Q1 2021 iQIYI Inc Earnings Call
Good day, and thank you for standing by and that will come to the I T E first quarter 2021 on these conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one telephone.
Today's conference is being recorded if you require any further assistance. Please press star zero.
I'd like to hand, the conference over to your Speaker today respond do Investor Relations director of ICT. These go ahead.
Thank you operator, Hello, everyone and thank you for joining.
Earnings Conference call.
Companies were released earlier today.
On the company's Investor Relations website.
Yeah.
On a call today a mixture.
A year ago, our founder director and CEO, Mr. Xiaodong, Wang our CFO Mr. Shao.
Do you feel chief content officer, and amidst a Shanghai young senior Vice President of our membership business.
On behalf of Mr. Ghosn I will give a brief summary on the shelf.
For the latter we sent out earlier today.
Who will go through the financials and guidance.
After our prepared remarks don't wait.
Zone.
Mr Ghosn and a sell down.
Q&A session.
Before we proceed. Please note that the discussion today will contain forward looking statements made on the on the Safe Harbor provisions on the U S. Private Securities Litigation Reform Act of 1995 for looking statements are subject to risks and uncertainties that may cause actual results to differ.
Materially from our current expectations.
Potential risks and uncertainties include but are not limited to low as outlined in our public filings with the SEC.
<unk> does not undertake any obligation to update any forward looking statement, except as required under applicable law.
With that I will kick start the call with a brief summary of our shareholder letter.
As you may have noticed we have sent out a shareholder letter earlier today.
It's the first time since our IPO for Mexico to communicate with our shareholders with a format Inc.
This matter mythical share somehow for his thoughts on the online video industry is a competitive landscape and our content strategy.
To start with the industry dynamics and our competitive advantage for.
From the perspective of users like that video content can be defined as a delicious.
10 men and the interest based video a way.
H I T E mainly focused on the latitude.
Our I T. App focuses on entertainment videos and our CCAR.
On interest based Tomatoes.
And depending on video market has extremely high entry barriers, including the economies of scale. The overall understanding of lead.
And its talents.
Well as the industry's capital intensive nature.
Empowered by our technology and that they have as our knowledge on the industry and our affiliation with a key content talent.
TS has established a solid a leadership.
For interest based news, we will continue to invest in say cook and expand that it will contribute to our core entertainment business.
Next about our approach to current challenges.
No we are constantly facing some challenges in our membership business, we still firmly believe that this business has huge potential too.
Two supporting data for that's hopefully end up for first quarter 2021, the number on a cumulative paid a comp has exceeded $419 million.
And to a first quarter 2021 the monthly average number of a flattening members who have membership benefits for any given day has reached nearly 160 minutes.
For the volatility of a membership a business we believe lack of a high quality content is the primary reason.
We believe a solution like Inc. The increase of our in house production capacity and did the industrialization of a video production.
To establish enough and highly productive in house studios is an important prerequisite for the improvement of our accounting policy.
We have now established over 50 in House studios within two years.
These internal studios, a focusing on original dramas and a variety shows and a few a concentrating on movies and animations.
As the capacity of our in House Studios is still far from enough. We will continue to expand our in house production capacity and a diversify the jobs of our in House Studios soon.
Through leasing how studios, we kept a not outstanding talents in the content production industry and upturn more premium.
And a production.
The industrialization on video production interest that a restructuring of industrial.
And the intelligent production techniques.
Next to the balance of neutrophil allergies.
Intelligent protection system, and a choice a gradually improving these inc.
Abled us to enhance the controllability of protection scheduled content quality and a financial risks and to further reduce costs and improving efficiencies.
Now I would like to total but to sell them for a first quarter uptick.
Florida once we hear from our vehicles a year.
With us on a call all revenue and credit.
Bruce.
Year over year, a quarter, which is above all previous guidance.
A recent corridor where revenue.
On your husband, a relatively stable our compound called a being effected a controlled on the losses.
A continued homero will continue for the market.
Awesome.
The more premium content, according to a mobile or a major.
On a monthly from spend all of that book.
The first quarter of 2000 up on that one.
Paul a membership.
As of March so there for us.
One we had 100 and a $5 3 million.
Barbara.
Great.
We reported a membership service revenue decreased by 12 percentage.
R&D for <unk>.
A flavor growth was driven by several reflector for.
Our top content for them.
From a performance.
Our top gun laws.
Critical.
It was a blockbuster.
For example.
Walt on on long form video with you every day.
Okay.
Helpful.
The overall perfect on all platforms.
He introduced very.
Missile tube.
Gary the heart diseases, you a different.
Two overall membership growth.
For printer growth membership service revenue was also due to a two vectors, including book or increase a willingness to pay up on Google.
ARPA growth driven by that had a lot of pricing adjustments from November 2001 day, which is a we're accepted a module maybe the true.
Meanwhile, with drug for some expense.
Our total addressable market for launching a new reality for ICU life.
Expanding our footprint for overseas.
Though we expect short term volatility from our subscriber number.
I'm confident in a minute.
A long term development of our membership guidance.
This is based on our dedication.
<unk> premium content as well.
Ongoing improvements to our original content ecosystem a knee.
On the production capability.
Moving on to a depository business during the quarter overall on the part of the market continued to recover our a lot of a positive service revenue increased by 45% a year over year, even though the first quarter, even for getting a low season for a while.
For the pilot a good news, we were able to achieve this on a sequential and year over year growth.
Like for traveling in the fourth quarter of 2000 tons a growth was.
Mainly attributed to a.
So on a content marketing and revenue.
Our content marketing revenue recorded a decent growth driven by major a RV shows on the grandmas the columns on the marketing revenue accounted for around a 64% of our brand advertising revenue in a first quarter, which was a peak for the last few quarters is again relative to a advertisers' recognition of our.
Premium content net.
Next for context, we continue to lead a industry in terms of a total number of titles on the viewership across of a category, including drama variety shows and emission charges on the other content for <unk>.
Drama or it could be a.
From a drama Mcelroy for Hudson to come on you from the future.
These loans.
The weighted innovation it seems on the.
Let's start provided by the whole new wait for input from you.
A drama, which will have a impact our future production.
For the movies, Oregon, a movie on the waterfront.
Thanks for bringing that you can share to reach a box office of over RMB 300 million.
<unk> has received a high rating from various prep platform.
For the second quarter two dramas.
A lot, including a low for dilemma.
For the Lady.
A history through bare licensee for it and the others low for a dilemma on a call later April and awareness cheap debt.
Our users with him for promoting.
Drama theaters strength with a burden on future romantic sometimes a scheduled for launch made per day. This year. We will also launch a new contender in this for theater. Later this year, you had a michigan new content could be already including no choice, but to be true.
For us the payoff for Walnut keepers, and the light heavy Michigan, a motto farther out as a son in law.
On the way or the other day.
Fiber.
Despite some expected a sudden case our comp on a schedule in the coming months.
We believe that's a inc.
For the weather you <unk>.
Medicated by our diversified a content pipeline, especially self produced dramas.
On the 10 years of Ice's growth with strongly.
With a long form video faithful.
Faithful.
On a.
And with him into a format.
Meantime.
We will continue with technology innovation and power on package production, we will have the capability to increase our hit ratio. It generates a waiver and look at a value and expanded the imaginary issue for the next generation of a procurement as well we look forward for even more good news for all shareholders.
Now, let me review our key financial highlights for the first for the for the first quarter total revenue reached RMB 8 billion membership fitness continues to be our largest opinion accounted for 54% of our total revenue our deposit a tennessee recorded a node for the fallen off a 105% increase on a year over year basis.
Both on a distribution business on the other opinions achieved a positive growth on a year over year basis, our cost of revenue a decrease of 10% year over year, mainly due to the 9% a year over year decline of content cost a few price was primarily due to a decline of licensed content costs, our operating losses margin on GAAP basis continuing to.
A narrow by 16% year over year to a certain percentage for the fourth consecutive.
Third quarter as of March 31st 2000 from the one the company had a cash cash equivalents restricted cash on a short term investments a RMB $13 three per day.
For a detailed financial data please refer to our on net.
Class a relief.
A website for the second quarter of 2000 from Hawaii, We expect a total revenue to be between RMB seven following a two 1 billion on the.
Onvia seven point, a six 5 billion a 3% decrease.
The increase year over year this forecast reflects a <unk>.
On a preliminary view with a typical change I will now open the floor for Q&A.
As a reminder to ask a question you will need to press star one on your telephone to redraw on your question press the pound or hash key Chinese speaking participants are requested to ask a question in Chinese first and then translate your question into English participants are restricted to one question.
Each time.
Standby, while we compile the Q&A a raft of them.
Yeah.
Your first question comes from Thomas Chong from Jefferies. Please ask your question.
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TPI a cause for pause on that.
Thanks management for.
King on my questions on my question is about.
There might be on each week, and one of them and in China a house.
Should we think about the regulations regarding the long form video and on day one.
How we should think about our shortfall on the deal.
Strategy I mean, the mix for media strategies.
So he could and any a T. P. I definitely can be share that would be great. Thank you.
But what I put on a deal sure.
Yeah.
The deal in Q1 ton per.
For him.
In terms of junk whatnot for dual young home video.
And whatnot from past.
Thanks for your particular, you may not have a one two.
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Just on blending it with you.
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For the other human shop with Doctor on the G&A.
Yeah.
You pull from that you can see a more well known trumps yet for yet should also needs a workforce a trigger new jobs for them.
Okay, well for the past two years a few.
You may have observed that's a regulation.
It's on almost a stable you can observe that before some kind of a season for example, and the upcoming on July 1st day, there would be like intensified owning a house a regulation on policy guidelines amendment on it.
We'll do actually impact our content pipeline in the short term and of course some uncertainties.
What are you free cool for me.
They often come to true, though that keep your eyes.
Fourth Street, a suggest a much important yet for the recall, Tom true <unk> trillion free Cook.
Two Jones Act Hsinchu distributors on debt.
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Shun two ships.
And then also on Kashi.
I can see that we're approaching about a year about consumer journey for them.
That's a Judy my either did not show National How're, you doing a GDS.
I'm sorry on that.
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Sort of a promotion general a chat incentive on me.
For the free flow.
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We're doing a software model credit comes out a thorough yes.
I think on naval who have a jet engine pump a dol younger Jeff Julien.
Your first eligible for deferral on.
Hold on just I have a bunch of them.
Okay for Sui could a P. P. We are right now.
Don't have a very quantitative kpis on over the past a one year, a we haven't been able to find it passed because value proposition, which is based on the.
The interest based V do a community.
All the things a including on the user interaction.
Interactions with a is doing the progress of the operating.
And.
In terms of the content community ecosystem, it's still a fall from a satisfactory a we still need to work hard on this.
Until it has been quite such a free our people a year and a we won't have from a very big promotion.
In terms of the user data on it.
It won't be a girls that we luckily a in the near term.
We'll do a have a very.
Elaborate a evaluation internally.
Okay. Thank you.
Okay.
Your next question comes from Piyush <unk> from Goldman Sachs. Please ask your question.
Thank you for taking my question.
My first question concerns the content cost spending which is look solid in this quarter in terms of control a wall.
Wondered if you could talk through the expectations for the rest of the a and whether these levels can be continued to improve on as we look forward for the rest of the that's.
That's the first a second news.
As we look at price.
As we look at our booth at this stage following competitions, joining you with raising pricing on a racing effective <unk> what is the outlook for where this number could go through for the rest of a yeah. As you as you roll that higher price true and where can you think where do you expect this to go and the third is for you.
You've spoken in the past about your income you'll move into the international markets could you just give us a bit.
We feel for the scale that you are likely to be able to attain and where you are at this stage.
Thank you.
This is although a well.
After the first question on public on that caused our net chunk Bob commented on our upward trend on the obviously a penis.
Conduct caused a I believe a total contact cast.
This year when Europe will continue to be a optimized in the next few quarters, which means a as a percentage of your revenue out of Iowa.
It's definitely a U S continued to see the trend of.
Decreasing of the Carlin caused a lot.
But a way to discuss the people I think we're thinking about like see a short term, we're thinking about like expand a florida new content for a different category, including movie a movie.
Movies in a Michigan, which could have a unlikely short term volatility of that total contact caused stuff.
For a long a period into a ratio improved.
I think what we discussed before that total spending.
Come on costs.
From a legacy absolute dollar a month effectively I believe we will continue to be optimized in the next few yes. Thank you.
Well not be at home for you on.
Oh, Yeah, yeah yeah.
You got a large alcohol Judy for you Jay if I may.
She she <unk> have a you know what day.
Oh I'm in a non xiaomi Wow, that's wonderful book.
How about you know with us, albeit from a nap.
Not just yet.
We were actually a very well come out of a peers on to follow our shoot for.
On a detailed information on what tool that true so far.
For a detailed information.
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Yeah.
I mean, let's say a half on quite a few of them in the arm for the thin zone element, yes, a U F embryopathy using a telephone to me on Q using that cash will finally be it wont be talking on a pool central to that she was on shot a manager that relied on I think it.
After the season kind of a highway you're trying to do.
Yeah.
It depends on the country.
Yeah.
Okay. So as you know a we actually adjusted our pricing last November.
For this quarter in terms of the opt for growth.
The sequential basis and also on a young year basis, it's around a 10% and a weighted at this channel will continue.
Uh huh.
A lot of what do you want to you what do you want on a year when she doesn't want me to head as a day.
Thank you for your time talked about sheet that's a.
Tones Xi'an tends to women's for the lease yet the gel class with its enzymes are then coming on that.
We don't see EBIT dollars yet from them this year.
What's your woman Sonya on the funding on a phone accounts is that Yahoo.
When I on each year.
Our international.
International business is still in a very early stage and it's definitely a is doing a very rapid a girl stage in terms of net future direction for the business and I think I see on a region a will be.
On major you'll occasionally on boot camp.
But what's up a tweak our highway.
Yeah.
Oh, yes.
Shanghai will not have again with us.
Sure.
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For me, but for yet.
On the journey you may put huge on yes, yes, yes.
He also has your name on that for me GMO Hale.
From our shop.
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Women will have a coupon income.
It's a true choose a.
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From what I'm on for that.
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Adoption.
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She got from job whole rule huge swaths of the true that's why U G D. A.
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I don't know Tim on shop, it's a law.
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But the total Citronalis Golda, who watch.
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<unk> should have you choose a needle travel channel.
On your opinion, a gala on board.
Hydrogen for Ya.
Actually up a 19, that's something that it's a journey handle three months on Saturday.
The waterfall from D. A.
Absolutely.
Yes.
Our current strategy for our international business is still a very disciplined on.
We are cautious a little you look at opportunities.
The major concern here is that we don't have enough in house or a regional content.
Particularly a in TV dramas and also a variety shows on the.
Capacity is a far from enough. It's a more of a case on for overseas a.
The expansion on.
Because.
In terms of the content a it has actually very strong on characteristics for for the regions.
It's a more also more of a case that in terms of the.
Production capacity for on a fuse and animations on it.
Also a floor for a long enough in terms of a capacity and the diversity. So we will continue to increase is kind of a capacity for our in house a production.
I'm, particularly a win for Eaton in terms of the acquisition content the marginal cost for the acquisition on content due to.
So a it's a major.
Approach a it is doing in house for the in house production capacity.
You don't know that I'm sure it was on.
On board.
I'm not doing a pipe all that pop a way.
Well I'm not going to other for from a ddos lift from.
Moving on to you play a Hong Kong.
Glioblastoma.
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On the Takeda for call how long you mentioned, Jim Hackett, North loving your true high net revenue.
Should you on cost.
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Shar once you're on that.
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Second on Europe, I'm sure you for class a new function for.
Sure.
For sure, Tom, especially a woman.
Our free cash.
Yes, $3 on time highlight passion for you on the name of them quite a while.
Yes.
I I want to add one point that overlapped things a IPO our earnings on core is many focusing on a this quarter and a new.
This quarter, it's a quite short term a week.
Haven't been able to have a chance to talk about our long term.
Strategy all of that a somatic a deal and so this time, it's ours is a first time since our IPO and to use a shareholder letter to communicate with our shareholders.
I understand it at a most of our I noticed a haven't been able to eke out some on time on to really I read in the shareholder matters I want to stress that a major challenge in here is actually not that shop on video or other income them for a magnitude wrapping our time spent.
Oh, our biggest a challenging for us is do the content itself on our.
A couple.
They do much vishal throughout each of that touch on there.
On top.
Funds from the yes sure.
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Yes, sure Tashard on that so you got you.
Huawei for suite product on that on a year.
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I'll close with a hang on.
Hollywood on Daniel you May each you may use Jong <unk> Yoon shop, a horrible trend.
For pump, we brought a guy.
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Total drop that you are pushing.
Looking for a home shop a lot.
More of a for rvs.
And for you saw true once with a bunch on shoes, a sure Tom on trend.
A big a food on time yet.
In terms of a licensed content on the T V drama categories on Etsy, you May know the content for a satellite television content has been a luckily shrink on this has of course, that's an issue for on the content that we can get them on our platform on a fuse Cabot.
Great.
Most of the COVID-19, a 10.
A break and also because of the change of the broadcasting was a how.
A Hollywood films and we also have a scale for key in terms of the fuse content on it.
Our.
So you know what for you do on yet.
But all of a dock Hugo thanks.
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From a natural range shouldnt, yet you're for income sorry.
So if we took on tongue from without doing a windfall.
We executed pretty low.
For top game for sure.
They want from you that yet.
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She on a shock common Nashville triples.
Because of the shrinking on T.
T V drama content for satellite T V.
Need to focus on our in house production capacity to a more.
On a more mass audience, Inc.
In this market on.
Just because they they need more conscious on our category.
Oh, so you from your side.
Thank you.
You got from Bush or a.
Welcome to the one more for them.
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To a commercial food on a poll.
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Come from Yamana, but yeah.
From washer Honeywell.
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Channel.
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On this call Fisher got a hold that don't yet.
So as a result, we all need to enhance the investments in terms of the numbers offering how students we have a and in addition, we need to increase on our budget on investments on a field and also a animation category.
But what do you want me just annually.
On top of either.
Hopefully that's a lot more light job for that 500.
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To deepen game for us.
We want to share some data with you guys a in terms of the a member shifts.
Tons band 60 per cent of the time spent on a drama on television drama in terms of the video viewership Oh the use a topic. The first a category is drama second if steel and for animation and a variety shows.
A much less than a formative.
On the Ashford some jobs.
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They hold true for tuned up goes off on a go.
We got a I'm not sure on golf lumpy Consol.
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When you buy chunky, Tom but you go book you know you want to yes.
In addition to increase the numbers are for in House Studios, a we also needed to improve the industrialization magnitude after the video production.
That solution as many took advantage of the technology.
This includes a three part first we need to increase the full forecast correct correct softness of the financials and also use a topics.
All of a certain business intelligence technique.
We need to take advantage of the AI on.
Oliver a technologies to assist in mice and a video production system.
In terms of a offload a REIT.
On reducing the cost and improve the efficiency and a third we need to take advantage of like intelligent choice on to reduce the cost and also improve efficiency.
Of what true one year or a medium kind a follow a true loans with what you're going for.
So we'll know for sure.
Sure a meal she's on June one jump shoot for.
Sure.
Okay.
As for bailout ease off on yet.
Book.
Over the past several years, we have already developed certain functions on a certain choice.
In terms of the industrialization on metal production, we have on them being able to a fifth.
With this work we want to and truth. That's Oh opened on next for a one three years.
From James Shuck still true.
For the on the offshore Hook turn on for book for June.
Hold on a lot.
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Electrics from yet.
So put that in a word on <unk>.
Our increased the number something in house juice, a it's the most important supporting.
Pillar for us.
Thank you.
Your next question comes from food Qing Liu from UBS. Please go ahead.
Can you share of Huntington's you saw what he.
Well, that's what I was telling me Oh Gee I don't go on T. You go to a hard you Sue on the kind of senior Eli query on since on that's like a bolt on charter no. On me you also went down for a cheeky and changes on board now Thiago when he can contact range on the balance sheet, you'll see a siobhan nuomi a comes out you'll see a going door to a particular guns holidays on it sounds Shannon number a civil and inside one she's a net.
A condo took a late on sit down on a mission that Houston a thank.
Thank you management for taking my questions I have two questions. We have seen greater fluctuation golf subscriber growth since last year, how can we mitigate such volatility secondly, a we are supposed to see more original content launching a second half can we expect a prominent improvement of content.
Quality and short term thank you.
On what I put under a bunch here a suitable for you guys.
For the board on food.
If you will for a late on ship a smaller pie on them.
Oh on meal.
And then on digital Hall for.
Your way a lap.
On their own well known for users at all coming on.
I'm not sure if you've a feed home for Zynga.
Meanwhile, such a complete without hurdle.
For what.
LG nurse haven't yet you don't have a bundle.
So you do have a name.
And you saw a and yet you're on mute.
A J.
Hugo.
The primary reason behind a volatility after that on our member subsequent for the score.
<unk> members is that backhaul for content on our platform a we have observed clearly a lot. If we have a good content a we will have in common users a for fall.
Adding to our platform if we don't have the big content for users will leave a lot for them. So this is a very clear a phenomenon on.
So the key solution here is that in a proven account on quality, which will be a man thing on in the second half.
I see a b have you seen something of a you know him the home zone for human biology.
Bye.
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Total timken junctions yet.
Bob I mean, it's huge for them.
Yes.
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Drop due to channel. So you don't all call it shouldn't assumption Judy.
And for that name all yes, I'll call it shouldn't.
Do you agree that chunk shanda pressure on <unk>.
Chunky on how many trading about needle.
But what kind of a wonderful genocea that's true she use a barbell with Cps you jumped on it yet.
I recommend that.
You look at all with a P. P. A we have the new feature here, which is calling the upcoming on new content.
Which included.
The content, a which have already a to.
<unk>.
Launching date and also including some a content with the uncertain launching debt.
If you look at our feature right now you will find that we have a 78, a new titles, which will be launched.
In a comedy.
How many quarters.
Thank you.
Yes.
Your next question comes from Eddie Leung from Bank of America Merrill Lynch. Please ask your question.
Well I need one day.
Thanks, Paul.
<unk> signed a win for <unk>.
For fun eager, but with total Lindsay Guangxi guns, Hi, Congress on value.
Two key needle you've got Peru someone new on a woman since I saw a guy that got a needle.
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Could you share so true.
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Thank you for your C&I deal. It was all of a myself like Bob You said, you don't see a true.
And I think a one could.
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Just a free a quick.
A question for the first one is on a follow up question on a total comes a comment about a regional content. So just wondering.
In the upcoming years, a spending how much of the a Patrick I guess a for the original content and then on the second question is a how are the so called on a large a screen strategy wondering if there is any update on the a user metrics a from.
A smart Tvs and then a finally.
We noticed that there wasn't a acquisition of a chocolate ice Brent a.
Two months ago, So wondering Andy a rationale behind it.
Even on the plants that are not on your follow on here.
I've always felt zone you heard I believe was helped a lot.
Here are some of them.
What are you talking Europe CTV, a connected Tvs It goes.
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For sure, but in the debt on the job.
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For sure.
But in the whole water you don't blend enough you don't drag for bulk Marshalls you, Johnny but you might have on all of the English for half you don't want it in a whole lot.
Demand for stocking up on kind of a for sure.
Let's jump back to some.
As a much with your mail, but you know for sure.
If you go down a hydraulic R&R.
And so on that May alter ego.
Geos from you the harpoon.
For your other two muscle disorder.
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On them.
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For sure.
Okay.
So I will I will tell them or to a cell phone a fuller.
Paul a question off the Accountants, Inc. A content costs are well on.
So that a connected TV a question first.
First.
We will conduct a T V.
We do a seasonal volatility our user time spent and also a user traffic on a connect TV a its still dabble a increasing.
Increasing.
In terms of the user time spent on the.
Connect TV has already surpassing on the mobile side, when I say, a mobile side, it's a increase both cell phone and tablet.
Right now we don't have a very.
Alright, a third party data and that's a I believe that in terms of a V. A U and I may you are on a connectivity a still smaller than mobile side I'm about the in terms of the.
Every on a daily time spent on the TV side, it's a PV side is a higher rate than a mobile site and we believe just kind of a trend that continues and in a long long ago. The PV side a in terms of the use a ton spend is a my contributes six percentage of 70% on.
Our total user time spent.
A couple a tweak to adoption do you feel you on.
Uh huh.
A few bolt on stuff.
For the general function or a pay per view on the general County, a moisture from.
For that much.
You mean for option one canyons for your name on them.
Yes.
A full fan zone.
Total.
But she'd be ghansham.
And I need to add a one point that connect T V.
We will be has a more.
For a potential in terms of the membership and also a keyboard a monetization on just because of the connectivity has a much better user experience.
And it's easier for you. This all the in terms of the willingness for a P.
Paying off for the users it's much higher.
Oh come on to hit all those.
A major feature all of which are so-called sure shortfall.
For a major fee charged on a year with them.
And on the.
She had on China on synergies.
Mhm on pilot, particularly.
From Dol.
On food Hall on hopefully U haul it'll come through the flow.
Sure.
Thanks, a lot.
Hum.
We achieved a tax.
For sure.
Yeah.
In terms of the trough like a company you have mentioned previously a it's called a mayor haynesville.
It's not a merger or it's not a consolidation bids a FEMA is just a minority.
On equity investment and safety our investments.
The total valuation of Megrahi Todd good.
More than doubled.
Is it a shovel.
It's a portfolio as a company that was a total come on calls for its around like 30%.
But if you look at the.
Across different categories very well.
For a drama a categories if a couple.
For all a 40%.
Sure.
It is a at a higher or the OLED I think it's a problem overnight handset.
We're not going to increase.
Confusing needed to get away a in the next few quarters, but I think the focus will be on.
On the quality well going to be for the quality of this for you know for the OXXO or you're a content and digital category.
In the coming year I think.
A try tweaks on a stand and how we are going to expand all ours isn't a conduct studies for other categories, including pharma, Inc. For the movies.
On the Michigan as a way.
We said before we're going to do something and.
It's more experiments in these two categories. So overall I think a U S T.
You'll see some increase of low or their contact as a total kind of on cost for next year.
That's M a C.
On.
A idea or a stable level of vertical on kind of other which is both a before what's your volume.
I'd say a.
42, a six day and if you look at the low penetration.
Mixed between audio content a buzzer licensed copyrights. Thank you.
Yes.
Your last question comes from a next year from Credit Suisse. Please ask your question.
Sit here balance I'm guessing a little T.
I Wonder if you could do something when you shop and a need and.
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There's somebody with a man that should be a pathway for chemistry.
On to Dol simple do you send that Youll recall, a pass it back down a good chunk.
Income can you had a short value see a feature of a challenging cyclical.
As a whole the outgo wouldn't you don't have this on what you saw.
So it seemed for many of them.
We then take.
So we don't keep a timberland to highlight seen a point of view.
So we didn't see a mood that you see a gym.
Yes, it seems a lot.
Quad channel I, probably don't see a shift but it's not.
Particularly people on the whole thing for them, we're talking about total who we thought a used here.
My first question will be I think a management for taking my questions. On my first question will be about a new VIP program for a for.
She lives.
Please.
Shell a when we first a defensive from.
From the original VIP programs.
You did help you penetrate into low tier cities and secondly, a.
Would you please share with us the impact of a new regulation on the reality shows on optical.
The events outside used to receive a suite.
Did it impact your thoughts about types of revenue from a bracket chunky in the future. Thank you.
What's helping a garland you even get a harshly on young jump on us from Das.
For your children, you only take a zone and T M O for men.
And on the whole you teach you a site and they on board.
From a bedroom from walking Ashford U E zone. So you a halt follow us in the mutual.
Inc.
Hong Kong Shanghai Jamul.
Oh, no sorry from what my time here for you.
I'm sure a J.
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Joining me on my lunch and he'll GMO.
On the auto auction I'm sure Jimmy a fad.
Got a hold of Young's Yao.
Have a P mod one actual on total cost.
On a holding share.
Central blip on that.
Yeah.
A go in.
Colleges that we we are sorry that we haven't been able to broadcast a must absolutely for use with you and as you have all already observed that the Beijing Municipal Bureau for the.
Redo and Italo region, a has issued a new guidance that we cannot vote on through without purchasing a goose on oh by a membership plans. So this means that the voting in a future.
Would it be only a for free.
On the in terms of intact in terms of our appetite for example, we asked do evaluate a teacher.
Jump on Hangzhou, and one thing I don't know what else we're day.
Actually it a digital bank and revision.
So you could use a been a pension income shown reductions yet.
Okay I can do a is it seems like you've done a notable young women a VIP on for like a figure a disciplined the V. I a few for you in person.
For the download time goes on a foundry view on Linzess.
As we often read people for you, which is a <unk> Chen free for you on it sounds because it can be a call on Michigan on from what you see a tiny amount of time day machine I'm a lot from Hudson for you on.
Okay.
So actually like a P. P F.
As you know, it's a mini potato to know what's yesterday on.
Lower tier city users, it's much more simplified in terms of a user interface, which is our main app on.
In terms of them a membership plan on I T like a P. P. A.
For.
This kind of a members a lady to watch a.
On certain advertising format, but in terms of the membership pricing, it's a much lower than our men app a membership on.
Just because for this kind of a flowers layer a willingness to paying for a content is not that high and so we want to leverage on some certain kinds of operation on tactics on to penetrate them.
Okay. Thank you.
I will now pass the call back to management for closing remarks.
Okay.
Thank you for joining our call a we look forward to a I'm talking with you guys on in a next quarter. Thank you.
Bye bye.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Yes.
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