Q2 2023 Bilibili Inc Earnings Call

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We believe the reason for guidance update, the court is just a fit. This is for a temporary phase change and it's not a change of foundation.

the core business actually remains intact. For example, the delay of games is just that we're recognizing the revenue a little bit later. For example, Pretty Derby has already scheduled to be launched on August 30th.

And we will be releasing this game on that day. This is confirmed and certain. And our outlook and our confidence in the quality of the game and

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Speaker 1: Good day and welcome to Bilibili second quarter 2023.

And as you may have already seen that in the second quarter the core business of live- Bass, is is the world's health and digital research centre.

We do expect that in the second half of this year and look forward to 2024, the advertising and live broadcasting business will sustain a very healthy and solid growth.

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Speaker 1: Yang, Executive Director of Investoration. Please go ahead.

In the beginning of this year, we have set our financial target to increase gross profit and narrow our net losses. So as our requirement, financial requirement or KPIs to each department, business lines is to ensure the absolute dollar growth for its...

Speaker 2: Thank you, operator.

Speaker 2: During this call, we'll discuss Business Outlook and make forward-looking statements.

Speaker 2: These comments are based on our predictions and expectations as of today. Actual 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.

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Speaker 2: 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. Definition of these measures and a reconciliation table are available in the news release we issued earlier today.

Strategically, we have lowered the revenue contribution of low margin business or lossmaking business. Even though some of the revenue growth rate has been impacted, however, the absolute dollar of our gross profit has sustained a very healthy and robust growth.

Speaker 2: 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 Billbilly IR website at irdolbilly.com.

In the second quarter, our gross profit grew by 66% in a year and our gross margin has experienced more consecutive quarterly growth and our adjusted net loss has narrowed by 51% young year. I'm confident to achieve our loss cutting target for 2023 and achieve our breakeven target by 2024.

Speaker 2: Joining us today from Billbillie's Intermanagement are Mr. Ray Chen, Chairman of the Board and Chief Executive Officer, Miss Collie Lee, Vice Chairwoman of the Board and Chief Operating Officer, and Mr. Zenf and Chief NS Officer. And I will now turn the call over to Mr. Fan, who will read the prepared remarks on behalf of Mr. Chen.

Speaker 3: Thank you, Juliet. And thank you, everyone, for participating in our 2023 Second Quarter Conference call to discuss our financial and operating results.

Speaker 3: and pleased to deliver today's opening remarks on behalf of Mr. Chen.

Speaker 3: We set our size on prioritizing profitability and dear you growth. And we have made solid steps toward these goals.

Speaker 3: In the second quarter, we meaningfully improved our growth profit and narrowed our losses.

Yes, this is Sam. I just want to add that on the loss reduction side, even through the revenue growth rate and encoder, as Chen already mentioned, that will be lower than expected, but we are still confident to achieve the loss cutting target.

Speaker 3: While continuing to deliver healthy DAU growth and strong community metrics.

Speaker 3: I will share more color on both fronts. First of all, on our path to profitability, in the second quarter, we further improved our commercialization efficiency, enabling us to convert our growing traffic to quality top-line growth.

We said in the beginning of this year, which is to cut our adjusted operation loss by $3 billion. So through the growth pot increase and expense control. And notably in the second quarter, our operating cash flow was close to break even.

Speaker 3: The momentum we see in our advertising and library testing business is encouraging.

Speaker 3: In the second quarter, our ad revenues increased by 36%, and the live broadcasting revenues increased by 32% both year over year. Moreover, our growth profit increased significantly by 66% year over year. Driving our growth profit margin to 23% marking the fourth consecutive quarter of improvement.

We think there's a good chance that we can achieve operating cash flow qualitative in the fourth quarter this year. Additionally, we are confident to continue to improve our gross profit margin in the second half of this year and achieve our bookkeeping target by 2024. Lastly, the updated full year guidance.

reflect our current projection of various potential outcomes. We will try our best to ensure a smooth product launch as well as achieve our goal of increasing the cost of poverty and narrowing losses.

and projection of various potential outcomes. We will try our best to ensure a smooth product launch as well as achieve our goal of increasing the gross profit and narrowing losses. Thank you folks.

Next question please, operator. We are now taking the next question.

Speaker 3: are 22% decreased in sales and marketing expenses.

Speaker 3: A 14% decrease in GNA expenses and a 7% decrease in R&D expenses or on a year-year basis.

Please stand by.

The next question is from Hee-wen Zhang from China Renaissance. Please go ahead, your line is open.

Speaker 3: These margin enhancements and our effective cost management contributed to our bottom line improvement.

Speaker 3: We minimally reduced our non-gap net loss by 51% the over-year.

Speaker 3: Moving on to our community growth. Our DAU's increased by 15% the over year to 96.5 million in the second quarter.

Speaker 3: Driving our DAU to MAU ratio up to 29.8%. Meanwhile, the user's average daily time spent on our platform reached 94 minutes in the second quarter.

I hope to see you in the next video. Thank you for your attention. I hope to see you in the next video. Thank you for your attention. Thank you very much. Thanks for taking my question. My question is about our game business. Can you discuss on the pipeline and especially for the PwE, how should we think about your expectations? And also, can you talk about our self-development game strategy and direction? Thank you.

Speaker 3: Driving total time spent up by 22% of the year. We are pleased to see this strong DAU growth has continued in Q3.

Speaker 3: As we move into the second half of this year, our main tasks will be in three core areas.

Speaker 3: First, we aim to further enhance our traffic commercialization efficiency by increasing our ad revenues and the libel casting revenues.

Speaker 3: Additionally, we will bring more high quality games to our users.

In the second half of this year, we have seven titles in our pipeline ready to be launched domestically and internationally. Among those seven, five of them have already gained approval and ready to be launched in the domestic market. Two will be launched internationally. Willow.

Speaker 3: including the highly anticipated game Pretty Derby.

Speaker 3: Secondly, we will continue to take a Putin's financial approach with strict control of our cost and expenses.

Speaker 3: and further narrow our losses. Finally, yet importantly, we are committed to achieving ongoing deal growth and fostering an inspiring video community for young generations in China.

As for the highly anticipated game, Pretty Derby, we have already scheduled the launch day to be August 30th. And right now within just two weeks of pre-registration.

Speaker 3: with that overview of our progress.

Speaker 3: I'd now like to provide a brief update on our three core pillars of content, community and commercialization.

Speaker 3: Starting with content.

Speaker 3: Content creators continue to be our ecosystems most valuable asset.

Speaker 3: Supporting these talented content creators in their ability to amass larger followings and to be able to earn more money among our top tax. As always, we continue to optimize our algorithms and products to facilitate high quality content and enable creators to be recognized.

Over 2 million users have already pre-registered for this game. This is a new record in our operating history for the pre-registration amount.

Speaker 3: In the second quarter, the number of daily active content creators on our platform and our monthly content submissions increased by 19% and 43% year-over-year respectively.

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Speaker 3: In the second half of this year, we plan to shift our video watching metric from video views to video time spent, which will help our users discover more high quality content on Billy Billy. We are also based testing an AI-powered search feature in our community that enables relevant videos to be found more easily.

Speaker 3: Create a monetization on billi-billy increased as well in the second quarter. Over 1.58 million creators earn money through various billi-billy channels.

highly anticipated games with large fan base, we actually spent a lot of effort doing the localization work, making sure that our gamers will be having the very original Pretty Derby experience. That's actually one of the reasons why it has been delayed by several months.

Speaker 3: Showing a 40% increase year-over-year. In addition to our cash incentive program, more creators are earning income through advertising and the live broadcasting channels.

Speaker 3: For example, our video comments as have opened up new efficient earning opportunities for content creators.

Speaker 3: In the second quarter, the number of creators who earned the money through video commerce grew by over 200 and 20% the overyear.

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Speaker 3: Resident content and multi-cineral products like story mode continue to drive platform traction.

We believe that Billy Billy's game launch team is the best ACG game launch team in China. And they are very experienced and they will make sure a very smooth and successful launch of Pretty Derby. And we are confident Pretty Derby will be up.

Speaker 3: In the second quarter, our total daily video views were up 31% year-over-year to 4.1 billion. Among which, star-remotes daily video views grew by 76% year-over-year. It has become one of the key video consumption scenarios for our users.

Speaker 3: contributing to our growth in DAU and at revenues Turning to our community

Speaker 3: Our users remain highly engaged and sticky.

If you have any questions, please feel free to contact us.

Speaker 3: The user's average daily time span on our platform was 94 minutes in the second quarter.

Speaker 3: reaching the highest second quarter level in our company's history.

Speaker 3: The amount of interactions reached nearly 15 billion in the second quarter of 19% over year.

As for our self-driven pipeline, we actually have two ACG card games will be launched in the second half of this year. This includes one game called Throt Fludo, which was already launched today. And there will be another game called Elushir. This will be scheduled for the third half of this year.

Speaker 3: Our call group of official members also increased by 26% the over-year to 214 million, with a solid top-mind retention rate of around 80%.

Speaker 3: Our signature offline events also bring our community together in person.

Speaker 3: This July , we hosted two exciting offline events, Billy Billy World and Billy Billy Microlink in Shanghai. Over 200,000 tickets sold out almost immediately.

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Speaker 3: The tremendous response highlights bilibili strong influence among young generations.

Speaker 3: as well as users' willingness to pay for our unique community experiences.

Please sign up later and follow us on Facebook, Facebook, YouTube and Twitter LevelCh

Speaker 3: Finally, let's look at our commercialization and financial progress.

Speaker 3: Total revenues for the second quarter increased by 8% over year to Mb5.3 billion.

Thank you.

Speaker 3: Specifically, revenues from our advertising and live broadcasting businesses.

Speaker 3: increased by 36% and 32% the over year respectively.

Speaker 3: Meanwhile, we continue to improve our growth profit and margin.

As for our self-development game strategy, as you may be aware, there's been a very heavy competition among the game industry this year. As for our own self-development game, the strategy will remain unchanged, which is focused.

Speaker 3: Our growth profits in the second quarter grew by a notable 66% over year. Driving our growth profit margin up to 23% from 15% in the same period last year. Looking at this in more detail.

Speaker 3: Revenue from our Value AdiServices business grew 9% year-over-year to Umbi 2.3 billion in the second quarter. Primarily driven by increased revenues from our Li-Bercasting business which grew by 32% year-over-year, as we further integrate Li-Bercasting within our video operations.

Speaker 3: We have opened multiple opportunities to expand and diversify our library casting content by converting content creators into library casting hosts.

Speaker 3: In the second quarter, the number of monthly active LiBocasting hosts increased by 15% year-over-year. In addition, we are exploring new LiBocasting products to create more paying channels for our users.

Speaker 3: quarter, the number of monthly active LiBerCasting hosts increased by 15% year-over-year. In addition, we are exploring new LiBerCasting products to create more paying channels for our users, including live celebration events.

Speaker 3: We expect our ongoing integration activities to support our revenue growth in the second half of 2023.

Speaker 3: By the end of June , we had 20.5 million premium members.

Speaker 3: Over 80% of whom are on annual subscription or auto-renew package, highlighting our trust-based user relationship.

Speaker 3: Incuse free, we released several highly anticipated Chinese anime titles, including Fog Kill of Five Elements.

Speaker 3: Wu Shao Wu Qin, Xichuan Huanzilin Tian

Speaker 3: And I will self-produce the title, link click season 2.

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Speaker 3: to bring more exclusive high quality content to our premium members.

Speaker 3: Turning to our other tidying business.

Speaker 3: As we progress our initiatives to integrate sales conversion with ad products.

Speaker 3: We believe we have found an effective way convert our high quality traffic to advertising revenue growth.

For the second quarter, our advertising revenues grew 36% year-over-year to be 1.6 billion.

Our top 5 advertising verticals in the second quarter of the game's e-commerce, digital products and home appliances, skincare and cosmetics and food and beverage.

Our continuous improvements to our integrated industry-ad solutions have also helped us gain more ad budget spend from industries such as games and e-commerce.

Specifically by introducing video commerce products.

and revenues from the e-commerce industry increased by 144% year-over-year in the second quarter. Meanwhile, content creators were able to benefit from more and more opportunities.

The number of creators who earn income through video commerce grew over to 120% year-over-year. Moving forward, we will continue to build our commercial database, refine our algorithms.

as well as optimize our ad product offerings.

We are confident that we can improve our ad revenues per DAU and achieve solid growth in the second half of 2023.

As for our game's business, our revenues were RMB891 million for the second quarter. A 15% decline from the same period last year.

The year-on-year decline was mainly due to a lack of new game launches in the second quarter and a growth in decline for certain titles. Our top two performing games, Azura Lane and FGO, remained stable.

Particularly, during Azure Link's six-year anniversary, the game reached a new peak in paying users and revenues. In addition, we have also successfully extended our exclusive license of Azure Link for another five years.

In July , we launched our first self-developed game in the female romance genre, Al Qaeda Land Records.

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Welcome by a host of female users, the game ranked number one on the iOS free download chart shortly after its release.

We are actively working on developing more games that users love. In the meantime, we have seven new titles that we plan to release in domestic and overseas markets in the second half of the year, including the highly anticipated game Pretty Derby.

Shan Yao, Liu Jingshou Niu Pretty Derby is scheduled to launch on August 30 and is now available for pre-registration.

Over 2 million players have already pre-registered as of today.

Given said that, the launch of Pretty Derby as well as few self-developed titles were delayed by several months than we initially planned.

Due to lower revenue contribution from games and other non-core businesses, such as IP derivatives and others.

We now expect a full year 2023 revenue to be between IMB 22.5 billion and IMB 23.5 billion.

As I mentioned earlier

Our key financial goal for this year is to improve our growth profit and narrow losses.

We have delivered on this goal with 66% increase in gross profit and the 51% cut on adjusted net loss in the second quarter.

Look ahead, we are committed to further improve our growth profit and control our expenses.

and meaningfully cut down losses in the second half of this year and reach our breakeven target by 2024. As we progress on achieving our financial target,

We will continue to lead the healthy growth across our platform and enrich the everyday life of young generation in China.

This concludes Mr. Chance remarks.

I will now provide a brief overview of our financial results for the second quarter of 2023.

As mentioned in Mr. Chen's remarks, our financials continue to improve.

We are improving our margins and showing clear results in our bottom line with narrowed losses. Total net revenues for the second quarter were MBE 5.3 billion, up 8% compared with the same period last year. Our total net revenues breakdown by revenue stream was approximately 43% less, 30% advertising.

17% mobile games and 10% from IPv derivatives and other businesses.

Our cost of revenues decreased by 2% over year to $4.1 billion.

Driving our growth profit to be 1.2 billion up 66% over year. Our growth margin was 23% up from 15% in the same period last year. We expect growth margin to continue to improve throughout the back half of the year.

Our total operating expenses were down 14% year over year to MB2.5 billion.

Tight control of our expenses is ongoing while we improve our monetization at the same time. We cut sales and marketing expenses by 22% over year to earn 918 million. While our DAU's grew by 15%, as a percent of total revenues,

sales and marketing was 17% compared with 24% in the same period last year.

GNA expenses were RMB 539.7 million down 14% year-over-year.

and the expenses will be 1 billion down 7% over year.

Our net loss and adjusted net loss were 1.5 billion and I'm being 964.1 million respectively.

narrowing by 23% and 51% year-over-year respectively.

Our adjusted Nelloth ratio in the second quarter was 18%, improving from 40% for the same period a year ago.

Turning to our capital allocation and liability management.

In June 2023, we completed the Repurchase Ride offer for our 2027 nodes with a total total principal amount of $746 million US dollars.

as of the end of the second quarter.

Our outstanding convertible bombs totaled the principal amount of $876 million US dollars.

As of June 30, 2023, we had cash and cash equivalents. Time deposes and short term investments of RMB 14.3 billion or 2 billion US dollars.

We believe this amount is sufficient to cover all of our remaining convertible bounds and fund our future operations.

Thank you for your attention.

We would now like to open the call to your question.

Operator, please go ahead.

Ladies and gentlemen, we now begin the question and answer session. If you wish to ask a question, please press star 1 and 1 on your telephone.

and wait for your name to be announced.

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.

We are now taking the first question.

And the first question, Pricking Zone from CACC. Please go ahead. Here I need to open.

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video further increased in the second quarter, so what's the deal train going forward? And the conventional demo details on the engagement during the recent summer hard days. Thank you.

From the start of last year, I have been trying to improve the ability and the health of the DAU It is the most important thing in our work in the actual work

Last year I have been emphasizing increasing our earning power and achieved healthy and sustainable dear youth growth are the top two priorities of our company and we have been exercising on that throughout our respects.

This year, the K2, in our market, used the same price as 22% of the price. Our DAU is the same price, increased 15% to 9650,000. The daily use of the goods is 94 minutes. It is also the same market value of the same time.

In some aspects of our view of the laundry we houses too, theseieron are very beautiful and anxious.

In the second quarter with self-marking down 22% young year, we have grow our DAU by 15% reaching 96.5 million. And our daily time spent, daily user time spent, bitched.

96, 94 minutes.

This is the record high of St. Pyrr in our operating history and our overall time spent of the entire community grew by 22% year over year. All of above matrix shows a very healthy and robust close of the community.

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Why do we value the growth of DAU so much? Because we believe that the growth of DAU is a prerequisite and foundation for Bilibili's profitability.

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The reason why we have been emphasizing on the healthy growth of our DAU is because we believe the healthy growth of DAU is the foundation and preliminary requirement for billability to achieve sustainable profit. And we believe we have already discovered an effective way.

to convert our high quality traffic into increasing top line, dual advertising and live broadcasting.

And we believe with this effective route and methods, we can achieve TAU and top-line growth. And this will be a virtuous cycle.

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In the second quarter, our Rav-Ad revenue and live rock housing revenue achieved 36% and 32% young yield growth respectively, which exceeded the industry average growth a lot.

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As for the outlook into the summer, given that we're in August in the past,

surpassed a very exciting milestone of 100 million. And we also expect our average daily time span can reach a new historical high.

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We are very confident with tight control on sales and marketing expense, we can continue to attract our users with high quality content and return our user with our engaging community and achieve DAU's sustainable and healthy growth.

and we also believe this high traffic can be effectively converted to our sustainable top line growth.

Next question, please. Thank you.

Thank you for the question. We are now taking

Next question. Please stand by. And the next question, please are from Bank of America. Security please go ahead. Your line is open.

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Thank you management for taking my question and congrats on the solid advertising growth. My question also relates to ad business. Can you share with us the major driver of the ad business or follow the strong base of second quarter? Also, can you give us some updates on the June 18th, 2019, 2020, 2018, 2019, 2019, 2019, 2019, 2019, 2019, 2019, 2019, 2019,

at growth, on the delivery and how should we think about the new business, e-commerce streaming, development to our ad business. Thank you.

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our ad growth rate has exceeded the industry average. At the same time, if you look at the ad revenue per, at ad revenue at percentage of a total revenue, it has increased from 25% in here last year to 30% in the second quarter.

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is beginning to pay off and that's been driving our advertising revenue growth. The one horizontal actually referring to the technology middle platform and the data capability. It includes optimizing the recommendation model, improving the advertising inventory.

matching efficiency and the application of AIGC to improve overall ad efficiency.

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The one vertical is referring to the six customized industry app models, including games, e-commerce, FMCG, automotive, and internet service, among which,

E-commerce and games starting to show very positive results. In the second quarter, ad revenue from E-commerce industry grew by over 140% in year. And advertising revenue from game industry grew by over 40% year on year.

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The second reason is that since last year, we have stick to the integration of content and commercialization and expand at inventory in different scenes of the community, on the basis of ensuring user experience. In the first half of this year, it has formed very good growth momentum.

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Thirdly is that many of you probably already aware that we have established the treating ecosystem, ecosystem center.

to focus on building video e-commerce related capability in the second quarter. By integrating the transactional scenario into the advertising products to further boost the revenue growth. We expect the video e-commerce related ads will generate about 10 to 100% of ad revenue this year.

And in the next few months, we also plan to upgrade the membership shopping for UNGO tab on our main page to a Guam shopping tab and creating a new entrance for more commercial opportunities.

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June 18th, period promotions, how you've performed through our in-depth data collaboration with Ecommerce platform, the revenue of the Ecommerce industry, I brought you from Ecommerce industry, including transaction scenario during June 18th, period.

actually grow by 200% year over year. And we expect to achieve 15% to 16% of revenue year on year increase from e-commerce industry during upcoming Double 11 Festival. As for examples,

We actually did a collaboration with Alibaba Spark Program, aka a????, and the results exceeded our expectation.

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There are a few interesting days point I can introduce about 70% of the user who entered Taobao to bilibili were new customers and this ratio reached even to 90%.

for certain industries. That shows that we have the effective ability to consistently convert user to four advertisers.

In addition, Billy Billy user maintained a very high conversion value. 15 days after the related baby was posted.

During June 18th, the AB revenue from Alibaba actually increased by 300% year-over-year.

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While many other content platforms choose to build their own e-commerce platforms, Bilibili on the other hand, we choose to take an open approach partnering with e-commerce players and brand owners to grow the sales volume together on Bilibili.

First of all, we will see that when this is actually the beginning, we will have to pay attention to the consumption of the low-income. Young people must have the ability to consumption of low-income. But in the low-income consumption, it is actually necessary to see the consumption of low-income.

In fact, we still have a lot of confidence to give them their benefits. In the last half of the year, there are 3,000,000 users who have been using the blockchain platform, which is called the blue chain, which is a part of the exchange of exchange. The exchange of exchange of exchange of exchange is a part of the exchange of exchange of exchange. I believe that the future space will be very big. Now, the total exchange of exchange of exchange of exchange of exchange is increased by 8 times. The number of live streaming companies is also increased by 7 times. First of all, cultivating users' consumption behavior and mind share on bilibili is our top priority. We believe that the YAHN generation has strong willing to consume and building the mind share is very important. As we unleash their consumption power on our poplars, in the first half of this year.

near 30 million users clicked on the shopping link on Bilibili's video commentary section, which leaded to a transaction related behavior. As we unleash our user consumption demand, the number of videos that carries product links increased by eight times in the first half of this year. And the number of live broadcasting e-commerce shows increased by seven times in the first half of this year.

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Secondly, we will continue to how far can you on Tim Creator, too.

achieve sustainable operations through our video e-commerce initiatives. More content creators already started to try out Bilibili video e-commerce. This includes but not limited to many well-known content creators such as Wang Shifui, Xiao Ma, Mao, Mi Deng, Bao Jianzhao, Da Wuxiyan, and et cetera. We are very delighted to find the model is very valid and successful. And this also broke the rumor that Bilibili's user has no consumption power.

And actually, as a matter of fact, from the data that's shown that we have a lot of female users with consumption potential and power, actually 45% of billy billy users are female. We do notice that they do have strong willingness to consume on billy billy and they have strong purchasing power. Design video....

Moreover, the price veal comes to a competitive price contrasting as well. The selling price of the V6 combinations are based on customer service and those purchase an Shawn sleeve shelf down on the sale page to see an ok. At the same time, we were able to buy a Lamborghini in the frontward shoe shops. .

and society will continue to try far more to build up thosems in order to establish new development along with communications and reactin scaling. Many nice examples come from the

So now I will come back to the

Thirdly is that we intend to try more categories from our, on top of our traditional strong verticals in addition to the IP derivative, aka as our membership shopping, which is focused on the ACG preferential product and content. We intend to explore more categories such as food, beauty, and food.

3C and digital products, home appliances, and et cetera. And here's an example. In mid-April, Xiaomi launched a live broadcasting e-commerce show promoting its new cell phone based on the data that I have in hand, the lily lily bank number one in terms of GMV among all content platforms. It not only reflected that the strong word of mouth influenced selling technology for more than 25 years, but being coordinate to some degree at a lower price, none had real money to pay for sixtywater production and during one year, they got to the point of a record where we were talking about a big company and to some degree they were running software that was very others nodes that could streaming today that mix all of these things with the few and could

I think the Bilibili ad model has evolved from establishing brand perception and mind share to a true integrated ad solution, a full advertising chain of brand building, seeding and self-conversion.

Yeah a tomby, but SHO's the Jun out. I should pro about thinking the.

In the first half of this year, we have upgraded our industry app for Lucian for game and e-commerce and transactional strategy and it's already starting to show positive results. In the second half, I personally plan to conduct additional upgrade for our leading ad inventory, ad industry such as FMCG.

All of the implied meanings behind the task it can drastically increase the efficiency of how our content team process the content.

Some people thought a year social that's yet to surpass the one more thing is and I'll go to Samsung.

And the total here Peter have actually open door.

Yes.

You'll see it alitalia on this issue.

Packaging tissue calculus of sand that you just showed in the.

Since I'm sure to the fleet.

Hershey Yugo.

Sometimes totally you'll go on a journey to decrease that.

The total economy, if you will.

One of the.

Most importantly, Copa <unk> Yada layoff accumulator use it judiciously.

This is chip.

Without them, we would or would you prefer.

Canadian who cannot take the essence availing yourself of the eligible politically.

Yes.

You'll note here in Nashville, just typically see licensee.

So you said that you won't like it.

Zero Trophy downtown.

Of course, you can I hope, we all kind of frugal.

So obviously with the vehicle.

Only a certain pattern and I'll go through it all you guys since it I understand that I cannot tell them the social part of it or the way you want to reenter the city I mean, I guess, you said should okay.

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Traditional wings to Jupiter two sure Youll notice that you refer to the payout you will not see too much of it.

Partially what you got for me until you go from here.

And a lot their application scenario would be enhanced search.

Because they really have some vast content library and each videos carries a lot of scatter information and we can leverage.

And.

Drastically enhance the search efficiency, we are actually better testing a new enhanced search that by adjusting typing question in our search box are large language model can summarize and answer questions.

Very valid example would be with the recent version upgrade of Jensen impact people can just simply asked which card is worth drawing and wish character is we're spending time to to improve and large language model can summarize the family information.

And just provided to the user versus in the past they have to watch several several videos to summarize that content.

Formation, nowadays with the just spoke up hand.

You can get the correct and fast faster.

The Peru highly go through all that yes sure.

As he said and only cover yourself.

To him, but I don't go to hotel assets in the Eagle Ford.

She said, Georgia.

You kind of languishing.

We're going in.

See the screenshot here, especially not in Iot the prescriptive.

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When did we shall do so.

Certainly Miss Alva CEVA.

Sure.

So you guys are the only the ticket.

But also any color you got <unk>, you got Max Macbook or are you looking at further diversity I'll call eligible Johan you don't really want to go sell throughs and you've got to have a certain event Jamba Mecca.

Mmm broader securitizing HOKA MLR, so if youre looking hot topic.

South of the tablets or something no matter, who sell throughs.

Wait on particularly it Shouldnt go to somehow.

Kind of shifting that even here.

Another function upgrade that we are testing as AI assistance.

This will accompany users when they are watching a video help them to summarize and extract useful information for example, and Macbook review video user can ask the AI assistant.

What's the difference between two croquette and two chip, what's the price difference, what's the efficiency difference and the AI assistance and can extract the exact information to help the user to to get what they want all.

All of this will help to increase visibility user experience.

How should we think will address that answer where do you see that.

Would you look to go GA.

Okay.

Hi, Tushar yugo.

I'll leave it to you, but perhaps you could yourself xing intent.

And you don't put them on kind of Angola that Peter has been kind of shifting over to conduct shibuya AIG.

Does it hurt you so you could see through all that.

Go to <unk>.

The signal integrity passion mango auto since you got into a corner here.

She got applicable here.

Uh huh.

When we're selling as a product you vishal.

Internally.

We really value the AIG see technology. We believe this is a once in a lifetime makes spirit opportunity. This will be similar to the invention of mobile internet, which enable <unk> mobile user grow by tenfold and we believe with the AIG.

<unk> technology.

Technology matures, we can leverage this technology to.

Largely enhance our user experience our content creators experience and productivity as well as increase our commercialization efficiency.

Dotcom koos.

The question operator, we can.

The call today.

And that concludes the question and answer session.

Thank you once again for joining <unk> second quarter 2022 it finance it shows and business update conference call today.

He has any further questions. Please contact Juliet Yang <unk> IR.

So our pitch on the financial communication.

Correct information for <unk> in both China and U S can be found on today's press release.

Great day have a great day.

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Good day, and welcome to <unk> second quarter, 'twenty, 'twenty financial results and business update.

Conference call today's conference is being recorded.

This time I would like to turn the conference over to Juliet Yang Executive Director of Investor Relations. Please.

Please go ahead.

Thank you operator.

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

Actual 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 stock exchange.

The non-GAAP financial measures, we provide are for comparison purposes only.

Nation of this 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 webcast replay of this conference call will be available on the availability IR website at IR <unk> com.

Joining us today from <unk> Senior management are Mr. <unk>, 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 and Chief Financial Officer.

And I will 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 2023 second quarter conference call to discuss our financial and operating results I am pleased to deliver today's opening remarks on behalf of Mr. Chen.

We set our sights on prioritizing profitability and <unk> growth and we have made a solid steps towards these goals.

In the second quarter, we meaningfully improved our gross profit and narrowed our losses.

While continuing to deliver healthy growth and strong community metrics.

I will share more color on both fronts.

First of all on our path to profitability in the second quarter, we further improved our commercialization efficiency.

Enabling us to convert our growing traffic to quality top line growth the.

The momentum we see in our advertising and LIBOR testing business is encouraging.

In the second quarter, our AD revenues increased by 36% and live broadcasting revenues increased by 32% both year over year.

Moreover, our gross profit increased significantly by 66% year over year.

Driving our gross profit margin to 23%, marking the fourth consecutive quarter of improvement. Meanwhile, we have continued to strengthen our expense controls. Our total operating expenses declined by 14%, including a 22% decrease in sales and marketing expenses.

A 14% decrease in G&A expenses, and a 7% decrease in R&D expenses on a year over year basis. These margin enhancements and our effective cost management contributed to our bottom line improvement, we meaningfully reduced our non-GAAP net loss by 50.

1% year over year.

Moving onto our community growth, our <unk> increased by 15% year over year to $96 5 million in the second quarter.

Driving our <unk> ratio up to 29, 8%.

Meanwhile, the users average daily time spent on our platform reached 94 minutes in the second quarter.

Driving total time spent by 22% year on year. We are pleased to see this strong <unk> growth has continued in Q3.

As we move into the second half of this year, our main tasks will be in three core areas.

First we aim to further enhance our traffic commercialization efficiency by increasing our AD revenues and the LIBOR testing revenues.

Additionally, we will bring more high quality games to our users.

<unk> the highly anticipated game pretty Derby.

Secondly, we will continue to take a prudent financial approach with strict control of our costs and expenses and further narrow our losses. Finally, yet importantly, we are committed to achieving ongoing <unk> growth.

And the fostering of inspiring video community for young generations in China.

With that overview of our progress.

I'd now like to provide a brief update on our three core pillars of content community and commercialization.

Starting with content.

Content creators continue to be our ecosystems, most valuable asset.

Supporting these talented content creators in their ability to amass larger followings and to be able to earn more money among our top tax.

As always we continue to optimize our algorithms and the products to facilitate high quality content and enable creators to be recognized in.

In the second quarter.

Number of daily active content creators on our platform and our monthly contest submissions increased by 19% and 43% year over year, respectively.

In the second half of this year, we plan to shift our video watching metric from video views to video time spend which will help our users discover more high quality content and visibility. We're also beta testing and AI powered search feature in our community that enables relevant videos to be found.

More easily.

Greater monetization on visibility increased as well in the second quarter.

Although 1.5 dollars 8 million creators money through various visibility channels.

So in a 40% increase year over year.

In addition to our cash incentive program more creators not only income through advertising and the LIBOR testing channels. For example, our video Commerce ads have opened up new efficient only opportunities for content creators in the second quarter. The number of creators who are in the money.

Through video Commerce grew by over 220% year over year.

Rather than the content and multi scenario products like story mode continued to drive platform traction in the second quarter. Our total daily video views were up 31% year over year to a full point of 1 billion, among which star remote daily video views grew by 76% year over.

A year.

It has become one of the key video consumption scenarios for our users contributing to our growth in da youth and added revenues.

Turning to our community.

Users remain highly engaged and sticky.

The users average daily time spent on our platform was 94 minutes in the second quarter reached.

Reaching the highest second quarter level in our company's history. The monthly interactions reached nearly $15 billion in the second quarter up 19% year over year. Our KOL group of official members also increased by 26% year over year to $214 million.

With a solid a tough month retention rate of around 80%.

Our signature offline events also bring our community together in person.

This July we hosted two exciting offline events visibility world and visibility macro linked in Shanghai over 200000 of tickets sold out almost immediately.

Tremendous response highlights <unk> strong influence among young generations.

As well as users' willingness to pay for our unique community X periods is.

Finally, let's look at our commercialization and financial progress.

Total revenues for the second quarter increased by 8% year over year to RMB, five 3 billion, specifically revenues from our advertising and LIBOR testing businesses.

Creased by 36% and 32% year over year, respectively. Meanwhile, we continued to improve our gross profit and margin our gross profit in the second quarter grew by a notable 66% year over year driving our gross profit margin up to 23.

Percent from 15% in the same period last year.

King at this in more detail.

Revenues from our value added services business grew 9% year over year to RMB, two 3 billion in the second quarter, primarily driven by increased revenues from our LIBOR custom business, which grew by 32% year over year as.

As we further integrate LIBOR testing within our video operations, we have opened up multiple opportunities to expand and diversify our LIBOR casting content by converting content creators into LIBOR casting hosts in the second quarter. The number of monthly active LIBOR cutting holes <unk>.

<unk> by 15% year over year in.

In addition, we are exploring new LIBOR casting products to create more paying channels for our users.

<unk> live celebration events, we expect our ongoing integration activities to support our revenue growth in the second half of 2023.

At the end of June we had 25 million premium members over 80% of whom are annual.

Annual subscription auto renew package, highlighting our truss space user relationships in.

In Q3, we released several highly anticipated Chinese anime titles, including fog here all five elements.

I was in <unk>.

And our self produced the title link click season to Shaoguan Diluvian DRG.

To bring more exclusive high quality content to our premium members Tony.

Turning to our advertising business as.

As we progress our initiative to integrate sales conversion with AD products. We believe we have found an effective way convert our high quality traffic to advertising revenue growth for the second quarter, our advertising revenues grew 36% year over year to RMB one six.

Mainly led by our performance based AD revenues growth, which increased by over 60% year over year and revenues from our brand and the sparkle offerings also grew by double digit percentage year over year.

Our top five advertising verticals in the second quarter, what games E Commerce digital products and home appliances skincare and cosmetics.

Food and beverage our continuous improvements to our integrated industry AD solutions have also helped us gain more AD budget spend from industries, such as games and E Commerce space.

Specifically by introducing video commerce products and revenues from the e-commerce industry increased by 144% year over year in the second quarter. Meanwhile, content creators, who are able to benefit from more ads opportunities the number of creators.

And income through video Commerce grew over 220% year over year moving forward, we will continue to build our commercial database refine our algorithms.

As well as optimize our AD product offerings. We are confident that we can improve our AD revenues per <unk> and achieved solid growth in the second half of 2023.

For our games business, our revenues were RMB $891 million for the second quarter, a 15% decline from the same period last year. The year on year decline was mainly due to a lack of new game launches in the second quarter and the growth in decline for certain titles.

Our top performing games, <unk> and <unk> remained stable, particularly during azure laying six year anniversary that game reached a new peak in paying users and revenues.

In addition, we have also successfully extended our exclusive license of our <unk> for another five years.

In July we launched our first self developed game in the female romance genre al-qaeda landed record.

<unk> vector control.

Welcomed by a host of female users again ranked number one on the Io as free downloads chart. Shortly after his relief.

We are actively working on developing more games that users love in.

In the meantime, we have seven new titles that we plan to release in domestic and overseas markets in the second half of the year.

Including the highly anticipated game pretty Derby shut Yo Yo lodging Sean you.

Adobe is scheduled to launch on August 30, and is now available for pre registration over 2 million players have already pre registered as of today.

Given sets out.

The launch of pretty Adobe as well as fuel self developed titles were delayed by several months than we initially planned due to lower revenue contribution from games and other noncore businesses, such as IP derivatives and others. We now expect our full year 2023 revenue.

To be between RMB, 22, 5 billion and RMB 23 5 billion.

As I mentioned earlier, our key financial goal for this year is to improve our gross profit and narrow losses.

We have delivered on this goal with 66% increase in gross profit and a 51% cut on the adjusted net loss in the second quarter.

Head, we are committed to further improve our gross profit and control our expenses and meaningfully cuts down losses in the second half of this year and reach our breakeven target by 2024, as we progress on achieving our financial targets, we will continue to lead the house.

Growth across our platform and the reach to everyday life of young generation in China.

This concludes Mr. Chen's remarks.

I will now provide a brief overview of our financial results for the second quarter of 2023.

As mentioned in Mr. Chen's remarks, our financials continue to improve.

Improving our margins and they're showing clear results our bottom line with narrowed losses total net revenues for the second quarter was <unk> five 3 billion.

8% compared with the same period last year.

Our total net revenues breakdown by revenue stream was approximately 43%, thus, 30% advertising, 17% mobile games and.

In the 10% from the IPV derivatives and other businesses.

Our cost of revenues decreased by 2% year over year to RMB four 1 billion.

Driving our gross profit to RMB, one 2 billion up 66% year over year.

Our gross margin was 23% up from 15% in the same period last year, we expect gross margin to continue to improve throughout the back half of the year. Our total operating expenses were down 14% year over year to RMB, two 5 billion.

Tight control of our expenses is ongoing while we improve our monetization at the same time.

We cut sales and marketing expenses by 22% year over year to RMB $918 million.

Our da use grew by 15% as a percent of total revenues sales and marketing was 17%.

Paired with 24% in the same period last year.

G&A expenses were RMB $539.7 million down 14% year over year.

<unk> expenses were RMB 1 billion down 7% year over year.

Our net loss and adjusted net loss of RMB, one 5 billion and non being $964 1 million respectively.

Growing by 23% on the 51% year over year, respectively.

Our adjusted net loss ratio in the second quarter was 18%.

Proving from 40% for the same period a year ago.

Turning to our capital allocation and liabilities management <unk>.

On June 23, we completed a repurchase right offer for our 2027 notes with a total principal amount of $746 million.

As of the end of the second quarter, our outstanding convertible bonds total debt principal amount of $876 million.

As of June 32023, we had a cash and cash equivalents time deposits and short term investments of RMB 14, 3 billion or $2 billion. We believe this amount is sufficient to cover all of our remaining convertible bonds and fund our future operations.

Thank you for your attention.

We would now like to open the call to your questions Ultra.

Operator, Please go ahead.

Ladies and gentlemen, well now begin our question and answer session.

If you wish to ask a question. Please press star one and one on your telephone.

And wait for your name to be announced.

For the benefit of all participants on today's call. If you wish to ask a question to management in Chinese. Please immediately repeat your question in English.

Please limit your questions to one at a time if you wish them a follow up question. Please rejoin the queue.

Okay.

We are now taking the first question.

Okay.

And the first question <unk> Zhong from <unk>. Please go ahead your line is open.

Got any time soon.

Additionally to that Ghansham, you could see two in for Michael.

No other than T, Josh Guang, Yang who actually to come now in the <unk> thing Jonathan Chang.

We like doing that <expletive> shooter, she's already well into the high <unk>.

Bastian.

Hey, Good evening management, Thanks for taking my question and congrats on the Typhoon Torch passed.

And that question Okay.

Engagement.

Oh, sorry, the increase in the second quarter saw what's the trend going forward.

And can management share more details.

The engagement to change some.

From a high base. Thank you.

Yeah.

And switching and passion, our ease of that challenge is only minimally.

Lina Li Crystal again, Tim Conder theory of them done so consistently all the way on the answer.

Well, you're going to see some of the existing.

Last year I have been emphasizing.

Greasing, our earnings power and achieve healthy and sustainable growth.

Top two priorities are.

And we have been executing on that strategy.

Sure.

So you don't want me to jump up and Josh Arthur Chen with Lithia users can be something Jonathan I'm not sure.

Sure.

Yes, sure Hamzah towards a sequential yeah sure yeah.

Yeah.

Sheila this is ingo.

Understood.

How important is from Jonathan Eckard Citi Fuji film, what kind of torture <unk> conflicts committee this week.

In the second quarter, well sell some marking down 22% year on year, we have grow RBA by 15%, reaching 96 5 million and our daily time spent daily user time spend base.

90, 694 minutes. This is the record high of same period, and our operating history and our overall time spent the.

The entire community grew by 22% year over year all of the above matrix shows a very healthy and robust growth of the community.

Wisdom.

From a chance to hear you that you got 10 times longer.

When was your own way.

At some juncture pizza Tianjin leader Chan.

<unk>.

Womens.

<unk> yeah.

What kind of a truly called hugel Guangzhou Coachable generally go down to our soldiers in Cassandra.

Women's <unk> Diego Solano accomplished in between that someone can kind of tailor.

The reason why we have been emphasizing on the healthy growth of our <unk> U S. Because we believe the healthy growth of <unk> is the foundation and preliminary requirement for visibility to achieve sustainable profit and we believe we have.

We have already discovered or effective way to convert our high quality traffic into <unk>.

Increasing top line through advertising and Libra housing.

And we believe with this effective route and methods, we can achieve <unk> and top line growth and this will be a virtuous cycle.

The authority to a woman.

<unk> <unk> Sandler Columbia patents, essentially all show up at noon Central Hudson.

Particular short versus total hired opinion setting.

In the second quarter, our AD revenue Libra housing revenue achieved 36% and 32% year on year growth respectively.

We exceeded the industry average growth a lot.

So the issue she looks at Luna and you assume that you entered.

Rudolf and Eagle Ford shale, where market cannot offer.

<unk>.

Sure Paul sure Tim Hortons in Atlanta.

<unk> B is under the erosion on goal for.

So two pool, neither tagline Archie at the hub.

So if you assume somehow.

Cingal.

As for the outlook into the summer given that we're in August and I'm sure. It is the summer vacation, we have been witnessing and experiencing a strong <unk> and daily user time spent growth.

We do expect that in the third quarter. Our D. You can surpass a very exciting milestone of $100 million and we also expect our average daily time spent can reach new historical high.

When we are seeing here.

So I don't see them on the 20th Poodle fees under the new normal.

Seeing Hollywood will come to us so.

So you can do that in handguns puncture passes at Gardner Denver.

So off highway woven selling your soul.

We are very confident with tight control on selling and marketing expense.

And continue to attract our users with high quality content and we can argue with our engaging community and achieve sustainable.

Sustainable and healthy growth.

And we also believe that hi, Tom.

<unk> can be effectively convert it to our sustainable topline growth.

Yeah.

Next question.

<unk>. Please thank you.

Thank you for the question.

We are now taking.

Next question.

Please standby and the next question to Lisa from Bank of America Securities. Please go ahead. Your line is open.

Oh, hi bodies, how I saw it.

They show a document and uncle John counting on call that.

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Sure why don't you go out in Colorado.

In Guangzhou, Hong Kong methane.

I'll kill that's how you heat I'll walk out.

Also what they hold out for.

Yes.

Sure Matt.

You can't go and keep on calls Ive got Yeah, Hi, Joshi, H allies them, all kinds of uncle uncle, Yeah without yoga, Iowa.

King.

So what I would say.

<unk> got some what kind of Oh, what do you think Oh, Thanks management for taking my question and congrats on the solid though either attaching golf.

My question also relates to other business can you share with us the major driver I'll also add the business.

Ill follow the strong base of second quarter.

Also can you give us some updates on the June 18th promotion.

All across our platform.

So in house the way no cats in second half I'll add crowds unbilled, if any and how should we think about the new business E Commerce Jamie.

Much of our AD business.

Thank you.

Oh gosh.

So.

Tony Jones on patent essentially ill say chunky some band, Yes, English is hogwash.

Yeah. That's also the processing you can kind of go on calls and so on so it would appear Li Changchun and Tianjin by law suits.

Since I Ah shall hold all of that and assess it yet just yet.

Consistent with either T cell and the second quarter, our AD revenue grew by 36% year on year and overall for the first half of this year our AD growth rate has exceeded the industry average at the same time.

Look at the AD revenue per AD revenue as a percentage of total revenue. It has increased from 25% same period last year to 30% in the second quarter, which directly lead the growth of our gross profit.

So the whole thing shouldn't you should go with some at Sidoti.

That has a true sada Joey I shouldn't really say autos tissue on the naval question. What does he go CFO Tony had another Li Shufu, Natalie I'll call Youll bear twist in them washing powerful T cell in Guangzhou the quote.

Well I think you pointed to pay the salary yay yay IDC they won't go shallow the T cell.

B one horizontal one vertical strategy, we mentioned last quarter is beginning to pay off and thats been driving our advertising revenue growth. The one horizontal actually referring to the technology middle platform and the data capability.

Includes optimizing the recommendation model improving the advertising inventory.

And matching efficiency and the application of Aig's to improve overall ad efficiency.

You told us is oh, well the neighborhoods.

Dodge laser huh, yeah, bulk or Youll see song says issue.

So she took longer I would think that you're going to be then you'll show the highest hope I'm washing dishes idea sounds and youll see that.

You showed out what it means yet.

Josh will then show seller side door.

Yes.

So Tony Jones.

You bet.

Now youll see that obesity.

Josh again talking about biosynthesis.

Yeah sure So Colombia turns out how will I E buses.

The one vertical as referring to the six customized industry at model, including games E Commerce, FMC G automotive and Internet service, among which <unk>.

E Commerce and game starting to show very positive results in the second quarter AD revenue from E. Commerce industry grew by over 140% year on year and game and advertising revenue from game industry grew by over 40% year on year.

So I just want to touch well imagine, yes, Shanghai Sanya Shanghai the yonker.

Paul T entity for <unk>.

So true with one targeting the quango yourself, which one thing that sometimes these things are true.

Troubled arsenal casual or chunky, one vessel the junk out there.

The second reason is that since last year, we have.

Stick to the integration of content and commercialization and expand AD inventory and different scenes of the community.

Basis of ensuring user experience in the first half of this year. It has performed very good growth momentum and drove the accelerating revenue growth.

Yeah sure.

Yeah, Yeah, you can get all the DRG the womens Leila Joe you, Shanghai, Chongqing joint to Y'all, Kenosha Dashwood Honda therefore, it sounds while the yellow one.

One by telling you to arrange a tissue, namely Zhengzhou each housing Yahoo. La Concha all the time he thinks he bought that shooting the show that jumped up to tier and you see that somewhat color showing with central so low the balance sheet us this year.

I realize we're just seeing swap I show here the quango the Teva, yes, she thought that shall we see the ITC action that does.

So to your question.

So if you got back syndrome that housing Youll see if you can realize I'd tell you Shanghai that I'm talking about are twofold.

Thirdly is that.

Many of you probably already aware that we have established the trading ecosystem equal ecosystem center to focus on building video e-commerce related capability in the second quarter by integrating the transactional experience scenario into the advertise.

<unk> products to further boost the revenue growth.

We expect the video e-commerce related ads will generate about 10% to 15% of AD revenue. This year and the next few months. We also plan to upgrade the membership shopping go tap on our main page two.

Shopping tab, and creating a new entrance for more commercial opportunities.

Company. It took me a question about Adelphia and Paul will go into something high <unk>, Oregon Center.

About <unk>, yes, uh-huh about what Joey a solo Toby turns out how about but.

But <unk>, yet the Guangzhou social warm in here.

Yeah in Gulf of the Jones Act now suggest won't be bad news.

You got it.

So it's really a tissue.

Okay Ali the sort of the simple <unk>.

So you said, it's the overall, yes, it will be a Dutch how you Tito.

As for the June 18th Pyrrhic promotions, how you performed.

Through our in depth data collaboration with E Commerce platform the rapid new.

E Commerce industry AD revenue from e-commerce industry, including transaction scenario during June 18th period actually grew by 200% year over year, and we expect to achieve 15% to 16% AD revenue year on year increase from E Commerce industry.

During upcoming double 11 festival.

As for <unk>.

Examples how we actually did a collaboration with Alibaba.

Spark program.

<unk> and the result exceeded our expectation setting here you go.

He says how long do you see as Sean said.

So these are all seeing with how about your own call your bathroom tissue shifting cook something you'll pull for Hong yeah to the PV powered by this shift.

Sure. Yes. So these are all set up on Dow Jones.

Yeah sure.

Thanks, Yeah, that's good yeah.

Yeah don't tell the suit Tianjin mix, yes.

Sure.

Josh It is unchanged.

Well that sure enable shorter powershell gotcha, sorry about sheets, yes, or no sugar rally the combi yesterday, saying that full bathroom sandbox.

There are a few interesting data point in tech in Turkey about 70% of the user who entered taobao <unk> were new customers and this ratio reached even to 90% for certain industry as shows that we have effective ability to.

Insistently comfort user too.

Our titers in addition, Billy Billy user maintained a very high conversion value 15 days. After the related video was posted and during June 18th period. The AD revenue from Alibaba actual increased by 300% year over year.

A year.

Okay that definitely is a quenching momentum luxury thinkgeek and sort of shifting bulk water.

So you're going to sell face I'm not sure.

Thank you Sandra.

Sandra shortly launching tie those as well.

But yes so.

Just lay the B one Dr. Sean.

<unk> sure so Josh.

Yes sure.

Uh huh.

So I'm Shanghai, Egypt, even pass on each side.

So it would be done so the sum of heart tissue toward that tell you pay more.

While many other content platform choose to build their own e-commerce platforms.

We really on the other hand, we choose to take an open approach partnering with E Commerce players and brand owners to grow the sales volume together visibility.

Yeah, well no quake condo PE, so eager just a tissue to crush.

Hi, Sue when we all pay out of your own quota piece on the shelf.

Yeah, and she and Neil.

It sounds like you all gave us I'll say the normally that should be there.

So shashi <unk>.

Yeah, well my I should probably also seen on how he said if I'm kind of on the shelf lately, so tier somebody and Youre seeing sunshine.

Total audience GPS on the shifting when she joined the Navy, which I'll.

So I'll, let Joe you sound Vanishingly no stranger young for shellfish issue that till he pushes up or something but I couldn't get we'll have that sounds that sounds to me that and Joe you should cancel out Tony Jones, Alibaba now Thats, what she boarder, Tom Toby jumped out of Chile.

First of all cultivating users' consumption behavior, and mind share and build their Lee as our top priority. We believe that the young generation has strong willing to.

Consume and building the mindshare is very important as we.

Their consumption power on our platform.

In the first half of this year near 330 million user clicked on the shopping link visibility video commentary section, which beat it to transaction related behavior.

As we unleashing our user consumption demand.

Number of videos that carries product links increased by eight times in the first half of this year and the number of Libra housing E. Commerce shows increased by seven times in the first half of this year.

The other than the hard tissue.

Surely to Repower when the actual total war Joey that fell into the sea.

Sure.

So it's a tougher comp.

So the team washing.

So that's a nice there's only a handful of absolute yes, Lucia like how shall I talk about cord cutting budgets. This year, yet our civil gunshot Mala me, though yes, yes.

See I don't know how many children unless there are most of the currently high Ohio used to the idea of course would agile leases teed up even the only thing.

These are single familiar with self lately.

Oh yeah.

For them or by selling into and be back that's for sure.

I guess I'll have to therefore pilots and I'm kind of a chunky young food on the shelf at Shan Li.

Keytruda.

Secondly.

We will continue to help our content creator to achieve sustainable operation to our video e-commerce initiatives more content creator already starting to try out and they believe video E Commerce.

This includes but not limited to many well known content creators such as Marcia voice out Mommas Midtown.

<unk> balance sheet and et cetera.

We are very delighted to find the model is very valid and successful and this also broke the rumor that the bill is user has no consumption power and actually as a matter of fact from the data that shows that we have a lot of steam.

Female user words consumption potential and power actually 45% of available either our female we do notice that they are they do have strong willingness to.

Consumer bill ability and they have strong purchasing power.

Besides which half of it.

The other piece late since total fees on the.

The place you go to school at Beazley Ping Pong, and you should see the Ikea chunky one myself.

Okay I'll go with us.

Wanda yet central via the sandwiches that these.

Sylvain Mayo.

While ship shipping point of view is that these are much all the anger. So much how chipotle you want me I'll, let you touch or slipping my tongue southeast trauma to judge Albion Thunder, that's only yet and our usual Honeywell user shuja.

The adoption of Xiaomi Shinji fossil sport, therefore that these aren't thinking cost shift.

To put that tissue is you don't see it you'll see that that younger social.

The shutdown of the year, I'd say, a T cell epithelial ciena and Youll recall the engine for them to sell this to the G O Beijing, Shanghai till the Jewell Coke.

As Koby show you.

He should have few basic telehealth aileen.

Thirdly is that we intend to try more categories.

Our.

On top of our traditional strong verticals. In addition to the IP to grow the test.

As our membership shopping, let's just focus on the Asia, ACG preferential product and content, we intend to explore a more categories such as food beauty, <unk> and digital product home appliances et cetera.

Here is the example in mid April Xiaomi launched a library has seen e-commerce show promoting its new cell phone based on the data that I have in hand deliberately ranked number one in terms of GMB among all content platforms.

And not only reflected that the strong word of mouth influence that we had him our young user group, but also the strong consumption power our users hat.

We've done the chunky the Guangzhou more things for <unk>.

I seem to tell their central Georgia, so he's into hallway sandeep.

Sandeep I seem to.

Central John's Hall say they'll show go quite as Joe any thoughts on what San Diego, the Chinese cellphone garble.

I think the <unk> model has evolved from establishing brand perception and mind share to a true integrated AST solution, a full advertising chain of brand building seating and sales conversion.

Some of them yes.

Well one thing Youll see yes, I would tell you Todd I just want you to go together, so seven young our Junko Yoshida.

So I'll put that by Sheldon Central Soma seeing things hold it appear that so you don't pull us she San Jos on the turnkey shop. So I think in Shenyang are sold on us here at Hanmi buttons that should offset it.

So the challenge that I should talk about changing the kitchen and the first half of this year, we have upgraded our industry App solution for game and E Commerce and transactional strategy and it's already starting to show positive results in the second half I personally plan to contact addition.

Upgrade for our leading AD inventory at industry, such as FMC Qi <unk> and digital products.

We believe as we deliver healthy and sustainable user growth. We are confident that we can achieve 25% to 30% AD revenue growth on a full year basis Jan here.

That concludes the questions.

That's question <unk>.

Operator next question please.

We have now taking the next question.

Please standby.

The next question from Kenneth Fong from Credit Suisse. Please go ahead. Your line is open.

Hey, Glenn.

In order to win.

What do you see what kind of outcomes.

<unk> three trillion, so let's see.

It took us a truly someone a somebody out of a Colorado woman tenure inquiries when it suits or the mobile I know him well.

Do you find yourself alright, Thank you management for taking my question.

I noticed that we lowered our full year revenue guidance can you share with us the key considerations behind are we still on track for narrowing losses for tissue. Thank you.

Although our tenure solid dreams household.

Yeah.

Stephen I, just don't Wanna go there, you'll see the filings should yeah.

We are gonna disorder, pufendorf, including U S Hotel.

<unk> quango, putting that without them.

So lou putting into children's and everything.

The reason why the guidance update as largely due to two reasons number one has.

Number of our game launch plan was delayed and secondly is certain noncore business, such as our comex and the IP derivative and others business and it is in the period.

Adjustments of strategy and.

Revenue is lower than expected.

Third one what can you kind of his or her on the solar side, probably the intouch tissue Pacifico, So Tito I assume the orders for Q2.

So we're tapping pusher Orlando so.

So for me into your good humour me ever got Yeah sure sure.

We're pumping push a woman since tahira.

Of course in particular.

So there is no touch on would be helpful.

The road will shortly you will see that visa Unc and Sheila desktop neither.

Trading logical fashion that you go <unk>.

Usual.

Shanghai audience on tightening trading versus that previous Asher two questions here.

The we believe the reason for guidance update the court is just.

Okay.

It's for a temporary phase change and it's not a change your foundation.

The core business actually remains intact for example, the delay of games.

That we are recognizing the revenue a little bit later for example, pretty Derby has already scheduled to launch to be launched in August 30th and.

We will be releasing the schema.

On that day visits confirmed uncertain for sure.

A woman so you'll.

You'll do something differently.

Okay.

And our outlook for and our confidence in the quality of the game and the revenue is unchanged.

Okay.

What kind of is that two are women.

Hydro, forcing you to broaden Guangzhou auto show had a thumbs up torture.

<unk>.

And as you may have seen that in the second quarter in the core business.

Literally live broadcasting and advertising has achieved very solid growth when we use the genius Albanian bottoming, yet woman the cable hookup.

Solar puncture Tien <unk> question with them that we do expect that in the second half of this year and.

Forward to 2020 for the advertising and live broadcasting business will sustain very healthy and solid growth.

The artists who are some soldiers or she is a woman that scholarship program until reducer evening chip.

For those who will be.

So she answered Somalis, Jack Cleveland, soy, though hydro's are woman's that senior to replace all the you should use important small either thumbs up.

Yeah.

In the beginning of this year, we have set our financial targets to increase gross profit and narrow our net loss so as a requirement financial requirement or kpis to each department business lines is to ensure the absolute dollar growth for it.

Gross profit.

T elements, so that put us on tiers all of <unk>.

<unk>.

Queensland can be forgiven.

100, <unk> year with the solar roof Petrodollar income that's a woman multi that's one.

Quite of them done.

Strategically we have lowered the revenue contribution of low margin business or loss, making business.

Even though some of the revenue growth rate has been.

Impacted however, the absolute dollar of our gross profit has sustained at very healthy and robust growth.

They argue to consider malibran couldnt be some jobs that were introduced.

100, <unk> <unk> season.

Nothing into our Wynn Macau the whole team Christmas it wont be soda revolution.

In the second quarter.

Gross profit grew by 66% year on year, and our gross margin has experienced four consecutive quarter quarterly growth.

And our adjusted net loss has narrowed by 51% year on year three we're the only woman dimension in Cleveland Showdown mobile sure notional agenda, RTL and <unk> being one of them will go.

Yep.

I am confident to achieve our loss cutting target for 2023 and achieve our breakeven target by 2024.

Yes. This is Tim.

I just want to add.

On the loss reduction side, even though the revenue growth rate.

And encode a chance.

Well be lower than expected, but we are still confident achieved a loss target. We set in the beginning of this year, which is to cut out just the operation loss.

Is $3 billion.

So through the gross profit increase and expense control.

And then notably in the second quarter, our operating cash flow was close to breakeven we're seeing a good chance that we can achieve operating cash flow positive in the fourth quarter. This year. Additionally.

We are confident to continue to improve our gross profit margin in the second half of this year and achieve our breakeven target.

By 234 lastly, the updated full year guidance.

It reflects our current projection of address potential outcome, where trial path to ensure smooth.

The launch as well as achieve our goal of increasing the cost bucket and narrowing losses.

Okay.

Next question please operator.

Sure.

And now taking the next question.

Okay.

Please standby.

Yeah.

The next question Tal <unk> from China Renaissance. Please go ahead your line is open.

Hey, how does go in so much of harsh if you don't Wanna, Cuba, well, what I'm not physically or SEDAR.

Just how many shots on goal with a pipeline.

Sure.

Oh, yes.

Well no you guys Mark.

No.

While you will see why you're so chamberlain.

So of course, it's a must see.

Cool.

So what are you personally.

Thanks, so much for sure. So thanks for taking my question. My question is on the hour.

Dennis can you discuss the pipeline and especially with the <unk> how should we think about your expectation and also can you talk about our self development games strategy pay off in the direction. Thank you.

Well Michel <unk> Youll see a vocal and they were the ones that came in.

Not about harder with a related party.

Hi.

In the second half of this year, we have seven titles in our pipeline ready to be launched domestically and internationally.

Among those seven five of them have already gained approval and ready to be launched in the domestic market too will be launch internationally.

There's a whole.

So I know, you'll give a song usually you'll see <unk> or <unk>.

So that actually that the whole initiative, particularly Asia. However, you guys aren't necessarily Emma to her previous answer Ho Ho Hum.

The phase one.

Yeah, so without even zemba Eugenio toggled down below other ones here.

Sure.

Yeah.

Yeah.

As for the highly anticipated gain pretty Derby, we have already scheduled the launch day to be August 30th.

And right now within just two weeks of a pre registration over 2 million users have already pre registered for this game. This is a new record.

In our operating history for the pre registration a month or so.

You May wonder based on SEDAR, So a woman that's sort of the Shanghai Sanya those eager somewhere in their filings that they are going to go there. So we'll measure based on its own.

Well I mean, you guys are following the opportunity to talk about how the <unk> the whole Chevron and go get one got that leg of entry that way either.

So you should see the UCP.

Yes.

<unk>.

Just because that it.

Our highly anticipated gains with a large fan base, we actually spent a lot of effort doing the localization work, making sure that our gamers will be having the very original pretty derby experience, that's actually one of.

The reason why it has been delayed by several months, you're a woman that can do it in there as well.

Coordinate the fashion art and you'll see if only until you're putting out there.

So we will not continue with Jean <unk>.

So hard to acquire.

Well, Mike I know youre going to start and then I'm going to go away. It would tell us that you would hope would happen.

We believe that the legalese.

Game launch team is the best ACG game launch team in China, and they are very experienced and they will make sure a very smooth and successful launch.

Of the therapy, and we're confident <unk> will be a very successful title and also has good.

User feedbacks and reputation.

So anyway to a woman's usual absolutely unclear.

Alright.

Please don't hear you guys are <unk>.

Sure.

Neither Jim here, how are you going to sure Youll see are with us together.

As for our self developed pipeline, we have actually have two ACG card game will be launched in the second half of this year. This includes one gain cod Rod Little girl, which is.

<unk> already launched today and there will be another game called it'll here this will be scheduled to launch in October .

Great.

We're talking about those kind of daughter seizure Youtube senior manager, you'll see certainly syndrome.

In.

So really the hydro for women and those are going to see any.

Youll see continued potential which is handful shortage of rutile to choose all woman that's equal to the European leg tons should Ohio.

We work with this on kind of zone.

Two real big push you on that.

Oh man.

Well nothing Brushy Eagle that's annually each handled sort of hotly Google So.

What does it say car wash it but I don't see her daughter, you believe it.

So it's important that youll see at Homegoods.

Yeah, I hope so.

Let's hope woman Tesla.

So those are three English huni, English or things of that nature.

Fit Unquenchable hotel should we go together.

As for our self developed games strategy as you make you all aware there's been a very.

<unk>.

Have become competition among the game industry. This year as for our own self development games. The strategy will remain unchanged, which is focus focus are on the content part.

On the Shamrock captivated has most advantage of me personally will be spending a lot of time to ensure our success rate as we have.

Have only started doing self development games.

He will be very down to earth and ground it to take a step by step approach to ensure every game that we launch will be high quality and we will be successful. This is the target.

I personally will send a lot of time to ensure and also require our team to achieve the tiara devices.

You may need to drill a.

We'll either Youll see how you're doing this without accounting for the openings on tier.

So either hydro for.

What the EBITDA due to the work can be done either Zika CA youll see things.

Google put onto those homes here in Brazil, when we took quickly Lisa.

So that means that youll see a woman that if.

I can tell.

<unk> 10 billion.

Pulsar they'll have different rules seems like Santana.

I think it will be about continuing to fill rate, particularly at Eagle should go.

Secondly is about the long term operation of the game I believed in the future all the game will be a long term operation cycle.

Otherwise you won't make any profit. So this is the requirement I have for our self developed game if the title from day, one and it's not a long term operation title, we won't be we won't allow it to be set up as far as licensed game, if it's a law.

Not small lifecycle gate, we won't we won't sign it we won't license it as for the team.

That's already online.

Long lifecycle management and operation will be also be one one of the most important kpis I have for the team sees a piece of the code share figure what do you mean.

So you should see.

And Florida harder when the pillow homes yet.

June Th Lee.

Latonia and she will.

<unk> <unk>.

<unk> gone down.

Yes sure.

She's only answer to her.

Sure sure.

Great to hear you will see that its income to total fit on proposal <unk>.

<unk> do you do in your initial Hilco.

The hydrogen will mostly about chico's credence should affiliation yeah about JD and thoughtful woman.

Sure.

As for our visibility we have very good track record.

Making sure long long lifecycle operation as matter of fact as you were in languages celebrated six years of anniversary and F. G. L. Just last week, we celebrated its seventh year anniversary and all of the user data matrix remain very healthy.

For both of the game as matter of fact during the sixth anniversary of <unk>.

Even surpassed the six year anniversary.

So it will stay come this route and making sure that all of that are deemed more sustained long life operation cycle.

Operator next question. Please thank you.

We are now taking the next question.

Please standby.

The next question Phil Link Hong Kong from Goldman Sachs. Please go ahead.

Okay.

Oh sure Yeah, carnitas to ensure no what I want to say, Sean Cornett chicken cheese ctrip yet.

Hey, Joseph.

Yes sure.

Do you see in terms of strategic options.

Shanghai shoulder.

And you're talking to your social.

Sure.

Right.

It's just that Colgate shrunk quite some time.

Sure Gotcha.

Let's just say you know what you.

Sure.

So my question that's all true.

G CSF vacation period.

So from past Investor day, we've already seen.

From and.

Developing our ox Stryker to showcase in terms of.

Sure splitting up production efficiency.

Marketing and promotion to scratch lower status.

Integrate research could management elaborate more around how we can probably address that could benefit.

Thank you.

70, <unk> hundred dollars of LTC sequel questions. Either you go chiefs belonged told US what countries, we're putting him kind of as you say to Amsterdam and tell them. Okay. You don't play along with what seems like you're getting some KBS KBS surgical AVR yeah. There you go.

Tissue the Eagle clothing.

We believe this is.

Breakthrough technologies.

See what can we bring to the industry.

The way we look at it it's.

Equal to the mobile Internet that happened 10 years ago, and this will not only benefit Billy Billy will actually benefit everyone.

Sure.

These unless we have a woman.

Yeah sure shipping.

<unk> the whole woman physically cannot LTC shipping.

Hi, Tushar, you mentioned that you've got some either tupi.

Uh huh.

How long ago.

When do the golf homes with a total knee.

He was on it.

Peugeot Mclean conductivity that subsequently if I'm hearing you at IBM Watson.

Even under easier passionate group of women the Shaw <unk>.

A little harder to say.

BJ you presented it to.

For the year were dealing with somebody who has <unk> disease.

Taylor.

That's important.

So as for availability, our core business is video and ACG and it is fair. It has been very clear that aig's, he can enable and increase efficiency.

And a large amount on both brands for example.

Content production as well as content recommendation also in term based on the L. L. N. We can increase.

Part of the efficiency managing our community by understanding what are.

The tax means.

One to me.

Within our community.

And we believe this technology is aig's he has multi face edge applications and scenarios to help us to improve all around user experience.

Sure.

Please yes.

Yeah, I would say, yes, you say that's useful at Hugo.

That's your goal.

So I don't have that high volume production.

Some of those either.

Is Honda finance is not being put to some producers and I feel for you all.

In the Zika.

Sure. The final word he lead <unk>, which what I push a button.

As far the application scenario actually we have already contact.

Some extended research and development and we believe there is a lot of scenarios that we can leverage for example.

The prepared remarks.

Spoken by Sam just now before the Q&A session actually it was not actually conduct by Sam.

Powered by our <unk>.

<unk> developed AI tool tech text to speech TTS tool.

And similar where products like that.

We have already starting to research and develop and apply it in our various scenarios to proceed with this.

It was a chance that a woman or you were telling you anything you can say if I could.

Before Illinois sounds senior PMA, our care centers are.

Sure Nick opinion, the Mega getting shorter.

AIG in someone's home.

And there are other examples for example on this year's Billy Billy Macro Inc.

Sure.

Our virtual host two two and 23 their voice was also generated by the same.

Toward TTS AI toward that.

That visibility self developed.

February women these aren't tissue converting articulated on shifting shifting of shipping the coating.

Through last year Hottelet's rule.

Obviously, we're talking about land within Chile or challenge that's useful.

AI fundamental what it.

How much of that either some income to keep with that point in the world.

<unk> come a puma either publicly that's what we can do affiliate and they'll go to Congress shutting Michigan.

And another example would be knowledge related video creation as many.

Knowledge content content creators they generally right.

Right the tax and they require the voice with the help of this AI tool they can.

Can largely improve its production efficiency.

February was also on target I'm watching to see how a woman Mayo to.

<unk> Italia and most of them they were kind of you talked more about that.

Doug will then the sorry I'm watching this as you would imagine.

As for the L M, even though we haven't.

<unk>.

Quite.

Aggressively, but actually we have already starting to apply them in.

Sorry.

Daily operation to beautiful women than anyone to answer of course, she's over more quarters.

It's all of our sins that target them more thing you asked how do you Im sure Youll Legionella lead affiliate Tango Pangu and some quarters with you.

One was we actually go so for the children.

Another example would be on the content auditing side in the past we have to spend a lot of human resource and power and managing managing the content with the help of large language model because he can understand avoid the tax the meaning.

<unk>.

All of the implied meanings behind the task it can drastically increase the efficiency of how our content team process the contents.

Some people thought a year total other tier.

One more thing is and I'm going to somehow these anecdotal here Peter how much open door.

Yes.

You don't see it Alitalia listenership.

Our topic what is your calculus of sand that we just showed in the agenda are machines that sure. So the Cleveland Hershey Yugo.

Sometimes totally youre going to need to decrease the total economy. If you will the whole one of the most entitlement Copa <unk> and Yodlee room for Q&A.

So this will continue.

With that we will talk with you.

Colonial who cannot take the essence of damning yourself eligible public with it.

Yes.

You'll note here in Nashville, just typically see listenership.

Sure.

Zero Trophy downtown.

We all.

Comma frugal Sega.

There you go.

When we are shipping.

And I'll go through it all you guys since it understand that I cannot tell them the social calling on her way to reengine.

Now on an Italian working particularly pool to 30 June .

Pulled out or is it really the shipping pattern.

Traditional ones with Jupiter two so you will not.

Did you refer to the payout you will not see too much of the tool.

Partially what you got from utility with hotels.

And a lot their application scenario would be enhanced search.

Visibility has some vast content library and each videos carries a lot of scatter information and we can leverage.

I am too drastically enhance the search and efficiency, we are actually better testing a new enhanced search that by adjusting typing question in our search box are large language model can summarize and answer questions.

Very valid example would be with the recent a version upgrade options and impact people can just simply asked which card is worth drawing and which character is where.

Spending time to to improve and large language model can summarize the family information and just provided to the user versus in the past they have to watch several several videos to summarize that content.

Formation, nowadays with the just spoke up hand.

Can get the correct and fast faster.

The higher you go through a woman yes sure.

It isn't the only caveat ghana to them, but I don't know.

In the Eagle Ford.

She says you are sure to some kind of language that can go.

Yes.

See the screenshot here that are not familiar with geopolitical issues.

So if you wanted to vishal.

Certainly Mr Alba.

Sure.

So you listen only the ticket.

But also on your color you got <unk>, you got Max Macbook Rico people truly negotiating I'll call eligible.

Trajectory once it goes Arturo and he started with shipping demand Jamba Mecca.

M a broader say pure dosing HOKA and Mark if you were listening hard to distributors in the south of the tablets or something no matter what.

So it's a real quick one.

Particularly it Shouldnt go to somehow.

<unk> casualty late with here.

Another function upgrade that we are testing as AI assistance.

This will accompany users when they are watching a video help them to summarize and extract useful information for example, and Macbook review video user can ask the AI assistant.

What's the difference between two CRO cap and two chip, what's the price difference, what's the efficiency difference and the AI assistance and can extract the exact information to help the user to to get what they want all.

All of this will help to increase visibility user experience.

How should we think will address that answer where do you see the U S.

Was it a to go GA.

Okay.

Hi, its actually yugo.

I'll leave it to you, but perhaps you hurt yourself and you don't put it in a long time ago that Peter how many kind of shipping later.

Industrial failure.

AIG is it higher so you could see the reward non go to show the signal integrity passion, mango composites, which you've got in the quarter here.

She got applicable here.

Uh huh.

When we're selling it as a product you can sell it.

Internally.

We really value the Aig's <unk> technology. We believe this is a once in a lifetime makes spirit opportunity. This will be similar to the invention of mobile Internet, which enable Billy believes mobile user grow by tenfold and we believe with the AIG.

Yes.

Technology matures, we can leverage this technology to <unk>.

Largely enhance our user experience our content creators to experience and productivity as well as increase our commercialization efficiency.

Dotcom koos.

The question operator, we can.

The call today.

And that concludes the question and answer session.

Thank you once again for joining <unk> second quarter 2022, It finance it shows and business update conference call today.

Any further questions. Please contact Juliet Yang <unk> IR.

So our pitch on the financial communication.

The information for <unk> in both China and U S can be found on today's press release.

Great day.