

Your next question comes from the line of Ella Ji from China Renaissance. Please ask your question.

Hi, Thank you.

That's that's called 24 shares held on spot and yet.

Oh Boy Oh, My God is done.

No.

Well I think yes, okay. Thank you I think I'm wondering.

Okay.

Gosh, it really no.

No minimum wage import she is not going from Goldman Sachs.

Hi, gentlemen acquisition I know you quote.

Well no kind of no she's out like that.

Okay.

Okay got it Okay, Hello, and good I think hotel in New York Cornell Clintonian Dominican Danny.

Okay.

Good morning, Google.

No it's I'm going to other kids I see that shows that we'll get Hello English.

Well, we contacted though is as you go well you can go either way.

Okay, Okay, Oh, Okay, hi, the Oh.

Just shared ownership.

Yes, I can't find me, although she told you see it lays down slightly down incrementally market relates to that.

So my question relating to the.

Membership.

Gross.

Well actually going direct and then job afterwards, I guess I wonder what lessons.

No, there's no big opportunity and going forward in order to great Penn Mall, you're saying the increase more members.

What are the men Jackie or the election, the company wouldn't like to follow exactly where they are an 18 on revenue.

I'm a combination.

Oh, well multinational Brent there's some weakness in sponsorship at a at global pandemic a increases I just wonder if you asked the same situation here. Thank you okay.

How much is yes or no.

Sure So I want to you.

Yeah sure in long haul.

Sure video without England cared onward.

Hey, Ryan.

I want hotline.

Jay.

So.

Okay.

For commercial.

Oh, well on function in the home yet you do all of them did not want and she's talking.

Yeah.

Ooh.

Sure, Jeff Dayno cheaper than a traditional what you've been offshore.

Jim what when you answered, yes, handler ginger large how long.

International option from college shop at Threadneedle shopping voyage.

Hi.

Jimmy Optometry, yes.

Our entravision quality on how young.

One college.

But these are long haul.

The compliance yet once again that John Bank talked on function.

Yes.

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Genuine Youd JV Egencia, you mentioned Judy.

I'm not sure what do you want multiple firing on all three gold mines yet.

Yes, you hundreds during the June quarter future GDP injury, Loescher domains, yet we will review.

Yes, you are jumping views.

But the long haul.

All been got something about should yet.

You shop.

Hi.

Hi, Thank you for your pattern.

I'm sorry.

For the user time.

First I will defer passion for membership to our activities.

Not much of business.

I will discuss later.

For all of the user equaling three users.

Oh, great numbers, we have looked at in the Uh huh.

Two years those.

Yields are talent has stabilized entered into a very stable development stage. So they are.

Hi.

No it's quite stable so they usually the the consumption there are times that will easily during Chinese new year holidays vacations, especially when it is a pandemic outbreak increase as well, but because they use our patent has.

Exactly so we think we.

Predict those use our patent we will gradually come back novel after the pandemic a was contained.

Regarding the second question for advertising, we Hot Oh I recently.

Decline the film for axle problematic lines, how quickly being recovering.

So for.

I don't hedging has quickly coming back to a level that close to.

Pre pandemic level platform.

International clients, because because of their decision, making cross out these longer than domestic clients we.

I think we attribute.

Pat will come back to normal maybe two three months later on that.

Thank you.

Phenomenal.

No.

Well that was also exactly.

Yes, a lot cheaper.

Fancier she's during your last year, which is you guys you're going sessions with the 2000 Bush and so you look we'll be so this is Dan.

Moving on what the easiest on reductions on life Sciences actions on one hand de Minimis Gabriel Youre levels on Canadian just will happen, which is up 70 miles.

I'm not simple okay.

To this Oh, we'll meet that you do see Jim softness, although you are actually like I mentioned for tool for that losses on zero sum on the what's video games and disorder potential.

Oh.

Hi added that we also have.

Some of our member.

Transferring the our offline.

And with him and conduction flat shot.

The yard and go to movie to what vertical the optical film but.

Pandemic operate the.

Which to online to watch the.

It's actually during these are outbreak Fury, we launched actually a lot of.

All lines will be very good online content I think some of those portion of users. They made today they might be.

Switching more to online consumption for this.

In content.

Thank you.

Your next question.

Thank you. The next question comes from the line of Binnie Wong from HSBC. Please ask your questions.

And.

Hey.

Any kind of thoughts on how she's it's all are appealing eight cents you guys are no joshing womankind out like you did they finish lots you see I should say if I might not work now once you sure type of Shuffle English I should say, yeah, hi, She's short your share choice take ocean shore Mentorship make a pinch and monetization culturally hip hop.

So you can call here, what you should think I'm not yeah, what kinda give and take a a press release woman goes into cash.

Sure well no way I can assure me she wanted to diversify well, Mike just in Santa Monica monetization streams in a decade had so would that sounds like there's got to take your what they hold it you get used to.

I just think we're talking about you see it just shoot you should take before that comes out my notch would it just thinking that you shop shovel sure well my pleasure to explore it assuming you say up isn't the content, yes, I won't go. She goes will show that we're making a only or wait you got your people moving out.

Yes.

Okay.

Okay.

Oh, sorry, let me translate my question in terms of the monetization here, we saw that jumpstart. The total revenue folks, it's still a little bit solved and then a is that.

Related to me because of the advertising growth slowed down due to the corporate 19 or is that that's released some structural reasons that we should be aware off.

Then I think the press release, you also mentioned Oh.

Decade, apart the diversification of our monetization streams I just wanted to understand I'm more in terms of Holly acquisition in that and in terms of given that the subscriber number has also been going nicely advertising corpus Juris itself.

Thank you and also with Debbie any color in terms of our subscriber target as well. Thank you.

But what will you.

Your first bubbled up between shop.

Each of drill hole.

Youre pool to sure through her universe.

Yes.

Hi, which means you what.

Digest, what can shoot Hong Kong Gigi Gen hundreds.

Commercial industrial height.

So when you just you go thank you Jeff.

Hello English.

Okay extra cash neutral impact or each office.

You got.

John.

If you add them up.

When you trade unions gentry.

No yard so what you.

Moving offshore magician.

Regional drill hall utilization.

I don't garbled.

In the U.S young in Taiwan Gall.

So shorten that.

Yes.

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Lumpy arm gaucher.

Yes, you Egypt.

Hi for long.

Almost all shop in shop.

Come on R&D do.

What do these young audience it off and you go where some people. So we got your unit.

Sure it yet.

Hi, Thank you for your question I will comment on day.

The Oh.

Membership first and also the advertising and then we will add his comments I think it's our normal pattern.

During the pandemic upgrade people what too much entertainment I observed.

For cheap if people were.

Somewhat hard optics.

Too much Alliance Entertainment, we observed is also in previous years.

After the kids over people will.

The washing up.

Functional will decline so that that that's the first thing I want to match.

Hi, Jim it's actually when people, graduating coming back to work come back to school I think it's really very logical for people to videos online. So that are the result.

That's not our membership happiness.

Fluctuation in terms of the retention.

And secondly, I actually for brand advertising.

Our revenue.

Clients a major reason is because.

The.

I would highlight willingly.

Two.

Sure.

I'd Love your budget for at hadn't allocation has been.

You know had some impact because of.

Michael E com because of the.

Impacts and another reason if some of our major account has played labor content.

I have been push out too.

Twoq through Fourq long future, that's understandable because of that pandemic.

So because of the accountants late that we will also have active impact on our advertising.

Thank you.

So.

Morning.

I tried to alter the question through a different angle.

You know I'm always talking about the supply demand they use a key.

To understand as a business trend up for the for the second quarter definite because of this like say covering biting situation you with the challenger or like a decreasing demand.

Second quarter and also I think if you're talking about like structure issues. We are facing the next few quarters beside us it's like see what type of situation. The theyll be some stage and factors. We haven't talking about people are very long time in the past few quarters.

Okay, I can tell itself, which actually becoming the supply.

Of our platform actually I think even in the previous question Ela asks about like through the profile of the.

Paying subscribers steering the list that you would call like the decrease in pure rate.

I think more even important is not the profile of those acquired worse, it's because.

Most of the case the fruit because they have the payment.

Side of the balance of subscribers. So ciber similar situation here I think if we continue with what you invest that you are already under contract continued to improve the quality of our human content.

Certainly your what showed you the pattern here so lets back to the normal that's better for the basis of our business. We will see are both on the go to where we have been.

Focusing the past few years. It we will continue in the technology reinvesting tech larger the Oregon the content like my view for the it's like see what are your call like structure. All one time case specter's. Thank you.

Thank you. Thank you that's very helpful.

The final question comes from the line of Thomas Chong from Jefferies. Please ask your question.

Hi, Good morning expense management for taking my questions.

I've a question regarding the timing on profitability.

Isn't that.

The content cost, we are seeing benefits coming from.

The cap on the I test compensation and in Q1, we have seen that deepwater.

Most of its actually less than 300 million I'll be.

Given the fact that more and more.

Benefits onto content cost will come in China, just trying to one and trying to 22.

Can management give us some color about a in comes off the.

So it was probably trend or the timing of profitability.

So just want a challenge I wanted to you and what they're going to issue equity.

So much a whole about breakeven cogency you need us again.

Oh.

Finally in Cambodia, China, but you didn't say Oh, sorry about that you got Trisha Oh.

GP that Q1.

No we didn't see us I wish that.

They get patients. So are you, saying when you're probably libel and see the most Chicago Malady, Hi, ill also must again, how about yes, you need us agenda.

Sure.

Okay. That's helpful.

It's it's not like a new questar hit its a very frequent Dr Pepper truth.

Six also.

Well be exactly the same by the way we provided before because nothing actually change for the bump on days you have there been if if we can I just mentioned, we can steer improve the quality of our within the context would have thea inquiries. The volume of already content that is where the mix authority in content.

By by doing that definitely we will attract more paying subscriber our platform increasing the margin increasing the revenue.

And now even measuring the tablet fund monetization models so basically.

[music].

What we should the folks is not a time a timetable, but again, we should have focused on the quality of our within contact and.

Bye bye.

Before by decrease the content costs as percentage of revenue and talk about it like 50% to 55%.

You will see a definite.

Except the wall profit margin in the next few years so.

If you will see a wants to know exact time table at what I can tell you is our exterior maintain though are going to appears you obviously see us margin level or the operating.

Last level, so give you some sense either way this like see we called Carbonite mm.

Situation the management to us.

And keep the or even though our local to long term development of the been is well still confident on our path to profitability. Thank you.

Thank you.

There are no further questions at this time I would now like to hand, the conference back to today's presenters see may continue.

Thank you all again for joining todays call if you have.

Please feel free.

Thank you.

Thank you, ladies and gentlemen that does conclude their conference for today. Thank you for participating you may all disconnect.