Q4 2023 iQIYI Inc Earnings Call
Operator: Good day, and welcome to the iQIYI 4th Quarter and Fiscal Year 2023 Earnings Conference Call. All participants are in a listen-only mode.
Good day.
Speaker Change: Welcome to the Cui quiet fourth quarter and fiscal year 2023 earnings conference call.
Speaker Change: All participants are in a listen only mode.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then 1 on a touch-tone phone.
Speaker Change: Should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
Speaker Change: After todays presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question you May press Star then one on he touched on phone to withdraw your question. Please press Star then two.
Operator: To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Chen Yu, IR Director. Ms. Yu, the floor is yours.
Speaker Change: Please note this event is being recorded.
Speaker Change: Now, let's turn the conference over to MS. Chang Liu IR Director MS. You the floor is yours ma'am.
Chang Liu: Thank you operator, Hello, everyone and thank you for joining Ice's fourth quarter and fiscal year 2023 earnings Conference call. The company's results were released earlier today and available on the company's Investor Relations website at IR E arc com.
Chen Yu: Thank you, Operator. Hello, everyone, and thank you for joining ITE's fourth quarter and fiscal year 2023 earnings conference call. The company's results were released earlier today and are available on the company's investor relations website at ir.ite.com. On the call today are Mr. Yu Gong, our Founder, Director, and CEO; Mr. Jun Wang, our CFO; Mr. Xiaogui Wang, our CCO, Chief Content Officer; Mr. Wenfeng Liu, our CTO, Chief Technology Officer; Mr. Youqia Mr. Gong will give a brief overview of the company's business operation and highlights, followed by Jun, who will go through the financials. After the opening remarks, the management team will participate in the Q&A session. Before we proceed, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Chang Liu: On the call today are Mr. Yu Gong, our founder director and CEO is striking Wang our CFO, Mr. Shan Li Wang our C. C O Chief content Officer, Mr. William Hill, Our CTO, Chief Technology Officer, Mr. Doyle Senior Vice President of our membership.
Chang Liu: And Mr. Shanghai Young senior Vice President of movies overseas.
Chang Liu: Mr. Goldberg give a brief overview of the company's business operations and highlights followed by Jim who will go through the financial.
Chang Liu: After their prepared remarks, the management team will participate in the Q&A.
Chang Liu: Before we proceed. Please note that the discussion today will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Chen Yu: Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC. ICE does not undertake any obligation to update any forward-looking statement except as required under applicable law.
Chang Liu: Looking statements are subject to risks and uncertainties that may cause actual results could differ materially from our current expectations potential risks and uncertainties include but are not limited to those outlined in our public filings with the SEC I E does not undertake any obligation to update any forward looking.
Chang Liu: Statements.
Speaker Change: As required under applicable law I will now pass the floor to Mr. <unk>. Please go ahead.
Speaker Change: Hello, everyone. Thank you all going up to that.
Yu Gong: Hello everyone. Thank you all for joining us today. After an iconic turnaround in 2022, we continued our success in 2023, delivering the best performing year in the company's history by focusing on high quality growth. Both total revenues and non-GAAP operating profits in 2023 increased several digits year-over-year and reached historical highs, despite macro having, more importantly, our growth in profit. Sponsored ADR Class A, They've demonstrated that we feel it in our business and our operational excellence. Let's take a closer look at the key metrics in 2023. Total revenue reached RMB 31.9 billion, up 10% annually. Non-GAAP operating profit reached over RMB 3.6 billion, up 68% annually. Non-GAAP net profit exceeded RMB 2.8 billion, up 121% annually. We generated a sizable total free cash flow of RMB 3.3 billion in 2023, which improved our liquidity position, allowing us to make investments to drive future growth. All four mentioned key metrics are record-setting time.
Speaker Change: After the iconic wrong in 2000, and they too will continue.
Speaker Change: With all the DSV delivering the best performing year in the company's history, Oh Kirstie have qualitative growth.
Speaker Change: Both total revenue and non-GAAP operating profits, resulting in D C increased double digits year over year.
Speaker Change: Yes.
Speaker Change: Oh hi.
Macro headwinds.
Speaker Change: Importantly, all in profit.
Speaker Change: Some sense or that somehow that granules.
Speaker Change: Let me finish.
Speaker Change: We sell it all.
Speaker Change: Isn't it.
Speaker Change: Our operational excellence.
Speaker Change: Let's take a closer look at the key magic into southern.
Speaker Change: And do you see.
Speaker Change: Total revenue reached RMB, one 9 billion.
Speaker Change: Tenant reps and annual non.
Speaker Change: non-GAAP operating profit.
Speaker Change: H O R N B C C Bailey.
Speaker Change: Bailey.
Speaker Change: H person annual that and the non-GAAP net profit is RMB two 8 billion.
Speaker Change: 171 person anyway.
Speaker Change: In January.
Speaker Change: Yes, that's the total free cash flow.
Speaker Change: So you see Billy.
So it's all done in history.
Speaker Change: Improved.
Speaker Change: Liquidity.
Speaker Change: <unk> allow us to make investments to drive.
Speaker Change: Truck rolls.
All fall Oh Mashing key metric he has got car Ts.
Yu Gong: It has become very clear that the company was following the right course, offering sustainable value growth for all stakeholders. Our exceptional financial results mirror our solid leadership in China's long-form video industry. Our capacity for consumer engagement, real-shape market share, creative content production, and technological innovation is second to none. Indeed, in consumer service, iQIYI stands out as a signature brand for providing top-tier content. This was supported by viewership market data as well. According to Enlightened, We were ranked number one in drama viewership share for three consecutive years. Notably, in 2023, we broadcast seven out of the 10 most-viewed new dramas in the American market.
Speaker Change: Very clear that they will come there was following the call.
Speaker Change: Oh free.
Speaker Change: That's terminable ladder girls for all stakeholders.
Speaker Change: Oh, it's a sectional for Nashville resolve mineral oil.
Speaker Change: In China long form video yesterday.
Speaker Change: All copper copper seed head Paul.
Speaker Change: Paul consumer engagement, we all see it shell.
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Speaker Change: And what we've said is that.
Speaker Change: Affect segments will not.
Speaker Change: Indeed, Inc.
Speaker Change: In consumer surveys I'd. She has stood out as they can to ensure our brands well providing top tier companies.
Speaker Change: This was supported by the market data as well.
Speaker Change: Well in license.
Speaker Change: We're ranked number one in.
Speaker Change: In drama viewership shell, well see incentive yes, notably in 2020 suite, we have borrowed constitute seven two.
Speaker Change: Although the 10 most of deal Youll dramas in the Americas and.
Yu Gong: In addition to drama categories, we also dominated the online movie streaming segment with a total viewership share of 47%. Our market share leadership is deeply rooted in our unique capacity to produce original premium content. In 2023, ITE Originals accounted for over 65% of all key dramas released. An annual record in our history, the original production capability is not only guaranteed but also ensures a steady, inclusive supply of premium content. It also optimized our cost efficiency, measured by an operational metric known as the content-related cost ratio. For the drama category in 2023, this ratio improved 12 percentage points compared to 2022.
Speaker Change: Addition tool.
Speaker Change: In addition to drama on categories. We also.
Speaker Change: The money Oh.
Speaker Change: And they did so online will be a streaming segment.
Speaker Change: Total viewership share of 47%.
Speaker Change: Our market share leadership is deeply.
Speaker Change: Good heads in our unique comparison yeah.
Speaker Change: So produce original premium content.
Speaker Change: In 2000.
Speaker Change: In 2020, you'll see Oh this is al I'll.
Speaker Change: Oh, Colonsay is well over 65% of all key drama relief.
Speaker Change: Uh huh.
Speaker Change: Lockhart in history.
Speaker Change: Or is it all production cover village here not only a guarantee.
Speaker Change: Uh huh.
Speaker Change: If supply premium content is also optimized oh, all cost efficiency measure.
I wish I know Max you know at the content related cost ratio.
Speaker Change: Well drama category in 2020, and see this ratio improved health CHRISTUS page Pos compel a tool to solve them.
Speaker Change: Cool.
Yu Gong: The notable increase in efficiency translated directly into an increase in our profits. This is why our original capability is often recognized as the most important defensive barrier protecting our business, mirror. We are also a leader driving technological innovation in the long-form video industry, industrializing the content production process, and upgrading Users' Entertainment Experience. For example, we developed the IT content production management system, a highly efficient data-driven system that recorded every crucial aspect of the Intel content production process. This system, together with generative AI, would meaningfully improve the history show while enhancing the production and operation efficiency.
Speaker Change: The notable increase in efficiency in Pennsylvania, it directly into our interests in our profit.
Speaker Change: This is why all of original comparability, it's opening the call.
Speaker Change: All of them that are mostly.
Speaker Change: Mostly importantly.
Speaker Change: Steve Farrell protection obviously.
Meanwhile.
Speaker Change: We are also the leader driving an analogy nomination in loans, where are we doing this.
Speaker Change: The straight line lease industrial lies the cones in the production process.
Speaker Change: And upgrade your users and their team member experience.
Speaker Change: Good luck.
Speaker Change: I see it comes into production management system, a highly efficient clean.
Speaker Change: Cleveland is stuff, that's all that I have here a crucial aspect of that until it comes into production process.
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John: John the range here.
John: Well the meaningful improvement Oh.
Yes, we have shown well enhancing their protection.
John: And our operation efficiency.
Yu Gong: One more example of our technology and leadership is A max. Thunder, which we pioneered to deliver the ultimate cinematic-like experiences on certified TV devices, covering more than 19,000 episodes of content across 157 TV models. Being a leader means constantly having our eyes on what's ahead, not the past, and thinking more about long-term strategies rather than short-term games.
John: One more example of our technology leadership.
John: Hey.
John: Max offender.
John: To deliver the ultimate cinema in the Magic light is condensate.
John: Certify the T V.
John: Covering more than 19000 episodes of.
John: All contents across 157 TV models.
John: Being a leader means that simple math.
John: Hobby.
John: Hum.
John: And I was thinking more about long script strategies, rather than short term gaps that's.
Yu Gong: As a management team, what really matters to us is the potential returns, or until content portfolio code year, in the next several years and whether we can find a systematic approach to improve that ROI either through technological advancement or by upgrading our content creation and management process. This perspective is a sharp departure from the public conventional way of measuring our success by the number of key titles in a specific quarter. But we firmly believe that this perspective best upholds our long-term leadership in the industry. Likewise, when we notice a fluctuation in our subscriber numbers, it motivates us to boost the quality of our content and improve our services to further engage underserved demographics like seniors and the young, so as to improve long-term retention and audience.
John: As a management team.
John: What's the Elliott mattresses glass is towards a potential yet.
John: All until it comes into play Paolo hold it here in the next several years.
John: Rather we can file.
John: Systematic approach to improve our.
Speaker Change: I either I don't know.
Speaker Change: So basically the month spent all by upgrading all comes in greater Asia and amended route management process.
Speaker Change: Perspective.
Speaker Change: Sharp departure or from the public.
Sure.
No way.
Speaker Change: Mary.
Speaker Change: Oh, that's that's by the number of households in specific terms, but we firmly believe that this perspective.
Speaker Change: That's our hope.
Speaker Change: Long term leadership in the industry.
Speaker Change: That's why.
No it wasn't me.
Speaker Change: Locked to Asia.
Speaker Change: Snapper members.
Speaker Change: It's motivates us close to the policy at all.
Speaker Change: All content.
Speaker Change: Oh, so this will further engage and theirs.
Speaker Change: Danville grasses like senior yeah, so cool.
Improved long term retention and our.
Speaker Change: Yeah.
Speaker Change: We are firmly believe that addressing.
Yu Gong: We firmly believe that by addressing these fundamental, long-term challenges, we will be able to grow our value-to-user partners and investors in a sustainable manner. Looking forward to 2024, we remain committed to our long-term vision and continue to focus on high quality growth. Our key priorities include stressing our current market position in core content categories such as dramas and movies, improving our competencies in additional vertical gyros such as kid cartoons and animation to enhance all capabilities in incremental areas, integrating cutting-edge technologies to increase efficiency in content production and operational execution, enriching the user experience, and last but not least, exploring new markets and business opportunities. Now, let me walk you through the details of our core business values, starting with membership services.
Speaker Change: Addressing the fundamental long term challenges, we will be able to grow all downhill to you also on the nurse and the west des in that's terminable manner.
Speaker Change: Looking for work to southern.
Speaker Change: We remain committed to our long term vision and are continuing to focus on.
Speaker Change: High quality growth.
Speaker Change: Right.
Speaker Change: Yeah.
Speaker Change: Uh huh.
All key part.
Speaker Change: Our priorities include strengthening our current market position in call accounted in the kind of Grace.
Speaker Change: The drama and the movie is improving.
Speaker Change: Competencies.
Speaker Change: In addition to or what do you call Kara back to ask here the top school in the animation tool.
Speaker Change: All of her ability.
Speaker Change: Core mental areas integrating cutting edge technologies to increase.
Speaker Change: Efficiency in <unk>.
Speaker Change: Patients in comes into production and the operation or you can say application enrich in reaching the you'll start your experiments and that stuff.
Speaker Change: Is Florida.
Speaker Change: In our case and the business opportunity.
Speaker Change: Oh well.
Speaker Change: Walk us through the details of alcohol business sentiment.
Speaker Change: With membership.
Speaker Change: I'll go with the membership business.
Yu Gong: Our goal for the membership services business is to drive long-term and sustainable membership revenue growth, and our focus extends beyond more than the quarterly net addition. Membership revenue is driven by three components, namely ARM, Subscriber Lifetime, and Subscriber Debt. ARM and Subscriber Lifetime are currently key focus areas in driving the long-term economic value of membership services. In 2023, our membership services revenue exceeded RMB 20 billion, up 15% compared to 2022, driven by an increase in both ARM and subscriber base for Q4. Membership services revenue reached RMB 4.8 billion, up slightly year-over-year. ARM maintained sequential rate growth for five consecutive quarters and hit a record high of RMB 15. They believe all are, has ample room to grow in the future. First, the monthly membership fee for the industry is still very affordable compared with other affordable discretionary spending, such as movie tickets. Coffee and a Happy Meal in Quick Service.
Do I have long term.
Speaker Change: Those tend to bolt membership revenue grows on the all smokers U S b.
Speaker Change: Laura.
Speaker Change: Plots of land that addition.
Membership revenue is driven by C component, namely.
Speaker Change: Subscriber lifetime.
Speaker Change: I'll describe our bad.
Speaker Change: Oh.
Speaker Change: I'm Scott for a lifetime.
All current and a key focus in driving the long term economy value membership services.
Speaker Change: In 2020 suite, our membership services.
Speaker Change: If they did.
Speaker Change: N b and appealing.
10% compounds towards solving the 20th pool, driven by increase in both on the subscriber base well cool fall membership. So this is rich.
Speaker Change: Reached RMB four 8 billion.
Speaker Change: Yeah, Oh, yeah.
Speaker Change: Maintained sequential lake World, while five consecutive quarters.
Speaker Change: What I would call high of RMB 15.98 in Q4.
Speaker Change: 17% annual and 3% sequentially.
Speaker Change: We believe all of them.
Speaker Change: I'm hopeful.
Speaker Change: Grow even a field trial for the monthly membership fee for the industry is still very affordable compounds with either a foldable.
Speaker Change: Its creation that red spending such as movie tickets.
Speaker Change: Let's see.
Speaker Change: Oh happy meal in the Soviets yes.
Yu Gong: Yes, Ross, with more premium content and a higher perceived value, users' willingness to pay will increase, allowing us to strategically get back on its costs. Additionally, our innovative value-added services, including the Express Package, Offline Events, and Merchandise Benefits Show Promising Potential In Q4, we launched the Express Package for 6-Dremel serials, and for a nearly 58% sequential increase in the number of participants. Members redeem POND, for access, increased by 40% sequentially, and cash purchased by members increased by 250% sequentially.
Speaker Change: Yes Ross.
Speaker Change: More premium content.
Speaker Change: The higher perceived.
Speaker Change: Those are well needs to pay well.
Speaker Change: Great, allowing us to strategy.
Got back on its cost.
Speaker Change: Additionally.
Speaker Change: <unk> innovative ideas.
Speaker Change: It is always is including cross package.
Speaker Change: Offline you bass merchandise benefits.
Speaker Change: So all my potential.
Speaker Change: Potential in.
Speaker Change: In Q4, we announced glass package.
Speaker Change: Farmer cereals.
Speaker Change: Well on the early 50% sequential increase in the number I think it depends members.
Speaker Change: Part of it.
Speaker Change: I'll address that.
Speaker Change: Increased about 40% sequential that and the cash purchase by members increased up by all kinds of other safety.
Speaker Change: Sequentially.
Speaker Change: Furthermore, our premium membership options Heartbeat science tool.
Yu Gong: Furthermore, our premium membership options are designed to entice users to hire peers. Monetizing greater monetization potential, for example, in Q4, events like the story of Kunning Palace, Nianru Meng Fan Meeting, and the 2023 iQIYI Screen Nights provided opportunities for long-term members, particularly those on the SMS plan, to win event tickets from inclusive draws. This has led to a shift with members upgrading from the Standard Gold plan to the higher-end Planting and Assignments plan, which, although more expensive, offers enhanced privileges. The average daily subscriber for Q4 was 100.
Speaker Change: Entice you also saw our shares have hanging too great.
Speaker Change: Asian potential well you've done though in Q4 events like the story of <unk> Palace.
Speaker Change: The angle.
Speaker Change: Meeting.
Speaker Change: In 2010, DSC and she is screen guidance provided opportunity in some well Lora long term members.
Speaker Change: Particularly those that asked and that's flat.
Speaker Change: In the event tickets is exclusive to us.
Speaker Change: <unk> has led to a shift with members upgrading from the center Gulf.
Speaker Change: The higher <unk>.
Speaker Change: Plant.
Speaker Change: At 10 minutes plan, which although.
Speaker Change: Expensive offer enhanced privilege.
Speaker Change: The average daily subscribers Q4, Q4 was about 100 of pumps.
Speaker Change: We mainly with the holter and Denver are higher and.
Yu Gong: Sponsored ADR Class A, Captivate subscribers, the subscriber mix has improved compared to the same period last year, with a substantial increase in the production of annual plans. With strong content sales as late as 2024, we are confident that the number of dramas breaking the 10,000 popularity index dropped will support the park. In 2023, premium content will go naturally to fuel revenue growth. For 2024, we are taking a number of steps to strengthen our membership serials business. We will offer more differentiated products. Sponsored ADR Class A, Second, to optimize continence gathering. Marketing and Operations to attract new members while increasing member retention. Keep improving the Laurel.
Speaker Change: Daily Opex for the call her.
Speaker Change: All comes into continuous tool.
Speaker Change: Hum.
Speaker Change: Captivate subscribers.
Speaker Change: Fiber or.
Speaker Change: <unk> comparable to the powerhouse parallels.
Speaker Change: Yeah.
Speaker Change: The actual increase in the cost.
Speaker Change: Okay.
Speaker Change: Annual pass with a strong culture and yourselves are slaves, what who sells into 'twenty for.
Speaker Change: Confident that the number of drama breaking the 10 fold in popularity.
Speaker Change: Paul.
Speaker Change: All support the pop.
Speaker Change: That's all.
Speaker Change: And you can see premium content for the natural lag that of tool steel.
Speaker Change: Revenue growth.
Speaker Change: Well it was on the 20th Wall, we are taking a number of steps.
Speaker Change: That scrapping.
Speaker Change: Membership service gives them.
We will offer a more.
Speaker Change: Deeper try and hit her that.
Speaker Change: Taylor will defend yields a whole house and provide value for money.
Speaker Change:
Speaker Change: Our second well optimize comes into scouting.
Speaker Change: Marketing.
Speaker Change: Creation tool attracts the new member well increasing member.
Speaker Change: Is that right patient retention.
Speaker Change: Kept improving.
Speaker Change: <unk>.
Yu Gong: Four quad, two, Incentivizing users to choose long-term premium on the auto-renewing plan that you need you never have will further boost a member's fitness and increase lifetime value. Moving on to the content. Our consistent market leadership in core content, in general, has solidified our reputation as a Diversified and High-Quality Premium Content Powerhouse. Original programming remains the cornerstone of all content strategy and a key revenue driver. We have made remarkable progress in the quality of our original production. In 2023, original content contributed 80% of the total revenue from Key New Drama during the new relief period. And that's not all.
Speaker Change: Laura pain profile tool.
Speaker Change: England.
Speaker Change: Insane.
Speaker Change: You've been here, what you'll start to choose long term premia.
Speaker Change: Auto renewing flat.
Speaker Change: Gotcha.
You never tip.
Speaker Change: Well those are post member of Cigna.
Speaker Change: Right.
I've talked about it.
Moving on to content.
Speaker Change: Yeah.
Speaker Change: All consistent market the laser ship.
Speaker Change: All contents of arrows.
Speaker Change: Solid defined.
Speaker Change: Vascular tissue.
Speaker Change: That works fine and the high quality of premium content powerhouse.
Speaker Change: Original programming remains.
Speaker Change: The cornerstone of all comes in that strategy and a key revenue driver.
Speaker Change: I made that remark on.
Speaker Change: The one.
In the College Hill.
Speaker Change: All original production.
Speaker Change: Southern <unk> from D. A C O Rosenthal comes in comfort Gilthead 88 persons or total revenue from key new cameras during the new release perils.
Speaker Change: That not all well.
Yu Gong: For seven three-quarters, over half of the revenue for new key drummers has come from original titles. Additionally, our content efficiency has largely improved. Our content-related cost usual for drummers has improved for the third consecutive year. Although decreasing by 12 percentage points since last year, that's a clear mark of progress in enhancing our cost structure and, ultimately, Open Mic. This is underpinned by a sophisticated content production and operation mechanism, which maximizes the efficiency of our content investments while parking. Uh, sparking the creation of Innovative New Titles.
Speaker Change: Seven three of the call Harris overall hospitals, the ramp for a new key farmers have come from all of the known titles.
Speaker Change: Now it all comes in the efficiency it has a lot to really improve.
Speaker Change: All contents of religion, Costa usual autonomous.
Speaker Change: Improved for the third consecutive years.
Speaker Change: Decreasing by itself the person page.
Speaker Change: Last year, that's a clear marker programs.
Speaker Change: Enhancing all caused us not to draw on.
Speaker Change: May two at <unk>.
Speaker Change: Our bottom line.
Speaker Change: This is on their part.
Speaker Change: By all the great.
Speaker Change: Content in the production and the operation kind of thing.
Speaker Change: Thanks, Mike.
Speaker Change: CNC all content investments well parking.
Speaker Change: It's partly the creation of.
Speaker Change: Innovative new households.
Yu Gong: Our IT content production management system lies at the heart of the progress, empowering our teams to deliver up-to-date programming with remarkable efficiency, with effective resources, allocation, and program management at every step. In addition, we give our creative talents enough flexibility to really push the envelope with their innovative ideas. The blend of robust content management and creative liberty allows us to consistently deliver high-quality content so efficiently. It's a secret sauce for our content strategy. I'll cut him a little bit. We have seen a consistent flow of premium content and a history show for and until our content portfolio improved.
Speaker Change: She comes into production management and system lies at the heart of the progress empowering our teams to deliver.
Speaker Change: T R a profile.
Speaker Change: Bankable efficiency.
Speaker Change: We've effectively without it.
Speaker Change: Our location and our program.
Speaker Change: Management.
Speaker Change: Yes, sure we gave up.
I'll create Egypt talents enough blocks the ability to.
Speaker Change: Push it up really well.
Speaker Change: I will love.
Speaker Change: Our innovative ideas the Atlanta office.
Speaker Change: Robust content management.
To elaborate here allows oh.
Speaker Change: <unk> deliver a high quality of content so efficient Tonight.
Speaker Change: Secondly, as a source.
Speaker Change: All contingent strategy.
Speaker Change: I'll call them do it.
Speaker Change: We haven't seen a consistent.
Speaker Change: Flow of premium content.
Speaker Change: Oh Wow.
Speaker Change: Until it comes into play.
Speaker Change: But.
Yu Gong: For example, in 2023, there were more titles with a popularity index score of 9000 and above, up 71% compared to 2021, reflecting a steady improvement in content quality. Additionally, over 70% of all key drama releases in 2023 met or surpassed all, packetation. Moving on to detailed content performance in Q4 2023, for Dramas, Story of Kunming Palace, Nian Ru Meng, was a great success as it offered a fully in-house produced original to reach a popularity index score of 10,000, leading the industry real shift during its run. Another drama that also reached a popularity index of 10,000 was Quantity. Journey to Love, Nian Guanshan, which set the record for the best opening day viewership in 2000. 23, During the quarter, the new season of Mr. Seltzer returned, and the success of Lonely Warrior, another consolidation leadership in the suspense genres, reaching a peak popularity index of more than 9,800, a record high for the series and 24 episodes short drama category.
Speaker Change: In 2010 do you see the old war more titles, it's popularity score of 9000.
Speaker Change: Uh huh.
Speaker Change: 70.
Speaker Change: 71 person to come out of the tool to solve them.
Speaker Change: One is black team.
Speaker Change: The improvement in content quality.
Speaker Change: When they over or 17% of all key drama released in 2020 at sea mass.
Speaker Change: That's all.
Speaker Change: Expand the patient.
Speaker Change: Moving on to the detail comes into the performance in Q4 was up in D C or drummers salary of cleaning pallet Yahoo months, what's up with that as our first full length.
Speaker Change: In house for deals to Orange adult who's rich popularity Oh.
Speaker Change: 10000, leading the industry youll ship to them it's about another.
Another drama. That's also reached a popularity index of 10000.
John: John It will not.
John: Which that's the Revpar was at best opening the ownership into solvent.
John: 20th suite during the called her then you won't see that meets our return.
John: As long as well.
John: Well some of it.
John: Console late they've hit leadership.
John: At Spence Jaras, reaching a peak of pulp.
John: Our popularity.
John: Once then nine solve them.
John: 800.
John: I called highest well that means test houses.
John: And before I saw sharp drop in our category.
John: On our premium titles in Q4 and growth and the cell that also a roadmap of the kingdom.
Yu Gong: Other premium titles in Q4 included The Fearless,, Romance of the Farm,, and Tiger Cream, showcasing the diverse range of our general product value. For moving, we maintained a leading leadership shell in Q4 as per, in Python. Ian Lai, Our movie channel features 20 major releases, many of which top the box office charts. Additionally, we are happy to see the recovery of the offline movie market and the fall of iQIYI's original zero-article film, which garnered box office revenue of over RMB 100 million in 2023. Our original strategy extends across all content genres. In animation, we largely scaled up original content in 2023, doubling the number of original titles launched and posting, a 90% increase in revenue contribution compared to 2022. For kids cartoons, we now have 11 original IPs, 8 of which were multi-season. Notably, Princess Doraemi Season 3, was named the Best 3D Animated Program at the 28th Asian Television Awards, which is one of the largest entertainment, content, and broadcast awards in the Asia-Pacific.
John: And the Tegra Creighton, who he also showcasing the worse event of all time.
Speaker Change: Well move it.
Speaker Change: We maintained our leading viewership shell in Q4 as well.
Speaker Change: In Thailand.
Speaker Change: Enlightened.
Speaker Change: Our movie Channel feature plenty of major releases, mainly talking about office chasse additions on that we are happy to see that recovery.
Offline, we will be at Marquis enough Paul.
Speaker Change: Operational <unk> Agricole films.
Speaker Change: Gone there.
Speaker Change: <unk> revenue of over RMB 100 Muni.
Speaker Change: In 2000 and the history.
Speaker Change: Oh, Oh, Oh, Oh original strategy.
Speaker Change: It's across all contents Jarrod.
Speaker Change: And in Asia, we had lunch base.
Speaker Change: Our original content in 2020, and see a doubling the number of rigs don't pencil launched I'm not posting a 90% increase in revenue contribution compounds to 2022.
Speaker Change: Well Keith cut school, we now have 11 Aldrich Don.
Speaker Change: Eight of which well multi season ultra black.
Speaker Change: Proves that our EMEA Susan St.
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Speaker Change: On television or worse, which as well is that entertainment content on our broadcast are worse in the Asia Pacific.
Yu Gong: Demonstrating Our Expanded Influence in the Overseas Market Next, let's take a look at our content pipeline in 2024. For drummers, our goal is to deliver diversified and high-quality content on a continuous basis.
Demonstrating our independent.
Speaker Change: Pendants influence in overseas market.
Speaker Change: Next let's take a look at it all comes into pipeline into itself and defaults bulk.
Speaker Change: Hello, drummers I'll go with de lever that we're certified.
Speaker Change: High quality of content.
Speaker Change: Continue our spaces.
Yu Gong: We are increasing investments in our premium program. While keeping the total number of titles relatively stable, our content... Slate includes Asian customs.
Speaker Change: We are increasing investments in crimping improvement programs, while keeping our total number of titles on our table and stable all content.
Late in.
Speaker Change: The custom.
Yu Gong: Dramas, such as The Highly Anticipated Fox Spirit Matchmaker Wu Yao, Xiao Hongyang Warning Flip, Yeah, yeah. Sponsored ADR Class A, Follow Your Heart, Yan Qingzhi, Moon, in Blizzard. Baiyue Fanxing, The Second Season of Strange Tales of the Tang Dynasty, Tang Dynasty Ghost Stories 2, and others.
Speaker Change: Gotcha.
Speaker Change: The highly anticipated.
Speaker Change: Spirit Matchmaker, we all shopping yeah.
Speaker Change: Barney flame.
Speaker Change: Yeah Yeah.
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Speaker Change: Our firm know Johan <unk>.
Speaker Change: In brief.
Speaker Change: I guess I assume.
Speaker Change: The second season of stringent tell Tom Dennis.
Speaker Change: Okay.
Speaker Change: And the others.
Yu Gong: In addition, Mr. Seltzer will debut new titles in 2024 with Tell No One, Breaking the Shadow and Lost in the Shadow, In the reality gyrus, the premium of always on the move. Nanai Beiba, known for its top-notch production and a strong audience, appear as its peak popularity score reached as high as 9,959. Another example showing the case of strong content capability. Viewers can also look forward to the upcoming City of the City, Chengdu Zhicheng, for Lightning Qiulongchenbian, adapted from the famous science fiction novel written by Liu Cixin, as well as In the Name of the Brothers, RB1944, for movies. We expect several iQIYI originals to hit the shelters in 2024.
Speaker Change: In addition, Ms itself.
Speaker Change: Will it builds new titles in 2024.
Speaker Change: Hell no what we'll call them breaking the shadows.
Speaker Change: When you endure shop and lots of English adult.
Speaker Change: On your phone yet.
Speaker Change: In the reality of gyros, the Permian of always on the mall.
Speaker Change: No no no.
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Speaker Change: Top notch production and a strong odeon.
Speaker Change: P. R F S peak popular artists call rich.
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Speaker Change: <unk> hundred 15, nine not there.
Speaker Change: Ample showcasing our strong content and I'll cover a bit him.
Speaker Change: Okay.
Speaker Change: Okay and also look forward to the upcoming details I'll cede to longer term.
Speaker Change: That's what I'm trying to get adapted from the famous the science.
Speaker Change: And as Al will return.
Speaker Change: And you'll see this year as well.
Speaker Change: And then also the rather Harvey Yosef.
Speaker Change: While movies.
Speaker Change: We expect.
Speaker Change: We expect several IQ or who knows okay. The sales here in 2000 and default all line up includes the action.
Yu Gong: Our line-up includes the action comedy Rob and Rob in Shijia'an, which premiered in January and garnered a total box office of RMB 236 million. Also, we are excited to release the eagerly I waited to find the parallel of your your own, Wang Wangzhi Ren, adapted from the renowned novel written by Keiko Hagashino for our online movie segment Cloud Cinema. We have introduced Action Master, our new brand that brings together a diverse line-up of action movies for our viewers.
Speaker Change: Comedy <unk>.
Speaker Change: And the wrong issues yeah.
Speaker Change: Rich premiums in January.
Speaker Change: Gone there to our total box office of.
Speaker Change: Of RMB 213 fixed maybe also.
Speaker Change: I think they pivoted to really the.
Speaker Change:
Speaker Change: Eagerly awaiting it flattens thats past.
Speaker Change: Somebody will.
Speaker Change: You are.
Speaker Change: How long trip adapted from the.
Speaker Change: Notable recent by Hateful Hawk Akshay.
Speaker Change: Yeah.
Speaker Change: While online movie segments cloud Sandbox, we have introduced action master milestones.
Speaker Change: That brings together that we're buying off of action movies, while all viewers, we have he would be able to switch titles so far.
Yu Gong: We have debuted three titles so far and earned high praise from audiences. Additionally, we look forward to the upcoming release of The Wild Blade of Strangers. The latest addition to our Action Master catalog. For variety shows, in addition to new seasons of established IPs like The Detectives Adventure 2024, Meng Tan, Can Tan An, and The Rap of China 2024, we will continue to develop new programs spanning different themes, such as Player One, In Wonderland,, Young's Group, Qiluo Group, and others. For kids cartoons and animation, we are actively expanding our production capacity. We will introduce brand new IPs and new seasons of classic IPs of original kids cartoons. And for animation, we are planning to release around 20 seasons of original animation with enhanced quality and thematic diversity.
Speaker Change: Hi.
Speaker Change: From audiences addition that we have looking forward towards I'll call.
Speaker Change: Relief.
Speaker Change: Why the delays.
Speaker Change: Dress modal.
Speaker Change: That Lady in Duchenne.
Speaker Change: Actually master them kind of law.
Speaker Change: Well why rentals shows in addition to new seasons of timeline.
Speaker Change: Next I'd like the detective's advent trucks 2004.
Speaker Change: Mountain time.
Speaker Change: And there's a glut of China 2020.
Speaker Change: She has worked out from what you put out so we will continue to do well.
Speaker Change: Yield profile.
Speaker Change: Different themes such as layer what are in Wonderland.
Uh Huh sure control without insurance.
Speaker Change: Yes, correct.
Speaker Change: Children.
Speaker Change: And the others.
Speaker Change: Well kids come some animation activity.
Speaker Change: A production cut.
Speaker Change: Cover a cta.
Speaker Change: I'll introduce rather new apps, and then you'll see that sort of classic.
Speaker Change: Orange All kids constant coffee Cup.
Speaker Change: And therefore and in Asia, we are planning to release all wrong.
Speaker Change: Plenty of original animation.
Speaker Change: We used to enhance the quality here.
Speaker Change: Imagine that works it here.
Yu Gong: To sum up our 2024 content strategy, we aim to reinforce our drama leadership and achieve breakthroughs in other genres. Our focus will remain on premium titles, increasing their supply, quality, and monetization. We'll also optimize our content scheduling to cater for our diverse user base and their varied preferences. Moving on to the advertising business, in 2023, we recorded an annual increase of 17% in our advertising revenue, both brand and performance ads, focusing on health growth over the previous year. In Q4, advertising revenue increased by 6% annually to RMB 1.65 billion, beating all expectations thanks to outgoing content influence among brand advertisers. Advertising revenue from content-targeted ads accounted for over 50% as AdWords' highest-selling product. Vlogs for top dramas and shows like The Story of Kunning Palace, A Journey to Love, and We Never Stop.
Speaker Change: To sum up.
Speaker Change: <unk>.
Speaker Change: 2020 for content this strategy.
Speaker Change: Fourth of drama or leadership.
Speaker Change: Sure Bruce.
Speaker Change: Other gyros I'll focus will remain on premium titles, increasing their supply quality I'm not monetization.
Bruce: Well also obviously I'm biased all content Scouting tool case for all of.
Bruce: Got worse your service.
Bruce: Why red preferences.
Bruce: Moving onto the other one has seen business in 2020 as suite, we had record age of annual increase.
Bruce: 17%.
Bruce: Testing ground.
Bruce: Brad and the procurements at Folkestone.
Bruce: How that grows over other approvals here in Q4 advertising revenue increased by 6% to RMB one pump.
Bruce: But bidding beating.
Bruce: It's packed pizza.
Bruce: Our growing content influence among brand advertisers revenue from content targeted at accounted for over 50%.
Bruce: Uh huh.
Bruce: Other work past service.
Bruce: Flocks to two top drama on the show like sorry, it will quite often.
Bruce: <unk> Palace drive into law.
Bruce: We never stop.
Yu Gong: Broken down by sectors, the annual growth in Q4 came mainly from the recovery of brands in industry, including food and beverage, communications, and healthcare. Performance S continued to show annual growth despite the high baseline set in Q4 last year. We expanded our customer base to attract new advertising budgets, such as new e-commerce platforms and short-form dramas. Our solid performance also capitalized on our technology upgrades as we made effective use of generative AI to improve ad creation and ROI. Looking ahead to 2024, we remain culturally optimistic about the ad market, and we are closely monitoring the Dynamics of Macroeconomics and Advertisers Settlement. With that said, our performance in 2023 once again proved that we remained a go-to platform for advertisers. Thanks to our unmatched content quality, extensive user profile, and strong sales ability. Brand F in 2024, we will retain key clients in food and beverage. Cosmetics and Politics, and communications while striving for breakthroughs in healthcare, entertainment, and other promising sectors. We expect that domestic brands will experience a faster recovery compared with their international peers.
Bruce: Broken down by sector.
Bruce: The annual growth in Q4 came mainly from the recovery of brass industry, including food and.
Bruce: Beverage communication.
Bruce: And the house count.
Our firm has asked continue though to show annual growth is part of the the highest based lives that in Q4 of last year.
Bruce: That is our customer base.
Bruce: Attract a new otherwise and seeing badges, such as new E Commerce platform.
Bruce: Trough from farmers are solely as a preferred minutes also.
Bruce: Last year.
Bruce: Our technology upgrades as we've made it effectively use of trying that John or <unk>.
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Bruce: Paul.
Bruce: Harsher lab optimistic of the abbot market.
Bruce: We are closely monitoring.
Bruce: Dynamics Mike.
The macro economy.
Speaker Change: Hi, sorry.
Speaker Change: Our assessment.
Speaker Change: With that that outperformance in 2010 do you see it once again.
Speaker Change: Those apps, we've remained as a goal.
Speaker Change: Alcohol for advertisers.
Speaker Change: Thanks to our unmatched content quality.
Speaker Change: User profile and a strong south ability.
Speaker Change: Hello, Brian.
Speaker Change: In 2017 for <unk>.
Speaker Change: With 10 key clients in food and beverage.
Speaker Change: Cosmetics.
Speaker Change: Apologies.
Speaker Change: And they'll communications well striving for Brooks.
Speaker Change: <unk> entertainment and the other.
Speaker Change: All sectors.
Speaker Change: <unk> patch that domestic Nebraska.
Speaker Change: Perry a faster recovery compelled.
Speaker Change: They are international cares Furthermore, with our niche in that tool tap into more so than it is as we observed a higher demand for athletes.
Yu Gong: Furthermore, we were positioned to tap into more opportunities as we observed a high demand for ads visible to subscribers and not on Qdrama. For performance ads, our strategy is to stress on offering for key clients in established areas like internet services, e-commerce, and gaming. Meanwhile, we are set to boost revenue in new growth areas, such as live streaming, e-commerce, and short-form dramas. Technology called innovation is our priority. We need to provide a cutting-edge ad solution to maintain our privileged ads.
Speaker Change: Who subscribers.
Speaker Change: On key drivers.
Speaker Change: Well permits as our strategy is to stress and.
Speaker Change: Offering for key clients in a place like.
Speaker Change: <unk> Internet services e-commerce and the cadence.
Speaker Change: Meanwhile, we are all set to have Bruce Avenue.
Speaker Change: Gross aerials.
Speaker Change: Live streaming e-commerce, and the short form dramas.
Speaker Change: <unk> technology called Novation.
Speaker Change: Alright.
Speaker Change: It needs to a provider of cutting edge solution to maintain.
Yu Gong: Competitive ADR Moving on to technology and the product, we are committed to centering around fostering technological innovation to push the industrialization of content production, improve the user experience, and boost operating efficiency. We have integrated the latest technology into our top original productions. For example, our major original drama, The Story of Mystics, really leverages virtual production to achieve remarkable results, capturing over 3,000 minutes of footage.
Speaker Change: Okay.
Speaker Change: Competitive edge.
Speaker Change: Moving onto <unk> technology on the perfect.
Speaker Change: Oh commuter tent.
Speaker Change: The center a round of fostering technology innovation to push through the industrialization of content protection in pool, Youll say he's heard in operating efficiency.
Speaker Change: We have integrated well.
Speaker Change: Is that late if that technology into our top of our Haynesville production for example, a major arteries both drama the Astoria off.
Mistakes I'm really lie rich work full production achieved remarkable results.
Speaker Change: Uh huh.
Speaker Change: Over.
Speaker Change: So then the minutes of footage.
Yu Gong: This pioneering technology marks a paradigm shift in filmmaking, enabling immersive, Sponsored ADR Class B, On-site footage could be immediately uploaded to a proprietary cloud, enabling remote production, oversight, and content quality checks, as well as swift real-time editing by expert eyes. In the post-production phase, this boosts our efficiency in both production and program management. We are leveraging technologies to refine our products and enhance user experience as well. For example, our deployment of AI to filter out poor quality comments and supply learns creates a better community environment and boosts user engagement.
Speaker Change: These pioneering technology powered.
Speaker Change: Paradigm shift in fuel, making enable them in more safe.
Speaker Change: Efficient.
Speaker Change: Create a table on the last call it housing while the fuel trucks. Another example, while many children.
Speaker Change: Productions.
Speaker Change: I'm, sorry that footage could it be EMEA terabytes uploaded.
Speaker Change: Paul Art tirade crop cloud, enabling remote production or side on the content the quality checks as well as a suite.
Speaker Change: Real time editing tool.
Speaker Change: Right.
Speaker Change: Post the production phase.
Speaker Change: Our efficiency in both protection and the program.
Speaker Change: Management.
Speaker Change: We are leveraging technologies to refi.
Yu Gong: In addition, we are broadening the reach of technology to allow more audiences to engage and indulge in the ultimate VR experience through our Pioneer XF Max. In terms of generative AI, we are advancing every stage of content creation, from planning, development, and promotion, enhancing both efficiency and creativity. These efforts not only improve content production and operation efficiency but also unleash creative potentials. For example, over the past year, we used AI for mass-producing quality marketing materials, which outperformed manual design in collecting phone rates and viewership. Comprehended video content at the minute level enables detailed plot summaries for each playlist.
Our products and in costs Youll start you've parented youll start its parents as well.
Deployment of AI fueled her out for qualitative comments.
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Speaker Change: Chris extra commodity environment.
So youll Sir.
Speaker Change: Engagement, yes.
Speaker Change: They are.
Speaker Change: Then the Dod, which all technology it will allow more audiences.
Speaker Change: Okay.
Speaker Change: Indulge in the ultimate deal.
Speaker Change: These parents as soon on 10 year.
Speaker Change: Max.
Speaker Change: In terms of drama or HFC.
Speaker Change: We are advancing high risk stage of content creation.
Speaker Change: From a new development tool promotion enhancing efficiency.
Speaker Change: Hey.
Yu Gong: Now available for over 3,000 drivers, for our business performance in regions outside of mainland China. We achieved our first full-year operating profit in 2023. Additionally, we continue to expand the influence of C-pop with C-dramas contributing more than 50% of revenue. In Q4, membership revenue and ad revenue both recorded double-digit annual growth, driven by the growing popularity of premium content among users and advertisers. Membership revenue increased by over 80% in Japan, Hong Kong, and the UK and over 50% in Moscow and South Korea.
Speaker Change: These efforts not only improve content production.
Speaker Change: Efficiency on also.
Speaker Change: Sure.
Speaker Change: Potentials over.
Speaker Change: Other parts of Europe.
Speaker Change: Well last produce quality and marketing materials.
Speaker Change: From the menu it flies in collecting some grades.
Speaker Change: We'll ship addition demands as comparability.
Speaker Change: <unk> comprehend.
Speaker Change: Comprehended, a video content at maintenance level enables detailed.
Speaker Change: Some are as well.
Speaker Change: They at least.
Speaker Change: Now available for over 3000, new drivers.
Speaker Change: Alright.
Speaker Change: For our business the performance in regions outside of mainland China.
Speaker Change: We achieved our first a full year operating profit in 2017 suite additions, we continue to use patent.
Yu Gong: Ad revenue grew 20% annually under, 49% sequentially. Our three dramas have continued to captivate international audiences. Story of Pony Palace leads the ranking in many markets, setting record high metrics for Chinese content on ORC platform. On the other hand, A Journey to Love also dominated many charts in Southeast Asia, North America, and Australia during the broadcasting era.
Speaker Change: E E influence.
Speaker Change: <unk> also see pop with Steve dramas contributing more than 50% of our revenue.
Speaker Change: In Q4 membership revenue.
Speaker Change: Got it.
Speaker Change: Recall that although DJ its annual growth actually in the growing popularity of proving content among yields us on either our passers membership revenue increased by over 80% in Japan, Hong Kong and the UK.
Speaker Change: And the over 50% in basketball and now South Korea, Allograph rules could be a person any of that.
Yu Gong: We are also exploring ways to bring local content from overseas to the domestic Chinese market. In January this year, we debuted our original Malaysian drama, Rampart Sing Paku. Sponsored ADR Class A, Pursuit of collaborative opportunities remains strong. We have introduced a bundled plan. Sponsored ADR Class B Sponsored ADR Class C Looking into 2024, we have prepared an exciting slate of C-pop for key markets while wrapping up original production of premium content for local users. Notably, we are set to debut an international version of the iQIYI original music show, Young of You.
Speaker Change: Our 49% sequentially.
Speaker Change: I'll cede dramas.
Speaker Change: Continue the tool.
Speaker Change: <unk> international audiences.
Speaker Change: Immune patents leave rankings in many markets.
Speaker Change: Hi, I'm matrix for Chinese content.
Speaker Change: Or is it.
Speaker Change: Our platform.
Speaker Change: Our journey to love also dominated by any chance in southeast Asia.
Speaker Change: I know, Australia outdoor broadcasting area.
Speaker Change: We are also exploring ways to bring overseas local content to the domestic Chinese market.
Speaker Change: This year, we built it.
Speaker Change: Our original.
Speaker Change: On what Ron.
Yu Gong: Meanwhile, we will continue our efforts to promote C-dramas and local content in partnership with Southeast Asia TV stations, alongside increasing our brand in Florida. In summary, the year 2023 marked a milestone for iQIYI. It's exciting to see that the transformation we started back in 2022 really paid off.
Speaker Change: <unk>.
Speaker Change: Total us yet in China.
Speaker Change: <unk> solid staff in Florida amplifying.
Speaker Change: Synergy between domestic and overseas content.
Christine: And Christine will collaborate.
Christine: Opportunities remain strong.
Christine: Introduced bundled plan.
Christine: So in partnership with Telecom.
Christine: Telecom indications.
Christine: Either in pilot on the Hong Kong, We also look to with tourism authorities in Thailand, Singapore, and Hong Kong will craft, our especially our lifestyle commercial content and although our testaments.
Yu Gong: We celebrated record high revenue, profits, and cash flow. In 2024, we aim to sustain the highly quality growth trajectory and further growth of revenue and profit. We are confident that our efficient content production and robust operations will drive further success. We also continue to integrate advanced technologies to increase productivity and support our strategy of long-term sustainable growth. We are Institute Ethics about Collaborating with our Stakeholders for a Prosperous 2024. Now, let me pass on to Jun to go through our financial performance. Thanks to the mythical and Halloween, we maintained our strong momentum in 2023.
Christine: Looking towards the southern plentiful we have propel.
Christine: Exciting slate of the pump will key market as well.
Christine: Production of premium content for local users most of that.
Christine: That tool it field.
Christine: International worsen the.
Christine: The music show.
Christine: Yeah.
Christine: Meanwhile, we will continue our efforts to promote safe dramas on the local content in partnership with Southeast Asia television stations.
Christine: Hello.
Christine: <unk> our brand.
Christine: In Florida.
In key markets. We are also <unk>.
Christine: Paul.
Christine: Worse IP monetization opportunities.
Christine: In summary.
Christine: The Europe, so it doesn't put new sweet market milestone flight.
Christine: It's exciting to see that that transformation with docs back in result.
Xiaodong Wang: The impressive financial results once again demonstrated the resilience and scalability of our business model. Thanks to increased profit and enhanced liquidity, we have an even greater capacity to sustain long-term value creation for stakeholders. Now, let me walk you through the key numbers.
Christine: 'twenty two.
Christine: Pete.
Speaker Change: Oh elaborated.
Speaker Change: The high end revenue profits and cash flow.
Speaker Change: In 2024, and two the 10, the highly quality and growth.
Xiaodong Wang: In 2023, total revenues increased by 10% from 2022 and reached RMB 31.9 billion. The revenue growth was driven by membership and online advertising services, as both recorded double-digit annual growth. Membership Services revenue was at RMB 20.3 billion, up 15% annually.
Speaker Change: Jack to array and further our growth.
Speaker Change: On the process.
Speaker Change: We are confident that all efficient content production.
Speaker Change: Robust operations will drive further success.
Speaker Change: We also continue to integrate.
Speaker Change: Oh technologies to increase productivity.
Speaker Change: Our strategy of long term sustainable growth.
Speaker Change: We are.
Speaker Change: You can still see acetate about collaborating with all stakeholders.
Xiaodong Wang: The growth was driven by an increase in average revenue per membership, i.e. ARM, and a rise in average daily subscribers. Online advertising revenue grew by 17% annually and reached RMB 6.2 billion. The rise was primarily fueled by the growth in performance-based ads and, to a lesser extent, brand ads.
Speaker Change: Paris 2020.
Speaker Change: On the floor.
Speaker Change: No that's being passed on to choose what goes through off of natural performance.
Speaker Change: The estimate of all and Hello, everyone.
Speaker Change: We maintained our strong momentum in 2023.
Speaker Change: <unk> financial results once again demonstrate the resilience and the scalability of our business model with.
Xiaodong Wang: Notably, performance-based ads revenue actually reached historical highs in 2023. Turning to our offline performance in Q4, total revenues increased 1% annually to RMB7.7 billion.
Speaker Change: The increased profit.
Speaker Change: Enhance the liquidity, we have an even greater capacity to sustain our long term value creation of our stakeholders.
Speaker Change: Now, let me walk you through the key numbers.
Speaker Change: In 2003 total revenues increased by 10% from 2010, the shoe and the reach RMB 30, 119 billion. The revenue growth was driven by membership and online advertising services, both recorded double digit annual growth.
Xiaodong Wang: Membership services revenue was RMB4.8 billion, up 1% annually, and the air. Our ARM strategy proved highly successful, achieving sequential growth for five consecutive quarters. Online advertising services revenue was RMB 1.65 billion, up 6% annually, and exceeded our expectations.
Speaker Change: Membership services revenue.
Speaker Change: RMB eight 3 billion.
Speaker Change: Up 15% annually.
Speaker Change: Growth was driven by the increase in average revenue per membership I.
Xiaodong Wang: The growth was largely driven by the growing attractiveness of our premium content among advertisers. Now, moving to the cost and expenses. For 2023, the common cost was RMB 16.2 billion, down 2% annually. Total operating expenses were RMB 5.8 billion, up 8% annually. For Q4, the current cost was RMB 3.7 billion, down 5% annually, mainly driven by our improvement in the content strategy and operating efficiency, and a fewer number of majority of major variety shows launched in the quarter as well. The total operating expenses were RMB 1.4 billion, down 1% annually.
Speaker Change: <unk> and <unk>.
Speaker Change: The average daily subscribers.
Speaker Change: All of my advertising revenue grew by 17% annually and the reached RMB six 2 billion.
Speaker Change: Hawaii was primarily fueled by the growth in performance based AD and to a lesser extent the brand ad.
Speaker Change: Notably <unk>.
Speaker Change: AD revenue actually lead historical high in 2023.
Speaker Change: Yeah.
Speaker Change: Turning to our top line performance in Q4.
Speaker Change: Total revenues increased 1% annually to RMB seven 7 billion.
Speaker Change: Membership services revenue was RMB, four 8 billion up 1% annually.
Speaker Change: Our arm.
Speaker Change: On strategy for the highly successful achieved sequential growth for five consecutive quarters.
Online advertising services revenue was RMB 165, billion% to 6% annually and exceeded our expectations.
Xiaodong Wang: Turning to profit and cash flow, for 2003, we successfully delivered what we promised for profit growth earlier in the year. Our non-capital operating income surged to over RMB 3.6 billion, up 68% annually. For Q4 alone, the non-capital operating income was RMB 928 million, positive for 8 consecutive quarters.
Speaker Change: The growth was largely driven by the growing attractiveness of our premium content among advertisers.
Speaker Change: Now moving to the cost and expenses.
Speaker Change: So without any street common costs with RMB 16, 2 billion down 2% annually.
Speaker Change: Total operating expenses was RMB, five 8 billion up 8% annually.
Speaker Change: For Q4, the common cost was RMB, three 7 billion down 5% annually, mainly driven by our improvement in our content strategy and operating efficiency.
Xiaodong Wang: Furthermore, our free cash flow in 2023 totaled RMB 3.3 billion, achieving its first full-year positive, with Q4 contributing RMB 614 million. Strong cash flow improves the healthiness of the balance sheet, leading to value creation from deleveraging and de-risking. As of the end of Q4, we had cash, cash equivalents, restricted cash, short-term investments, and long-term restricted cash, including prepayments and other assets, totaling RMB 6.2 billion.
Speaker Change: And the fewer number of man majority of major variety shows launched inequality as well.
Speaker Change: Operating expenses was RMB, one 4 billion outlook, 1% annually.
Speaker Change: Turning to profit and the cash flow.
Speaker Change: For 2023, we successfully delivered what we promised for profit growth earlier in the year.
Speaker Change: Our non-GAAP operating income surged to over RMB, three 6 billion up six 8% annually.
Speaker Change: For Q4 alone non-GAAP operating income was RMB 928 million positive for eight consecutive quarters.
Speaker Change: Furthermore, our free cash flow in 2023 totaled RMB three 3 billion achieved.
Speaker Change: Achieving its first full year positive.
Xiaodong Wang: In terms of the future use of the cash, the company has a total of US$396 million in convertible bond potable on August 1, 2024. After meeting this potential repayment obligation, the management will be able to actively explore various shareholder value enhancement initiatives, such as the commonly used share buyback, on top of our investment for future business growth. The implementation of such plan is contingent upon the financial condition of the company, the market conditions at that specific point in time, and is subject to our audit discussion approval.
Speaker Change: With Q4, contributing RMB $614 million.
Speaker Change: Strong cash flow improve the healthiness of that balance sheet, and leading to a value creation from deleveraging and derisking.
Speaker Change: As of the <unk> Q4, we had a cash cash equivalent.
Speaker Change: Cash short term investments and long term restricted cash, including the prepayment and other assets totaling RMB six 2 billion.
In terms of the future future use of the cash the company had a total of art of U S. Dollar is 396 million uncomfortable.
Xiaodong Wang: To conclude, echoing Mr. Gong's earlier remark, we are now with substantially strengthened fundamentals, remain deeply committed to creating enduring value for all stakeholders, and to continue leading industry evolution. As we just celebrated the Chinese New Year, I would like to take this moment to extend our sincere thanks to our investors and allies for your consistent support throughout our past. For detailed financial data, please refer to our press release on our IR website. Now, we will open the floor for Q&A. Thank you, sir. We will now begin the question and answer session. To ask a question, you may press the star, then 1 on your touch screen phone. If you're using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: On August one 2024.
Speaker Change: After meeting this potential repayment obligations and our management will be able to actively explore the areas shareholder value enhancement initiatives.
Speaker Change: Our company uses share buyback on top of our that's debt for future growth.
Speaker Change: The implementation of such plan.
Speaker Change: Upon the financial condition of the company.
Market conditions at that point of time.
Speaker Change: Obviously, a lot of discussion and approval.
Speaker Change: To conclude echoing with Mr. <unk> over to Mark we are now with a substantially strengthened the fundamentals remain deeply committed to creating enduring value for all stakeholders into company a leading evolution.
Speaker Change: As we just celebrated the Chinese new year or I should take this moment to extend our Ccs thing.
Speaker Change: Ill, let investors and analysts for your consistent support throughout our path.
Speaker Change: For detailed financial data, please refer to our press release.
Speaker Change: Our web site.
Speaker Change: Now we will open the floor for Q&A.
Speaker Change: Yes.
Speaker Change: Thank you Sir.
Operator: If any time a question has been addressed and you'd like to submit your question, please press star then 2. We please ask that you state your question in Chinese first, and then translate the question into English. Also, please limit yourself to one question at a time. However, you may re-enter the question queue for further questions, time permitting.
Speaker Change: We will now begin the question and answer session.
Speaker Change: I'll ask a question you May press Star then one on your Touchstone phones.
Speaker Change: Isn't this speakerphone, please pick up your handset before pressing the keys.
Speaker Change: My question has been addressed seem like to withdraw your question. Please press Star then two.
Speaker Change: We please ask that you state your question in Chinese first and then translate the question into English.
Xueru Zhang: At this time, we will just pause momentarily to ask some more questions, and the first question we have will come from Xu Jing Zhang of CICC. Thank you, Guan Yu, for accepting my question. I would like to ask, in the case that other video platforms have good content, what is our strategy for 2024, and what is our core goal? What indicators are we most concerned about? And, in the long term, what could become some new growth points? Thank you. Thanks, management, for taking my question. Given that other players have strong pipelines this year, what is your strategy on KPI for 2024? What indicators are you most concerned about? In the long term, is there anything that can become a new driver?
Speaker Change: So please limit yourself to one question at a time. However, you may reenter the question queue for further questions time permitting.
Speaker Change: At this time, we will just pause momentarily to assemble our roster.
Speaker Change: And the first question, we have will come from <unk>, Zhang Zhang of CIBC.
Xueru Zhang: She said when he transitioned with some.
Xueru Zhang: Got it got it just started to touch on shipping.
Speaker Change: Very good.
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Thank you Jason.
Jason: Thanks management for taking my question.
Speaker Change: Given that the players have Jon pipelines this year, what's the gesture and PPI for Kent you had before.
Speaker Change: And what do you take that as most of the concept.
Speaker Change: In the lung in a long time.
Yu Gong: Thank you. My name is Gong Yun. I will answer this question. In 2024, our main goal is high-quality growth, i.e., income and profit grow at the same time. The growth rate of profit is higher than the growth rate of income. This goal was firmly determined in 2023. So far, even the numbers in this direction have not changed.
Speaker Change: Anything can become a new driver centric.
Speaker Change: Oh.
Speaker Change: Yes.
Speaker Change: I don't know to almost be onshore culprit on Hong Kong, Yes, Joe sure Fogel, who do you run it for some time.
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Our CEO call answering this question so.
Yu Gong: Our CEO, Gong Yu, is answering this question. So our target for 2024 is to maintain high-quality growth. What's sad is that revenue and profits will both grow, and profit will outpace the growth of revenue. And this target was set by 2023 Q4, and that hasn't changed.
Speaker Change: Target for 2024 is to maintain high quality to grow with it that is that.
Speaker Change: Revenue and profits well, both growth and profit well outpaced the growth of revenue and this target was set by 2024 and that Hasnt changed bundle with Daniel just chunky.
Yu Gong: There are a few points to pay attention to. First, it has to do with content. What's important about content is to attract more talented people so that they can create better and more content. Second, it's to continue to build and optimize our scientific evaluation mechanism, which includes human-made rules and system optimization to make predictions and judgments more accurately. Third, it's to optimize our smart production system to improve the level of industrialization of content production. It comes in different forms. Three points so far.
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Speaker Change: Our <unk> product.
Speaker Change: They want to go up.
Speaker Change: It comes in different aspects three points. So far the first is related to content first is we're recruiting the top notch talent.
Speaker Change: Producing very high quality content and that's the first one and then a second one is by using them very effective.
Speaker Change: Shannon decision, making.
Speaker Change: Process and also the management process to assist dramatically increased the hit rate of our entire content offerings.
Yu Gong: The first is related to content. First, we're recruiting top-notch talent and producing very high-quality content. That's the first one.
Speaker Change: Third is to utilize our content management program.
Yu Gong: And then the second one is by using very effective evaluation and decision-making processes and also the management process to systematically increase the hit rate of our entire content offerings. And third, to utilize our content management program to really improve the efficiency of our content offerings and operations. In addition to what I just mentioned, we're also focusing on new business areas. Hopefully, that will become our second growth curve in the future, including but not limited to our first overseas business and also IP derivatives, including both the online and offline segment.
Speaker Change: Really to improve the efficiency of our content production and operation.
Speaker Change: Does it come with them, they're trialing, but similarly, but yeah and.
Speaker Change: And countries.
Paywall pay your toolbox.
Speaker Change: Yes, Jason.
Speaker Change: I kind of funky on ballpark, how many yet.
Speaker Change: Oh, yeah, absolutely some three or four years.
Speaker Change: Share count for the change.
Speaker Change: Ohio.
Speaker Change: Here are some tools that are there.
Speaker Change: And she will come soon.
Speaker Change: In addition to what I just mentioned that we're also focusing on new business.
Speaker Change: Hopefully that will become our second both color Kurt if you address are included but not limited to our first overseas business and also IP derivatives.
Speaker Change: Including both online and offline segment now also to utilize.
Xiaodong Wang: And also to utilize generative AI to really improve our operating efficiency and content capability. And then, in terms of the financial aspects, I will invite our CFO Wang Jun to add on. I will answer the question in English, and thanks a lot, Xuexin, for the question.
Speaker Change: Innovative AI to really improve our.
Speaker Change: Operating efficiency and content capability grain telephone menlo chimney.
Speaker Change: And between Chicago, and then in terms of financial I invite.
Speaker Change: Our CFO launching two to Adam sure.
Speaker Change: Third question English and since the last year and part of the question I think that when we are looking at our financial numbers for 2004.
Xiaodong Wang: I think that when we are looking at our financial numbers for 2024, we always focus on two keywords, which are growth and health. Then, the pursuit of high-quality growth has been repeatedly mentioned during our comments, and it is self-evident. Due to the time constraints, we will not get into details on this call, but we'll be happy to share color on future occasions.
We always focus on keywords.
Yes.
Speaker Change: Then the pursuit of the highest quality Ralph has been repeatedly mentioned that during our call.
Speaker Change: You'll be able to comment and it is self evident due to the time country, we will not get into details on this call. So we'll be happy to share color on each operation.
Xiaodong Wang: But on this call, we would also like to highlight that in 2024, what you will observe is a further improvement in financial healthiness because we have a very solid growth in our open cash flow, which de-leverages our balance sheet and actually offers two critical benefits. And first, in my view, I think it gives us a clear roadmap to decrease the average cost of capital. The steady, stable cash inflows actually give us the ability not only to pay down existing debt but also to tap into the low-cost capital pool, such as long-term loans or investment-grade credit products, which would otherwise not be available. And such low-cost capital could be used gradually to replace the previous high-cost debt, and mathematically, it is translating to a possible decrease in the total discount rate for the long-term DCF model.
Speaker Change: In this call we have also like to highlight that in 2008.
Speaker Change: <unk> is a further improvement of our financial healthy net because we have a very solid growth and cash flow, which deleveraged our balance sheet and actually offers two critical benefits.
Speaker Change: And first in my view I think they give us.
Relative map to decrease the average cost of capital.
Speaker Change: Steady stable cash inflows actually gives us the ability not only to pay down existing debt also to tap into the low cost of capital pool, such as long term loans.
Speaker Change: Greater credit product, which will otherwise not be available.
Speaker Change: Such low cost capital could be used gradually to replace that previous high cost debt and mathematically it would translate into a possible decrease the total discount rate for the long term DCF model.
Xiaodong Wang: So if our shareholders and analysts agree with such an argument, and I think starting from 2024 and going forward, you should probably increasingly refer to our net income instead of the operating profit to check the progress, because our net income would be able to capture and reflect this positive value creation from de-risking and de-leveraging. And on top of that, as we previously discussed, it also offers us more tools, I think, to enhance shareholders' returns. And this is a second critical benefit. I will not expand on this call and repeat myself.
Speaker Change: Our shareholders and analysts agree with China.
Speaker Change: Argument and I think starting with from two dumped into important going forward.
Speaker Change: You should probably increasingly take reference told them that often.
Speaker Change: Operating profit to check the progress because our net income.
To capture this part of the value creation from the Derisking and deleveraging.
Speaker Change: And on top of that.
Speaker Change: Previously discussed it also offers.
Speaker Change: Offers us.
Speaker Change: Look tools I think to enhance our shareholders returns and this is the second critical benefits I will not spend in this call and to repeat myself.
Xiaodong Wang: So, in summary, I think our goal, our financial goal for 2024, is to deliver a healthier balance sheet and a stronger P&L to all of you. Thank you.
Speaker Change: So as a result of the summary, I think our goal our financial holds lets go onto the floor is to deliver a healthy balance sheet and a stronger P&L to all investors.
Thank you. Thank you.
Lincoln Kong: The next question we have comes from Lincoln Kong of Goldman Sachs. Thank you, Mr. Gong, Mr. Wang, for accepting my question. Congratulations to the company on its solid 2-3-0 performance. I would like to ask a question about AITC.
Speaker Change: The next question we have comes from Lincoln.
Speaker Change: Goldman Sachs.
Speaker Change: Okay.
Lincoln: Bob I know one's own grandson, just sort of Q.
Lincoln: Can you guys talk to that.
Lincoln: What's going on with <unk>.
Lincoln Kong: Could you please share with us how you see the latest technology of GeneXus AI, including the latest launch of SORA? What impact will it have on the whole industry, and what impact will it have on iQIYI? How do you plan to invest in AIGC? Thank you, Mr. Wang, for accepting my question. Congratulations on a solid 2-3-0 result.
Lincoln: You see from them.
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Lincoln Kong: My question is about AIGC. How would the management view the latest GeneXus AI technology, especially SORA, and what implications it will have on the movie or drama industry, as well as to iQIYI themselves? And what's the company's plan in terms of the investment and strategy in this front? Thank you.
Lincoln: So the cost of that she sees it.
Lincoln: Sure.
Lincoln: Yes.
Lincoln: Your thoughts on that.
Speaker Change: So thank you I imagine for taking my question and congrats on the solid results.
Speaker Change: So my question is about <unk>.
Speaker Change: How would the management.
Speaker Change: He is the latest generation.
Wenfeng Liu: We invite our CTO, Wenfeng Liu, to answer this question. We are very optimistic about the technological development of AI bringing opportunities to the film industry. We believe that by actively applying this technology, we can greatly improve the efficiency of creation, the level of creation, and decision-making, and that we will play a significant role in content planning, development, production, and promotion. The rapid development of AI technology can allow artists to use it to create more efficient and high-quality works.
Speaker Change: Technology, especially with Sarah.
Speaker Change: The expectation do you happen to be a drama industry as far as Takeda themselves.
Speaker Change: And what's the company's plan.
In terms of the Boston.
Speaker Change: Thank you.
Speaker Change: And so on CPO charm that CPO yogurt.
Speaker Change: Okay.
Speaker Change: Let me invite our CTO went on to answer that question.
Speaker Change: No.
CTO: Well, mostly townhouse, Susan AI, and that's useful Boston D C band throughput without CE <unk> absolute tons on the Xiaomi also though.
CTO: Let's just sourcing.
CTO: And then.
CTO: So a lot of time constants.
CTO: Duties from propositions.
Wenfeng Liu: In particular, we see that the creation and production of AI content that cannot be animated has the opportunity to break the barriers to production that have always been there, which can lead to changes in the industry structure at the level of creativity. We are very bullish on the opportunities that the development of generative AI technology can bring to the long-form video industry and believe that actively applying this technology can significantly enhance creative efficiency and elevate the levels of creation and decision-making. It can also play a very important role in the planning, development, production, and promotion of content. In addition, the rapid advancement of generative AI technology enables artists to use this technology to create higher quality works with greater efficiency.
CTO: And that's useful.
CTO: <unk> lines were down on costs and loss on just one of those will go on the call.
Speaker Change: Handoffs Suzanne.
Speaker Change: So funding looks almost to accumulate a whole ETE in Idaho.
Speaker Change: Appealing to them.
Suzanne: Wanted to see if he chooses.
Suzanne: Yes.
Suzanne: We are very bullish on the opportunities that the development of generated the AI technology can bring to the long form video industry believes that actively.
Suzanne: Our technology can significantly enhance great creative efficiency and elevate the level of creation and decision, making it can also very important growth in the planning development, but production and promotion of content.
Suzanne: In addition, the rapid advancement of generation X analogy enables artists to use this technology to create higher partly due works with greater efficiency. This is particularly true for the creation and production of animated content powered by generators.
Wenfeng Liu: This is particularly true for the creation and production of animated content powered by generative AI, which has the potential to break through the long-standing capacity barriers and drive changes in the industry landscape at creative levels. We have been paying close attention to the latest developments in the voice-over AI industry. We are also working with voice-over AI companies in China and abroad to establish a cooperative relationship and apply the latest voice-over AI technology to the production process of video games. In particular, we will combine large-scale video data from iQIYI with large-scale models to conduct training and micro-adjustments and develop a series of applications for video game industry scenarios.
Suzanne: Which has the potential to breakthrough the lost any capacity barriers and drive changes in the industry landscape at accretive levels.
Speaker Change: Well he does that financial center hung in and see heating hickey when they want it hopefully Suzanne and who can be cool. Thank you.
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Wenfeng Liu: In the future, we will expand our investment in this area of research and development and application and use AI development and comprehensive upgrades to serve iQIYI's smart production system and iQIYI's professional content creation. We have been keeping a close eye on the latest developments in the generative AI industry and actively establishing cooperation with market-leading companies in China and abroad. We are implementing the latest generative AI technologies in the content production process, especially by combining iQIYI's extensive long-form video data with large-language models for training and fine-tuning. Our aim is to develop generative AI-powered vertical applications tailored for long-form video scenarios.
Speaker Change: I know <unk> got out there.
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Speaker Change: Thank you Jamie.
Speaker Change: We have been keeping a close eye on the latest developments user generated AI industry and actively establishing cooperation with market leading companies in China and abroad.
Speaker Change: Lamenting the leanest generate of AI technologies, and the content production process, especially by combining ice's extensive long form videos Tox data with large language models are training and fine tuning. Our aim is to develop the generated power vertical applications tailor for long form video scenarios are going.
Wenfeng Liu: And going forward in the future, we will step up our investment in R&D and the application of generative AI technology. We plan to use this technology to develop and comprehensively upgrade our in-house intelligent production system, thereby empowering the creation of ITE's professional video content., Okay, thank you. Thank you. Next, we have Lei Zhang of Bank of America Security.
Speaker Change: In the future, we will step up our investment in the R&D and application of generator technology want to use this technology.
Speaker Change: And comprehensively update or in how intelligent production systems, thereby empowering the creation of Ice's professional video content.
On the tissue. Thank you.
Speaker Change: Next we have Lei Zhang of Bank of America Securities.
Lei Zhang: Uh-huh Glenn is now on its own hospitals, that's all about T Rowe, but I wanted to do so by email.
Lei Zhang: Hi Management, good evening. Thank you for accepting my question. My question is about the content. We have noticed that in the past 23 years, the content of the entire industry has generally improved, especially some of the exciting content that everyone pays more attention to. And I would like to ask Management, how do you see the overall content competition and iQIYI? How should we maintain the advantage in content in the next 24 years? I will translate it myself. Thank you, Management, for taking my question. We noticed that major players were more focused on the top content last year.
Lei Zhang: Well I'm not going to have somewhat kind of hot yeah. Let me I don't think so it sounded like it was just a bad Bob My uncle, it's helpful. David.
Lei Zhang: I've got one final one.
Lei Zhang: Well I think the phone call.
Lei Zhang: It's about the Amdocs.
Speaker Change: Oh sure.
Speaker Change: Thanks management for taking my question I noticed that the major players are all focusing on the top comp last year.
Here with asking a wheel I'm, calling from a consultation on the house or the way they can purposes in terms of kind of probably a tiny tiny fall. Thank you.
Speaker Change: Yeah.
Speaker Change: Oh sure Yeah. So initially.
Speaker Change: Hum.
Speaker Change: Well in light of our Chief content Officer yourself wafer answered your question.
Speaker Change: Hum.
Speaker Change: I think so.
Speaker Change: So on the GTH in them so the aegis Diana Thank you Sue.
Lei Zhang: Can you share with us your real content competition and how we should stay competitive in terms of content in 2024? Thank you.???? We'll invite our Chief Content Officer to answer this question. Hello everyone, I will answer this question.
Speaker Change: On a P P initiatives yielded renewal.
Speaker Change: For some years PMO.
Speaker Change: The competitive market dynamic is an ever present reality, well, where the ultimate competition, we think light into substantial sustainability of high quality content.
Speaker Change: As well as achieving a balanced and a win win situation in terms of customer quality and also commercial returns.
Speaker Change: And why that's a year, which would be EBIT can do DNA and E notes issued.
Xiaodong Wang: Although there has always been fierce competition in the market, we have always competed for the sustainability of high-quality content supply, as well as the balance of content quality and commercial benefits. The competitive market dynamic is an ever-present reality where the ultimate competition lies in the substantial sustainability of high-quality content supply, as well as achieving a balance and a win-win situation in terms of content quality and also commercial returns. In addition, capital is not the only competitive burden. For iQIYI to continue to lead the industry, there must be an accumulation of talent behind it. In addition, capital is not the only sole barrier to competition.
Speaker Change: She should be hopelessly tied to Chile.
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Speaker Change: Sounds good.
Higgins: Okay Higgins with Dolce.
Higgins: And in addition capital is not the only barrier to competition <unk> ability to maintain and market leading position in the industry is actually under tender.
Higgins: Simulation of talent control of industry resources, and effective content reveal and management mechanism and a support from a business intelligence system.
Higgins: All of which.
Higgins: Indispensable.
Well no.
Higgins: They went public on July one we will be all set.
Higgins: So with the iPhone.
Higgins: Sure.
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Higgins: Dr Schwartz yield hunk eating options in April.
Higgins: Switching pool name or something so hopefully with food or shall we can honey.
Higgins: Our content creation value that uptake is actually focused on three areas first is to produce content with high public recognition.
Xiaodong Wang: iQIYI's ability to maintain a market-leading position in the industry is actually underpinned by the accumulation of talent, control of industry resources, an effective content review, a management mechanism, and support from our business intelligence system, all of which are indispensable. Our core content creation value and goal is First, to be recognized by the public Market return, Sponsored ADR Class A, 3. Continue to pay attention to the efficiency of the content, the quantity of content, and the social impact. Sponsored ADR Class A: In terms of the core drama category, there has been a clear improvement in the quality of our content inventory. As key premium content is critical to maintaining a high competitive edge in the market, we maintain a market-leading level of inventory reserve for premium titles. For the 2024 lineup of our IT Originals and Exclusive Licensed dramas, the premium key titles are expected to account for over 50%.
Higgins: Market trends.
Higgins: Is to create innovative high quality content.
Higgins: As to continuously focus on efficiency and a number of key premium titles and social campaigns.
Higgins: Uh huh.
Higgins: Let's see do farm, yet Neil will be essentially on the <unk> zone.
Higgins: So even with volumes, reaching nearly that one yet.
Speaker Change: Not an option.
Speaker Change: <unk>.
Speaker Change: Nothing yet we want something that's the truth.
Speaker Change: I Hope we will see you named.
Speaker Change: Hopefully some of this will be done.
Speaker Change: Total looser.
Speaker Change: Yeah.
Speaker Change: In terms of the foreign common category there has been a great improvement, although you are content inventory actually.
Speaker Change: Key premium content is critical to maintaining a high competitive edge in the market, we maintain our market leading level inventory, we insert for premium titles.
Speaker Change: 24 lineup of our I T O original and exclusive license from US the premium key titles are expected to account for over 50% and thank you.
Speaker Change: Yes.
Speaker Change: This will conclude today's question and answer session I would now like to turn the conference call back over to management for any closing remarks.
Speaker Change: Thank you everyone for supporting Us and joining the call today and if you have further questions feel free to contact the IR team. Thank you. Thank you so much.
Speaker Change: Yes.
Operator: Thank you. This will conclude today's question and answer session. I will now like to turn the conference call back over to management for any closing remarks. Thank you, everyone, for supporting us and joining the call today. And if you have further questions, feel free to contact our team. Thank you. Thank you, everyone, and we thank you for your time also today. The conference call is now concluded. Again, we thank you all for attending today's presentation. At this time, you may disconnect your lines. Take care. Sponsored ADR Class A Sponsored ADR Class A [inaudible] Sponsored ADR Class A, Thanks for watching!
Speaker Change: And we thank you for your time also today.
Speaker Change: Conference call has now concluded again, we thank you all for attending today's presentation. At this time you may disconnect your lines take care.
Speaker Change: Okay.
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