Q4 2021 iQIYI Inc Earnings Call
Good day, and thank you for spending by welcome to <unk> fourth quarter and fiscal year 2021 earnings Conference call.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question answer session to ask a question. During this session you would need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference of what to your first speaker.
Today, Ms Changzhou IR director of the company to retail opening remarks, and a safe Harbor statement. Please go ahead.
Thank you operator, Hello, everyone and thank you for joining Ice's fourth quarter and fiscal year 2021 earnings Conference call. The company's results were released today and are available on the company's Investor Relations website at IR, the IC dot com on the call.
<unk> today are Mr. Evan Guo, our founder director and CEO , Mr. <unk>, Wang our CFO , Mr Shan Li Wang our chief.
Chief content officer, Mr. Irwin from our CTO, Chief Technology Officer Ms. Vivian.
Our CMO Chief Marketing officer, Mr. <unk>, <unk> senior Vice President of our membership business and Mr. <unk> <unk> senior Vice President of movies overseas business.
Mr. Kum will give a brief overview of the company's business operations and highlights followed by <unk>, who will go through the financials. After the prepared remarks sharply windfall Vivian hotel in Shanghai will join miserable and Jane in the Q&A session.
Before we proceed please note that the.
Discussion today will contain forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1995.
Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations potential.
Potential risks and uncertainties include but not limited to those 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 now turn the call over to Mr. Kang. Please go ahead.
Hello, everyone. Thank you for joining us today, we will follow up on the tonnage.
For 'twenty one.
Your next year.
One year ago shell.
Western in all shareholder shareholder Alaska.
As you Delever.
It's producing.
Producing.
Premium entertainment content.
Yeah.
Moving.
It has been.
<unk> <unk> and <unk>.
Tricia you control Gaslog.
NIM appeal and we continue on the tool ranked number one in aerials user metrics or cutting tools third party data.
Today, we will last through shareholders Tweed tool called <unk> that he is leading.
Of a new chapter in Chinese lumped in with the industry.
And therefore struck torque track to our tenants.
The market competition shifts from quantity to quality.
The operational priorities shift from Bakken shale.
Efficiency.
Our robust leasing the industry is now taking a more balanced approach that result in higher efficiency.
Paul.
Positive social impacts.
These changes are positive they are.
Chip.
Constant.
Industry leader, including H E.
They will be helps until industry to achieve that.
10, the bulk girls in the long term.
This trust.
All told Bronx near term benefits, resulting.
In healthy.
Fourth call her E.
For instance.
<unk>.
Activity dropped to a protest that generated low iron ore.
<unk> has had limited value creation.
Meanwhile, we are more display.
Vesting in the non core business.
The initiatives with low long payback.
Okay.
Open ablation become.
Lima Zimbra.
We are more focused on our core business, resulting in significant improvement.
Cost of structure.
Operating efficiency.
The initial results.
<unk> been very encouraging.
England Horticultural.
2021, the non-GAAP operating loss of <unk>.
Measure for our business performance.
Second <unk> by 45% annually and 52% sequentially you're fading out.
We expect solutions.
The benefits from these tests.
Beyond <unk>.
Beyond Q4.
non-GAAP operating loss to be narrow secondhand vessel.
I'll call for a fall 2000, and a new tool.
Our goal is to reach operating breakeven.
For the full year of 2002, new tool on the non-GAAP basis.
And that we hope to create culturally non-GAAP operating brick EBIT as soon as possible.
We believe that we are in the right direction in reaching our goal.
We will continue to increase.
Operating efficiency and improve.
Quality of diversified content autopilot.
I'm confident in the Alisha.
Production refinement in this red line Alicia.
Alicia video production.
<unk> monetization methods.
We are firmly believe premium long form video content is one of the core needs of human being.
Soon.
You bet.
Sure.
Sure.
Last year under that program.
We have accumulate in the English.
Industry, we will continually corporate deals and deliver a more high quality.
The diversified premium content.
Our members and our user base over the long term.
Now <unk> performance in this segment in the first culture at the full year.
2020, Bob.
Let's start with membership.
Paul Copious naval strategy remains focused on the three <unk>.
What's that.
Membership services.
Growth.
First increasing average revenue per membership ethanol as well.
Yes.
Sure.
Second.
Improving retention Peyton member.
Yes.
Continue attracting new members.
<unk> active members.
In the fourth call her all membership revenue grew by seven person.
The full year.
2020, what membership.
Lastly from last year, mainly.
Driven by improvement.
Let's call her multiday arm was RMB.
One.
14, one six up 14% annually.
Sure.
Sequentially.
The improvement.
It was mainly.
Attributable to more premium services.
Provided for our users.
The success of our niche markets operate.
Innovative offers.
In their sharp hips.
Creation.
Efficient promotional efforts.
Successful price adjustment that will be.
Go out in November 2000.
Sure.
For example, we launched on Monday.
Retail marketing campaigns for a number of high anticipated.
Content launched in December .
All our resolve trial months areas from Chile.
No.
Model.
Sales here.
Bring equals our perks.
Members.
Benefiting from the success of last year Mr. Salta.
<unk> revenue of.
With a modest recovery.
Historical high among all 700 drivers.
During the first two months of the call there.
Great uncertainty in the salary and the many Keith.
While our delay of towards that I know of.
The culture.
Daily number of total subscribers members for the FERC called her was.
97, kneeling compounded tool 100 and up to seven.
For Q4 2000.
And the <unk>.
100, and the fall.
Upon.
Seven BLA for Q3 2000.
Tony.
As we launched premium titles this December .
The number of subscribers.
Back at <unk> level.
Its pilot control.
Flu flush pure Asian in average daily.
While our culture, we are happy to see that.
Our subscriber growth on large screen devices maintain growth momentum.
User time spend on TV devices continue to increase showing.
I appreciate Asia Accountabilities for Boeotia Big screen, it's growing.
This trend.
That's great.
Great.
Monetization potential and big screen.
Future, we will continue to improve acquisition and retention of paying subscribers, so with Phi the operation strategies as well as in the pilot.
Penetration into large screen.
Another driving force.
Continuous growth of our business.
Now moving onto <unk>.
Overseas sales overseas business made great progress.
Yields are based on the revenue achieved significant growth year over year.
Influence.
Overseas platform continues to increase bring wider cognition.
Youth culture, amongst all of our safety culture.
First the user base recorded.
Paul if growth.
Yeah.
In 2020, what tripled from last year, we saw.
That's a growth momentum in Thailand.
Annual growth of nearly 700%.
Well.
The growth rates in many of our regions exceeded last time growth percent.
As countries in Asia.
Asia.
Korea.
Australia.
Second the overall revenue growth of the overall.
Therefore, with also encouraging membership revenue grew by over 40% sequentially in the first caller.
Over eight 8% for the full year.
Advertising revenue grew by about 10% sequentially.
The culture and the over 100% for the full year.
So continuous releases of scalar idols success with one company.
Carbonation from OSA yields are.
Driving our revenue increase in the <unk>.
Our ability to continuously expand our user base.
During the year why the op Chinese mainland content.
As the original.
John .
Original shows.
Top 10 ranking in.
For teen countries, including Australia.
Tyler on the Japan Korea U S. Lastly, we continue to.
For comparability.
Comparability.
The call operator.
All operations with local partners.
It launched our App.
Amazon South <unk> local television.
America.
Overall, our many TV devices.
And so far.
And <unk>.
During the year, we also launched our AD platform.
These patents cover it.
Operation over seats Brandon.
Sir.
Agencies.
In the future we will continue to focus on expanding the scale of our user base and revenue.
Leveraging the premium content.
And.
Continuous improvement.
Operation efficiency.
We are striving to.
To maximize monetization comparability of for the rest of this platform.
Moving on to advertising.
Advertising revenue decreased 10% year over year.
During the call here.
Mainly due to the decline in brand as that decline in Brian was mainly.
Attributable to.
First the lack of content both for the drivers and why are they sold in the first two months of Q4.
Weak.
Overall.
Growing environment.
Pardon.
The decline in branded App, we are pleased to see that added revenue from the sale.
Sales of our doubled in 2020, while highlighting the fact that.
And the importance of already coal sales of our model our model strategy.
For 2022.
Targeting to secure more key accounts and the increase.
<unk> revenue contribution driven by continuous content innovation develop sequels towards SaaS titles.
Revenue from our permits as achieved steady growth, both annual and sequential rate during the quarter.
Your line was a major driving force.
The operating metrics of <unk> increased second half is underway.
So perfect.
Tangela.
Safi.
Correct correct.
Yes.
Given.
The benefit for sure.
Traffic in creative.
The annual growth.
Of apartments.
Also benefits from the improvement of the.
Our products have to be a continual optimized at all.
Awkward.
Moving over.
For covenant.
<unk> current turbulence fifth Miami uncertainty.
Directly impacted content.
The year on that.
In the first two months of the first quarter.
Last week at <unk>.
And this testing.
The industrial policy.
We are able to comprehend.
The rates of content protection under Scouting.
We proactively managed the program the process.
Christa.
Resilience related to covenant Scouting uncertainty, we had launched in Miami prudent cognizant towards.
First to call there.
Obviously my Felicia.
Overall content cost.
Most aspects of our recent operation not strategy.
For the first quarter.
The content related to the cost ratio continued to improve.
This vehicle as we introduced in the last call.
Effectively.
Flat operating efficiency also the accountant in glass.
Okay.
The mutual.
Improved over 20% annually.
It's Carl here.
A number of low.
Performing titles.
This is Chris both annually and sequentially. Meanwhile, we have utilized.
Intelligent and the protection technology to increase our data.
And then maybe core and forecasting capabilities.
Which in return increase to all content.
Right.
We believe we have a team of content to professionals that have surpassed the industry knowhow.
Yes.
<unk>.
Our fourth imagine that you make sure it helps the overall quality of outcomes and the team that well for them.
True.
Now, let's go through the key titles to them they will call her.
<unk>.
During the quarter, we ranked number one for the number of new Commerce launched in the industry are all calling in.
In light and motion.
And we've maintained the leading position in terms of market the shelf, whereas you saw cosmos.
Chip.
For the full year 2020.
<unk> what are maybe the shelf movies dramas, where are they short cut tools.
Yes, all ranked number a lot and there's a number of new drama launched was the highest in the industry.
For dramas, we forecast.
Rich.
Buying our IP monetization comparability as well.
For example, we are building the Ikea Chinese Hello, Rick.
CBA Youll numerous prototype.
Developing content, which is based on the traditional Chinese culture.
Showcasing thus yesterday of rich Chinese culture to look global user so diversified or result protection.
We may be able to hit our first of work on the franchise.
Of the original TV drama <unk> young.
Which generated in media.
<unk>.
The popularity index of function Loy Yang broke.
Some of the effect of launch.
One of the.
Top ranking Heath drivers.
Achieved with such high index, let's call.
Platform.
Future.
Hi.
Anticipated to.
Development et cetera.
Production.
Under the same concept.
That's up from past.
For the second let's see.
A number of titles.
To be able to hit in <unk> called her further enhance infarct up as Brian in Florida.
Among viewers.
The.
The monetization of our ability.
Mr <unk>.
An important growth driver for our membership.
<unk> mother generated the highest the membership revenue.
Titles.
<unk> has also attracted more advertising budget 12 platforms.
Demonstrated great.
Working with advertisers.
Vertical.
Model.
For clarity Schulze, we continue to explore new tariffs received praise.
Both in the upstream professionals and others.
For Q4 ordered or original production.
Yes.
<unk> maintained solid number one user time spend for gyros.
Sweet fulfilled they continue to appeal to all.
San monitoring they'll call her.
Aiming to further expand the monetization profitability.
Tabulation, new online ecosystem for film distribution.
For example, part of our original films.
Only released online.
But no model.
The initial success was encouraging in.
In 2021, we launched a total.
Of nine field.
The people model, among which orange goldfield.
Houston rather.
What.
Was released in Q4.
The second best performing people feel of the euro.
Please.
The supply of premium content.
<unk> talented content creators.
Sure.
Keith Porsche.
TB.
Being resolved, but both steel mill cars on our platform.
For <unk>.
We also achieved.
Sure.
Our success in the fourth quarter.
Introduced animation punchy Loy Yang Chen.
Sean.
Deferred taxes, basing the ICU Chinese.
As Tarek CPA universe from China.
Or is.
Seven hold that demonstrates.
Diversified IP monetization strategy.
Its popularity index broke for.
We are seeing.
Third in ours.
<unk> launch of <unk>.
That Chad.
Platform.
Looking into 2022.
For dramas, we will continue to improve the quality of our content in a puddle salad.
Especially for our premium.
The production and the buildup.
TTIP barriers for our content ecosystem the key influencing.
We are in there.
Explore the brand Nevada.
Vertical content.
The content and the lifestyle lifecycle by producing multi season dramas on the shelf scenarios and what he wholesale Aldo.
We will continue to grow.
<unk> achievements base.
In your Chinese.
It's Tom.
Hey, Julien.
Youll tourists from China.
Now have three when it closed sales hires that provides deeper shade.
Content services.
While yields us, namely.
<unk> just us patents.
<unk>.
Mr <unk>.
Well Matt.
Sweet answer.
And our new launched comedy and statement.
Settle down.
We recently launched.
Lifelong Germany, Jennifer again.
<unk> generated.
Our first key drama.
Yes.
It has maintained leading positions in terms of effective <unk>.
According to the latest.
Heightened data.
Before RNA shops.
<unk> maintained our leadership position in boots gyros.
And focus on categories that we have reached in Paris.
Such as military style competition games comedy music and Roadmaps and their move outflows are in the lead table.
Shoals impulse underperformance competitions to meet the latest youll start demand.
Sweet fulfilled.
Upgrades, the number of protests and skills on their gyros of orders don't films as compared to 2021.
Dissipated.
Thanks to my <unk>.
Agriculture related sales of our <unk>.
Digital films.
For <unk>.
We will continue.
Cultivate cultivate the rollout to all IP is a bad making cell.
<unk>.
Doug.
For example.
Just a couple of them.
<unk> called <unk>.
It's our first operated lower Chinese animation broadcast it Inc. <unk> TV channel it has become.
Instead it is already in there.
Molly you said Stevens development.
Okay.
Two products.
Great.
In the fourth quarter.
<unk>.
IGT.
Achieved.
Lending fulfillment.
<unk> operating metrics.
In particular our peak.
Rich.
I mean youre right.
Carryout.
Your lives.
To us in penetrating into low tier cities.
B Lowe user overlap <unk> light on all main app.
And as such overlap continues to decline.
Such of library content is much higher.
<unk> light.
Different user behaviors between these two apps.
As for.
Interest our best community. So it could continue to improve on the English outcomes and ecosystem.
For the full year.
2021, So you Cook contributed about.
Seven <unk> percent user time spend on our platform interest based video.
Constitute tools.
One of the very important components of our content ecosystem.
That seems low cost ultimate accounted to answer it.
Relatively low.
If the all cost of pressure.
Tucson Asset addition.
Asia traffic generated by contributing to the growth of the performance AD inventory drag.
Driving revenue growth.
We hope the user generated short form videos will attract attention.
Consumption of active.
Active long form videos.
Creating a closed loop for.
Online video ecosystem.
Okay.
The special events during the quarter.
<unk> optimized the.
Open ablation.
The optimization of the structure and created a flatter organization structure.
Helps to up to bring in more focus back to our core business.
Great.
The efficiency of our.
Our operations.
As a result, there was non recurring.
Okay.
The severance cost recorded in the fourth quarter.
Bye bye.
<unk>.
Although that lesion structure, we have.
Both.
Right.
The team which enables.
To better focus.
<unk>.
A copy of the dance and improve operational efficiency.
To summarize we have seen initial positive.
In fact from our hubs to.
Oppenheimer optimization opened last Asia alignment.
As part of the turbulence in the past year, we have still maintained.
Our market leadership, we are dramatically improved our business performances.
We all keep enriching and improving the quality of our diversified content deposits outlook.
Buying operations of our vertical content.
Sales of our model improving.
Efficiency of content investment.
Debating our content ecosystem.
Growth of our community called Trump, Yes in Asia.
To continue increasing our penetration in different geographies.
User kaufhof soon.
Right.
Large screens.
Our seeds business.
In Asia to us.
As a result, all fundamentals will continue to improve okay.
Our goal is to reach non-GAAP operating breakeven for the full a full year of 2020.
And the two rich quarterly non-GAAP operating breakeven as soon as possible.
We have strong confidence and looking for work to bring our Bachelor and helps our <unk>.
On the 22.
Now I'll hand over to Mr. Jim and Bob to go soon after naturals.
Thanks, Tim.
Now, let me walk you through our key financials for the fourth quarter.
In this quarter, we introduced the concept of non-GAAP operating loss for the first time, we believe it will help our shareholders to better understand and chuckle up visits performances.
So starting with the revenues in fourth quarter. Our total revenues reached RMB seven 4 billion a solid performance considering macro how do we our membership services revenue increased by 7% year over year, mainly driven by the growth of arm or average revenue per member.
Sure.
Our fourth quarter, <unk> increased by 14% annually and 4% sequentially.
We expect this momentum to continue going forward.
Now move to the cost and expenses with on.
Initiatives previously explained.
Cost of revenue decreased by RMB 277 million.
Compared with the same time last year.
A contributor to the narrow our operating losses.
On the other hand, our operating expenses also decreased by RMB $110 million.
<unk> by 6% year over year, even with the one time severance costs.
As a result, our fourth quarter non-GAAP operating loss decreased significantly down 45% annually from 941 million RMB, two 516 million RMB.
We're presenting a saving of RMB $425 million.
Compared with the previous quarter non-GAAP operating loss is also narrowed by RMB 500.
<unk> 7 million or 52% down sequentially.
Heading into the first quarter of two.
2022.
To see further significant improvement in both GAAP and non-GAAP operating losses.
Compared with the fourth quarter 'twenty.
<unk> 2021 2021.
Again this benefits from.
From our initiatives in cost optimization and efficiency improvement.
Our goal is to reach non-GAAP operating breakeven for the full year of 2022.
<unk> reached quantity non-GAAP operating breakeven.
As possible.
As of December 31, 2021.
<unk> had a cash cash equivalents with through the cash and short term investments.
MB $4 4 billion.
For detailed financial data, please refer to our press release.
Our web site.
Now I will open the floor for Q&A.
Thank you so remind clearly if you'd like to ask question. Please press star one on your telephone and wait for a name to be announced cancer.
I'll request, please press the pound or hash key.
Kindly ask your question in Chinese first and then you just translate the questions into English.
The participants are requested to restrict to one question at a time.
The first question comes from the line of Alicia Yap from Citi. Please go ahead.
Hello, Thank you Juanita.
Thank you vishal with that one.
Do you see your Guangxi.
Lee.
John will then tissue negotiate a question.
Sure Scott.
Thank you Bonnie.
<unk> sure sure.
Jonathan Please go.
John I'm going to actually go out and lever so Danielle.
Why do you think you saw that you saw.
Sure <unk>.
The pipes.
Yes, Paul.
Does that tie to wassa and deeper with your negotiations.
<unk>.
Yeah. So thank you for taking my questions my questions is related to the cost and the profitability.
Seems like you have so separately.
Narrow down your loss ratio over the past few quarters.
Can management elaborate.
The company.
<unk> managed to effectively lowered the operating losses.
You mentioned about the full year breakeven timeframe. So is that indicating you is it possible that you can even achieve profitability as soon as even the second quarter. What you went through the quarter. Thank you.
Harsha <unk> with J.
Fulfillment Hawk, how machine for Apple launch in sugar and answer is yes.
Bala.
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General format as usual you are talking about them.
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Come till Q1.
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Youre not on mute.
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Total Nathan.
Jacob Good General Special Williams will be.
<unk> will enable Congress shouldn't trial quarter welcome to the show.
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Josh how long a young shoulder trial.
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Sean what we shall cut youth culture.
Hey, Sean.
Okay.
In the fourth quarter, we proactively adjusted our operating strategy, which focuses on optimizing costs and improving operating efficiency to reduce our operating loss overall the results have been very encouraging and we are also.
Optimize our organization alignment.
Which will help to reduce our employee costs and also create a flatter operation and more elite team to help us to focus on our core business of <unk>.
Now also to improve the overall operating efficiency.
Content site.
We are more focusing on the head premium high quality content.
For that aspect, we won't decrease the number of head content.
We will use content related cost ratio to help us to identify the low performing content and we're actually dropped those content investment overall.
Our process for investment procurement and operations will be refined to overall increase the operating efficiency.
Also we also built a promotional mechanism that focuses on increasing the revenue performance of the library content, increasing our content portfolio utilization.
Also.
Creating more inventory for the advertising side and also prolong the life span of our content.
Well as increasing the subscriber revenue.
And why.
For the industrial video industrialization that we've been talking about whether it's from the MIT short term and midterm and long term perspective.
Core.
Four area, we'll continue to push for industrialization at creates efficiency for content production and operation.
Well time will tell.
<unk>.
EPS.
Sure.
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Mr Thompson with attendee.
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One more fleet chunky for Qualcomm.
The slowdown.
The long term, but ete's your shop from them.
Jacob hydrocarbons.
Have you gotten for sure John P. J P F chang's.
<unk> Hello failed.
So the.
The whole premise and to remain stable revenue performance and also.
We need stable Mark you, Sierra as well as traffic and we will lower.
Employee costs.
Also trying to reduce the content cost and also the marketing expenses.
Alright.
So on June 20, <unk> two lines on the wall between now.
Sure.
The city to achieve that kind of number.
Tatiana <unk> <unk> <unk>.
<unk> achieved an adult where you got shifting the ECL.
Yes sure.
Issue that you can't keep up with it.
Sure.
Yes, Alicia could be at the Chilean government.
And that Jake.
On the R&D I thought is a PTT two quick consequences.
Chip in the woman plenty of announcing the title.
Women <unk> deliver on them quickly.
We will be up the other one.
And we will be able to ship Chen chairman and a non-GAAP operating Lee <unk> Jean I. This is Jim.
Thank you to them.
non-GAAP operating today Susan.
Okay.
So for Q4.
All the investors will see we have reduced our cost as well as.
Operating expenses and narrowed our opex approximately 500 million RMB and these positive impacts will continue to release in the next couple of quarters. As you mentioned about the breakeven timetable first I would like to mention that we weren't delivered.
For the year, our Gulf for the year is being what we will try to reach non-GAAP operating breakeven for the full year of 2022 and to reach quarterly breakeven on a non-GAAP operating level as soon as possible.
Yes.
Yes.
Thank you for the questions.
Questions will come from the line off.
Thomas Chong of Jefferies. Please go ahead.
Good morning, Amit.
I mean, it's all weather event.
Okay.
Continental shipping times.
Good you're saying some of the Banff AMA.
Sure.
<unk>, Ohio, Tycho CFO .
Meanwhile, I think I'll try this one.
Mr. Paul <unk>.
Sure.
Hi.
I don't problem.
True.
So it looks like that you say measures that J J. Thanks.
Management about taking my questions. My question is about the competitive landscape, but the long form video market.
Management or seeing any changes.
That.
We need to anticipate intend to Trinity and number two is more about the content production and procurement side.
Are we.
We're getting more and more rational going forward and finally on the policy or the regulatory environment side.
Seeing this that could is getting more stable.
And what we should expect any policies that may.
It may come out in the future. Thank you.
How do you see as some of them with biodiesel.
Uh huh.
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Johnson <unk> patents, so the issues that neighborhood problem yet.
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June yet.
But in their trading what went wrong.
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Hi, there John .
<unk> assumed that we would Ethiopia.
Youre welcome shareholders out here.
Nathan.
Quarter to quarter.
<unk> got your envelope.
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J D.
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You shop tissue.
Okay. So for the overall competitive landscape for online video industry. We think is entering a new chapter.
Within this chapter you will focus more on the efficiency.
Perfect.
Hoping to reduce our operating loss and increasing profitability.
So this is kind of different compared to the competitive landscape from before.
Driven by various reasons.
Major players.
Focus on.
Quality quantity of the <unk>.
Content versus.
<unk>.
And et cetera, et cetera, so and we think that the.
The operating focus now is back to the operating efficiency at much more healthy as compared to the market market share driven aspect for the content side I think.
For content production, whether it's for the original production.
It's very different from the licensing content.
Overall.
Competitiveness within the industry.
Should be relatively soft tech why because.
Right.
The process is much longer Atkins, Jeff too to the procurement for the licensed content. So there are various Keith that is our key.
Fashion store Keith.
Key point that we can hit among the amount the lines of this whole process. It gives us more leeway in increasing.
R&D of our ovation of policy.
Production and third regarding for the policies right now we think it's relatively stable and as we have better comprehension of the online video regulation.
Industry and regulatory environment, we note the boundary of content production as well as content scheduling.
Cash capability.
Greece overall and that will help in terms of the Blackberry.
Blackbird.
Asthma.
Revenue advertising site.
Oh, it's Appleton UBI Banca <unk>.
Got to be clear for you.
For Japan.
Jagoda.
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John .
Staff.
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Yes.
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Sure.
Jacob.
Sure.
Yes.
And it has two or three years, our strategy focus has.
In expanding our revision of production scale and also improving the production capability.
So in 2022, everyone will see our original production capability in ASP will.
We will increase significantly compared to before and I think we now have an industry leading team and also a good number of highly competitive our original production pipeline.
Thank you.
Thank you for your questions next question comes from Eddie Leung of.
Bank of America Merrill Lynch. Please go ahead.
Bye now.
Tons in Costa Union.
Yes.
Yeah, Jamie Gwen Nathan Thank you Jason.
Thats helpful.
So are you talking with you on.
Women.
So Daniel Jose lie.
Ladies and gentlemen.
Vincent Yes. So my question is about the membership growth, we have seen a bit of a smelter.
<unk> probably are related to regulation and conduct issues just wondering any outlook for the membership growth even through Dcs and future. Thank you.
As yet.
Hi, Anthony.
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Sure Okay.
For our overall member subscriber.
We have seen some relatively pressure in growing that over our membership numbers.
Because there are different aspects one is.
There is some impact as far as second the regulatory environment uncertainty and therapy.
Our video production capabilities. So all of these are the negative impact that will contribute somewhat to our overall membership growth.
And secondly, I think the overall.
Online video platform our video the user time spent has been decreasing that relatively.
<unk> factored for the market, but we want to make that the importance of online.
Video industry. The long form video, we think is core needs for human beings and the imported.
England capable I think for the overall Chinese online video market as well as the users and market.
More mature and this is a positive impact and positive factor for the overall industry and for US that's where the large stream as we see.
Namely the iPad.
Our strength in the card as well.
The number of screens have been facing.
There are different user behavior different screens.
Sample for cellphone.
The most frequent is it.
Its communication.
The large I think the most feature is.
For video viewing experience.
So overall this is a very positive impact or affected that will drive our future potential revenue growth as well as discipline.
Becker group as well.
The Orange that we mentioned before and overall.
Lastly for the IP protection.
Our theme.
<unk> and <unk>.
Front, especially for the long form video IP protection.
This will be beneficial factors to contribute to the overall growth of our revenue in the future.
Thank you.
Thank you for the questions due to time constraint I would now like to hand, the call back to the management for closing.
Thank you for joining us today feel free to reach out to us. If you have further questions. Thank you.
That does conclude today's conference call. Thank you for your participation you may now disconnect your lines.
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Good day, and thank you for standing by and welcome to <unk> fourth quarter and fiscal year 2021 earnings Conference call.
At this time all participants are in a listen only mode. After the speaker's presentation that will be a question and answer session to ask a question. During this session you will need to press star one on the telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the comprehensive way to your first speaker.
Today, Ms Changzhou IR director of the company to read the opening remarks, and a safe Harbor statement. Please go ahead.
Thank you operator, Hello, everyone and thank you for joining Ice's fourth quarter and fiscal year 2021 earnings Conference call. The company's results were released today and are available on the company's Investor Relations website at IR. The IC Dot com on the call today are Mr. <unk>, Gao our founder director and CEO .
Mr. Wang our CFO , Mr. Shan, Li one RCC Chief content Officer, Mr. Irwin from Bill our.
Our CTO Chief Technology Officer Ms Vivian.
Our CMO Chief marketing officer, Mr. You'll tell us what senior Vice President of our membership business and Mr. Shanghai Young senior Vice President of movies overseas business.
Mr. Kum will give a brief overview of the company's business operations and highlights followed by James who will go through the financials. After the prepared remarks sharply windfall Vivian hotel in Shanghai or join miserable and Jane in the Q&A session.
Before we proceed. Please note that the discussion today will contain forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1995.
Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations potential.
Potential risks and uncertainties.
Now limited to those 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 now turn the call over to Mr. <unk>. Please go ahead.
Hello, everyone. Thank you for joining us today.
We will further in 2021.
<unk> achieved one year ago the shelf.
In our shareholder shareholder Alaska.
The lower <unk>.
Call that at all.
ZIP Realty.
<unk> premium entertainment content.
Cody.
Correct.
And we have a model.
So as usual gaslog.
NIM.
And we are continuing to ramp number what areas Youll see metrics. According to third party data.
Today, we will last through shareholders.
To recognize that.
Leading the opening of a new chapter in Chinese long form video industry.
In both our number of truck torque track.
Thanks.
The market competition shifts from quantity to quality.
The operation.
Sure.
<unk> market share.
Efficiency.
We've seen the industry is now taking a more balanced approach that result in higher business efficiency.
Paul.
And positive social impacts.
These changes are positive.
<unk>.
Constance.
Of industry leaders, including <unk> and that they will helps us until industry to achieve.
And the bulk growth in the long term.
This structural changes also broth yield benefits, resulting.
In healthy.
Fourth call her a flight.
Four six.
Paul actively drops of protests that generated low iron ore.
Hi.
Limited value creation.
Meanwhile, we are more display.
Investing in the non core business.
In Asia.
Low long payback.
Yes.
Organization become.
Lima and Zimbra.
We are more focused on our core business.
Resulting in significant improvement.
On cost structure and operating efficiency.
Sure.
The initial results have been very encouraging.
In the fourth quarter of.
2021, non-GAAP operating loss.
Backdrop for our business.
Performance is great.
Second enabled.
By 45% annually.
And at 52% sequentially.
Exceeding our pad.
We expect CFS.
No benefits from Linda Chen.
Beyond <unk>.
Beyond Q4.
The non-GAAP operating loss to be a further narrow secondhand vessels.
First I'll call for a fall 2020.
<unk>.
Our goal is to reach operating breakeven for the full year of 2002, new tool on a non-GAAP basis.
We hope to create culturally non-GAAP operating Bruce EBIT as soon as possible.
We believe that.
We are in the right direction in reaching our goal.
We will continue to increase.
Our operating efficiency and improve.
Quality of our diversified content.
So on content in Alisha.
Production refinement in Asia.
Asia video production.
At worst monetization matters.
We have a formula.
Premium long form video content is one of the core needs of human beings.
So.
You bet.
Sure.
Software last year under the <unk>.
We have accumulate in the English.
The industry, we will continue corporate deals and deliver more high quality.
Our supply of premium content.
Our members and the user base over the long term.
Now <unk> got performance in there.
Sentiment in the fourth quarter and the full year.
2020, Bob.
Let's start with memberships.
Our corporate strategy remains focused on the.
Sweet.
What's that.
Membership services.
Growth.
First increasing average revenue membership ethanol as.
Hey.
Second.
Improving retention.
Remember.
Continue attracting new members.
<unk>, Inc. Active members.
In the fourth quarter, all membership revenue grew by 7% annually.
Full year.
2021 membership revenue grew slightly from last year, mainly.
Driven by our improvement.
Let's call her months' delay arm was RMB.
One.
Oh <unk>.
One six up 14% annually on the floor.
Sequentially.
The improvement.
Whats mainly.
Attributable to more premium services.
Provided.
Our youth.
Yes.
Our <unk> sharp tapes.
Innovative operating in their sharp hips.
Patients.
Efficient promotional efforts.
Successful price adjustment.
<unk> will be rolled out in.
In November 2000.
Yes.
For example, we launched on Monday.
Retail marketing campaigns for a number of high anticipated.
Intent luxury.
Gotcha.
Okay.
Our resolve drama scenarios from Zillow.
As a mother fault meter sales here.
Bring equals perks.
Members.
Benefiting from the success of last year military sales here.
Berth ship that Neal.
With a mother recalled it.
Hi.
Sales in our drivers.
During the first two months of the call Tomorrow.
Great.
Income from the salary.
And many Keith.
While our delay of towards that I know of.
Call Center.
Daily number of total subscribers.
For the first quarter was.
<unk> 7 million compared to 100 and up to seven.
For Q4 2000.
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100 <unk>.
Upon.
Seven Bofa flock Hill suite to solve that.
Right.
As we launched premium titles.
The current number of subscribers if not back at it.
<unk> level.
This pilot control.
Hello.
<unk> pure Asian in average daily subscribers for the quarter were happy to see that subscriber growth on large screen devices maintain growth momentum.
The user time spend on TV devices continue to increase showing.
I appreciate Asia of continuity distributions, we are big screen <unk>.
This trend.
Yes.
Great.
Monetization potential and big screen.
We will continue to improve our position.
Thanks.
Subscribers, so with five operations strategies at the same time the penetration into large screen will be another driving force.
The continuous growth of our PSS.
The multi outflow.
Sure Steve.
Sales overseas.
Great progress.
With yields are based on our revenue achieved in percent growth year over year.
Influence of our overseas platform continues to increase.
Wider coordination of the call.
Cultural amongst all of our safety also.
The user base recorded.
<unk> growth.
<unk>.
In 2020, what tripled from last year.
So growth momentum in Thailand and <unk>.
Growth of nearly 700%. Meanwhile.
All growth rates in many of our regions exceeded 100% such as countries in the fall.
Asia.
Korea and Australia.
Second the overall revenue growth of the overall platform with OTO encouraging membership revenue grew by over 40% sequentially in the first caller.
Over eight eight.
For the full year.
Advertising revenue grew by about 10% sequentially.
This call and the <unk>.
Over 100% for the full year.
So continuous releases of scalar idols success with one company.
While the nation.
OSA Youll Sir.
Driving our revenue increase in the.
Our ability of tool continuous patent argued surveys.
During the year why the aura of Chinese mainland that content.
As the OLED small.
And the original shows achieved top 10 ranking in a four team conjugates, including <unk>.
Sure.
China, Japan Korea.
Lastly, we continue to.
Improve comparability.
Comparability.
The call operator.
All operations with local partners.
It launched our App.
Amazon sell TV local television.
America.
Overall, our many TV devices.
And central.
And the <unk>.
During the year, we also launched overseas at platform.
These patents.
Corporate core operation over six <unk> headsets.
Nancy.
In the future we will continue to focus on expanding the scale of our user base and revenue.
Leveraging the premium content.
The main app.
Continuous improvement of operation efficiency.
Right.
To maximize our monetization comparability of for the rest of this platform.
Moving on to advertising.
Advertising revenue decreased 10% year over year during the quarter.
Mainly due to the decline in brand as that decline in Brian .
It was mainly.
Attributable to.
First the lack of content both for their drivers.
Are they sold in the first two months of Q4.
Second week.
<unk>.
Overall macro environment.
Pardon.
The decline in breath App, we are pleased to see that added revenue from the sales.
Sales have doubled in 2020, but highlighting.
And the importance of already coal sales of our model.
Model strategy.
For 2022.
Targeting to secure more key accounts and the increase.
<unk> revenue contribution driven by continuous content innovation.
Seek growth towards SaaS titles.
Revenue from our permits as achieved steady growth both annually and the secret ensure that during the call here.
Right.
We are driving for us.
The operating metrics of <unk> increased secondly emphasis to that.
Yes.
Super.
So.
Correct.
Yes.
Given.
The benefit had strong traffic.
Traffic.
The annual growth of procurements App also benefits from the improvement of the products have to be a continual to optimize at all.
August .
Moving over to.
<unk> content.
Ex currency turbulence.
Fifth the many uncertainties that.
Directly impacted content.
Still the year, especially in the first two months of.
The first quarter.
Last week at <unk>.
Right in that setting.
The industrial policy.
We are able to fast growth comprehend.
The rates of content protection under Scouting.
We proactively managed the program the process.
Christa.
We feel it's related to a covenant of scouting uncertainty, we elapsed and finally improving towards that I know of.
First quarter.
Optima Felicia.
Overall content cost.
Most aspects of our recent operation not strategy.
For the first quarter.
The content related to the cost ratio continued to improve.
This vehicle as we introduced in the last call.
The effective rate.
Flat operating efficiency also the accountant in glass.
So from.
The mutual.
Improved over 20% annually.
Annual layout for the firm's culture.
As a number of low.
Performing titles.
Chris both annual and sequential that Meanwhile, we have utilized all.
<unk> intelligent and the protection technology at <unk> in Greece.
Uh huh.
And then maybe a core and forecasting capabilities, which in return increase to all content.
Right.
We believe we have a team of content to professionals that have surpassed the industry knowhow.
Okay.
<unk>, that's our fault the fashion and make sure. It helps the overall quality of our content and the team well.
Will there be.
In Peru.
Now, let's go through the key titles.
James.
During the quarter, we ranked number one for the number of new drivers launched in the industry all colleagues.
<unk> even closer.
And we've maintained the leading position in terms of market the shelf or warranty sharp pencils.
Chip.
For the full year.
'twenty, one our market share of mortgages drivers where are they short casuals and initiatives all ranked number one and that the number of new drama lobster, what's the highest.
St.
For dramas, we forecast.
In reaching.
Diversifying our.
Monetization comparability.
For example, we are building the Ikea Chinese.
CPA Youll numerous prototype.
Developing content, which is based on the traditional Chinese culture.
<unk> Israel of Rich Chinese culture look global user so diversified or adult protection.
Debilitate I'll first walk of the franchise.
No.
The original TV drama from Zillow.
Which generated in media among viewers.
<unk> in depth of Funky Loy Yang broke my phone on the effectiveness of launch.
One of the top ranking Heath dramas that achieved with such high index score on our platform.
In the future.
And is anticipated to.
Development at <unk>.
Productions.
Same concept.
Thats upfront task.
For the effectiveness.
That's L.
A number of titles.
And to be able to hit in first quarter further enforced as Brian .
Florida.
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Yeah.
Monetization comparability for the Minister of <unk> has become an important growth driver for our membership.
Mother generated the highest membership revenue among all titles.
Success also attracted more advertising budget 12 black Swan.
<unk> demonstrated great.
Working with advertisers.
Vertical.
Model.
For clarity shops, we continue to explore new tariffs and it's safe to praise.
From both in the Australia professionals and audiences.
For Q4 are ordered already no production no field.
Of course actual.
That maintained solid number one user time spend for.
Gyros.
C fulfilled we continue to appeal to all.
Florida, Panama city around the corner.
Aiming to further expand the monetization profitability.
Placing new online ecosystem for field distributorship.
For example, part of our adult films.
Our only released online well bulk mold model.
The initial success was encouraging.
In 2021, we launched a total of nine field.
T bolt model, among which orange, though field.
North eastern product.
Was.
It was released in Q4 and what's the second best performing people feel of the euro.
These and other increases the supply of premium content.
Gave us talented content creators.
Porsche.
Achieving.
Well, both steel mill cars on our platform.
For couples.
We also achieved.
Sure.
Yes.
Success in the flux cadre intra.
Introduced animation punchy Loy Yang Chen.
Sean.
Project bids in the ICU or Chinese.
As Tarek said here universe franchise.
And if.
<unk> holds that demonstrated.
All diversified IP monetization strategy.
Its popularity index broke.
So we.
We are seeing.
So that in ours.
If launch talking that Chad.
Paul.
Looking into 2022.
For dramas, we will continue to improve the quality of our content in the puzzle.
Especially for our premium.
Production at <unk>.
Build.
Compete TTIP.
So for all content ecosystem the key influencing.
We are exploring.
We explored the brand Nevada.
Vertical content.
The content in the lab.
If cycle by producing multi season dramas and cereals and.
Wholesale although we will continue to push.
<unk> achievements with our ICU Chinese.
Its target.
Hey, you only work you'll join us from China.
Now I'll see what I call sell tests that provide deferred comp.
Content is <unk>.
While yields us nimbler.
Yes, Thats patents.
<unk>.
Mr alter the raw mats.
Suite sale.
Our new launched common Dan's statement.
Settle down.
We recently launched.
Lifelock, Germany, Jason yet.
January .
Yes.
The key driver for the year.
Yes.
It has leading positions in terms of effective VR ship according to the latest.
Enlightened data tool.
So we will maintain our leadership position in boots gyros.
And our focus on categories that we have rich parents with such as military style competition games comedy.
Zig and roundness and outflows are in the lead table.
Shoals, Inc. Pulse underperformance competitions to meet the latest Youll start demand.
See full field.
Upgrade the number of protests and skills generous of orders there.
Fields as compelled that tool in 2021.
It's a bit too high.
Thanks to my <unk>.
Article related sales.
Digital films.
For <unk>.
Sure.
We will continue.
Cultivate.
To date, the beloved IP its about making.
Realized.
Dr <unk>.
Paul.
Couple of them.
Dallas caught all that.
First already there's no Chinese animation broadcast it.
<unk> TV channel.
It's become.
Instead it is already in there.
Multi asset development.
Moving on to products and services.
In the fourth quarter achieved light.
It achieved.
Outstanding fulfillment.
<unk> operating metrics.
In particular.
<unk>.
Reached 5 million.
During the Carryout.
Your line.
As in penetrating into low tier cities.
<unk>.
B Lowe user overlap between <unk> and <unk>.
Ill.
And as such overlap continues to decline.
The.
Such of library content.
Much higher.
<unk> light show different user behaviors between these two apps.
As well our interest the best community. So it could continue to improve the enriched our content ecosystem.
For the full year.
2021 C Corp contributed about seven.
17% user time spend on our platform.
Interest the best video.
Constitute tools.
One of the very important components of our content ecosystem.
That seems low cost ultimate accounted to answer it.
Relatively low.
If the all <unk> 2000.
Asset, Yes Asia.
Asia traffic generated by contributing to the growth of the performance AD inventory drag.
Driving revenue growth.
We hope the user generated short form videos will attract attention.
Consumption of active.
Active long form videos.
Creating a closed loop for.
Online video ecosystem.
The special events in Q4.
John the call Center.
<unk> optimized.
Open ablation.
The optimization of the structure and created a flatter organization structure.
Helps to up to bring in more focus back to our core business and the increase.
Efficiency of all.
Our operations.
As a result, there was non recurring.
Great.
The severance cost recorded in the fourth quarter.
Bye bye.
<unk>.
Although that lesion structure, we have.
Some bold.
Right.
The team.
Enabled.
To better focus.
A copy of the dance.
Operational efficiency.
To summarize we have seen initial positive.
In fact from Oppenheimer optimization opened nine seizure alignment.
Despite the turbulence that you've got passed a year, we've still maintained our market leadership.
Semantic layer improve.
Improved business performance as well.
I'll keep enriching.
Proving the quality of our diversified content.
Hello.
Refining operations of our vertical content.
Sales of our motto improving.
Agency of content investment.
Cultivating our content ecosystem.
Growth of all come in they take hold Trump yes.
Asia.
True.
Increasing our penetration in different geographies and Youll Sarah Kaufhof soon.
Right.
Large screens.
Our seats.
Initial reviews.
As a result, all fundamentals will continue to improve okay.
Our goal is to reach non-GAAP operating breakeven.
For the full year of 2022.
And the two rich quarterly non-GAAP operating breakeven.
Hello.
We have strong confidence and looking for work to bring our Bachelor and helps our two.
2022.
No.
Hand over to Mr. <unk> to go soon after naturals.
Thanks, Tim.
Now, let me walk you through our key financials for the fourth quarter.
In this quarter, we introduced the concept of non-GAAP operating loss was their first time, we believe it will help our shareholders to better understand and track a lot business performances.
So starting with the revenues in fourth quarter. Our total revenues reached RMB seven 4 billion, a solid performance considering macro headwind.
Our membership services revenue increased by 7% year over year, mainly driven by the growth of arm or average revenue per membership.
Our fourth quarter increased by 14% annually and 4% sequentially.
We expect this momentum to continue going forward.
Next move to the cost and expenses.
Initiatives previously explained.
Cost of revenue decreased by RMB 277 million.
Compared with the same time last year.
A contributor to the narrow our operating losses.
On the other hand, our operating expenses also decreased by RMB $175 million.
<unk> by 6% year over year, even with the one time severance costs.
As a result, our.
Fourth quarter, non-GAAP operating loss decreased significantly down 45% annually.
941 million RMB, two 516 million RMB, we're presenting a saving of RMB $425 million.
Compared with the previous quarter non-GAAP operating loss is also narrowed by RMB 500 and up.
$57 million or 52% sequentially.
Heading into the first quarter.
2022.
To see further significant improvement in both GAAP and non-GAAP operating losses.
Compare that with our fourth quarter two.
<unk> 821 2021.
Again this benefits from.
From our initiatives in cost optimization and efficiency improvement.
Our goal is to reach non-GAAP operating breakeven for the full year of 2022.
<unk> reached quantity non-GAAP operating breakeven as early as possible.
Yeah, No with December 31, 2021, the company had cash cash equivalents restricted cash and short term investments of arm.
$4 4 billion.
But financial data please refer to our press release.
Our web site.
Now I will open the floor for Q&A.
Thank you so remind clearly if you'd like to ask a question. Please press star one on your telephone and wait for a name to be announced.
I'll request, please press the pound or hash key.
Kindly ask your question in Chinese first and then you just translate the questions into English.
Participants are requested to restrict to one question at a time.
First question comes from the line of Alicia Yap from Citi. Please go ahead.
Hello, Thank you Juanita.
Thank you Vishal.
What would you say youre Guangxi <unk> Li.
Okay.
John will then tissue negotiate a question.
Appreciate that.
Thank you Bonnie.
<unk> sure sure yes.
Jonathan Please go ahead.
The dial in number.
Please go ahead.
Why do you think you saw that you saw that.
Sure <unk>.
Yes, Paul.
Does that seem to wassa in detail with your negotiations.
With me if I am.
So thank you for taking my question. My question is related to the cost and the profitability.
Same site.
Separately.
Narrow down your loss ratio over the past few quarters.
Can management elaborate.
How the company has managed to effectively lowered the operating losses.
And you mentioned about the full year breakeven timeframe.
So is that indicating.
The possibility that you can even achieve profitability as soon as even the second quarter or the third quarter.
Hi, this is here with us today.
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In the fourth quarter, we proactively adjusted our operating strategy, which focuses on optimizing.
Optimizing costs and improving operating efficiency to reduce our operating loss overall the results have been very encouraging and we are also.
Optimize our organization alignment.
Which will help to reduce our employee costs and also create a flatter operation and <unk> that help us to focus on our core business.
Now also to improve the overall operating efficiency and content site.
We are more focusing on the head premium high quality content.
And for that aspect, we won't decrease the number of head content, but it really <unk>.
Content related costs this year to help us to identify the low performing content and actually dropped those content investment overall.
Our process for investment procurement and operations will be refined to overall increase the operating efficiency.
Also we also built a promotional mechanism that focuses on increasing the revenue performance of the library content.
This is a content portfolio utilization also.
And what inventory for the advertising side and also prolong the life span of our content as well as increasing the subscriber revenue.
And why.
For the industrial video industrialization that we've been talking it out whether its from the net short term and midterm and long term perspective.
Court.
Focus area will continue to push for industrialization at Cree.
Efficiency for content production and operation.
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The non.
non-GAAP operating today Susan.
Okay. So.
So for Q4.
All the investors will see we have reduced our cost as well.
Operating expenses and narrowed our opex approximately 500 million RMB and these positive impacts will continue to release in the next couple of quarters. As you mentioned about the breakeven timetable first I would like to mention that we will deliver our goal for the year our Gulf.
For the year is being what we will try to reach non-GAAP operating breakeven for the full year of 2022 and to reach quarterly breakeven on a non-GAAP operating level as soon as possible.
Yes.
Yes.
Well, thank you for the questions.
Next question will come from the line of.
Thomas Chong of Jefferies. Please go ahead.
Good morning, Amit.
Amit.
You bet.
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Neil DG, Ohio, Tycho CFO .
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No problem.
True.
So it looks like that you say measures that J J, Vince Mcmahon about taking my questions. My question is about the competitive landscape, but the long form video market.
Management or seeing any changes there.
We need to anticipate intend to Trinity and number two is more about the content production and procurement side.
Sure.
Getting more and more rational going forward and finally on the policy or the rectal HOA environment side are we seeing the sac is getting more stable.
And what we should expect any policies that may.
It may come out in the future. Thank you.
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Okay. So for the overall competitive landscape for online video industry. We think is entering a new chapter.
Within this chapter I focus more on the efficiency.
Aspect and hoping to reduce our operating loss and increasing profitability.
So this is kind of different compared to the competitive landscape from before and before driven by various reasons.
The major players and more focus on.
Quality quantity of.
Content versus.
Policy, and et cetera, et cetera, So and we think that the operating focus now is back to the operating efficiency is much more healthy as compared to the market market share driven aspect.
For the content side I think.
For content production, whether it's for the original production.
It's very different from the licensing content.
Overall.
Competitiveness within the industry.
Should be relatively soft day, one because.
Right.
Process, but it's much longer Atkins, Jeff too to the procurement for the licensed content. So there are various Keith that is our key.
Flagship store Keith.
Key point that we can hit amount the amount the lines of this whole process. It gives us more leeway in increasing the overall oddity of our ovation apologies.
And third regarding for the policies right now we think it's relatively stable and as we have better comprehension of the online video regulations.
Industry and regulatory environment, we note the boundary of content production as well as content scheduling so forecast capability increase.
<unk> overall and that will help in terms of our.
Blackbird.
As well as on the revenue advertising site.
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Jacob <unk>.
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Jimmy I think ive yet.
And it has two or three years, our strategy focus has.
In expanding our ovation of production scale and also improving the production capability.
So in 2022, everyone will see our original production capability and as far as well.
We will increase significantly compared to before and I think we now have an industry leading team and also a good number of highly competitive our original production pipeline.
Thank you.
Thank you for your questions next question comes from Eddie Leung of.
Bank of America Merrill Lynch. Please go ahead.
Why now.
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Jane Guan needle.
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1000, <unk>, so Jamie Jose lie.
Thank you.
Thanks Sanjay.
So my question is about the membership growth, we have seen a bit of a smelter down lots probably are related to regulation and content issues, just wondering and the outlook for the membership growth.
Into Dcs and future. Thank you.
Yes, yes.
From the top.
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Some of it changing yet you don't call up on boiler for jacobina enrollment update how youll be broader.
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J B hunt from Jaap.
Sure Okay.
For our overall number.
Scrubber.
We have seen some relatively pressure in growing that over our membership numbers because there are different aspects one is.
There is the COVID-19 impact as far as second the regulatory environment, uncertainties and therapy.
Our video production capabilities. So all of these are the negative impact that will contribute somewhat to our overall membership growth.
And secondly, I think for the <unk>.
Overall.
Online video platform our video the user time spent has been decreasing that relatively.
Two factors are the market, but we want to make that the importance of online video industry. The long form video, we think is core needs procurement.
And what it is irreplaceable I think for the overall Chinese online video market as well as the users and market.
More mature and a positive impact and positive factor for the overall industry and third fourth.
As we see.
Namely the iPad.
The strength in the card as well.
The number of screens have been facing.
There are different user behavior is different.
Different screens.
Example for cellphone the most of it is.
Is.
Communication versus large I think the most feature.
Sure.
For video viewing experience. So overall this is a very positive impact or a factor that will drive our future potential revenue growth.
Well as the subscriber growth as well.
The arm that we mentioned before and overall.
Lastly for the IP protection, we are.
<unk> seen improvement on that front, especially for the long form video IP protection for all of these will be beneficial factors to contribute to the overall growth of our revenue in the future.
Thank you.
For the questions due to time country I would now like to hand, the call back to the management for closing.
Thank you for joining us today feel free to reach out if you will.
You have further questions. Thank you.
That does conclude today's conference call. Thank you for your participation you may now disconnect your lines.