Q1 2022 Bilibili Inc Earnings Call

Good day and welcome to the Billy Billy 2022, first quarter financial results and business update conference call.

Today's conference is being recorded at this time I would like to turn the conference over to Juliet Yang Executive Director of Investor Relations. Please go ahead.

Thank you operator.

During this call we will discuss our business outlook and make forward looking statements. These comments are based on our predictions and expectations as of today.

<unk> events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with the SEC and Hong Kong stock exchange.

non-GAAP financial measures. We provide are for comparison purpose only definitions of these measures and a reconciliation table are available in the news release, we issued earlier today.

As a reminder, this conference is being recorded.

In addition, an investor presentation and a webcast replay of this conference call will be available on <unk> IR website at IR day availability Dot com.

Joining us today from <unk> Senior management are Mr. Ray Chen Chairman of the Board and Chief Executive Officer, Ms. Carly Lee Vice chairwoman of the board and Chief operating Officer and.

And Mr. Sam fan Chief Financial Officer.

And I'll now turn the call over to Mr Fan, who will read the prepared remarks on behalf of Mr. Chen.

Thank you Juliet and thank you everyone for participating in our 2020 to first quarter results conference call.

I am pleased to deliver today's opening remarks on behalf of Mr. Chen.

In the first quarter.

Unexpected outbreak of COVID-19 struck China natural law impacting people's everyday lives.

Shanghai, where our headquarters are based what particularly impacted by the strict lockdown.

Do you tell your time, our top priority and to the health and safety of our employees.

Over a thousand of our staff members have been working from home since mid March.

I rent essentials to be delivered to our employees in Shanghai, where it was.

The most difficult to get supply.

In addition, we opened our documentary LIBOR rate to the public free of charge during the May holidays, and the donated 2 million premium PDP membership to Shanghai citizens.

We are glad to see that the Lockdown just ended last week and hope everyone's lives in our daily business can return to a normal order food.

Compounding the challenges our business Foundation remains strong and resilient in.

In the first quarter, our evaluate community continues to grow at a faster pace.

Total EMEA use ROE by two 1% year over year to $294 million and the Dia us grow even faster at 32% year over year, reaching 17 9 million.

Total user traffic, which we calculate as da youth multiplied by daily time spent per user grew 52% yield a year.

During this period each user spend an average of 95 million <unk> per day, the longest that we have seen operating history.

This strong user matrix represent our solid business fundamentals and we are seeing the momentum continue as we move through the second quarter.

Despite the short term impact from the Covid Lockdown.

Our total net revenue for the first quarter Academy at RMB $505 billion.

Up 30% year over year.

In the first quarter, both our paying ratio and <unk> reached a record high of nine 3% and $27 2 million respectively.

Broadcasting was a major driver during the period with paying user numbers growing 60% year over year.

Despite softer industry demand, we continued to gain market share.

And grow our AD revenue by 46% year on year in Q1.

Improving our efficiency and exploring new products.

Such as App install remote.

Few of the initiatives, we expected to leverage as we work our way through the challenging microenvironment in the coming quarters.

User growth effective spending control and improving our operating efficiency our top goal.

We have made some progress on each of default in Q1.

Sales and marketing expenses decreased by 29% quarter over quarter accounting for 25% of total revenue.

Down from 31% in the previous quarter.

Silver and about what costs decreased by 2% quarter over quarter, which is no small feat given our daily video views increased by 36% sequentially.

We continue to invest in R&D in Q1, which we believe is essential for our long term sustainable growth.

Regardless of the pandemic impacts our short term financial matrix.

<unk> committed to our mid and long term growth of narrowing our loss ratio in the region breakeven moves.

Moving forward, we will further strengthen our commercialization capability control costs and improve human capital efficiency.

With that overview I'd like to grow through some details of our fourth quarter operations across our content community and commercialization BD believe unique content and our community offerings provide our users in replace of Bo if prs in the online video space since 2020.

One.

We have successfully extended to a multitude of Dell rail video community by launching our thorough mod and the smart TV App.

This has effectively brought our rich content to users in more formats that resonate with them across different viewing preferences.

User response to our short form video star reward had been very inspiring Dave.

<unk> shelf on video with BD PD features provides a unique walgreens experience to certify users on the go entertainment needs.

Remote bothy, an incremental increase in total video consumption.

Contributing more than 20% of our total video views in the first quarter and these numbers have continued to grow in Q2.

Yes addition to more views and creating deeper community bonds thorough Mod has also opened up a new avenue for commercialization opportunities with advertisers as well as our LIFO accounting services.

During the period.

User primarily engaged with content and the lifestyle.

And the table ACG and the knowledge categories.

Across these verticals and others content creation remains robust monthly average content submission was $12 6 million, increasing by 53% compared with the same period last year.

Mostly active during the quarter was $3 8 million up 75% year over year.

The deep value we place on our equator is one of the reasons, we are able to maintain our robust content and healthy community.

The key to motivate their continuous creation to help them gain recognition and provide the money to reward.

We are providing them with both.

Content creators with more than 10000 followers increased by 44% in the first quarter.

Beyond our cash incentive program.

Content creators encourage it.

<unk> realized their commercial value more fully through multiple avenues, including LIBOR casting our cycle AD platform creator recommended <expletive>.

The direct tips from users.

In the first quarter, a total of $1 1 million content creators highly received monetary compensation for their work up 19% year over year.

As for our community.

Continue to foster an active environment for our users to get closer to the content and intact with creditors and each other.

We can see this not only with the recall average daily time spend our platform of 95 minutes in the first quarter, but also in the increase average daily video views.

Which grow by impressive 84% year over year to nearly 3 billion.

Number of monthly interaction in Q1 reached $12 3 billion up an impressive 87% year over year.

The bond between our users and the community have continued to grow.

By the end of March we had 158 million official members.

41% with a stable 12 month retention rate of 83%, both our star Mod in the smart TV play a positive growth in driving engagement levels.

Now, let's take a look at our commercialization efforts.

Accelerating our commercialization effort is our most important target this year.

Despite the macro headwinds our business is resilient with advertising and e-commerce business have and well be particularly impact in the near term.

We are paying more attention to the quality of our revenue growth, particularly the margin contribution of each business segment.

For our game business in the first quarter net revenues from our Gan business increased 16% year over year to RMB 136 billion. We continue to invest in in house game development pipeline, a new studio in the first quarter at the same time, we are closely monitoring our existing projects.

And the condo thing agile testing to keep our pipeline ahead of the fast evolving industry. We're also working to improve our industrialize the development capability, which is equally important in lending and idea that walk.

Turning to our pipeline three can have already being approved.

In the late approval stage.

Paul again operation in the overseas market, we have three titles.

For launch in the second quarter.

More for the second half of this year.

Turning to our <unk> net revenues for that one B 2.05 billion, an increase of 37% year over year.

The pandemic with a lot of monetization opportunity in this segment, particularly in LIBOR crafty and other innovative community related value added services.

Our powerful <unk> video library, and the pool of talented Equators give us a unique advantage to leverage and reinforce our live broadcasting business.

In the first quarter the number of active live broadcasters on BD BD increased by 88% year over year.

We continue to roll out more tooth and function to latch quay towards showcase their talent and to introduce new forms of interactive virtual gifting program.

Meanwhile, the popularity of the remote opened a new gateway for users to discover in switching LIBOR caffeine content.

This initiative.

<unk> and natural conversion to our pay user arises.

In the first quarter MPA use LIBOR cough team increased by 60% year over year.

As for our premium membership by the end of the first quarter, we had $20 1 million premium members, 25% increase year over year to.

80% of these while annual or two new packages subscribers, representing the strong trusting us.

In 2022, we will continue to add exciting content to attract members, including a series of Billy Billy produced Chinese enemy variety shows and documentaries.

Looking at our advertising services revenues from this segment, while RMB, one zero bidding an increase of 46% year over year.

In the first quarter, our top five advertising industry verticals, what Ken skincare, and cosmetics <unk> products automobiles in the food and beverage.

In March the unexpected Colby looked down costs travel restrictions and logistics difficulties in major cities in China.

Tightening dollars what delayed our place our hold call counting the housing we are pressing forward to expand our culture advertising scenarios with more innovative AD products and increase our efficiency with a better conversion to kit.

We launched our store remodel as in April and the initial feedback is encouraging.

Compared with the tax picture based ads as in the store Remodels have higher ROI to add customers and bring incremental increase as inventory as well as our <unk>.

We plan to allocate more resources to improve its performance, including aggregations and product <unk>.

E Commerce is another area deeply impacted by the logistic disruption caused by the pandemic.

We believe our customer trust is our most valuable asset we offered our customers a free delivery delay services and automated refund option.

As we recover the kings our May <unk> sales, while again on the rise.

Going forward, we will continue to explore new innovative models.

To maximize our IP value and achieve synergy with our leading content verticals.

Compounding the macro challenges our action plan is clear for the rest of the year.

First we aim to take all necessary staff to resume normal business operations.

Second we will be focusing on the quality of our users and now revenue growth, particularly <unk> matrix and our business segments margin.

Lastly, we will take essential action to further control our cost and expenses.

This concludes Mr. Chen's remarks, I will now provide a brief overview of our financial results for the first quarter of 2022 and the outlook for the second quarter of 2022.

Total net revenue for the first quarter was RMB 505 billion up 13% from the same period of 2021.

Cost of revenues increased by 43% year over year to RMB four 2 billion.

Over in bandwidth costs as part of the related fixed cost component decreased 2% quarter over quarter.

And then what cost per video views decreased 27% quarter over quarter, showing our ongoing efforts and progress in cost savings.

Our gross profit in the first quarter was RMB 807, 2 million and gross margin was 16%.

Total operating expenses was RMB two eight building a 42% from the same period in 2021, which represents a 9% quarter over quarter decrease from Q4 'twenty to 'twenty one.

Sales and marketing expenses were RMB, one 3 billion.

Representing a 25% increase year over year, and RMB $507 7 million decreased quarter over quarter.

Selling and marketing expenses as a percentage of total revenue was 25% down from 30% in previous quarter.

G&A expenses were RMB, $535 3 million, representing a 38% increase year over year and keep flattish quarter over quarter.

<unk> expenses was RMB 1.0 billion, representing 74% increase year over year.

The increase was primarily due to increased headcount in research and development share based compensation expenses.

We will close monitor the progress and all of our investments and make ongoing adjustments when necessary.

Net loss was RMB, two 3 billion for the first quarter of 2022, compared with a net loss of RMB $904 9 million in the same period of 2020, what <unk>.

Adjusted net loss, which is a non-GAAP measure was RMB 165 billion compared with RMB 891.0, meaning the same periods of 2021.

Basic and diluted loss per share for the first quarter was RMB 580, compared with RMB 254 in the same period of 2021, adjusted basic and diluted net loss per share was RMB 420, compared with RMB 250 in Q1 2022.

Turning to our capital allocation and the liability measurement, we announced our $500 million share repurchase program in early March.

As of March 31, 2022.

Approximately $1 4 million.

He had been purchased under this program for a total cost of USD $13 million.

We are also optimizing our liability level in Q1, the company repurchased and cancelled an aggregate principal amount of U S. Dollar $204 million of convertible senior notes with a total cash consideration of USD $147 9 million and the.

Recorded cash saving of RMB $338 8 million.

As of March 31, 2022, we had cash and cash equivalents term deposits and short term investments of RMB 24, 7 billion as for our intent to convert to do primary listing on the main board of Hong Kong stock exchange and the NASDAQ.

The Hong Kong Exchange had acknowledged our application set in October three 2022.

Post the effective date for our conversion to primary listing.

Well expand our access to a wider investor base, while we expect to mentor our listings data on Nasdaq.

With that in mind, we are currently projecting net revenues for the second quarter of 2022 to brick routine RMB four five.

Five billing and RMB 495 billion.

Thank you for your attention we will like now to open the call to your questions.

Operator, Please go ahead.

For the benefit of all participants on today's call. If you wish to ask your question to management in Chinese. Please immediately repeat your question in English. Please limit your questions to one at a time. If you were sort of a follow up question. Please rejoin the queue.

Our first question comes from Li Zhang with Bank of America. Your line is open.

Yes.

Hi, Bonnie Zhang.

Hello.

Yes.

You too.

Got it.

Yeah.

That Bill mentioned.

And can you talk about that.

Hi, Scott.

Thank you.

Thanks Zack.

Thanks management for taking my question.

My question is mainly about.

Paul the lockdown impact to our business in the first half and then how should we look at our second half the user trend as the overall business outlook post the lockdown. Thank you.

Hmm.

Sure.

Let's look at somebody in Ohio.

So definitely Gwen in the.

Sure.

Certainly sequentially Eagle.

But what are you seeing.

India.

And all that can hurt your consumer book and in those dialogues.

We've got that in the calendar.

To her.

Shanghai Proofreading.

So we can say that the strategy.

Well I believe.

The pandemic is one of the question that most people cared about first half of this year.

And in.

Indeed has bought severe impact to macro economy, and people's everyday lives, especially in Shanghai as one of the Cds was particularly impacted.

So now in the group that actually is about Mr. <unk>.

Shanghai Tang going to backend Birmingham gone too.

So the Pentagon.

Horner Nico will measure.

Hi.

Border playful.

Consequently, when we all Lewis.

Also the soiled they will go.

Thanks.

Switching now to her QD oriented, but she's got a bundle.

One example to the assembly of the English as yet.

These are actually believe us.

That at least on the others.

The tissue.

There's a lot of similarities and so forth.

Parallel data beyond that.

Taking the ability for example over 8000 of our Shanghai employee has been working from home.

14th of March and we are just now starting to gradually returning back to office this week and sales teams.

Again, all the employee will be fully back to work.

Yes.

A total of three four months you can imagine.

Everyday people everyday life in Shanghai.

Google kind of using the pizza you encounter.

Water handling.

Eating pizza.

Cedar is here.

How should we you can see on the Peugeot Nathan Guangdong.

Yes.

Yes.

Each into <unk> should mainly Intel.

And how do we see the impact COVID-19 impacted deliberately.

Indeed, he has brought short term impact to our business, particularly for advertising and E. Commerce. However, we did not we don't think there is any impact to billings.

Term for us.

You can.

With that I think income taxes.

So youll see I think.

The.

So it sounds like value.

Someone yet focus on highly targeted data cutoff for that at all.

Jeff what are you seeing hydrophone, so I didn't want to Hangzhou.

Bronco to talk on the.

Cisco can inkjet rollout since the Hong Kong pitch.

The hydrogel.

Okay.

Yes.

Purely yoshizawa.

<unk> total equity showed up.

So the dosing with <unk>.

For for example for our advertising business. There are some short term impact for example in many cities in China in the first half of this year people are in some sort of lockdown.

Home mode maintain.

We maintain a lot of the advertisers putting their advertising plan on hold or delaying their advertising dollars and that that's the fact.

So these are the dance on you.

So in terms of leaving to Usher Julio.

Todd Orchard up some cash which is true.

Tom either to the team hydro gladly good either.

So those hands.

Oh cyclical thoughts on.

How quickly we got the entire holding company liquidity.

So what are the particular woman those.

So really the hydro one lithium sarnia, we are convinced that you can see.

Yes.

So what are the economics credential QR.

To accompany with utility needs.

<unk> e-commerce business, because starting from March, especially April and May a lot of logistics, it's dropped disruption.

The lockdowns or.

Staying at home measures across different cities in Shanghai.

In China, and Thats impacting people's willingness to purchase as well as <unk>.

Never services.

So we do expect this impactful.

Impact will continue in second quarter.

And that's what shows up on holiday in Canada.

Okay.

<unk>.

We are going away.

Louis I think so.

Coordinator.

Oh that linked with deer Hunter Greens totally jumpy.

For mail.

And August impact to our App business and E Commerce business.

Do think its temporary especially after churn went.

We reached certain milestone two.

Come back to the corvette.

Asian, a lot of the impact is starting to mitigate and disappear.

She's a woman.

We thought it through her eating pizza Silverman tushar.

John .

Five year round.

With that in the future.

Peugeot and can you kind of.

Good.

Well, if you look at official that Samsung.

Your home if he cannot.

Part of it.

Hum, which can wait that out.

She already in the future.

100 <unk>.

Pete on the typically unless you can sure.

Income.

As for availability fundamental we don't think theres any impact that brought by the pandemic for example, the video light sanction at Tampa.

Stoppable trend and we see the young generations their needs towards entertainment and cultural products is still very very they're strong and their consumption towards cultural related product is become even stronger. So that's why we do not we do think at theirs.

No impact to our fundamentals to them.

Kind of what kind of leads into the issue.

So either MA user can be for industrial purposes, essentially woman to either Diego to Colombia etcetera.

Advertising <unk>.

<unk> done that.

And looking at the specific user matrix for example in Q1, our <unk> grew 31% year on year <unk> grew 32% year on year both of the May check.

Accelerating compared to Q1 last year.

Okay. So the tundra.

<unk> to whom I hope will come down the CAGR.

To hit the I think you said that you got to wholesale.

I don't believe Theres room, <unk>, Google will Linda <unk>.

So cohort.

Archie the hydrogel wilmar fully over the top.

<unk>.

Hopefully you won't work because it's going to have a single ingredient.

The kisses assuming assuming look with enrollment.

Okay.

The courtyard.

But that sit outside Heidrick workshop.

As for the quality of our user growth.

Alright, this quarter, our ta use growth rate outpaced the miu gross bank and for our paying user growth rate outpaced the <unk> growth rate and we achieved a record high paying ratio of nine three.

We are not only experienced a very fast.

User growth rate.

Quality of the team here.

Also very strong and this is all done on <unk>.

The scenario that we have not increased.

Any of our sales and marketing budget.

These are significant P&C Jorge Alonso.

King.

Selling them off so it's really the whole contract hit at the woodlands.

The woman sequel.

Vocal that pega daughter.

I would assume firsthand knowledge I'm sure for sure.

Lucid single bulk of them in vertical.

So it can be summed up sort of pattern in your pocket.

Sorry.

Fuji.

Our total long ago.

Truck platform.

Either.

Selling your partners with you.

Totally understood with mortgages.

Not only because the bigger maybe we can some of the images shortly the thumbs up to face Honda.

My commentary.

They are literally half the business model of a typical platform Internet platform business model, whether it's <unk> or paying ratio record high time spend of 95 minutes and the engagement level grew 87% year on year all of those.

<unk> can be translate to commercialization and Thats why we think.

<unk> has no long term impact.

Typically thats at Walnut.

So that would only need the <unk>.

<unk> <unk> zone.

Sure right. So you can the intentions you could toggle.

Okay.

Louis is on cash flow.

Total leasing that you've done on inventory runway.

<unk>.

Just got a seamstress totally or Canadian.

Thus far the outlook for the second half.

Well this year.

For Q2, Theres still impact lingering and perhaps the impact to Q2 is even greater in Q1.

Since June this year, we can see there is a sudden change.

The environment.

Different cities in the country, starting to recover from the Lockdowns and Thats why we do think the second half of this year things will start to recover.

The yogurt and governmental naval women's here it seems that you mentioned.

Equally you put and are cautiously but to your other one.

So on water.

<unk> will come down even more garden argued Ohio woman Sandaza went home should qinhuangdao have conclusion.

Sure.

Homeaway conjuncture.

So that whole route.

With regard to mobile.

As for the user growth, we have delivered step by step of our user growth target.

At the same time, we're playing more.

Paying more attention to the quality of the user at the same time closely monitor makes sense, we spend on sales and marketing.

So you don't Novartis Alcon Tyler.

Familiar from cash.

We work with <unk>.

Until July call in English.

And it.

So again, yes.

Playful ode equinox.

As for the business side as I mentioned June month, we starting to walk out of the Covid impact and we also believe this is the time, we started to pick up our growth.

Gross rate for the Rep for our each of our business lines.

Operator next question.

Our next question comes from <unk>, Zhang with China Renaissance Your line is open.

What's your sense at all that people want to be on.

What are your story mode.

Well, it's a lot quicker and my kudos to remove 20 VITAS sentosa.

Our Tulsa your timeshare Couldnt call it reported yet.

Interesting.

Sure Jim So theres lots of lymphoma content story mode et cetera, and then or Centanni miniature so I'll focus I'll tell you wanted dividend.

Sure.

Thanks for taking my question. So my question is regarding story mode. So cannot share more color on that.

Update such as what the relative place our broader content ecosystem.

The progress.

Commercialization as bullish around that thank you.

Okay.

For hydro properly.

<unk> gone to Laurie.

Neither story models <unk> internal movements of lasers with us talking about the whole time.

Maintaining seek attack on a go kind of alter ego simply layer.

Indeed, essentially released earnings a lot of people are asking about the progressive story mode.

The strong total video views has now contributing more than 20% of our total video views. This is a very tangible new format of content.

That's playing a bigger role.

So that's really it's our historic model to Sundance Khasab, neither will the DRAM contracts of hydrogen pizza in the store and motorcycle trigger the left.

I've been pusher women they go to.

<unk>.

<unk> the hacienda.

Storm would also comment that.

Candor Nicholas <unk> neither closer.

Colorful border Pickle Fork in touch with you.

First of all I have three planes.

Wayne I wanted to emphasize starting first of all it is a pure incremental traffic for availability, it's not like the story mode traffic is replacing some of that.

<unk> topic, but while user are watching more pbgv's watching even more story mode.

What kind of food UK kind of Fuller picture.

Neither woman.

Good or both onshore does lead leader can be summed up Sir Patrick deposits.

Yes.

Storage has invested tons a topnotch it also.

Crude oil storage provider.

<unk> the full year sugar passenger orders in North America. So it's over.

Thanks.

The Puget with us so there was a couple of quarter.

Nico story models have one chance is that of course is not on the tissue.

Transalta.

You've seen them yet.

And from a statistic.

<unk> perspective.

Our video views as well.

84% year on year, and <unk> contributing 20% of total traffic.

Excluding the <unk> contribution.

<unk> growth rate is still around 50% to 60%, which is the similar rate we have kept in the past that mean.

Story mode.

Pure incremental addition to two hour delivery ecosystem.

The smoking.

But shipping.

Yes.

Sure.

Total operating casinos.

Neither of these items is that delta.

Daniel Chan will mature.

Sure certainly.

Does that answers a woman the Gordon row, Roucou particular, shrinking the shipping pattern wafer woman.

Sure.

And the only a license title industry's ability to assortment that means of course will not be counted on in terms of the Lindsey <unk>.

Sure sure dollars 80.

As for the storm out vertical sure.

Sure sure meeting format. This is not something new.

Matter of fact, we have this type of content starting from tier three years ago.

And.

Two our daily operation.

The most important thing is to make sure for this type of content is adding incremental traffic instead of replacing our traffic and from the results we have gotten a very big gap.

They are dealing with aircrafts Luisa enrollment and go back to historical towards company Yugo.

Sure.

Google Cloud because I think the story the shipping more qualified to answer.

Tableau conference in virtual Shlomo.

For that the arbitrage.

<unk> sure could go on that since that is <unk>.

So.

How does the sulfate is hunting completely I'll continue.

Because it seems that we don't go with Petrofac.

The containers into recovery.

I won't get us into southeast Asia to history, so either hydrosol makita tools or sales are to the store and model some type of tuck in <unk> TV.

So if you want to top quartile quarter Schindler selfish casino itself is challenging.

Why we can build a incremental.

Traffic growth from story mode.

Because we have viewed the story mode of variability daily unique flavor type of content. If we look at the story mode video creator many of those are content creator and for the consumer of that starting those are available existing users but.

Those users are consuming this type of content during their fragmented time on them more like.

Scenario.

We believe the story mode actually it is.

Comprehensive answer.

As a whole product supplement to our original Q GB content.

It's actually expanding a new consumption scenario for our users.

Are you more cautious towards utilities between concept and the optical therefore patch. It's really we're talking about shipments are coming along either.

How long do you suddenly you quantify the waveform hydrocodone either.

So we bought the board.

With Hermes helpful Fernando.

Sure.

And for our content creator.

Very good at making long form videos, it's actually very easy for them to create a shortage of vertical format of content. It's like asking you want to take that LIBOR, but it's very difficult to alpha weibo user to write a long article.

<unk> to <unk> this year.

Sales opportunity around how much you thought you were talking with our team.

How much of the cobalt Harsha payouts and gala will make their lives.

Partially on Pizza underpin Egypt quarter on the policy on challenging when you look at the toy industry.

And asking our content creator to make more sure short arrow vertical format of content actually help us to increase the video submission and also is helping our he is there to expand their video consumption scenario, making them more become more active and engaged on our platform. It's a women sexually.

<unk> for us.

It is only at the house.

Neither Nathan.

And the beauty.

We industry.

A woman <unk> put in a longer time, because when you will contribute for chico's hunting future tour.

For flagship chemo nave is hunting just your thoughts.

Now a quarter so sort of.

What was happening towards the border it doesn't believe budget due to penalize or the potash demand outstripping yield exiting eligible.

Please proceed thank you switching to either.

<unk> nasal social issues within those countries.

Yes.

And thirdly, I want to emphasize for Billy Billy we are not a tool type of product is very easy for people to see some of the internet platform our product as a tool. This particular product is far player for a long form videos.

For up short video player. This is a platform for Libra accounting for availability, we have it all because instead of it being a tool ability.

Our content our community platform that gathers people will then.

Let's see.

It does.

Danielle life.

The ruling at the league potentially on <unk> with US here Mr. <unk>.

How should I know Natasha adoption play like how does it all got into these two bills or negotiate.

Youll see there and hopefully see that be decrement Coyote a city that is actually makes that youll see triple HIFU are Peter <unk> the usual.

Just cutting through the Yahoo, particularly can be gender just the opposite.

We can't be that other people can't.

For the industry player than we are used to separate users.

By the product means however from a user perspective, they choose product.

I climbed 10 verde costs not by their industry categories. For example, again lever it will not only watch GB.

DB gain Puget.

And we'll watch the game related live broadcasting he or she might also play deliberately produced or license gain as for knowledge sector users he or she buy.

Both consume.

Knowledge related <unk> television and also watch the documentary on visibility.

The hydro test store in motor Young Kids, all Ms Dora model in parallel and in April .

Some port labor labor.

Later.

So general practice.

Neither pure Televisa some.

Neither.

Good.

And so as far as story, there massive content supply on story.

Related to lifestyle foodie patch and those content category actually narrowing.

<unk> category on the mainland.

<unk> please.

<unk> beaten tortured borders hotel Heartsease wisdom of Deutsche <unk>, you, Mr. Bruce Zanca mobile Kingdom.

<unk> work quite as opposite to Kenosha faster when you intend to tell me who are with US since day, one with a thorough more deterioration just a woman starring model being pushed away looking more hunting team zone, Arthur waiver that visa Matt Walsh.

Sure.

Many years ago.

We believe starting to July broadcasting business people will ask if we want to compete with certain libra passing path.

Yeah.

This is expanding our users' needs and extending our content offerings and so as far starring mode.

Competing with the <unk>.

Video platforms out there are actually satisfy our users' existing need and expand their content consumption scenario given what techniques.

Civil works. So this is Glenn.

Staring model selling Johan here.

<unk> automotive semi hard one for me in the hot runner to return to more typical.

Just within your control and it will mean to recover quite powerful.

<unk>.

So how do you from your.

Total credits or how you go from Hollywood.

It's early.

<unk> hi.

Hydro.

Stoller model.

Tyler will means that selling.

Selling our solar senior.

Lastly on commercialization.

The beauty of the short form videos.

Our model has been very very mature and there are so many very successful precedent in the industry. It has been proven to be have very high efficiency of AD conversion rate and its conversion for our life Rock housing is also very good and from our practice.

Also being proven this model work and this will bring incremental commercialization opportunity to deliberately.

<unk> for the.

Store and more tourism to the sedan dose in that.

Thank you for that kind of a foothold in the receiver to her.

Our three product for sure where the only store mode, which is always a woman.

<unk> got the mill capital attached to our centers.

And with that we rely very modest Patterson now with <unk> <unk>.

Port onshore.

We're starting to make a lot of trial runs with Bluebird.

With story mode product until now so far the progress has meet Hasnt has met with our expectations and we will continue to allocate more resource to develop.

And we believe it will bring incremental traffic to our billable ecosystem essentially it could be even bigger than the Incrementals GB.

Topic that.

<unk> has brought to deliberately akshay the hardware.

Sync that up reinventing Doescher Nico will purely thorium have we've got the visa anywhere the few degree there's probably been some format Shanghai Santa <unk>.

In the last year.

And Hell with which the board as a whole.

Ill now conclude that Youll definitely which is what has been diagnosed and a $2, but these have been milking things such as what does that mean.

Archie book patches put in.

In low acuity with Angela what normally is a young business.

<unk>.

It's a pleasure Kentucky.

Shipping quip interim fees at some kind of equilibrium.

And the rest assured.

The launch of story mode will not change how the builder ecosystem works it will actually become a new highlights.

Daily billing ecosystem as like many years ago, we started to do live broadcasting and some of the user express concern whether we are going to change to a live broadcasting platform as a matter of fact now live broadcasting.

Instinctual element embedding within within our ecosystem I believe the same thing will happen with the historic Billy Billy will now become a short video platform. However, this will be part of our ecosystem, serving users different needs and expanding our content offer.

Great.

Topic.

These unrealized realize your daughter.

Fantastic.

Sure.

Total <unk> in Tyler.

Okay.

We believe.

In the near future, we will have more and more high quality mid to longer form video beforehand.

It will be even more high quality short form video born and Eastside on visibility.

That concludes Mr. Chen's answer.

Next question please.

Our next question comes from Alex Yao with Jpmorgan. Your line is open.

Got it.

Hello.

We're trying to win share count you can go to when you're done with the Coca Cola Company.

Yes.

I'll, let Jamie jump on your beach, and Tom to keep them in sure.

Each Mayo Schmidt Gwen.

In Chongqing, Guangzhou and Chengdu.

It will be gaucher type.

James on for Tom.

Jean Michel for Amy.

Sure.

Jake.

Could you convert tissue.

Therefore, each mill.

No question.

So quite an important change in Washington, how should we do believe as you know for sure.

So you can see you can do the yes.

Yes.

Trade zone that Jim Jong Paul Jake.

I'll touch on the June call and.

My husband, Sean Peche enjoy your ship when you Couldnt call.

But sitting here the tissue.

Sure.

Downhole.

Please go to <unk>.

You spend items or sure Peter Correct me here sure Sean do your frame of mind here.

So a woman.

Michelle niche in the call.

Do you think John Deere Nashville.

Okay.

Elyse in the Congo.

Currently you showed that each new shop downhole, just to kind of shutdown yen traditional carlita Shanghai Shenzhen into your formula.

Some of the Mccann <unk> Paul.

Tiger three touch solution.

Sure sure.

Pardon me Sir.

I would like to ask some questions.

Advertising fundamentally.

I agree with.

Mr <unk>.

The long term determinant to advertising monetization includes number one.

The total platform usage number to use.

User demographics and number three to a pack none of which.

Has anything to do with the short term COVID-19 impact.

Okay.

Uh huh.

The investment communities follows the company and the type of company on quarterly basis. So we would like to understand the near term trend our advertising for example.

What are the types of categories that are more vulnerable to COVID-19.

Covid impact.

What are the category itself.

More resilient.

Similarly, what are the advertising formats that are more resilient and what are the more vulnerable advertising formats.

Shanghai has oh.

How do we see the advertising revenue growth rates into the next couple of quarters. Thank you.

Okay.

Oh, well just Alex.

Oh My God Cushing.

Thoughtful and my best I think they both have shown scale.

Can email copies of the Guangzhou ship.

Tony Jones.

This is a deal.

Does it go on Turkey.

Thank you.

Hi, Sheila.

Gaucho Twitch essentially is that king does it pull back we're just gonna, yes, yeah, though she young.

So the kisha signed out substantial a show called Suzhou call of one called whole pharma Patricia.

Tissue Pizza and Delphi are they pushing does it go without you did alcohol.

<unk> no question.

That's it.

Well, maybe it's tissue.

Yeah, Yeah, Yeah Golf show you how should be the way they like Wow okay.

So I'm going to kill or you just don't know who got you Donald Trump ourselves at all.

No the Asia, which ensure the peanuts.

Thank you Alex Thank you master it very essential.

Vantage affiliate beliefs.

Our Titan business.

You said due to macro economy.

Slowdown and the pandemic impact many advertisers budget were delayed or placed on hold in the first half.

The same time. This is also making the advertising market, reflecting the very reason to in past for advertising. We believe the platform that we have.

The problem has high user value and the ability to influence users' mindset and we've also continued to invest in technology that improve our conversion rate. We believe in the longer term daily billing will be more favored by advertisers.

So this should be done.

Changing yet.

Thank you.

Your password partially courses essentially.

Yes, sure its MBS, how we'll attack.

So if you go to search or those who don't go purely selfish.

B does then Sheila there's just such a cold box ourselves got you the keypad.

Hi, Tom.

Sonya Unfortunately at low Chomsky box, so is that that the Jones.

Sure.

Sure Sheila I'll show the Jones Act.

Let me ask you should say in general Steve.

Gotcha.

Hi, This is Josh.

Changzhou Teeny Yang for the dollar.

So you're right.

Hum.

Got you signed up for the <unk> for the short yeah towards hockey lives Shaw.

So it'd be telephone call you ship out should be that low Gwen.

The average age has been a bit of users 23, five years and 86% of our user are below 35 years, so more than half of our users are from first and second tier city, all of which matrix where print them.

The main cohort that's driving all kinds of consumption in China by mastering. This population we have become the wealth.

The platform that all of the advertisers Craig.

And if you look at past two to three years, our AD load has state 5%.

Haven't increased any of our outlook our advertising has maintained relatively higher growth rate throughout the last two to three years and this is an evidence that advertisers really value this visibility user as well as stability in the Brent <unk>.

Even though that the AD dollar in the market might reduce in the short term, but we remain optimistic about <unk> advertising long term growth.

So longer term they'll kill you.

<unk> essentially.

Yeah Bob.

The expense issue.

Good evening, Yao Chen Tong, Hi, Shlomo, but youll, certainly sounds really lies sort of out there.

Yeah, Youll see again sure yeah, Yeah, sure and they'll play.

Well the deal should how.

You'll see should be done.

How should something like.

This issue of Mayo volatile Hasegawa.

Well the challenge on high Na.

That's helpful. Keith a tissue the Copel <unk> well myself again shouldnt done yet you guys felt they need the Jones Act shortly.

Yeah, Yes, it does.

Oh God you got that.

So you say, there's a couple of changes.

How should come down not because also the jonestown.

As for the industry vertical that specially resilient in the first quarter gained three sea food and beverage skincare and cosmetics has been pretty strong in Brazil.

Especially for games, and automotive and first quarter without any game approval. The issue we have delivered better than expected game advertising dollar increase as for automotive.

Because the business user is growing.

Growing with the platform. There are consumption power is also growing and this has been cap.

Captured by a lot of the automotive advertisers they are willing to spend more advertising dollars to attract and and for its deliberately users.

Yes.

Trading King Buffalo, Alex downside at all.

The board of Deutsche Telekom.

Yeah, It's all questions that you show them, how it shouldn't be that clients will draw.

And so I'd say the bulk of them essentially.

So I'm asking just the changes at Dow Jones, So we apologize, but you sound on leap B dubs.

Sure.

She joins all Ian King Hi, Shirley Zhao cards at the same time.

The answer to that.

But that's kind of a woman Chongqing Shanghai, that's on track, yes, so she's a QE again, you've got turned off so quickly is the only real partners. This is key.

She'll part time co founder Neil Shah, what's your thoughts.

Sometimes in the country.

Yeah, Doug.

These are the bolt ons.

Thank God Ching Tai Shan Shan Shan club format, so pushing the antimony that turns out to be the niche.

Confronting the macro uncertainties and short term fluctuations.

Focusing on doing the right things the pricing deserves for long term, we will be focusing on developing more standardized and industrialized integrating marketing facility. This will be our long term growth engine.

Relying on the rapid iteration of a product capabilities and data capabilities. We will continue to strengthen the construction of our middle platform for commercialization.

And among the customers.

Invested in Q1, 74% of them rot across different products across different ad products.

A customer who brought integrated marketing and pain, namely brand performance of native ads also grew significantly year over year.

Just the idea of our my high school a high.

Hi shortage issue towards college holiday slowdowns.

<unk>.

Kitchen, Yeah, you do full board.

So the iPad TV blurry.

Yes, she's yellow orange and <unk> okay.

Okay.

Sure you bet.

I do not want golf tissue.

Ali.

I would say TV QE.

Youll tissue and towel Kevlar.

<unk> also got pulled out because it does seem that sounds like target children doing your question that needs to be done on your own solution.

I've done a U K duo massage it on television.

Allison Who's essentially.

So I know you won't see that insurance, just ensuring legal counsel.

So this is Sean.

All three of them, we think people talk about Paul <unk> on for Brandon.

Well, it's always hard to shift our originally with <unk> until we get that's what their salary mode at a certain target well just over time I think you said, yes, yes, yes.

So she can toggle switch on my shoulder yeah golf.

Well hope Hull no.

Unfortunately boardwalk.

Thank you for the young woman, that's what God.

Hygiene thoughtful woman that's shown within conjuncture.

On top of what we are good at the area. We're also expanding our AST scenario integrate multiple products and multiple scenario, including PC mobile apps, Ipass smart TV as well as TV OTT, the Libra housing enrollment page.

Making sure whenever users are our advertisers can reach them.

For the smart TV devices.

In Q1, the total Miu has reached over $50 million and for those TV user serves a nice addition to our existing user base as a supplement to our existing user cohort a lot of them are from third and fourth tier city and their time.

<unk> spend has.

<unk> been very good and we'll continue to.

Investing those smart TV and help us to convert living room and families scenario.

And we aim to further enhance this multi terminal integration too.

To optimize our marketing solutions.

Top of all that.

We will further expand.

And in last in the story mode commercialization.

Initiatives.

And from our initial data for the Star mode advertising CPM has.

Been quiet.

Quite significantly higher compared to our traditional.

Advertising scenarios.

Conversion rate is also improving so on top of on top of that.

We will first do what we are good at and add more scenarios and continue to invest in Astoria mode commercialization.

If you decide you know probably it should be done with rather just show them, how as you could see she probably up to the <unk> tied to we don't want to go more ships.

Neil I'll just sit around the object Gilolo Farquhar.

So the chimp high travel did show by the well known.

He will continue through the object.

Sure.

Sure Sanjay.

Walcott the pizza.

How do they look.

Countless research.

Yes, if I won't go there.

I looked at the Shanghai, while not quite Joshua young shall walk all guns.

You also have the backhaul.

That leaves it well maybe this is for those how about this.

Dan.

Oh firewood.

Please go ahead.

Yes.

And further leveraging our content creators creativity will launch more ad products that fits.

<unk> ability ecosystem now more than 24000 content creator and more than 6500 advertisers joined our sparkle App platform. We believe this number will double this year and for Sparkle App platform as one of that but.

Advantages Philadelphia advertising path.

Essentially as the rest of our floor advertiser's content creators create creative.

Creative ideas will help us to make 10 advertisers to stay in our ecosystem.

For the second half of this year well, we'll aim to expedite the process of connecting native ads with more standardized AD product for example.

In the first quarter more than 40% of our App customer purchased other standardized product to pair with their sparkle orders.

So hold Oklahoma hardship thoughtfully, Yeah, Trisha final question kind of Youll ship.

These actions had that shows your shrinking portfolio, there's attrition should download womens golf or the younger Joseph not wholesaler stocking of switching of adult <unk> patients who value time told us getting tired of Guangdong <unk> done so.

Sure.

Since we acquired the show attendees, how about the little sheep east.

Again, the Tony Jones on it because it means yes, Farquhar story mode, though the more should we be done she potential tianya here, Doug a woman Glen the Xinjiang Mitchell.

So just to.

Sure. So you said sounds so tien tsin. So it doesn't show that should see Xi'an should show them being even more powerful than the fourth well yeah well Shlomo.

She is a doughnut.

Okay.

Lastly, we aim to combine the industry trends with our <unk>.

Ecosystem advantages.

Riding on the waves of visualization trend leveraging the power of our content ecosystem, we have achieved healthy and quality growth of users and we have also discovered the video based app has much better conversion rate and the traditional ads.

Over 65% of our performance as revenue came from video based apps and our E. CPM has grown.

Significantly year over year in the quarter and the story mode on the other hand also serves a very incremental traffic and revenue growth for advertising business.

So for the as we look forward to the second half of year.

Do you need to do the right thing and to invest for the future.

The results will speak for itself.

Sure.

Next question comes from Alex Poon with Morgan Stanley . Your line is open.

Just any clarity just on the tier one or they want to see quite a beach gear was up.

So what are you guys seeing <unk> tied to some type of woman here what it means.

A woman with added that one just yet.

Thanks management for taking my question. My question is related to live streaming business.

Regarding the recent deregulation Ken.

Can management share with us the impact of this regulation.

And whats our expectation for development of.

In future. Thank you.

Paul <unk> see the torture bolt on acreage and whether it's the woman.

For the year, we will.

And that's in the ultra meetings.

<unk> mobile.

Bill hub.

So far the recent regulation update actually has no impact to <unk> broadcasting business.

And.

The full year target for Libra casting business remain unchanged.

What's the current user for these energy losses.

Some type of improvement <unk> got three and Evs and <unk>.

Other challenges faster towards 10%.

Let me <unk>.

Sure well I mean, we're seeing.

So a woman.

What pieces of <unk>.

Our woodlands.

In New York.

<unk> purchase orders at Guizhou <unk>.

Okay.

Sensing needle the triple will add senior Doshi, Tim Conder.

<unk> with Goldman Sachs.

Pandora overburden.

We have always mentioned that live broadcasting serves a very important part of our ecosystem as a natural extension of our library of our video platform.

Our growth will not be relying on attracting outside libra counter to the platform at attracting outside user <unk> housing as a matter of fact, there Seth.

Very strong overlap between the <unk> and content creators a lot of overlap with the <unk>.

Video users in Libra, passing users so my confidence and in Libra housing long term and sustainable growth remain unchanged.

Our next question comes from <unk>, Zhang with CIBC. Your line is open.

Thank you Glen and transitional at UBS.

Jack.

That's down <unk> <unk>.

So the agenda conscious on Glenn <unk>.

So again I'm sure you saw kind of addressing the China Championship.

Usually the T cell to a stay on the phone that can go to an outdoor shocks.

Shanghai to the U.

The push Amish Keytruda.

Yes.

non-GAAP income from Queensland Nickel move Bill mentioned will move downward change.

Yes.

Element <unk> got going on with Sangamo Gwen.

<unk> do you just see a bump in <unk>.

<unk> Nikko malnutrition.

<unk> seen a module.

Thanks for taking my question I would like to ask a question related to gas market and the cost control.

Boeing COVID-19 pandemic.

Firstly, what's the latest strategic okay.

Youll place high priority on gross margin improvement and cost control.

On the weight per parcel or the target to achieve the breakeven point on non-GAAP basis by 10 to 24 in last quarter's earnings call.

Unchanged and how do you balance the parking garage.

And also what's the gross margin change for the second quarter.

The second half of the year.

A lot of cushion molto segment gross margin. Thank you.

When we quoted here, who the R&R premium breakeven does even with Bill <unk>.

Sure.

<unk> woman, yes, it does.

All other income producer, but Sheila.

The interest in the evenings.

Total Sheila.

Clearly into affiliate of Hydrogel woman, there's a surgeon you lead us either CGM will be all <unk>.

Sure.

So the target of achieving non-GAAP operating breakeven by 'twenty 'twenty four remain unchanged.

I mentioned, the Covid impact for availability of short term and temporary it doesn't hurt our fundamentals or nor our long term target.

Hello, and welcome to the <unk> <unk>, we also innovate.

<unk>.

Does it go so from that phone call.

<unk> Malik with Ali.

What kind of <unk>, if I can answer if a woman that utility room I think it was required to be temporal.

The margin pressure, you're seeing in first quarter is mainly due to COVID-19 that resulted slowdown of our revenue growth.

And if you look at the expense side, we're actually not spending more money.

To accompany it hit all the Hugoton zone.

Theoretical fields agenda acquainted to reward your way to the high Hall <unk> capillary sure Paul phone call intelligence, you don't to reward the vehicle goes up as you go through that channel.

I will leave some of the attention given to the holiday road well Ms Steuart himself.

Uh huh.

So you wont youre looking quite a lot in there.

Sort of putting words.

You May tell you that Peter Suzanne departed a woman.

Well no.

We're here to support.

Sure.

So we like the home cooking.

I mean, you got our specialty, particularly Europe , we even talked about format.

Completely comfortable.

There was sandy.

And you asked about the relationship between user growth and expense control.

As a matter of fact, we believe user growth model with never purely driven by the sales and marketing expense, it's actually driven by our content ecosystem by this.

<unk>.

Nate.

In nature road, good content, those get content, essentially attracting user growth and expense we spend on sales and marketing is only helping people to quickly realize there is a very good platform called deliberately so it's never about just.

Pending sales and marketing to drive user growth as a matter of fact, our users.

Engagement level and retention level has.

Remained very healthy nature.

And in the future will be paying more attention on the south of marketing ROI.

And.

But for this effort it will not impact our user growth trend as well as that retention rate.

I'll conclude by field.

The whole front that you could consolidate with one or two top.

So those are some good early those hypotheses.

Our key growth continuing in <unk>.

We had some growth.

Coordinator six Cadogan negotiations.

Our Taylor Street.

The <unk> session.

And those two different dorm, Colorado mainland Javier is equivalent.

In propulsion.

Which of the hygiene laser.

Particularly because it further.

Maybe seamlessly umbrella so I don't think so.

<unk> since these data.

Tillman themselves.

International casualty growth controlling all of the eagles onto our push towards the women's in the industry for these answers.

Could you answer that.

It seems there is more.

What distinguishes on the jump in terms of what are the challenges.

And they're going to gel closing yields.

Sure sure.

He able tuition brochure property purchases to his for the year with the approval.

So you wanted or to receive the condenser curtailment.

The visa hydro.

Relaxing yet.

Pressure pushing between articles that have pushed exposure whether in the eastern territory Gotcha politics zebra.

The question of whether we are going to pad expense control on top of.

Everything else.

I have mentioned in last earnings call starting from 2022, Theres a lot of macro changes domestically and internationally, even though theyre. In addition, COVID-19 impact, but a lot of the difficulties. We're facing is not just because of the COVID-19.

And.

In nature to control costs and improve efficiency.

Is the most important job <unk> and also for the for the industry.

Well and for the specific action points, we wanted to be very very focused.

<unk> to go deep to go deep with our business narco broad.

And.

Yes.

This has come to a stage four <unk> as well as the industry player to be all focused on cost control and efficiency improvement.

So those are the moly to deal with.

The digital over Molly Sims.

<unk> seen the supercenter fee or charge offs, rather than you see with <unk>.

Somebody is so easily enchanted superstorm sandy soil, neither will mcgill at southern yet so it is either.

The the tissue the whole woman.

Noteworthy with themselves too quickly.

Great.

John of hydrogen Molly, who you're gonna be intently.

So somebody pays choice elements you highlighted as far the gross margin the margin pressure that we're facing in first quarter, it's mainly because the COVID-19 impact resulted in.

Revenue growth slowdown as I mentioned.

The COVID-19 starting to ease in the second half of this year, our revenue growth rate will return to a normal trajectory and also the gross margin level.

Along with it.

Yes.

I just want to at some point.

You know when we go talk about the breakeven everyone priority and tight cost.

Cost control and efficiency improvement, but we think we're going to be as I mentioned by Mr. Chen is equally important to expand our top line. So first of all we still believe that hotel room for us to improve our monetization efficiency. So we are into improve our paying ratio and expand our market.

Sure.

To improve our segment margin through.

Throughout the second half of this year, even in the first quarter, we still saw their gross profit margins for LIBOR accounting in our AD business improved quarter over quarter. So that trend will continue in the remaining of this year.

For the cost control side, we also made some progress.

First quarter budget.

The second quarter.

Pandemics.

So the result of the cost control actions will be more reflected in the second half of this year and.

As a highlight to the number of portfolio you saw there.

Selling marketing expenses decreased by 29% quarter over quarter now, it's just flat to 25% of total revenues.

Quarter was 30% and for the silver Bell, let's call it down 2% quarter over quarter, our total user traffic grow like 28% quarter over quarter and for R&D expenses.

We primarily invest in game development data.

ANSI and project related liabilities, we still believe is essential to improve our productivity to improve element tradition of efficacy, but we thought it's also important to invest in the future.

So look at a dollar.

Of those investments. So this year, we plan to continue and selectively invest in this area, but we will very close monitor the progress of each product.

And make adjustments if necessary.

To improve our Youll know total capital efficiency, so, we spat selling marketing G&A and R&D.

<unk> total revenue will be gradually decline from Q3.

Our top line spend and the loss margin will be naturally narrowed.

For Q2.

Yes, the overall spending will be.

Flat quarter over quarter, so the debt that will help either.

Look further for the module side.

Yeah.

Sure.

Now Thats, all and that concludes the question and answer session I would like to turn the conference call back over to management for any additional or closing comments.

Well. Thank you once again for joining US today. If you have further questions. Please contact me Julia Yan-bin executive IR director or TPG Investor Relations, our contact information for IR in both China and U S can be found on today's press release have a great day Bye bye.

This concludes the program you may now disconnect.

[music].

[music].

[music].

Good day and welcome to the Bill I believe 2022 first quarter financial results and this is a big conference call.

Today's conference is being recorded at this time I would like to turn the conference over to Juliet Yang Executive Director of Investor Relations. Please go ahead.

Thank you operator.

During this call, we'll discuss our business outlook and make forward looking statements. These comments are based on our predictions and expectations as of today.

<unk> events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with SEC and Hong Kong stocks change.

The non-GAAP financial measures. We provide are for comparison purpose only definitions of these measures and a reconciliation table are available in the news release, we issued earlier today.

As a reminder, this conference is being recorded.

In addition, an investor presentation and a webcast replay of this conference call will be available on the IR website at IR day availability dotcom.

Joining us today from deliberately senior management are Mr. Ray Chen Chairman of the Board and Chief Executive Officer, Ms. Carly Lee Vice chairwoman of the board and Chief operating Officer.

And Mr. Sam fan Chief Financial Officer.

And I'll now turn the call over to Mr Fan, who will read the prepared remarks on behalf of Mr. Chen.

Thank you Juliet and thank you everyone for participating in our 2020 to first quarter results conference call.

I'm pleased to deliver today's opening remarks on behalf of Mr. Chen.

In the first quarter.

<unk> I'll break all COVID-19 struck China national life impacting People's everyday lives.

Shanghai, where our headquarters are based what particularly impacted by the strict lockdown.

Turning to time, our top priority is to the health and safety of our employees.

Over a thousand of our staff members have been working from home since mid March and we are rent essentials to be delivered to our employees in Shanghai.

The most difficult to get supply.

In addition, we opened our documentary LIBOR rate to the public free of charge during the May holidays, and the donated $2 million premium PDP membership to Shanghai cities.

We are glad to see that the Lockdown just ended last week and hope everyone's lives in our daily business can return to a normal order food.

Compounding the challenges our business Foundation remains strong and resilient in.

In the first quarter, our evaporate community continues to grow at a faster pace.

Total EMEA use ROE by two 1% year over year to $294 million and the Dia us grow even faster at 32% year over year, reaching $79 million.

Total user traffic, which we calculate as da use multiplied by daily time spent per user grew 52% yield a year.

During this period each user spend an average of 95 million <unk> per day, the longer that we have seen our operating history.

This strong user matrix represent our solid business fundamentals and we are seeing the momentum continue as we move through the second quarter.

Despite the short term impact from the Covid Lockdown.

Our total net revenues for the first quarter Academy at the RMB 505 billion.

Up 30% year over year.

In the first quarter, both our paying ratio and <unk> reached a record high of nine 3% and $27 2 million respectively.

<unk> was a major driver during the period with paying user numbers growing 60% year over year.

Despite softer industry demand.

<unk> to gain market share advertising and grow our AD revenue by 46% year on year in Q1.

Improving our efficiency and exploring new products, such as App install remote field.

Few of the initiatives, we expected to leverage as we work our way through the challenging microenvironment in the coming quarters.

User growth effective spending control and improving our operating efficiency our topical.

We have made some progress on each of the funds in Q1.

And the marketing expenses decreased by 29% quarter over quarter accounting for 25% of total revenue.

Now for our 31% in the previous quarter.

And bandwidth costs decreased by 2% quarter over quarter, which is no small feat given our daily video views increased by 36% sequentially.

We continue to invest in R&D in Q1, which we believe is essential for our long term and sustainable growth.

Regardless of the pandemic impacts our short term financial matrix.

And committed to our mid and long term growth of narrowing our loss ratio and the ratio breakeven moving.

Moving forward, we will further strengthen our commercialization capability control costs and improve human capital efficiency.

With that overview I'd like to grow through some details of our fourth quarter operations across our content community and commercialization BD believe unique content and our community offerings provide our users as in replace bow if prs in the online video space since 2020.

One.

We have successfully extended to a multitude of Dell rail video community by launching our stellar in Mod and the smart TV App.

We have effectively brought our rich content to users in more formats that resonate with them across different viewing preferences.

User response to our short form video start with Mod had been very inspiring Dave.

Dave Shull phone video with PDP. Two features provides a unique walgreens experience to satisfy users on the go entertainment needs.

Still remote policy, an incremental increase in total video consumption.

Beauty in more than 20% of our total video views in the first quarter and these numbers have continued to grow in Q2.

Yes addition to more views and creating deeper community bonds story mode has also opened up a new avenue for commercialization opportunities with advertisers as well as our LIFO accounting services.

Please.

During the period.

User primarily engaged with content and the lifestyle.

In the table.

And the knowledge categories.

Across these verticals and others content creation remained robust monthly average content submission was $12 6 million, increasing by 63% compared with the same period last year.

Monthly active during the quarter was $3 8 million up 75% year over year.

The deep value we place on our equator is one of the reasons, we are able to maintain our robust content and healthy community.

The key to motivate their continuous creation to help them gain retaliation and provide the money to reward.

We are providing them with both.

Content creators with more than 10000 followers increased by 44% in the first quarter.

Beyond our cash incentive program.

Content creators encourage it.

To realize their commercial value more fully through multiple avenues, including live broadcasting hour cycle AD platform creator recommended ads and direct tips from users.

In the first quarter, a total of $1 1 million content creators highly received monetary compensation for their work up 19% year over year.

As for our community, we continue to foster an active environment for our users to get closer to the content and intact with creditors and each other.

We can see this not only with the recall average daily time spend our platform of 95 minutes in the first quarter, but also in the increased average daily video views.

Which grow by impressive 84% year over year to nearly $3 billion.

The number of monthly into action in Q1 reached $12 3 billion up again impressive 87% year over year.

The bond between our users and the community have continued to grow.

By the end of March we had 158 million official members.

41% with a stable 12 month retention rate of 83% both of US dollar and Mod and the smart TV play a positive growth in driving engagement levels.

Now, let's take a look at our commercialization efforts.

Accelerating our commercialization efforts is our most important target this year.

Despite multiple headwinds our business is resilient.

With advertising and e-commerce business have and well be particularly impact in the near term.

We are paying more attention to the quality of our revenue growth, particularly the margin contribution of each business segment.

For our game business in the first quarter net revenues from our Gan business increased 16% year over year to RMB. One <unk> 6 billion, we continue to invest in in house game development by opening a new studio in the first quarter at the same time, we are closely monitoring our existing projects.

And the <unk> agile testing to keep our pipeline ahead of the fast evolving industry. We're also working to improve our industrialize the development capability, which is equally important in lending and idea that walk.

Turning to our pipeline three can have already being approved.

In the late approval stage.

Paul again operation in the overseas market, we have three titles.

<unk> for launch in the second quarter.

More for the second half of this year.

Turning to our <unk> net revenues for that one B 2.05 billion, an increase of 37% year over year.

Beyond the pandemic with a lot of monday's hydration opportunity in this segment.

Clearly in LIBOR crafty and other innovative community related value added services.

Our powerful <unk> video library, and the pool of talented Equators gives us a unique advantage to leverage and reinforce our live broadcasting business in.

In the first quarter the number of active live broadcasters on BD BD increased by 88% year over year.

We continue to roll out more tooth and function to latch quay towards showcase their talent and to introduce new forms of interactive virtual gifting programs.

Meanwhile, the popularity of the remote opened a new gateway for users to discover interesting LIBOR caffeine content.

This initiative.

<unk> and natural conversion to our paid user arises.

In the first quarter MPA use LIBOR casting increased by 60% year over year.

As for our premium memberships by the end of the first quarter, we had $20 1 million premium members, 25% increase year over year to 80.

80% of these while annual or two new packages subscribers, representing the strong trusting us.

In 2022, we will continue to add exciting content to our truck members, including a series of Billy Billy produced Chinese enemy variety shows and documentaries.

Looking at our advertising services revenues from this segment, while RMB, one zero bidding an increase of 46% year over year.

In the first quarter, our top five advertising industry verticals, what gains skincare and cosmetics Tracy products automobiles in the food and beverage.

In March the unexpected Colby lockdown cost travel restrictions and logistics difficulties in major cities in China.

Timing dollars, what delayed our place our hold call vomiting. The headwinds we are pressing forward to expand our culture advertising scenarios with more innovative AD products and increase our efficiency with a better conversion toolkit.

We launched our startup mode as in April and the initial feedback is encouraging.

Compared with the tax picture based ads as in the store Remodels has higher ROI to add customers and bring incremental increase.

Our inventory as well as our <unk>, we plan to allocate more resources to improve its performance, including acquisitions and the product <unk>.

E Commerce is another area deeply impacted by the logistic disruption caused by the pandemic as.

We believe our customer trust is our most valuable asset we offered our customers a free delivery delay services and automated refund option.

As we recover the gains our may <unk> sales, while again on the rise.

Going forward, we will continue to explore new innovative models to maximize our IP value and achieve synergy with our leading content verticals.

Compounding the macro challenges our action plan is clear for the rest of the year.

First we aim to take all necessary steps to resume normal business operations.

Second we will be focusing on the quality of our users and now revenue growth, particularly <unk> matrix and our business segments margins.

Lastly, we all take essential action to further control our cost and expenses.

This concludes Mr. Chen's remarks, I will now provide a brief overview of our financial results for the first quarter of 2022 and the outlook for the second quarter of 2022.

Total net revenue for the first quarter was RMB 505 billion up 13% from the same period of 2021.

Cost of revenues increased by 43% year over year to RMB four 2 billion.

Over and bandwidth cost as part of the related fixed cost component decreased 2% quarter over quarter.

And then was cost per video views decreased 27% quarter over quarter, showing our ongoing efforts and progress in cost savings.

Our gross profit in the first quarter was RMB 807, 2 million and gross margin was 16%.

Total operating expenses was RMB, two 8 billion, 42% from the same period in 2021, which represents a 9% quarter over quarter decrease from Q4 2021.

Sales and marketing expenses were RMB, one 3 billion, representing a 25% increase year over year, and RMB $507 7 million decrease quarter over quarter.

Selling and marketing expenses as a percentage of total revenue was 95% down from 30% in previous quarter.

G&A expenses were RMB, $535 3 million, representing a 38% increase year over year and key flattish quarter over quarter.

<unk> expenses was RMB, one zero billion, representing 74% increase year over year the.

The increase was primarily due to increased headcount in research and development of share based compensation expenses.

We will close monitor the progress and all of our investments and make ongoing adjustments when necessary.

Net loss was RMB, two 3 billion for the first quarter of 2022, compared with a net loss of RMB $904 9 million in the same period of 2021.

Adjusted net loss, which is a non-GAAP measure was RMB 165 billion compared with RMB 891.0 milling in the same period of 2021 <unk>.

Basic and diluted net loss per share for the first quarter was RMB 580, compared with RMB 254 in the same period of 2021, adjusted basic and diluted net loss per share was RMB 420, compared with RMB 250 in Q1 2022.

Turning to our capital allocation and the liability management.

We announced our $500 million share repurchase program in early March.

As of March 31, 2022.

And lately, one 4 million.

Had been purchased under this program for a total cost of USD $13 million.

We are also optimizing our liability level in Q1, the company repurchased and cancelled an aggregate principal amount of U S. Dollar $204 million of convertible senior notes with a total cash consideration of USD $147 9 million and.

Recorded cash saving of RMB $338 8 million.

As of March 31, 2022, we had cash and cash equivalents come deposit and short term investments of RMB 24, 7 billion as for our intent to convert to do primary listing on the main board of Hong Kong stock exchange and the NASDAQ.

The Hong Kong Exchange had acknowledged our application set in October three 2022 as the proposed effective date for our conversion to a primary listing.

Well expand our access to a wider in back to base, while we expect to maintain our listing status on Nasdaq.

With that in mind, we are currently projecting net revenues for the second quarter of 2022 to be pretty RMB four five.

<unk> 5 billion and RMB 495 billion.

Thank you for your attention we will like now to open the call to your questions.

Operator, Please go ahead.

For the benefit of all participants on today's call. If you wish to ask your question to management in Chinese. Please immediately repeat your question in English. Please limit your questions to one at a time if you wish to have a follow up question. Please rejoin the queue.

Our first question comes from Li Zhang with Bank of America. Your line is open.

Yes.

Hi, Bonnie Zhang.

Yes.

Sure John Kim from Goldman Sachs.

Unfortunately I don't.

And James you sound Bad now.

So I feel a whole lot myself sat back and forth.

Our main thing.

While now.

Thanks, Yeah, Thanks management for taking my question.

My question is mainly about.

<unk>.

Paul the lockdown impact to our business in the first half and then how should we look at our second half new their trend is overall business outlook post the lockdown. Thank you.

Hum.

Hmm.

Sure.

It looks like you sound Danielle.

Definitely granting Nigel Sir.

So please do granting legal entity.

Or does anything.

When India.

Nobody can really transform our core kind of in those dialogues.

Got it alright.

Alright, Hey, it'll hydro her.

Shanghai those sorts.

So we can say that the strategy.

Well I believe.

The pandemic is one of the question that most people cared about first half of this year.

And <unk>, Indeed has bought severe impact to macro economy and people's everyday lives, especially in Shanghai as one of the Cvs was particularly impacted.

So now I'm a group that actually is about Mr. <unk>.

Shanghai Tang.

Glenn the backend Birmingham gone Youll see data to the Pentagon.

Nathan will measure.

Sure.

Border playful.

Just as a consequence, it will mean.

Lewis is now.

To the soil.

Second on December three and under her acuity orphans, because he's got a bundle to her tongue jumper.

The English as yet.

Is that accurate.

Directly.

Let's take a tissue.

There's a lot of similarities household data.

<unk> Hot.

Taking the liability for example over 8000 of our Shanghai employee has been working from home.

14th of March and we are just now starting to gradually returning back to office this week and sale 13th.

Jim all the employee will be fully back to work.

A total of 24 months you can imagine how it starts to everyday people's everyday lives in Shanghai.

Google kind of issue you got you.

Yes.

Water Congress.

Eating pizza.

Cedar is here.

How should we encounter Peugeot neither got cancer.

Yes.

You seem to be that sure.

Sure Mailings.

And how do we see the impact COVID-19 impact in Italy.

And indeed, <unk> has bought short term impact to our business, particularly for advertising and E Commerce.

However, we did not we don't think there is any impact to billings.

In terms of growth.

You can get back to you with that I think income tax Sr doses.

<unk> you Sir.

Political is repealed so it sounds like you are.

Someone yeah, Farquhar, Shanghai, which is having a deeper coverage for that at all.

These outflows were seeing hydrophone, so I just want to apologize.

Well I'll go through.

Cisco Cominco test rollout since the Hong Kong police.

So really the hydrogel.

Okay.

Yes.

Purely <unk>.

<unk> total equity showed up.

So the dosing of the <unk>.

For for example for our advertising business.

There are some short term impact for example in many cities in China in the first half of this year people are in some sort of lockdown or stay at home mode maintain a lot of the advertisers putting their advertising plan on hold or delaying their advertising dollar.

And that's that fact.

Sure Dan I'll tell you there's a woman so you can kind of leaving.

Julio.

Todd Orchard up.

Pass through which is true.

Tom either to the team hydro gladly good either.

<unk>.

Tim with your thoughts on how.

We've got the entire fleet in kind of a one quarter thing.

So what are the particular woman that's.

So really the hydro one lithium sarnia will convince us that heating season.

Youll see Georgia, the economic equivalents without QR.

The full year.

To accompany it with you, but you mean.

<unk> e-commerce business, because starting from March, especially April and May a lot of logistics, it's dropped disruption due to the lockdowns or.

Staying at home measures across different cities in Shanghai.

In China, and Thats impacting people's willingness to purchase as well as.

Deliver services.

We do expect.

Impact will continue in second quarter.

And that's further consolidating.

Cardosa leasing them.

I'll go your way.

Louis I think so.

Coordinator.

Oh that linked with you, but the hunter Greens totally jumpy.

For tomorrow.

And all of this impact to our App business and E Commerce business.

Do think its temporary especially after churn when.

We reached certain milestone two.

Come back during the Covid issue.

Asian, a lot of the impact start to mitigate and disappear.

She is a woman.

Sure.

<unk> totally piece under keep them in.

Cleans up.

Five year round quickly go through.

With that in the future.

B Roland can you kind of.

Good.

Well, if you look at official that Samsung.

Your home if he cannot.

Part of it.

Yes.

Yeah.

Sure.

So you don't have to repeat on the tip of my life.

Sure.

Income.

As for availability fundamental we don't think theres any impact that caused by the pandemic for example, the mineralization at <unk>.

Comparable trend and we see the young generations their needs towards entertainment and cultural products.

It's still very very they're strong and their consumption towards cultural related product is become even stronger. So that's why we do not we do think there is no impact to our fundamentals to them.

Kind of what kind of leads into the issue.

So either MA Yoder couldnt be conductor pipe is essentially one lender to either <unk> or can be done under patent et cetera.

$600.

Who do advertising while maturing in <unk>.

<unk> done that.

And looking at the specific user matrix for example in Q1, our <unk> grew 31% year on year <unk> grew 32% year on year, both at the May check.

Accelerating compared to Q1 last year.

Okay. So the turns on <unk>.

It will come down as eager.

So I'll just hit the I think you said that you got to monitor.

I just wanted to kind of our digital <unk>, Google will remember.

We will conduct.

Cohort.

<unk> is a hydrogel warmer fully over the coming off the top of the <unk>.

So fulfill it because it's going to have a single ingredient that civil cases, assuming assuming look with enrollment.

Sudhakar.

Thanks Archie.

But that's no doubt hybrid courtyard.

As for the quality of our user growth.

This quarter, our da use grocery outpaced the MAA gross bank and for our paying user growth rate outpaced the <unk> growth rate and we achieved a record high paying ratio up nine three.

So we are not only experienced a very fast used.

Used aircraft right.

Quality of LTE here.

Also very strong and this is all down under.

The scenario that we have not increased.

Any of our sales and marketing budget.

Business ecosystem P&C Jorge on longer.

King.

Selling them more seriously at Apollo will come that hit other willing to Diego <unk>.

The woman sequel.

Bulk of BG daughter.

Being able to see firsthand how that's evolved.

Sure Lisa single Bogo, and vertical who don't really can be summed up sort of pattern in your pocket.

So you can see at Fuji.

Also on the go.

Our platform.

Sean you're honest with you.

Julian I'll just share with them what was the total C&I power generally because each of the bigger mail you can send the images shortly that sums up the phase.

300 <unk>.

There were really high.

The business model of a typical cloud form Internet platform business model, whether it's <unk> or paying ratio record high hour time span of 95 minutes and the engagement level growth.

87% year on year all of those may effect can be translate to commercialization and thats why we think the.

Call that for availability has no long term impact.

Clinical audits at Loma some of them have some sort of where you only need <unk>.

<unk> <unk>.

<unk> yeah.

To use.

Sure right. So you can the interchangeable totaled.

Okay.

Louis is on cash are coming together.

Total leasing versus the typical inventory.

No way to sugar senior sub revenue.

<unk> totally or Canadian hotter.

Thus far the outlook for the second half.

Yes.

This year for.

Our Q2, they're still impact lingering and perhaps the impact to Q2 is even greater in Q1.

June this year, we can see there is a sudden change.

The environment.

Different cities in the country, starting to recover from the Lockdowns and Thats why we do think for the second half of this year things will start to recover.

So youll put them love them in Doha Naval women's here it seems that you're doing.

When you put the Anadarko through the EBIT line.

One is on water.

<unk> will come down even more.

How will that.

<unk> sure, we'll gather qinhuangdao have conclusion.

Let's start out.

Homeaway conjuncture.

Consulted whole rule at all.

We're going to automobile.

As for the user growth, we have delivered step by step of our user growth target.

At the same time, we're playing more.

Pay more attention to the quality of the user at the same time closely monitor makes sense, we spend on sales and marketing.

So you don't Novartis Alcon Tyler.

Familiar from cash.

Can we walk with meeting to consider.

Until July dollar negligible enrollment.

So we'll give you a quick playful.

Fortunately for us.

As for the business side as I mentioned June month, we starting to walk out of the Covid impact and we also believe this is the time, we're starting to pick up our growth.

Gross rate for the Rep for our each of our business lines.

Operator next question.

Our next question comes from England, Zhang with China Renaissance Your line is open.

Hey.

But I'd say its at all that <unk> want to be.

For your story mode.

Well, it's a known crypto remind you kudos to remove 20 VITAS sentosa.

Our torture you at ICR Coca Cola has reported yet.

Total interest until its done at the end of June .

Jim Theres lots of lymphoma kind of story mode et cetera, or centanni miniature so I'll focus Australia wanted development, especially on two issues here.

Thanks for taking my question. So my question is regarding story mode. So cannot share more color on that.

Update such as what the relative place our broader content ecosystem.

Our glass commercialized.

Commercialization, Malaysia around Pat Thank you.

Okay.

For hydro properly.

Ultimately all of those are going to story.

Neither story models <unk> living through internal enrollments of <unk> talk about Russia.

Maintaining seek tiger nickel kind of alter ego simply layer.

Indeed, essentially released earnings a lot of people are asking about is the progress of story mode.

The strong total video views has now contributing more than 20% of our total video views. This is a very tangible new format of content.

That's playing a bigger role.

So that's really it's our historic model.

As of Sunday in Tampa, Neither will the DRAM contracts of hydrogen pizza in the store in order. So you go turn trigger the left.

I've been pusher woman, who.

Can <unk>.

<unk> that kind of story mode.

Meant that.

Candor Nicos <unk> Mega closer.

More colorful border.

Food in the Dutch team.

First of all I have three.

Wayne I wanted to emphasize first of all it is a pure incremental traffic for <unk>. It is.

Not like the story MAU traffic is replacing some of that.

<unk> capex, but while user are watching more P&G lease at watching even more story mode.

What kind of food UK kind of school closer <expletive> woman.

Good or both onshore does lead leader can be summed up certain patents deposits.

Hello Nate.

Story, though has invested tons, a tough hand, the baton off Georgia.

Without storage provider.

<unk> full year sugar passenger orders in North America, So telephones.

Women are pure dividend producers' hardwood flooring led as a neighborhood store in order to launch answers that of course is owned on the tissue.

Walnut Transalta, you've got synergy.

And from a statistic.

<unk> perspective, our video views has grown 84% year on year and <unk> contributing over 20% of total traffic and if we are excluding the <unk> contribution that <unk> growth rate is still around 50% to 60% which is.

The similar rate we have kept in the past that meeting.

Starring.

Pure incremental addition to our visibility.

So this is a fucking the take on shipping.

So the cup.

Total procedures in those.

Neither of these items is that the desktop.

Daniel Chan.

Youll notice that <unk> doesn't answers a woman in the quarter.

Rule it out.

We are shipping the shipping pattern, where a woman.

Sure.

And ultimately a national title industry's ability to assortment that means our growth will not be counted on in terms of the Olympics so emotional EBIT.

$4 80.

As for the story mode.

Sure.

Sure sure medium format. This is not something new as a matter of fact, we have this type of content starting from tier three years ago.

And.

Two our daily operation. The most important thing is to make sure for this type of content.

Adding incremental traffic instead of replacing our traffic.

And from the results, we have done a very big gap.

They are dealing with their workouts release enrollment I'll go back to historical storage company Hugo.

From there, it's just a little.

Uh huh.

However, I think the story the cyclical.

Tableau conference in virtual Shlomo.

For that the arbitrage.

<unk> should go on Tinder DWP.

So.

How does the Soviet accounting completely I'll continue.

It seems that upper Devonian co with Petrofac only ship containers.

Containers into recovery.

Quintin assistants itself. It is yet to hear city Toledo hydro market sales.

Can you go to the store and motive some type of popcorn and other <unk> TV.

So if you want to top quartile quarter seemed ourself as the casino itself is foundry.

Why we can build a incremental.

He is traffic growth from story mode.

We have viewed the story mode, a very diluted daily unique flavor type of content. If we look at the story minutes video creator many of those are content creator and for the consumer of that starting those are available existing users, but those.

Users are consuming this type of content during their fragmented time on them more like <unk>.

Scenario.

So we believe for the story mode actually it is.

Comprehensive answer as a whole product supplement to our original Q GB content.

<unk> is actually expanding a new consumption scenario for our users.

<unk> Deutsche Securities between concept and optical touch.

<unk> shipments are coming along either so it sounds like you're saying you're going to you quantify the waveform hydrocodone, either Doug or Neill along the way for the board.

With him is helpful.

No.

And for our content creator.

Very good at making long form videos. It is actually very easy for them to create a shortage of vertical format of content. It's like asking you about your post that LIBOR, but it's very difficult to alpha weibo user to bright.

A long article.

Darren to hit this year.

So the opportunity around how much you thought you were talking with us the team.

How much of the poker.

Payouts and gala will make their lives.

Partially on pizza on the.

Quarter on the policy on challenging when you look at the toy industry.

And asking our content creator to make more sure short are vertical format of content actually help us to increase the video submission and also.

<unk> argues there to expand their video consumption scenario, making them more to become more active and engaged on our platform. It's a win win situation for us.

Sunday as a whole.

Okay.

Our agenda this year.

We didn't actually go.

Women <unk> put in one of those hunting because when you were going to build for chico's hunting for flagship chemo nave is hunting Joseph Tung.

Now a quarter, so sort of what was coming so towards the border that's probably about two two.

Teal close housekeeping yield exiting Gaeilge UA.

Pizza hut pushy eco conscious routinely with hunting touches seeger laser sources within those countries.

And thirdly, I want to emphasize for Billy Billy we are not a tool type of product, it's very easy for people to see some of the internet platform our product as a tool. This particular product is far player for a long form videos.

Our products are up.

<unk> video player.

As a platform for Libra housing affordability, we have it all.

Instead of it being a tool ability it's actually.

Content a community platform that gathers people will then ill go away.

And Danielle life.

Well, it's always intentionally accordingly project recently over time.

And while that kind of cash I know Natasha adoption play like how does it all cash.

Into the repeatedly to peers or <unk>.

So I think youll see there and hopefully to the decrement cardiologist.

Youll see triple HIFU are Peter <unk>.

Usual legal judicial passing through the Yahoo.

We can't be agenda, so that we can be that other people can't.

For the industry player. We are used to separate users by the product mix. However from a user perspective, they choose product by client and Verde costs not by their industry categories. For example, again lever it will.

Not only watch the dv.

The Gamecube GB and we'll watch the game related live broadcasting.

Our shoe might also play literally produced or license gain as for knowledge sector users he or she buy.

Both consume.

<unk> television and also watch the documentary on visibility.

100, <unk> store another youngster, there's almost all our models in parallel and in April .

Some of our labor labor later, or so scenario patches.

Neither <unk> or neither.

Automobile.

And so as for story, there massive content supply on story.

Related to lifestyle foodie patch and those content category actually narrowing.

<unk> category on <unk>.

<unk> beaten tortured borders hotel at the heart team the wisdom of Deutsche <unk> you, Mr. Bruce downturn more kingdom.

<unk> work quite as opposite to Kenosha faster, William <unk>, who are with us since.

And that one little storm water serious general woman starring model being pushed away Luca Momo Momo champion Dean zone, Arthur whaler that visa map towards the future.

Many years ago when visibility is starting to July broadcasting business people will ask if we want to compete with certain libra passing path.

Sorry about.

This is expanding our users' needs and extending our content offerings.

So as far starring mode.

Competing with the software.

Video platforms out there are actually satisfy.

Our users existing need and expand their content consumption scenario, given what they need.

Civil works. So this is Glenn.

Staring motive its the selling Johan here.

<unk> automotive semi hard one for me in the hot runners they were kind of more shipyards.

Just using the open door.

Tony to recover.

So is there a pattern.

So how do you from your total credit toward our Eagle from Hollywood.

It's early.

<unk> suite of Hydro one store.

Automotive retailer, we're selling our solar senior.

Lastly on commercialization.

The beauty of the short form videos are its model, it's been very very mature.

And there are so many very successful precedent in the industry. It has been proven to be have very high efficiency of AD conversion rate and its conversion for our live broadcasting is also very good and from our practice. It's also been proven this model works and.

This will bring incremental commercialization opportunity to Billy Billy.

We'll move to Q&A and Kaiser.

So a thorough and most of that is equal to the sedan portions of that.

Plenty of all that kinds of fulfillment the receiver to her.

Or three probe for sure where Youre only store mode, which is always a woman appeared to be some kind of you've got the lift.

Capital charge here.

That will lower.

So really more of a pattern, which.

Which <unk> huge EV.

Sure.

We're starting to make a lot of trial runs with.

Yes.

<unk> product until now so far the progress has meet Hasnt has met with our expectations and we will continue to allocate more resource to develop.

Alright.

And we believe it will bring incremental traffic to our billable ecosystem essentially it could be even bigger than the Incrementals GB.

Topic that.

<unk> has brought to deliberately akshay the hardware.

Doug up reinventing Doescher <expletive> were purely story mode have we've got the visa anywhere that <unk>, probably been strong format some types of Santa <unk>.

Jean Ann Taylor with Deutsche the border so ill let.

Ill now conclude thank you organically, which is what has been diagnosed and a $2 <unk>, which is what does that mean are.

<unk> patches in.

In low acuity with Angela what normally is a young business.

<unk>.

Shipping quip interim fees at some kind of equilibrium.

And the rest assured.

The launch of story mode will not change how the builder ecosystem works it will actually become a new highlights.

Daily billing ecosystem as like many years ago is starting to do the live broadcasting and some of the user express concern, whether we're going to change to a live broadcasting offline as a matter of fact now live broadcasting has become in essential element embedding within within our ecosystem I believe.

The same thing will happen with the historical Billy Billy will now become a short video platform. However, this will be part of our ecosystem, serving users' different needs and expanding our content offerings and bring them home.

Our topic.

You do realize that all the symptoms of a fantastic team.

Yeah.

<unk> Tiger two.

Yeah.

We believe in.

In the near future, we will have more and more at Pi forward, a mid to longer form video beforehand, Benelux, Italy, there will be even more high quality short form video born and insider visibility.

That concludes Mr. Chen's answer.

Next question please.

Our next question comes from Alex Yao with Jpmorgan. Your line is open.

Hello.

We're trying to win share count you can go to when you're done with the Coca Cola Company.

Our first horizontal homogeneity.

I'll, let Jamie jump on your beach, and Tom to keep them in sure.

Each Mayo Schmidt Gwen.

In Chongqing, Guangzhou and Chengdu.

Sure.

It's James on for Tom.

So we're seeing some shelf they need.

I'm going to show.

Hi, Jake.

Congrats neutral.

Therefore, each mill.

Sequentially the.

So quite an important change in Washington actually you could you believe digital tool, yes sure.

So you can simply do the yes.

Yes.

<unk>.

I'll touch on that Jim Clark and the husband, Sean Peche enjoy your ship when you Couldnt call.

But sitting here.

Beautiful.

Each bundle.

On the Leach pad.

Thats clearly you spend items or sure Peter Correct me here sure Sean do your frame of mind here.

Wonderful woman.

Michelle niche in Nook on golf targeting <unk> drug conjugate.

HMH in the Congo.

Sure.

Apparently you showed that each name shop downhole, just short term shutdown yen could be a so called Ito Shanghai Shenzhen into your Formula.

Some of them are Khan J shall edges, Oklahoma.

Sure.

With our solution.

Sure sure.

The apartment.

I would like to ask some questions.

Advertising fundamentally we agree with.

Mr churn rate.

The long term determinants are two advertising monetization includes number one.

The total platform usage number to use.

User demographic and number three to a pack none of which.

Has anything to do with the short term COVID-19 impacts.

Okay.

Uh huh.

The investment communities follows the company and the trap the company on a quarterly basis. So we would like to understand the near term trend our advertising for example.

What are the categories that are more vulnerable to COVID-19.

Covid impacts.

What are the category itself.

More resilient.

Similarly, what are the advertising formats that are more resilient in the water.

Are there more vulnerable advertising formats.

Now that the Shanghai.

How do we see the advertising revenue growth rate into the next couple of quarters. Thank you.

Okay.

This is Alex.

Alex.

Thank you for your question Brian .

Thoughtful and my best I think they both had shortly.

QE, though puppies up on consoles.

I see.

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Can you just embellish a dash Alicia Tom she should call of one called whole pharma Patricia.

Tissue Pizza and Delphi are they pushing gotcha alcohol sales are now.

<unk> no question.

Maybe it says here that you know what's interesting timing, okay. Yeah, Yeah, Yeah Golf show you how should be the way we.

Wow Okay.

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Gotcha, Donald Trump I shall resolve dongle.

Asia washing through the P&L.

Thank you Alex Thank you master it very essential.

That vantage affiliate beliefs.

Advertising business.

Like you said due to macro economy.

Slowdown and the pandemic impact many advertisers budget were delayed or placed on hold in the first half.

At the same time. This is also making the advertising market, reflecting the very reason to in past for advertising. We believe the platform that we have.

The problem has high user value and the ability to influence users' mindset and we've also continued to invest in technology that improve our conversion rate. We believe in the longer term daily billing will be more favored by advertisers.

So this should be done.

For engineered T shirts and sand.

Thank you.

There is a possibility.

So essentially yes, yes, yes, so the sandy it's how well it back.

So if you go.

So I'm sure those don't go purely selfish Legion visa.

Thank you.

Yeah, it's a cold box ourselves again, she got you the kiehn pad.

Hi, Tom.

Yeah. It does sound you. Unfortunately.

Oh Chomsky box does that person with Jones.

Yeah.

Sure Sheila I'll show the Jones Act.

Let me ask you should say in general Steve.

Gotcha.

Hi, This is Josh.

Changzhou Teeny yanking per $1.

So you're right.

Hum.

Got you signed up for the loss for the short year towards hockey life saw a woman's IP telephone call you ship out should be that low Gwen.

The average age of a user's 'twenty three five year or so and.

And 86% of our user are below 35 years, so more than half of our users are from first and second tier city, all of which matrix where print them.

The main cohort that's driving all kinds of consumption in China by Master invest population, we have become the wealth platform that all of the advertisers Craig.

And if you look at past two to three years, our AD load has state 5%.

Haven't increased any of our outlook our advertising has maintained relatively higher growth rate throughout the last two to three years and this is an evidence that advertisers really value this visibility user as well as stability in the Brent <unk>.

Though that the AD dollar in the market might reduce in the short term, but we remain optimistic about <unk> advertising long term growth.

So longer term they'll kill you man.

Thanks, Sean.

Yeah box on you'll see expenses shifting.

Shifting now to Thomas Chong, Hi, Shaw, whether youll ships.

Sounds very lives sort of auto dealers, yeah, Youll see Gucci sure Yeah, Yeah, She and I played golf, which Lisa will there be or should I should see you'll see should see that's how ships like this issue of Mayo behalf off I'll, let small horsepower that youll see the golar.

Well the challenge on high Sugar No God knows how long do you keep a tissue the copel <unk> well myself again shouldnt done yet you guys sounds like the Jones up shortly.

Yeah, Yes, it does.

Oh God you got that.

So you say, there's a couple of change he can go shallow high Silicon Valley because also of the Jones Act.

As for the industry vertical that especially resilient in the first quarter gained three sea food and beverage skincare and cosmetics has been pretty strong in Brazil and.

Especially for games, and automotive and first quarter without any game approval. The issue we have delivered better than expected game advertising dollar increase as for automotive.

Because the business user is growing.

Growing with the platform. There are consumption power is also growing and this has been cap.

Capture by a lot of the automotive advertisers they are willing to spend more advertising dollars to attract and enforce deliberately users.

Yes, one of we're trading King counsel, Alex downside at all.

The board.

California, It's all questions that you show them, how should we think Atlanta, Georgia.

So I would say that should be.

Okay.

So I'm walking the chances of Belgium.

But he is on the leap.

Sure.

While it's in Sushi Jonestown, King Hi, Shirley Zhao cards at the same time Ashwin.

Sure.

But that's kind of a woman Chongqing Shanghai, that's on track yes.

<unk> again, you've got turned off so quickly is the only real question I suppose is key.

What time shameful bounded Neil Shah Deniz.

Yeah, Doug I don't have changed is that these are the bolt on something so I would say.

I'll just speak out.

Hi, Sean Sundance Trunk club format, so pushing Indiana Jones out yet to where the niche.

Confronting the macro uncertainties and short term fluctuations.

We'll be focusing on doing the right things the right thing that serves for long term.

I will be focusing on developing more standardized and industrialized integrating marketing facility. This will be our long term growth engine and relying on the rapid iteration of a product capabilities and data capabilities, we will continue to strengthen the.

<unk> of our middle platform for commercialization and among the customers.

We invested in Q1, 74% of them rot across different product.

Across different ad products.

A customer who brought integrated marketing and pain, namely brand performance of native ads also grew significantly year over year.

Today at the end of our my high school are essential.

Hi shortage issue towards college holiday slowdown.

<unk>.

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Full board excuse me so the iPad TV blurry thing since you asked that.

Yes, she's yellow orange and <unk> okay.

Yes sure.

Sure you bet, so I won't call that not even the Guangdong tissues with each week and then Ali.

Television.

The Mou tissue and towel killer T.

<unk> also got lots sold or.

Because it does seem to salvage housing so if I'm doing it puts you on that needs to be done on your own questions.

I've done it.

Yes.

Well massage it on television.

Allison who is essentially shut down.

For the insurance, just ensuring legal counsel.

Yes. He does all three of them, we think that people talk about Paul.

Total ambiance.

Oh, Okay sure they don't get that with Keith I wouldn't tell you that's what their salary mode of switching is holding well just over time I think you said, yes, yes, yes.

So she can toggle switch on my shoulder, Yeah golf Li <unk> Fung.

And then thoughts housing program.

Before the young woman that's one.

Thoughtful.

Thank you Joshua.

On top of what we are good at the area. We're also expanding our AST scenario integrate multiple products and multiple scenario, including PC mobile apps, Ipass smart TV as well as <unk> TV OTT Libra housing enrollment pages.

Making sure whenever the users are our advertisers can reach them.

And.

For the smart TV devices.

In Q1 total Miu has reached over $50 million and for those TV user serves a nice addition to our existing user base as a supplement to our existing user cohort a lot of them are from.

Third and fourth tier city and their time spent has been.

Being very good and we'll continue to.

Invest in those smart TV and help us to convert more leaving room and families scenarios.

And we aim to further enhance this multi terminal integration to optimize our marketing solutions.

Top of all that we will further expand and.

And last in the story mode commercialization.

Initiatives and from our initial data for the Star mode advertising CPM has.

<unk> been quite.

Quite significantly higher compared to our traditional.

Advertising scenarios and its conversion rate is also improving so on top of on top of that.

We will first do what we are good at and add more scenarios and continue team has been a story mode commercialization.

Do you decide you know probably it should be done with other Indian just show them a high sugar sharply up to the <unk> tied to a region.

Sure Sanjay heal.

The object Jalula woman she will go between high travel they show all that.

Well, maybe to continue and you will see the absolute <unk>.

You don't play Joshua funding.

Walcott the pizza.

How do you feel about.

Go to countless research.

Obviously with the ship I won't go through that.

The Shanghai, while not quite Joshua young your actual walked all guns.

He also thinking doubtful.

That leaves us well maybe this is for those how about this.

Dan.

Full firewall Alger.

Okay.

And further leveraging our content creators creativity will launch more AD products that fits with the mobility ecosystem now more than 24000 content creator and more than 6500 advertisers.

<unk> joined our Sparkle App platform. We believe this number will double this year and for Sparkle App platform as one of that bet advantages Philadelphia advertising path.

Essentially as the rest of our floor advertiser's content creators create creative ideas will help us to make 10 advertisers to stay in our ecosystem.

For the second half of this year well, we'll aim to expedite the process of connecting native ads with more standardized AD product for example in the first quarter more than 40% of our AG customer purchased other standardized product to pair with their sparkle.

Orders.

So hold Oklahoma hardship, it's awfully hard to ship power question I'll try that Youll ship, so it should be.

These are some type of show.

Shrinking portfolio, there's attrition should download womens golf with the Jones Act that wholesaler stocking is switching Guangdong <unk> W. I am told that type of Guangdong <unk> got Joel Simkins, while the show attendees Hullabaloo Shaw.

Again, the Tony Jones, so babies yet.

So we model the more should be done.

Sequential.

Yeah, Hey, Doug a woman Guangdong Xinjiang Mitchell.

So just to.

So Andrea Lucca tissue, but you said it sounds like.

So I'm not sure that should see Oh, yes, again should show them being even more powerful than the form though yeah. We should see in college. So she is a genre.

Yes.

Lastly, we aim to combine the industry trends with our <unk>.

Ecosystem advantages.

On the waves of visualization trend leveraging the power of our content ecosystem, we have achieved healthy and quality growth of users and we have also discovered.

Video based App has much better conversion rate and the traditional ads over 65% of our performance as revenue came from video based apps and our E. CPM has grown significantly year over year in the quarter.

And the story mode on the other hand also served at <unk>.

Every incremental traffic and revenue growth for advertising business.

So for the as we look forward to the second half of year will continue to do the right thing and to invest for the future and.

The results will speak for itself.

Our next question comes from Alex Poon with Morgan Stanley . Your line is open.

Specific one is competition would've Q1 order once you see quite each year with us.

<unk>.

Yeah, good evening gentlemen.

A woman whaler, that's that one just yet.

Thanks management for taking my question. My question is related to live streaming business.

Regarding the reset with the new regulation Ken.

Can management share with us the impact of this regulation.

And whats our expectation for development of it.

In future. Thank you.

Okay.

Paul <unk> team Cedar to her to the board on a good tailwind for.

The woman to border.

Industrial Laotian meetings.

We will continue to border mobile.

Bill hub.

So for the recent regulation update actually has no impact to <unk> broadcasting business.

And the full year target for Libra casting business remain unchanged.

We're just getting easier for designers with water.

Some hyper improvement sue on the certain zones.

Yes.

It's all the challenges of a faster towards 10%.

Let me.

We're seeing a.

A woman.

What pieces are.

Our walkman subscription Eagle construction budget cuts at the border at Guizhou <unk>.

Okay.

Finishing needle <unk> dosing.

<unk> Tim Conder.

Goldman's out where does it sit within.

And we've always mentioned that live broadcasting serves a very important part of our ecosystem as a natural extension of our library of our video platform our growth will not be relying on attracting outside light broadcaster to the platform attracting outside.

<unk> housing as a matter of fact theyre.

Very strong overlap between the <unk> and content creators lot of overlap with the.

Video users in Libra, passing users so my confidence and in Libra housing long term and sustainable growth remain unchanged. Our next question comes from <unk> Zhang with TICC. Your line is open.

Thank you Glen and transitional with GBM.

Yes.

Is that <unk>.

And even in medical agenda conscious sung <unk> just shows you how should we start kind of addressing the China joint venture.

Usually the attrition to a stay on the conscious falling back in golf and outdoor shock.

Shanghai into they used to push Amish keytruda.

<unk> knockouts imply in Queensland nickel move now not just the move downward Shan Shan Shan Shan.

Element <unk> got going on with binge on the ground now.

Well, you're touching granite and Joe can you just give aman gilani.

<unk> sure.

<unk> retail.

Thanks for taking my question I would like to ask a question related to gas market and the cost control.

Ongoing COVID-19 pandemic.

What's the latest strategic focus.

Higher priority on gross margin improvement and cost control.

On the weight per pulse the pocket to achieving a breakeven point on non-GAAP basis by.

By <unk> in last quarter's earnings call.

Unchanged and how do you balance that were talking with yogurt goes.

And also what's the gross margin change for a second.

And the second.

Second half of the year.

A pressure a lot more color by segment gross margin. Thank you.

Okay.

When we quote it is who the R&R premium break even those even with <unk>.

Okay.

Those are easing woman, yes, it'll other income producer, but cedar.

Interestingly the income from Chancellor.

Lisa Silicone hydrogel will then there's a surgeon in leaders either Jim will be.

Obama.

So the target of achieving non-GAAP operating breakeven by 'twenty 'twenty four remain unchanged.

As I mentioned, the Covid impact for availability is short term and temporary it doesn't hurt our fundamentals or nor our long term target.

Hello, and welcome to the <unk>, how the audience, we also innovate.

Hum.

So from that phone call three <unk> small literally reality third room, what kind of <unk>. If I can answer for walnuts activity to them I think was required to be temporal.

The margin pressure, you're seeing in first quarter is mainly due to COVID-19 that resulted slowdown of our revenue growth.

And if you look at the expense side, we're actually not spending more money.

Yes.

To accompany it hit all three <unk> growth.

I really like our fields agenda to grow granted to reward your way to the high Hauck <unk> <unk>.

<unk> is under local Appalachia coal phone call intelligence futile to reward passing you guys sometimes hurdle.

Women leave some of the change in terms of the Hanmi ROE when the store aorta.

I'll go through that whole time.

Yes.

You only open looking quite seamless carlotta Hindu pressure pumping.

Hey, good to hear Uhm.

Hello, Peter Choosers Endovascular woman.

Ultimately for Madhu.

We're two into support.

So we like to hope it comes out of Europe .

In our particular.

Particularly youll have we even thought.

Doc format Youll photos of Apache is completely accountable for Linda.

And you asked about the relationship between user growth and expense control.

As a matter of fact, but we believe user growth model with never purely driven by the sales and marketing expense, it's actually driven by our content ecosystem by this.

In.

Nate.

In nature wrote good content those get content is that essentially attracting user growth.

<unk> expense, we spend on sales and marketing is only helping people too.

Quickly realized there is a very good platform called deliberately so it's never about just spending in sales and marketing to drive user growth as a matter of fact, our users.

Engagement level and retention level.

Named a very healthy nature.

And in the future will be pay more attention on the self marketing ROI and.

But for this effort it will not impact our user growth trend as well as the retention rate.

A quick word about feeling closes.

Sounds good.

But what I will do so.

Those are some goods into those type of others.

With regard to continuing into <unk>.

Growth for T Rowe coordinators.

<unk> okay.

Our either the East Coast Australia.

And bush two different door macondo the mainland.

Yeah, there is equipment.

Okay.

Which is a highly in wages.

Particularly because of some further.

Ladies seamlessly unveil so it didn't seem like how would you do.

The <unk> syndrome data.

Some of it themselves.

So in doing that.

In 2012 controlling all of the Eagle point to a purchase order women's in the east.

So these answers are to put into that.

Tim This is mark.

I was just on the jump in terms of what are the challenges in they're going to gel closing yields.

Saint Archer robots either.

Tuition pusher property budgets.

As for the year with a tool.

So in order to receive the condenser curtailment.

And when you put it the Pisa Hydrotheca relaxing.

And yet with all pressure, especially between the articles that have pushes closer within reach and Thats all captured all the efficacy as well.

The question, whether we're going to pad expense control on top of everything.

Everything else.

Like I mentioned in last earnings call starting from 2022, Theres a lot of macro changes.

That's typically an internationally, even though theyre in.

In addition, COVID-19 impact, but a lot of the difficulties. We're facing is not just because of the COVID-19.

And in nature to control costs and improve efficiency is the most important job for <unk> and also for for the industry.

As well and for the specific action points, we wanted to be very their focus strategically to go deep to go deep with our business not go abroad.

And.

Yes. This is this has come to a stage four below daily as well as the industry player to be all focused on cost control and efficiency improvement.

So those are the small leads through it.

The digital over Molly Sims.

<unk> seen the supercenters sell downs other than you see with <unk>.

Somebody is so easily in some particular sure Sanjay so either neither will the railway to the southern yet so it is either.

Similarly, the tissue the whole woman.

Solely with Amdocs to quickly liquidate.

The challenge of hydrogen Molly, who you're going to be until you go guys.

Somebody pays shoretel materiality when you put it.

That's why the gross margin the margin pressure that we're facing in first quarter, it's mainly because the COVID-19 impact results.

Revenue growth slowdown as I mentioned, the COVID-19 starting to ease in the second half of this year, our revenue growth rate will return to a normal trajectory and also the gross margin level will come along with it.

Yes.

I just want to add some points portfolio no. When we go talk about the breakeven.

One priority type.

Cost control and efficiency improvement, but we think for BBB as mentioned by Mr. Chen is equally important to expand our topline. So first of all we still believe that hotel room for us to improve our monetization efficiency. So we are into improve our paying ratio and expand our market.

Sure.

To improve our settlement margin too.

Throughout the second half of this year, even in the first quarter, we still saw their gross profit margins for LIBOR accounting and I'll add this improved quarter over quarter. So that trend will continue in the remaining of this year.

For the cost control side, we also made some progress.

First quarter budget.

The second quarter.

And pandemic.

As a result of the cost control actions will be more.

Collected in the second half of this year and the death of highlights to the numbers first of all you saw there.

Selling and marketing expenses decreased by 29% quarter over quarter now, it's just flat to 25% of total revenues.

Last quarter was 30% and for the silver bandwidth cost is down like 2% quarter over quarter, our total user traffic grow like 28% quarter over quarter and for R&D expenses.

Primarily lapping Chem development data.

P&C and project related abilities, we still believe is essential to improve our productivity to improve element tradition efficacy, but we thought it's also important to invest in the future.

So looking at the dialogue.

All of those investments. So this year, we plan to continue and selectively invest in this area, but we will very close monitor the progress of each product.

Target and make adjustments if necessary.

To improve our Youll know.

Capital efficiency, so we expect the selling marketing G&A and R&D.

Percentage of total revenue will be gradually decline from Q3.

As our topline spend and the loss margin will be naturally narrowed.

For Q2.

Yet the overall spending will be.

Flat quarter over quarter, so the debt out either.

Further for the module side.

Now Thats all and that concludes the question answer session I would like to turn the conference call back over to management for theirs.

A closing comment.

Well. Thank you once again for joining US today. If you have further questions. Please contact me Juliet Yang Executive IR director or TPG Investor Relations, our contact information for IR in both China and U S can be found on today's press release have a great day Bye bye.

This concludes the program you may now disconnect.