Q1 2024 Tencent Music Entertainment Group Earnings Call

Operator: After management's remarks, there will be a Q&A, and please be advised that today's call is being recorded. With that, I'm pleased to turn the call over to Cushion, the Executive Chairman of TME Group. Thank you, Millicent.

After management's remarks, there'll be a Q&A and please be advised today's call is being recorded with that I'm pleased to turn the call over to cushion executive chairman of T M cushion.

Cushion: Thank you, Millicent. Hello, everyone, and thank you for joining our call today. 2024 is off to a great start. Strong execution of our dual-engine content and platform strategy is yielding impressive results and driving vitality industry-wide. In the first quarter, the number of music-paying users increased to 113.5 million, propelling 43% of the overall growth in online music revenue. Our high-quality growth strategy also drove a robust net profit margin expansion. Subscriber growth in this quarter significantly exceeded our expectations, reaching a quarterly historic high of $6.8 million net asset. What's more, we maintain the ARPPU at a healthy level.

You Melissa Hello, everyone and thank you for joining our call today.

Melissa: 'twenty 'twenty four is off to a quick start strong execution of our dual engine content and platform strategy is yielding impressive results and pushing vitality industry what in.

Melissa: In the first quarter the number of music paying users increased to $113 5 million profiling, 43% from the openings with Vogue in online music revenues.

Melissa: Our high quality growth strategy also drove a robust net profit margin expansion.

Melissa: Subscriber growth in this quarter significantly exceeded our expectations.

Melissa: Which in a quarterly historic high of $6 8 million net at Wassa.

Melissa: What's more we maintained <unk> at a healthy level.

Cushion: Both achievements demonstrate our keen understanding of users' needs and our knack for anticipating and meeting their demands operationally. As you have seen in our earnings release, supported by our strong fundamentals, we are very pleased to announce an annual cash dividend policy and US$210 million in cash dividends for the year of 2023, on top of our ongoing buyback program. This reflects our confidence in future growth and commitment to sharing our success with shareholders.

Melissa: Bob achievements demonstrate our keen understanding of users' needs and our neck for anticipating and meeting that demand operationally.

As you'll have seen in our earnings release supported by our strong fundamentals.

Melissa: Very pleased to announce and new cash dividend policy and $210 billion in cash dividends for the year of 2023.

Melissa: On top of our ongoing buyback program is to be frac, our confidence in future goal and commitment to sharing our success with shareholders.

Melissa: Next I would like to share an overview of this quarter's content development efforts.

Cushion: Next, I would like to share an overview of this quarter's content development efforts. Through a balanced combination of copyrighted music and original content, we enable users to discover the latest and trendiest content and enjoy a superior experience on our platform. Let me go over a few highlights.

Melissa: Through a balanced combination of copyrighted music and origin low content.

Melissa: We enable users to discover the latest and <unk> content and enjoy a superior experience on our platform.

Let me go over a few highlights.

Melissa: First.

Cushion: First, we renewed and reinforced the partnership with record labels to broaden our music library's comprehensiveness and popularity. Our innovative value-added privileges, features, and promotion services extend far beyond mere licensing, further unlocking the value of music content industry-wide. We renewed our cooperation with Time Function Entertainment and Shilai Function.

Melissa: We renewed and we enforce our partnership with record labels to broaden our music libraries comprehensiveness and popularity.

Our innovative value added <unk> features and promotion services extend far beyond mere licensing further unlocking the value of music content industrywide.

Melissa: We renewed our cooperation with time Cogent entertainment she licensing.

Cushion: Featuring 30-day head start benefits on new songs and adding Dolby Atmos upgrades for popular groups like TFBOYS and Teens in Time. Xi Zhaishan, We also expanded our agreement with HIM International Music, Huayan Guoji, incorporating an industry-first component authorizing TME to use licensed AI features to promote HIM's iconic C-pop content. This will ensure the authentic and responsible use of AI.

Melissa: Featuring 30 day Headstart spend was on new songs and ethane Dolby Atmos upgrades or popular groups like Pf boys and teams in times, she's actually out in time.

Melissa: We also expanded our agreement with <unk> International music <unk>, incorporating an industry first component authorizing <unk> to use licensed that AI feature to promote <unk> iconic CPAP content.

Melissa: This will ensure the authentic and responsibility cabo use of AI.

Cushion: Showcasing TME's commitment to protecting artists' rights and interests in the AIGC era, artists benefit from TME's tech-powered promotions and copyright protection while users enjoy the latest in interactive features, which is a win-win. Yoga Lynch, Lin Youjia, and Wang's new album, Love Lord, are one reason to say, For experiments on our platform, we connected our AI thing, song along feature, and DMV live offline concept, exploring fan interaction within new scenarios. We enriched our K-pop content and related offerings with various artist fan activities, digital albums, and active merchandise for new generation groups like iLit, Babymonster, and Rise.

Melissa: Showcasing <unk> commitment to protecting August <unk> and interest in the Aig's CEO.

Artist benefits from <unk> Tech powered promotions and copyright protection, while users enjoy the latest in interactive features.

Melissa: Which is a win win.

Melissa: Yoga Lynch renew that new album Love Lord One is one reason to set for its power on our platform. We connect our AI sing song alone feature in PNG life offline concepts.

Melissa: Sparing fan interaction within new scenarios.

Melissa: We enriched our K pop content and related offerings with various artists spend activities digital albums and active merchandize for new generation groups like islet baby Monster and life in the first quarter K pop user engagement and streams both grew year over year.

Cushion: In the first quarter, K-pop user engagement and streams both grew year over year. We expanded our original content, and key defense shaders to attract users and enhance engagement. Based on our keen grasp of trends, we delivered an array of hits catering to users' ever-changing tastes. That's called They produced the original soundtracks for hit TV dramas such as The Legend of Sanli, Yu Fengxing, and in Brunswick, Hua Jianling, including 17 songs and 38 scores, featuring top tracks by TME's strategic partner artists such as Jessie, Li Dawei, and Wang Jingwen.

Melissa: Next.

Melissa: We expanded our original content.

Melissa: A key differentiator to attract users and enhance engagement.

Melissa: Based on our key crops of trends, we deliver an array of his catering to users ever changing taste headquarter.

Melissa: They produced the original contract for <unk> TV dramas.

Melissa: The legend of some neat.

Melissa: Promising and in Bromstad.

Melissa: Once I mean, including 17 songs and 30 <unk>.

Melissa: Featuring top tracks by <unk> strategic partner ARCUS, such as Jesse evaluate and wanting one.

Cushion: These catchy OSTs create massive social media buzz that boosts streams and viewership. Their outstanding performance showcases our ability to spot and set content trends while maximizing the value of content. Our OST for The Legend of Saint Li, produced by Tencent Video, also highlights the power of collaboration within the Tencent ecosystem. It smashed records with over 150 million streams within 30 days of release, making it the number one OSD debut so far this year.

These techy osce's create a massive social media buzz that booster streams and real issues.

Melissa: The outstanding performance showcases our ability to spot and set content trends, while maximizing the value of our content.

Melissa: Our OSB for the election of semi produced by Tencent video.

Melissa: Also highlight the power of collaboration within the Tencent ecosystem is smash the rec cost with over 150 million streams within 30 days of relief, making it the number one OSB debut for partnership.

Melissa: We also partnered with strategic assets and indie musicians on user protection and promotion to build our platforms qualities music offering.

Cushion: We have also partnered with strategic artists and indie musicians on music production and promotion to build our performance quality music offering. Our self-produced song, River Flow, by TLA, Yuan Yawei, and What I Anticipate is Not Snow.

Melissa: Our cell phone is a song wafer flow rule by Poa.

Melissa: And what I anticipate is not snow was hit either position yet.

Cushion: by Zhang Miao Ge became the top-rated hit on social media this quarter. Moving on to our commitment to social responsibility, we cooperate with Tencent Charity for the third consecutive year on our theme program to drive autism awareness. If music has a shape, this year, Donna Shih and Xue Kaiqi performed the project's theme song, Do You Understand What's Left of Me?

By John Alcoa became a top writer hits on social media this quarter.

Speaker Change: Moving on to our commitment to social responsibility.

Cushion: More than 60 other renowned actors and groups, including Jay Chou, Zhou Jielun, Shouke Shen, Xue Qixian, and Niu Jin, also share songs and support children with autism. We will then host an art exhibition featuring artwork by children with autism inspired by these musical works. Leveraging multimedia to amplify our caring message and boost music's social value. In conclusion, by expanding content and introducing more tailored platform offers that resonate deeply with users, we continue strengthening our vibrancy to drive industry development.

Speaker Change: And cooperate with Tencent charity or third consecutive year on our <unk> program to drive or to some awareness.

Speaker Change: Most of it has to shape this year due honesty Shanghai performed at the project's theme song do you understand whats left of me since other meeting the Homer.

Speaker Change: More than 60, other renowned actress and books, including <unk> children, So culture, Shoji, San and new genes also share songs and support of children with autism.

Speaker Change: <unk> holds an exhibition featuring artwork by children with autism inspired by these musical works.

Speaker Change: Leveraging multimedia to amplify our caring message and boost music social value.

Speaker Change: In conclusion by expanding content and introducing more tailored platform offers that resonate deeply with users. We continue strengthening our <unk> drive industry development, we are confident that our powerful content and platform do engines and ever deeper.

Cushion: We are confident that our powerful content and platform dual engines and an ever deepening understanding of content will propel our sustainable growth in 2024 and beyond. Now, I would like to turn the call over to Ross for more color on our platform development. Ross, please go ahead.

Speaker Change: <unk> understanding of content renewable power sustainable growth in 2024 and beyond.

Speaker Change: Now I would like to turn the call over to Ralph for more color on our platform development.

Please go ahead.

Ralph: Hello, everyone.

Ross: Strong execution, once again, resulted in solid online music growth. Recall the highest number of subscribers.

Ralph: Strong execution once again resulted in solid online music growth.

Ralph: Recall the high neither subscribe our eyes.

Ross: SIDI, ARPPU, and Healthy MLs all reflect this robust performance, our efforts to attract and retain users being the driving force behind it. Utilizing our extensive industry experience and peerless insights into users and content, we are laser-focused on anticipating and meeting users' needs with enhanced experiences and trendy musical journeys. First, I want to talk about user retention. We have taken a multi-pronged approach to engaging users through constant innovation of trend-setting filters. I will walk you through a few examples.

Ralph: <unk> <unk> and <unk> all reflect this robust performance.

Ralph: Our efforts to attract and retain users where are the driving force behind it.

Ralph: Realizing our extensive industry experience and the Paradise insights into users and content.

Ralph: Laser focus on anticipating and meeting users' needs basically enhance the experience and the.

Ralph: 10 million tons annually they call journeys.

Speaker Change: First I want to talk about that user retention.

Speaker Change: I would take a multi pronged approach to engaging users through constant innovation of China <unk> fantastic.

Speaker Change: Walk you through a few examples.

Speaker Change: Our new AI applications make a music discovery more fab engaging and covenant in.

Ross: Our new AIGC applications make music discovery more fun, engaging, and convenient. In the first quarter, we launched a large audio model that increases promotion accuracy, helping users discover more high-quality music content. Initial results showed that streaming share of promoted songs increased notably following the model's release. We also tested an AI system that supports text and voice tracking for a more customized search experience, as well as an AI playlist assistant to curate playlists, a key personal music site that strengthens users' techniques.

In the first quarter we.

Speaker Change: We launched a large audio model that increases promotion accuracy hurricanes.

Speaker Change: European Yosef discovery more high quality content.

Speaker Change: And you saw a soft shop less streaming share of promo. This fall increase not all following the model's release.

We also tested on AI.

Speaker Change: Tenant that has a pulse texts and OIS trading for a more customized search experiences.

Speaker Change: As well as our AI playlist assess tender to kill rate play list.

Speaker Change: Key personnel.

Speaker Change: Our sites that are strengthen user's thickness.

Speaker Change: Recently, we introduced <unk> reward rewards program users can exchange the ponds they earn for benefits such as trail subsequent Shan digital iphones and personalized privileges.

Ross: Recently, we introduced an interactive reward program. Users can exchange the points they earn for benefits such as child subscription, digital albums, and personalized privileges, while enhancing user experience. The program also opens new avenues for commercialization for the future. Ongoing platform upgrades continue to reinforce our product appeal. This quarter, we introduced a light listening mode, Shengyou Mudai Moshi, to facilitate a smooth listening experience in a low bandwidth environment.

We are enhancing user experience.

Speaker Change: The program also opens new avenues for commercialization for the future.

Ongoing platform upgrades continue to reinforce our protest appear.

Speaker Change: This quarter, we introduced our light listening mode, Shanghai O'meara moisture portfolio facilitated our smallest listening experience in law bandwidth environments.

Ross: Our enhancements allowing greater interface customization are driving increased user adoption of our platform's players. Beyond the Listening Experience, users may captivate users with a variety of interactive activities, including the same The Song Guys contest, subscriber badges, and more. These interactive filters not only boosted strong streaming volumes but also boosted more artists' follows and additions to favorites. As users' personal music assets on our platform grow, so does their loyalty to TME. Moving now to User Acquisition.

Speaker Change: Our enhancements, allowing greater interface customer validation are driving increased user adoption of our platform players.

Beyond the other thing is currency.

Speaker Change: Capital Limited Youll first with a variety of interactive activities, including <unk> gas Comcast subs.

Speaker Change: Fiber projects in the mall.

Speaker Change: This interactive filters not only posted a song streaming volumes, but also possibly the more artists the falloff.

Speaker Change: Patients two favorites.

Speaker Change: I see all service personnel music aside our platform girl sought after her loyalty to Tammy.

Speaker Change: Moving on now to user acquisition.

Ross: Our focus here is on discovering and cultivating users with long-term paying potential through refined marketing and operations, joining Chinese New Year. Riding on the favorable seasonality, we utilize our deep understanding of users across various demographics to roll out a series of effective promotion activities. Our targeted multi-channel promotions with e-commerce, telecom operators, and long-form video platforms contributed to a stronger-than-expected subscriber growth in the first quarter.

Speaker Change: Our focus here is on the screen and cultivating users with long term paying potential through a fan marketing under operations.

Speaker Change: During the Chinese new year.

Speaker Change: Riding on the failure of the ball seasonality.

Speaker Change: We utilized our deep understanding of users across virus demographics to roll out a series of effective promotion activities.

Speaker Change: Our targeted multichannel promotions with E Commerce telecom operators and the long form video platforms contributed to a stronger than expected to subscriber growth in the first quarter.

Speaker Change: Okay.

Ross: They also teamed up with all the auto companies to launch holiday-themed playlists and common share promotions. This organically broadened our reach to new users and increased user activity, contributing positively to the sequential MAU recovery in our online music services. On partnerships, we recently formed a pre-installation partnership with Xiaomi Suqi. We also enhanced our collaboration with rideshare leader Cao Cao Chuxing. Our new self-service Real Estate Music Selection filter offers ride-share passengers an easy way to navigate music consumption, further extending our reach.

They also came up with all the auto companies for launch holiday same the playlist and common share promotions.

Speaker Change: This all clinically.

Broadened our reach to new users and increase the user activity.

Speaker Change: Contributing positively to our sequential <unk> repower.

Speaker Change: The online music services.

Speaker Change: Yeah.

Speaker Change: Our partnerships with recently for forgone pre installation partnership with Xiaomi Sushi.

Hence our collaborations with Ryder Saturday either total twitching.

Speaker Change: Our new self service, rather say that music selection filters.

Speaker Change: Rather say our passengers are easy to navigate that music consumption further extending our reach.

Speaker Change: Or trying to signing a new QQ music at Amphenol Ross <unk> at the amongst ambien for the first time, including online and offline offerings.

Ross: I was trying to sightsee a new QQ Music Dianfeng Awards, QQ Music Dianfeng Shengdian, for the first time, included online more offline offerings, participation in interactive online filters, rewarded fans with tickets to artists' meet and greets, Great Grace, Artist Merchant Merchandise, and more.

Participation in interactive online filters rewarded our fans with tickets for artists that meet and.

Great Chris artist Matan, modernize and a more.

Shirley: Thanks to a lineup of popular artists and inspired performances, this event reinforces our appeal among our core young user base, which is, however, is short. Our rich content and unparalleled product offerings continue to fuel users' acquisition and engagement. With users' needs at the heart of everything we do, we remain committed to creating a music platform that users cherish. With that, I will turn the call over to Shirley, our CFO, for a deep dive into our financials.

Speaker Change: Thanks to our lineup of popular artists on the inspire the provenance.

Speaker Change: This event reinforced or appear among our core young user base.

Speaker Change: In sharp.

Speaker Change: Our rich content.

Speaker Change: Parallel product offerings continue to fail user access.

Speaker Change: <unk> and the engagement.

Whereas the author is either the heart of everything we do.

Speaker Change: We remain committed to creating a music platform that <unk> tariffs.

Speaker Change: With that I will turn the call over to Sherri, our CFO for a deep dive into our financials.

Shirley: Thank you, Ross, and greetings to everyone. I will now turn to our financial results. Our success in effective monetization for musical services and operational efficiency management continued to need to bolster financial results in the first quarter of 2024. RFI's net profit increased by 28% year-over-year to RMB 1.5 billion, and non-RFI's net profit rose by 24% to RMB 1.8 billion. Our total revenues were RMB6.8 billion, down by 3% year-over-year.

Sherri: Thank you Ross and greetings to everyone.

Sherri: Now turning to our financial results our success in fact monetization for medical services and operational management.

Sherri: Management continues to need to sit down with the national results in the first quarter of 2024.

Sherri: Net profit increased.

Sherri: Okay.

Sherri: Yes.

Sherri: <unk>, one <unk> 5 billion.

Sherri: And now that net profit rose by 24% to Andy 1.8, beginning.

Sherri: Our total revenues were RMB six eight.

Tank painting.

Sherri: <unk> say percent linear.

Shirley: Our online music services achieved significant revenue growth, which largely offset the decline in revenue from social entertainment and other services. In the first quarter of 2024, our online music revenues increased by 43% to RMB 5 billion on a year-over-year basis. This surge was driven by the strong expansion of our music subscription and growth in our advertising business, supplemented by an increase in revenues from offline performances. Music subscription revenues in the first quarter reached RMB3.6 billion, marking a 39% increase year-over-year and a 6% rise sequentially.

Sherri: Our online surveys is a children's techniques can examine grows which largely offset the decline in revenues from social entertainment and other services.

Sherri: In the first quarter of 2024.

Sherri: Our online mix revenues increased by 43% to RMB 5 billion on a year over year basis.

Sherri: Search was a dry land and expansion of our musical stops practicing and the growth in advertising business.

Sherri: Supplemented by an increase in revenues from offline performed nicely.

Sherri: Music subscription revenues in the first quarter reached RMB stream, playing mistakes, meaning marking our 39% increase year over year and 6% rise sequentially.

Shirley: Our refined operations and effective pricing strategy enabled us to achieve higher-than-expected growth in music subscribers while maintaining a healthy monthly ARPPU. Monthly ARPPU was 10.6, up from 9.2 in the same period last year. Taking the difference in the number of days into consideration, our monthly ARPPU would have remained relatively stable sequentially.

Sherri: Our refining operation and effecting pricing, Jackie and never asked her to higher than expected growth in military subscribers, well maintain our highest monthly atropine.

Sherri: Monthly atropine with a 10 point mistakes after frontline two <unk> last year.

Sherri: Making the difference in number of days into consideration our Montney apps, you have mentioned the nature of its stable sequentially.

Sherri: Columba online music paying users well 100 and.

Shirley: The number of online music paying users was 100,000 or 13.5 million, representing a 20% increase year-over-year and a record-breaking quarterly net ad revenue of 6.8 million users. Our enriched content offerings and enhanced member privileges, such as Doobie and Atmos upgrades, have made our products more attractive and improved user stickiness. Advertising revenue also had strong year-over-year growth, primarily due to the growth in ad-supported advertising. We upgraded our incentive ads, experience, and provided more attractive interactive features to our users, which helped the improvement in entry rates.

Sherri: 13 point defined meaning you print and 20.

20% increase year over year.

Sherri: Record breaking quarterly net adds of six eight meaning you assess.

Our enriched our content offerings and enhanced our member prevalent cases, such as Dolby Atmos upgrades have made our products more attracting and improve user stickiness.

Sherri: The attracting revenue also had a strong year over year growth, primarily due to the growth and supported by the way.

Sherri: Typing.

Sherri: <unk> upgraded our essential.

At CRH and provide more attractive and active build trust to our users.

Sherri: I hope that the improvement in and transfer rate.

Shirley: We continue to innovate and diversify our product suite and advertising format. Social Entertainment Services and other revenues will be 1.8 billion, down by 15%, year-over-year. This was mainly due to adjustments in certain live streaming interactive functions and more stringent compliance procedures as well as the implementation of several service enhancement and risk control measures since the second quarter of 2023. As these adjustments and the procedures are largely completed, we expect our social entertainment services to remain relatively stable.

Sherri: They continue to innovate and diversify our product suite and advertising format.

Sherri: So and 10 managed services and other revenues were RMB, one 8 billion down by <unk>, 15%.

Sherri: Year over year. This was mainly due to adjustments in certain lag streaming in acting function and more stringent accompany items per se trust isolated implementing them.

Sherri: Several service enhancement and at risk of cultural megawatts since the second quarter of 2023.

Sherri: These adjustments and of course, they chose Atlanta The company take May expect our social and 10 minutes msas to remain stable.

Stable.

Shirley: Our Growth Margin for Q1 reached 40.9%, marking an increase of 7.8 percentage points year-over-year due to a few factors. First, growth of revenues in online music subscriptions and advertising has generated the benefits of economies of scale. Over the years, we have made significant efforts and investments in the music industry and have built win-win relationships with labels and audiences. And now, these efforts and investments are starting to bear fruit.

Sherri: Our gross margin for Q1 reached 49%.

Sherri: Marketing an increase of seven point, a present to entry point year over year due to a few factors.

Sherri: Foster.

Sherri: Gross revenues in online music subscription and advertising has generated a benefit of economics of scale.

And yes, we have made a significant effort and investments in the Utica in touch and haven't built Leeming limited shapes.

Sherri: Both in auto.

And now these efforts and the investment that's the bearing fruit.

Shirley: Additionally, the ramping up of our own content continued to impact our margin favorably. Lastly, we have optimized the revenue-sharing ratio for live streaming and also improved monetization in raising membership and advertising, which also benefits our gross margin. All of our factors have collectively enabled us to move to a healthy margin model.

Additionally, the ramping up of our own content continued to impact our margins favorably.

Sherri: Lastly, we have optimized grabbing no sharing ratio or lack screening and also improve the monetization Macy's membership and advertising.

Sherri: Also benefit our gross margin.

We're about back half collectively enable us to move through.

Sherri: Macro model.

Sherri: Moving onto operating expenses.

Shirley: Moving on to operating expenses, in the first quarter of 2024, they amounted to RMB 1.1 billion, representing 16.8% of our total revenues compared with 70.5% in the same period last year. Selling and marketing expenses were RMB187 million, down by 12% year-over-year. We will continue to spend in areas such as online music with a long-term growth perspective, as well as content promotion. General and administrative expenses will be $949 million, down by 10% year-over-year, primarily driven by lower employee relations.

Sherri: In the first quarter of 2024, they amounted to RMB, one 1 billion representing 16.8% of.

Sherri: Our total revenues compared with 75% in the same period last year.

Sherri: Selling and marketing expenses were RMB 187, meaning <unk> perfect yeah over here.

Sherri: We will continue to spend in areas such as online music with long term growth perspective, as well as content promotions.

Sherri: General and administrative expenses were RMB 949 million.

Some banks, 10% year over year.

Sherri: Primarily driven by lower employee related expenses.

Shirley: Our effective tax rate for Q1 was 19.9%, compared to 12.2% in the same period of 2023. This increase was primarily attributable to the accrual of withholding tax of RMB 107 million related to earnings to be remitted by our PRC subsidiaries to offshore entities. Additionally, changes in preferential tax rates for certain entities also impacted our effective tax rate...

Sherri: Our effective tax rate for Q1 was 19, 9%.

Sherri: Compared to two 2% in the same period of 2023.

Sherri: This increase.

Sherri: It was primarily attributable to the accrual of withholding tax of RMB 100, and the same are meeting related to earnings and make it our PRC subsidiary to offshore entity.

Sherri: Additionally changes.

Sherri: Corporation tax rate closer to entertain also impacted our effective tax rate.

For Q1, 2024 hour net profit and net profit attributable to equity holders of the company, while RMB, one 5 billion and RMB, one 4 billion respectively.

Shirley: For Q1 2024, our net profit and net profit attributable to equity holders of the company will be RMB 1.5 billion and RMB 1.4 billion respectively. Non-office non-profit and non-office non-profit attributable to active holders of the company will earn RMB 1.8 billion and RMB 1.7 billion respectively. Our diluted earnings for ADS reached a record high this quarter at RMB0.91, up 25% year-over-year. Non-RFS diluted earnings for ADS increased to RMB1.1, up 23% year-over-year.

Sherri: Non <unk> net profit and loss line.

Sherri: Atlanta perfectly to attributable to active corridor of the company while on the one 8 billion.

One point of 17.

Sherri: Tony.

Sherri: Our diluted earnings per ads reached a record high this quarter at RMB <unk> nine one up 25% year over year.

Sherri: Diluted earnings per ads increased to RMB 1.1.

Sherri: Up 23% year over year.

Shirley: This result underscores our robust financial performance, enhanced operating efficiency, and the beneficial impact of our share repurchase program. As of March 31st of 2024, our combined balances of cash equivalents and term deposits were RMB 34.2 billion, as compared with RMB 32.2 billion as of December 31st of 2023. This combined balance was also affected by changes in the exchange rate of RMB to USD at different balance sheet dates.

Sherri: These results.

Sherri: Underscored our robust financial performance enhanced operating efficiencies and the beneficial impact of outlets you repurchased program.

As of March 31, 2024 hour combined balances of cash cash equivalents and term deposits were RMB $34 2 billion.

Sherri: As compared with RMB 32.2 billion as of December 31st 2023.

Sherri: This combined balance was also affected by changes in exchange rate of RMB to USD at deeper in the balance sheet updates.

Shirley: As part of the share repurchase program announced in March 2023, as of March 31, 2024, we had repurchased 32.2 million ADEs from the open market for a total cash consideration of US$235.5 million, of which approximately US$61 million were repurchased in the first quarter. Looking forward, we will continue to invest in high-quality content and original content production, as well as new products and technologies such as AIGC. We remain confident in the prospects of the music industry and our music production and advertising business. This concludes our prepared remarks. We are now open to taking your questions.

Sherri: And the share repurchase program announced in March 2023 as of March 31, 2024, we had repurchased 32 appointed two meaning a data from the open market for a total cash consideration of U S. Dollar 235 5 million.

Sherri: Of which approximately U S. Dollar 16, one meaning what we repurchased in the first quarter.

Sherri: Looking forward, we will continue to invest in high quality content, and Orange and accounting of protection as well as new products and technologies such as Aig's team later in May and competent in the spa.

Sherri: <unk> of milk industry, and our mills up question and I know it hasnt been leased.

Speaker Change: This concludes our prepared remarks.

Speaker Change: Now open to taking your questions.

Operator: Thank you, Shirley. If you are dialing in by phone, please press 5 to ask a question and then 6 to unmute yourself. If you are accessing from the Tencent Music or Vogue Music application, please click the Resend button at the bottom left. For the benefit of all participants on today's call, please limit yourself to one question, and if you have an additional one, please re-enter. If you ask your questions in Chinese, please repeat them in English. And the first question comes from the line of Alicia Yap from Citigroup. Alicia, please.

Thank you Shelly if you had not only impact Oh. These price fight a quick question and then six to 10 years.

Speaker Change: Actually I think from the Tencent paint.

Speaker Change: And application.

Speaker Change: Resend button.

Speaker Change: At the bottom right.

Speaker Change: But the benefit of all participants on today's call. Please limit yourself to one question and if you had additional one please reenter if you ask your questions in Chinese please repeat in English and our first question comes from the line of Alicia Yapp from Citigroup Alicia.

Hi, Thank you management.

Alicia Yap: Hi, thank you, Madison. Good evening, management. Thanks for taking my questions. Congratulations on solid results. I'm going to ask you questions in Chinese first, and I will translate myself.

Hey management, Thanks for taking my questions congratulations on solid results.

I think Chinese bus and I'll translate myself.

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Speaker Change: <unk> intended sheesh higher Arpus Ashish at Yahoo.

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Speaker Change: <unk> Oh my God.

Speaker Change: G E.

Speaker Change: Questions.

Speaker Change: For 2024 outlook. So after achieving strong set of offerings now, especially high quantity.

Speaker Change: What should we be expecting but theyre not off trend for the second quarter and also the <unk> trend for the second quarter and also the rest of the year and any comment on the overall growth rate expectation for the total online revenue. Thank you.

Alicia Yap: [inaudible]

Okay. Thank you so much Alicia for your questions and.

Speaker Change: For the full year of 2020 for our online music subscription revenue are well on track and the profitability is also expected to be slightly better than the PTC anticipated. So the subscription side I think that we are pleased to see that to Q1. The net says really quickly accessing our our expectation.

Alicia Yap: My question is for the 2024 Outlook, so after achieving strong

Alicia Yap: that have been involved, especially with a record high quarterly net ad revenue. What should we be expecting?

Alicia Yap: for the NET Act trend for the second quarter and also the ARPPU trend for the second quarter and also the rest of the year. And any comment on the overall growth rate expectation for total online music revenue?

Speaker Change: So we will keep us a really strong start for this year and therefore, we are cognizant that the total net F for the 2104 will exceed our initial projections and indicating.

Unknown Executive: Okay, thank you so much, Alicia, for your questions, and for the full year of 2024, our online music and subscription revenue is well on track, and the profitability is also expected to be slightly better than previously anticipated. So for the subscription side, I think that we are pleased to see that in Q1, the net S is really quickly exceeding our expectations. So it really gives us a really strong start for this year.

Unknown Executive: And therefore, we are confident that the total net S for 2024 will exceed our initial projections and indicate to be a total greater than the year of 2022 and yet slightly slower than last year, which is 2023. But on the other hand, we remain really committed to a healthy long-term future of our business. So on the full-year ARPPU side, we expect it to continue to expand year-over-year, although at the moment, I think it will have a more modest growth rate compared to 2023.

Speaker Change: <unk> total greater than the year of 2022, and yes slightly slower.

Speaker Change: And last year, which is trying to transitory, but on the other hand, we remain really committed in our healthy long term growth of our business. So on a full year Arpus side, we expect to continue to expand year over year, although at the moment I think more modest low grade <unk>.

Speaker Change: <unk> two <unk> hundred 20 fleet and to recap I think the last year's rapid year over year growth.

Unknown Executive: And to recap, I think the last year's rapid year-over-year growth was primarily due to the scale back of the discounts. So based on last year's healthy ARPPU level and benefits of some of the operational optimization to be introduced throughout this year, we expect slightly higher ARPPU growth in the second half of this year when compared to the first half. However, we will remain unchanged and confident in the long-term ARPPU expansion potential, supported by our experience in user education and also a variety of operational strategies.

It was primarily due to the scale back of the discounts. So based on the last year, a healthy <unk> and benefits of some of the operational optimization to be introducing <unk>. This year, we expect a slightly <unk> globe in the second half of this year.

Speaker Change: When competitiveness first half.

Speaker Change: However, we remained unchanged and confident in long term <unk> expansion potential supported by our experience in uses education and also a variety of operational strategies.

Unknown Executive: A couple of points that I would like to add are that we have a valid and effective Q1 to add, which is primarily due to a couple of reasons. First of all, I think Q1 is typically the peak season for the entire year, especially due to the Chinese New Year.

Speaker Change: A couple of points that I would like to add there should be we have the.

Speaker Change: Better than expected Q1 to ask which is primarily really due to a couple of reasons first of all I think Q1 is typically the peak season for them high year, especially due to the Chinese new year. So as use are more willing to pay for the entertainment and secondly, we are also mixed.

Unknown Executive: So users are more willing to pay for entertainment. And secondly, we are also expanding effective promotional activities, which attract more high-potential users. So we do multi-channel promotions across different areas, and we significantly drive good growth in our user base. But I think that... As we communicate and see in the 2023 patent, I think rolling off the strong seasonality, the Net S should return to more normalized and sustainable levels over the next few quarters.

Speaker Change: Spending.

Effective promotional activities, which attract more high potential users. So we've food a multichannel as promotions across different areas and we will.

Speaker Change: Significantly drive good growth of our user base, but I think that.

Speaker Change: As we communicated in Athene and the 20th anniversary patent I think rolling off a strong seasonality the net as should return to more normalized and sustainable levels over the next few quarters. So besides us for peripheral business I think that for the non subscription business. You also had a strong start in Q1 this year.

Unknown Executive: So besides the subscription business, I think that for the non-subscription business, we also had a strong start in Q1 this year, and we expect growth to be solid in the remainder of this year as we continue to innovate the advertising products and expand the merchandise sales with labels and others.

Speaker Change: And we expect growth to be solid in the remainder of this year as we continue to innovate.

Speaker Change: The advertising products and expand the merchandise sales with labels and artists as well.

Speaker Change: Thank you. The next question comes from the line of Alex Poon from Morgan Stanley.

Alex Poon: Thank you. The next question comes from the line of Alex Poon from Morgan Stanley.

Alex Poon: Congratulations, management, on a very strong quarter. My question is related to growth margin. In Q1, while we had negative seasonality for both advertising and social entertainment, we still expanded growth margin significantly sequentially from 38% to almost 41%. Can management share how the revenue and cost structure have changed on a sequential basis, and how should we think about growth margin in the rest of 2024? Thank you very much.

Congratulation management on very strong quarter.

Alex Poon: My question is related to gross margin.

Alex Poon: We in Q1, while we have negative seasonality for both advertising and social entertainment, we still expanded gross margins significantly sequentially from 38 to four almost 41%.

Alex Poon: Can management share how the revenue and cost structure has changed on sequential basis, and how should we think about gross margin in rest of 2024.

Thank you very much.

Thanks for taking my hometown once you have that.

Unknown Executive: Congratulations on achieving a very strong business performance level in the first quarter. My question is related to the interest rate. In the first quarter, we can see that, from a seasonal perspective, advertising and social entertainment businesses, as well as related services, have seen a negative increase, but the interest rate has still achieved a significant increase, from 38% to nearly 41%. Can you please help me to distinguish the current income and cost structure, including how we should look at the trend of full-time photography this year? Thank you.

Alex Poon: I think people should know that the contract.

Speaker Change: What are you going to ship.

Speaker Change: I think it came out.

Speaker Change: So we've got some integration costs.

Speaker Change: So I'll shut up.

Speaker Change: It's about for some time that fourth shift towards a helpful from.

Speaker Change: As a reminder.

Speaker Change: You can't go back and just think about.

Speaker Change:

Speaker Change: Catherine.

Okay.

Speaker Change: Yeah, It's Michael and his guys, who are kind of acting in Shanghai change Patricia.

Speaker Change: Patricia.

Speaker Change: Okay.

Uh huh.

Speaker Change: Gross margin can support point of 9% in Q1.

Speaker Change: Yes.

Unknown Executive: Thank you. It increased by 7.8% year-over-year and increased 2.6% quarter-over-quarter. There are several reasons, as follows.

Speaker Change: Increased by seven 8% year over year.

Speaker Change: An increase of 2.6 quarter over quarter.

Unknown Executive: The first is that music subscription revenues and advertising revenues have shown significant growth. Second, we have made significant efforts and investments in the music industry and have built win-win relationships with labels and artists. Additionally, we focused on ROC to manage content costs more efficiently. Our online music revenue growth ratio was higher than the net growth ratio of content costs. And third, we gradually ramp up our self-owned content, which has a positive impact on our growth margin.

Speaker Change: There are several reasons as palace there.

Speaker Change: First music subscription revenues and advertising revenues harvests, taking them from the growth.

Speaker Change: Second we have made a significant efforts and the investments in the milk industry and have built a lingering in the newspapers with labels and artists. Additionally, we're focused on our CE to manager content costs more efficiently.

Speaker Change: Our online news cause revenues to gross ratio was higher than that gross ratio of content cost.

Speaker Change: And third we gradually ramp up our self owned content, which is a positive impact on our gross margin.

Unknown Executive: And fourth, even the live-streaming revenue decreased. Therefore, we optimized the live-streaming revenue sharing strategy. The live-streaming revenue sharing ratio decreased, and the VIP revenue and the advertisement revenue on WeChat platform increased, all to our benefit, our growth margin. Our growth margin has improved for eight consecutive quarters. Looking forward to Q2, we expect subscription revenue and advertisement revenue will continue to be healthy growth. On the cost side, we expect our in-house-made content will have a positive impact on growth margins consistently, and we will continue to increase our operational efficiency and monitor each cost item for our model. We expect our growth margin will be increased in Q2 continually, and looking forward to the second half of 2024, we expect our growth margin will also be increased.

Speaker Change: And of course, even the lifestream revenue decrease like Optima.

Speaker Change: Optimize the life streaming revenue sharing and strategic the laminates dreaming revenue sharing ratio decrease and the web revenue.

Speaker Change: Revenue and the advertisement revenue on leasing platform increased all about a benefit our gross margin.

Speaker Change: Our gross margin has improved for eighth consecutive quarter.

Speaker Change: Looking forward to Q2, we expect subscription revenue and the advertisement revenue will continue to be healthy growth on the costs that we expect our in house made content.

Speaker Change: Positive impact on gross margin continue on it and we will continue to increase our operational expenses and monitor each across the iconic honestly model links back to our gross margin will be increased in Q2, we're continually and a look forward in the.

Speaker Change: Second half of 2020 for the <unk> hour.

Speaker Change: We expect our gross margin will be more subtle.

Lincoln Kong: Thank you. And the next question comes from Goldman Sachs, Lincoln Kong. Lincoln, please.

Speaker Change: Thank you and the next question comes from Goldman Sachs Lincoln Lincoln. Please.

Speaker Change: Okay.

Lincoln Kong: Thank you, management, for taking my question. So congrats on that very strong order. So my question is about online music services, specifically advertising. Could management comment on what we have seen in terms of advertising in the first quarter and into the second quarter, and by the different formats? So what is the sort of new advertising format companies are thinking of implementing, and any of the trends of those sponsorship ads or premium member ads?

Goldman Sachs: Thank you management for taking my question and congrats on another very strong quarter.

Speaker Change: Most of my questions Scott.

Speaker Change: The online music services, specifically out of pricing.

So could management comment.

Scott: So what you see in terms of out of box and combined first quarter and into the second quarter.

Scott: Yes.

I had a different format what are the new advertising format company.

Company I, thank him to implement.

Scott: Any help to advance of those sponsors can ship has a premium member.

Unknown Executive: It's a nice one to share. Thank you.

Scott: Remember back.

Speaker Change: Sure. Thank you.

Unknown Executive: Thank you very much. Thank you, Management Team.

Speaker Change: Okay. Thank you everyone for your.

Unknown Executive: My question is about the issue of renewable energy services, especially advertising. Can you briefly introduce it to me? In the first quarter and the second quarter, we can see the progress of advertising-related business. What is the trend? Are there any new ways of doing business? How does the company respond to these new ways, and what measures have been taken? And what are the new development trends seen in the advertising industry so far, including the progress of advertising services?

Speaker Change: A bunch of manufacturing we are forever.

So about 18 months.

Speaker Change: Excellent.

Speaker Change: Okay.

Speaker Change: I mean.

Speaker Change: Shifting from that actually it just wasn't enough extra competition.

Speaker Change: Uh huh.

Speaker Change: Sure.

Speaker Change: Thank you Keith.

Keith: That's for sure.

Okay.

Keith: Yeah.

Keith: [noise] Gugel Honeywell thing is for sure.

Unknown Executive: In terms of advertising, first of all, QE and... (inaudible)

Keith: Triangle Culiacan.

Keith: So there'll be a lot harder some gum around QR economically.

Keith: TJ in Q2, Q3 and in Germany, it's future.

Yeah.

Unknown Executive: Thank you very much. Thanks for your question. Indeed, for the advertising studies in Q1, we have a very strong grip, and I think in Q2, we're going to maintain such a strong grip.

Speaker Change: Thank you very much. Thanks for your question indeed that advertisement can do what we.

Speaker Change: We have a very strong bench and I think in Q2, let me to maintain such a strong branch.

Unknown Executive: As the number of members increases, the main challenge comes from the flow of non-members.

Speaker Change: Let me reiterate a clear answer the phone 20 minutes of auto charge likely.

Speaker Change: Unable from the Doj on the.

Speaker Change: The one in New York.

Unknown Executive: You know that we are not expanding our subscriber base, but I think the key challenge for advertising is how we are going to leverage the traffic of non-subscribers.

Speaker Change: So not that we're not extending our stock buyback.

Speaker Change: But I think a key challenge for advertising.

Speaker Change: And how that can affect that.

Speaker Change: Traffic nonstop.

Unknown Executive: So, in this case, the traffic that can be used has decreased because the membership has increased, so we still have to continue to optimize the solution for advertisers and use more attractive rights to assist traffic operations.

Speaker Change: So you decided on some of our shorter crazy only early order on pensions I shall I tell them that they got Cheung shop.

Speaker Change: So on the hydro geothermal you walk a five gigawatt hardware that you're you're fine.

Speaker Change: We continue to see an leader change LIFO rule around the green.

Unknown Executive: You can say that we see the traffic from non-subscribers continue to go down because we are now having more subscribers. That is a reason for us to continue to optimize the solution we provided to the advertisers and make sure we can also provide a very attractive interest package to continue to operate and optimize the traffic operation.

Speaker Change: So I can't say that we see that traffic from the non subscribers continue to go down because we are now having more top Spanish that is a range of for US we're going to continue to optimize distribution, we provided us with advertisers and making sure. We can also provide a fairly attractive.

Speaker Change: As a package to continue to operate and optimize the traffic operation.

Unknown Executive: Since last year, our advertising business has been doing well, and we expect to see a steady increase this year.

Speaker Change: They treat element from Shanghai to Omega, Ohio issue, though you'll be all but one will be sharing at all you're seeing on generic <unk>.

Speaker Change: Should be all the agenda, it's onshore.

Unknown Executive: In the first quarter, we mainly contributed to the sales of e-commerce, video games, and content information. We also contributed to the spring and autumn of e-commerce at the beginning of the year, so we mainly saw an increase in the number of e-commerce advertisers.

Speaker Change: We utilized one or two arches, BR Changsha Xian, Dan Schlanger Yoshi go nutrition.

Speaker Change: Quite a shelf on me and the Honeywell module shipment to our circle media Iot sure. So unions with Ebola intent on us when you Don School.

Speaker Change: So you want me on Saturday went to all high kind of audience, how neighborhood of autozone out of elimination.

Unknown Executive: We can say that at the start of the year 2023, we already registered a very good performance regarding the advertisement business. Well, regarding what we're going to do this year, I think this year we're also going to maintain a very stable growth in the advertisement business. At least from what I can see from Q1 of this year, we have very strong growth. Especially, we have key revenue contributors coming from e-commerce, the gaming industry, content information, and the fast consumption industry.

Speaker Change: Okay. So you've got to start from the idea of trying to consciously we're already registered a vertical peppermint shake out on the advertisement.

Speaker Change: We've got a lot of automotive tier one AC I think for Nokia and what's coming to Manhattan real estate.

Stable grants for the advertisement.

Speaker Change: At least from what I can see from Q4 Q1.

Yeah, we have a very strong grass, especially we have the key revenue contributors coming from the E Commerce Adobe industry, our content information and to foster consumption, I think upstream and especially due to that we are launching.

Unknown Executive: And especially due to e-commerce, they are launching large-scale promotional activities during the new Chinese year. So we are happy to say that in Q1 of this year, we also had very good growth coming from the e-commerce channel regarding advertisements.

Speaker Change: Non she cannot scale promotional activity.

New Chinese yet so we're optimistic that in Q1 of this year. We also have a very good grasp coming from the E Commerce channel regarding the advertisement.

Unknown Executive: As for Q2, a more important node is 618. In the case of 618, we also want to serve the e-commerce industry better. We hope to achieve a better growth trend than last year on this important e-commerce node. At the same time, we have actually set up a relatively rich advertising model for these e-commerce advertisers.

Speaker Change: So I think you are right.

Speaker Change: And <unk> see that.

Speaker Change: Shimon.

Speaker Change: <unk> got to Harden shoe food Hall, Samsung table table Nonvolatile angle assurance.

Speaker Change: I am totally honest and transparent you announced your WGNA Kahala turned out and Tricia I want my Pennsylvania to GDS founder.

They go under huge trailer bill often for the Washington.

Unknown Executive: Well, talking about Q2 of 2024, I think the key event we're going to have in Q2 would be the 680 Shopping Festival Online. In that way, we're going to leverage this great occasion to serve our e-commerce advertisers because we hope that by serving them, we will be able to have better growth compared with last year. And we also prepared many good solutions in order to continue to serve the e-commerce advertisers.

Speaker Change: Well I'm talking about the Q2 of Pennsylvania pool, I think the key is and we're going to have to would be the 618 shopping festival online and that's where we're working to leverage this great occasion, Pittsburgh at E Commerce advertisers, because we hope that by studying that will not be able to handle that fabric crouse comparator rate locked.

Speaker Change: Yes.

We also prepared with that good federal changed and audits are consuming the e-commerce advertisers.

Speaker Change: Therefore.

Unknown Executive: In addition to this, we also rely on TME's rich music ecosystem. We have also completed a more diversified advertising model and a more innovative advertising model.

Speaker Change: I'm thinking you probably didn't want me to I mean, if at all from them for some time.

Speaker Change: Women Army of Undrawn long, janitorial harder Kenosha, and sugar and beat our termination of our more moisture.

Speaker Change: They're not out of the fact that we are always very careful game that will enrich and diversify their music ecosystem at Seattle.

Unknown Executive: You know that besides that, we are also leveraging the very enriched and diversified music ecosystem of KMU, continuing to roll out more diversified formats of advertising and new advertising business models.

Speaker Change: Continue to allow us more diversified format of advertising.

Speaker Change: Advertising business model.

Unknown Executive: For example, we can combine advertising with offline performances.

Speaker Change: Maybe I was wrong.

Speaker Change: Talking about holiday behind what Medicare for all the government change Ian's wheelchairs.

Unknown Executive: For example, investment advertising could also be well combined with our offline performance and content.

Speaker Change: For example for the investment advertising it could also be a welcome back Mike.

Speaker Change: And contracts.

Unknown Executive: As I said before, we are focusing on Golden Glory in Q1. (inaudible)

Furthermore, merchandize QE.

Speaker Change: <unk> please.

Speaker Change: First of all actually the wrong, you've got to be there you go.

Speaker Change: TD one launching that now I think that you can kind of not.

Speaker Change: EMEA Shuang law somewhat hard stops you don't know who you're also emerge.

Speaker Change: In the mall.

Speaker Change: I'm going to assume that you're going to go I'm not sure.

Unknown Executive: As I mentioned, in Q1 of this year, we also launched an incentive-based advertisement format that is based on the coin. By launching this new model, we hope that we will be able to continue to improve user retention while at the same time, start a new stream of revenue for the advertising business.

Speaker Change: As I mentioned in Q1 of <unk>. We also launched an emphatic advertisement format that is based upon the cooling.

Speaker Change: Launching next year most of them.

Speaker Change: But being able to continue.

Speaker Change: The user retention rate at.

Speaker Change: Same time to start a new listings off the back of your advertising.

Unknown Executive: So basically, for us, we can be in a low-priced contract and a business-to-business model. Because we have a very rich and diversified advertising product, we believe that this can better support the healthy growth of our advertising business.

Speaker Change: So have you been on salaries.

Speaker Change: Salaries too.

Speaker Change: Criticized ching jaw. So you can draw down since I know, most lasalle element Bella trade home phone for their dwell hardly going all the time here. So we want.

Speaker Change: On the Oklahoma Switchers from audio when it's in Hong Kong.

Unknown Executive: Xueqing Zhang said that based upon the three business models regarding price competition, contracted advertising, and investment advertising, we do have a full portfolio of advertising solutions. In that way, we will be able to leverage this whole mix of products to continue to grow our advertising business in a healthy and sustainable way.

You can see that based upon the silicosis modems, they got into class competition under contracting advertising excellence type of turnkey breakthrough.

Speaker Change: Audience.

Speaker Change: Next generation battery.

Speaker Change: But to leverage.

Speaker Change: But that product to continue to grow our advertising.

Housing.

Speaker Change: Okay.

Lei Zhang: Okay, thank you. And the next question is from Zhang Lei, Band of America, Merrill Lynch. Zhang Lei, please.

Speaker Change: And the next question from family Bank of America Merrill Lynch Charlie Please.

Charlie: Hi, Glenn anytime I found hospital, there's someone else doing it.

Lei Zhang: My question is mainly about the overall trend of profit and profit margin. I see that our EQ is overall much better than the expected market profit trend. Especially in terms of sales and marketing, there is also a significant increase in return. However, the overall return of MAU is relatively stable.

Charlie: Although what's you're Groucho Kwangtung T D. Ranke anyway, you should oh cannot will not equal the hydrant attributes should kind of itchy dogs. The rents you for Hoffman door.

Charlie: Sure.

Charlie: When you go south of market in Farmyard, well, Joe should one be they got pushed out of Q4 that should not I may hold off I don't get hung up on me.

Lei Zhang: So I would like to ask the driver behind us how to look at future trends, the overall trend of profit margin, and overall profit margin. Thank you.

Charlie: So you're talking now on I think what they hold their travel Ohio.

Charlie: But you should have a chunk of that in South, Florida, Our J E T.

Speaker Change: Yeah. There you go beyond attitude should not at all do you think you're saying you've got Matt. Thanks management for taking my question. My question is mainly regarding the margin trend is back on the South America and China. All I can say there we have all Q on Q can show lineup that south of marketing expense that you maintained though.

Lei Zhang: Thank management for taking my question. My question is mainly regarding the margin trend, especially the sales and marketing trend. Consider we have a queue-on-queue control on sales and marketing to maintain the MAU sequentially largely stable. So how should we look at the driver and the overall sales and marketing and the margin trend in the following quarter? Thank you.

Matt: And they use sequentially largely stable so how should we look at the driver out of the overall market and the market in China in the following quarters alright. Thank you.

Matt: Hum.

Unknown Executive: We have just analyzed the situation of Maolili, which is that there is a big growth in copper ratio and ring ratio. This is the starting point, and we also expect that there will be some growth in the future. We can see that, in terms of Q1, the impact cost of copper and ring ratio is actually falling.

Speaker Change: Oh man things started to go up Maldini, that's hundreds of malicious or sort of a.

Matt: Toby funding so here you've got some talent that.

Matt: This was achieved and no Maggie.

Matt: So late I, yeah halfway between that turns out.

Matt: I'm looking at kind of unsold mantech kill either.

Matt: And you shall see number one because those are the type of San Diego.

Matt: Uh huh.

Unknown Executive: Thank you very much. Thanks for your question.

Speaker Change: Thank you very much and thanks for your question Jason.

Unknown Executive: Just now, in our private sponsor, we also mentioned the GD margin. Actually, for our GD margin, we registered a significant growth no matter on YUY or MOM basis. That should be a very solid baseline for our performance. I do believe in the near future, we're going to continue to grow based on that. And if Q1 of this year, talking about market expansion, it was ever going down on YOY and MOM basis?

Speaker Change: Private sponsor wants to mention about the GP margin actually for our chip imagine with registered a significant scratch their head around lateral Y O M O M.

Speaker Change: That should be a thing of that is funny at baseline.

Speaker Change: I do believe in the near future, but they need to continue to grow.

Speaker Change: And he can walk I think talking about that that marketing expenses.

Speaker Change: Evergreen Oh, Wow, what a M O M.

Unknown Executive: Q1 is relatively low in terms of sales, and Q4 is relatively low in terms of marketing activities.

Each of them, we don't add Julian J D, but she has a QE potentially it could be down.

Speaker Change: And ticket Tonight slippage at Beta E. G. G. It number one and then does that he mentioned.

Julien Thunder, you close them down she says that.

Speaker Change: Gabon, Massachusetts are highly easier to shop with or without Jesus. So there'll be some you didn't.

Unknown Executive: When talking about the seasonality of the marketing census, Q1 of each year is traditionally considered a low season for marketing events because the majority of brand promotions and promotion activities are conducted in Q4 of each year. So, all of us, in Q1, we launched less marketing events.

Well don't forget our that's been our medical marketing expenses Q1, each year traditionally in coffee as I don't see that.

Unknown Executive: [inaudible]

Speaker Change: Because I'm trying to get around the conventions and the promotion activity is being conducted in Q4 each year.

In Q1, we launched mass market events.

Speaker Change: Yeah, I'd say the momentum <unk> E X gene patents as well.

Speaker Change: Pension I need I don't.

Speaker Change: No not at all I don't think a.

Speaker Change: Pharmaceutical phone kind of quite an Isa no need you on let's say, even if only in the core match without a doubt I may need hopefully don't wait season got Houston.

Unknown Executive: But I can't say that our platform, or should I say the monetization of our music platform continues to be improved. And also, with the well-established ROI management measures in place, we do expect we're going to spend more on market expenses in order to regain the traffic for our channels.

Speaker Change: But I can't say, that's our castle or should I say the monetization of our platform continue to increment and also rates that were established by management is match them.

Unknown Executive: [inaudible]

Speaker Change: Where do you expect what can he gets back on new market expansion.

Speaker Change: But again the traffic for our tenants.

Consequently, the.

Speaker Change: The bulk of them in that they treat other Asia a fail.

Unknown Executive: At the same time, we're also going to reduce market expenses in the channel of live streaming.

Speaker Change: At the same time, we're also going through maintenance and marketing expenses in the China five stream.

Unknown Executive: On the other hand, content, especially self-made content, is an important aspect of our development. We will also actively invest in content promotion and marketing.

Speaker Change: Later on she said she says does it and also what Amanda Patnaik I'm talking on a phone number that neither am I shouldn't.

Speaker Change: Yeah. So I'll tell you what if I'm at your way at TD the total.

Unknown Executive: Well, my second point is regarding content, especially self-commissioned or self-developed content. This is going to serve as a key driver for our future business. So we're going to make a good investment in content promotion.

But my second point is regarding the content, especially our self commissioned will talk about the contract based on that yourself as a key driver for our future.

Speaker Change: So we're going to make good investments for the promotion.

Unknown Executive: Yes, so we expect that our marketing costs will rise in Q2. But overall, the whole year's marketing costs will be controlled at the same level as last year's overall whole year's marketing costs.

Speaker Change: So you'll need your column in the English aren't they don't want you also Samsung does its own yeah. It doesn't change.

Speaker Change: Like when does that can change and the tendency that union that they don't play out.

Speaker Change: Excellent.

Unknown Executive: So we could say in Q2 of this year, the market expenses will rise, but, overall, the market expenses for 2024, the full year, would be in line with what we saw last year in 2023.

Speaker Change: Oh wait for sale in Q2, I think that marketing expenses will rise, but overall speaking and marketing expenses for time to time.

Speaker Change: So it would be in line with what we sold off.

Great.

Unknown Executive: And then we come to our GNA fee, which is mainly the cost of our personnel investment. In the past year, we have actually done a lot of work to reduce this cost. In fact, the number of people has also been significantly reduced.

Speaker Change: I'm almost done I think a woman that I think Jan and I feel like I'm thinking into that just to think a woman in Colorado.

Speaker Change: Got you the unions using installed towards the girl.

Speaker Change: Gentlemen, thank each other also she's our initial yes, you see it.

Speaker Change: Doug Hospital that you get junky box.

Speaker Change: So coming that's going to come in Ontario, and.

Unknown Executive: So, coming next, let me comment on GM&E's extension and especially the investment we made in the team. And actually, for the past one year, we have already adopted a cost initiative and continue to downsize the team.

Speaker Change: And especially the investment we made on the key and that's true for the past one year, we have already adopted a coffee, Michigan economy to contract.

Unknown Executive: On the other hand, we will continue to invest in new technologies and new products. Similar to AI technology, we will continue to invest in it.

Speaker Change: But anyway, if I may a momentary machine to ensure she was hampered in the Colo heisler with tissue.

Speaker Change: So you saw our AI teacher for me it doesn't have with tissue.

Speaker Change: Yeah.

Unknown Executive: At the same time, we are also going to continue investing in new technologies and new products, for example, CIGC.

Speaker Change: We are at the same time, while I'm talking about your continued investment in new technologies.

Speaker Change: If I could ask for like P. I G.

Unknown Executive: Yes, so in general, we think that the GNA's overall spending for 2024 will be equal to that for 2023.

So it's an E mail.

Speaker Change: John anything you want tenure.

Speaker Change: Australia, Chunghwa, it's even hopefully its audience in Switzerland.

Unknown Executive: So, generally speaking, regarding G&A, we do believe that the total G&A expenses in 2023 would be in line with, and in 2024 would be in line with, 2023.

Speaker Change: Generally speaking regarding Chinas Symphony.

Speaker Change: Symphony the telephone.

Speaker Change: And plan to participate.

Speaker Change: In time to time to call exactly.

Unknown Executive: So, overall, in terms of gross profit growth, we expect to see some growth in the second half of the year. Our promotion fee and GNA fee are in a stable state. Therefore, our net profit and net profit rate are expected to increase.

Speaker Change: So and then Keith I Wonder Maldini things.

Speaker Change: So let me <unk> Shah our chairman annually also within that lets you.

Speaker Change: No woman.

Speaker Change: Oh I'll tell you don't call. It Gen. Eight lets say you asked about so your Goldman peanuts on that no matter what might look to go out to meet her Jimmy the Nuomi EG don't want you also what you said.

Unknown Executive: So, overall speaking, as you can see, we continue to grow the GDP margin, and we can also see the revenue in H2 of this year also going to go up, while at the same time, we also stabilize the promotion expenses and the G&A expenses. So I do believe for the full year, the net profit rate and the net profit will be improved.

Speaker Change: So overall speaking as you can see we're comfortable with the growth that you see margin.

Speaker Change: We see the revenue.

Yeah.

Speaker Change: So we're at the same time, we also stabilized the promotion expenses and achieve.

Speaker Change: So I think the name of places, yes, but not perfectly and that's part of it.

Speaker Change: Will it be.

Unknown Executive: ??????????????????

Speaker Change: But I would say it's Tony here.

Tony: So the Yankees.

Unknown Executive: We are coming next, so please allow me to talk about ERT, the effective tax rate.

Speaker Change: Well I mean, that's a please allow me to talk about effective tax rate.

Unknown Executive: Yes, as you can see, our ERG QE has risen to 19.9%. The main reason for this is that, as mentioned earlier, we have divided our subsidiaries from domestic to overseas. This will cost us a lot of tax. However, in 2024, our effectiveness will improve, similar to the situation in QE.

Speaker Change: Yeah actually it doesn't.

Speaker Change: Kind of kill you.

Speaker Change: Samsung since the Odeon deal.

Speaker Change: Pleasant Noma Sydney mental illness.

So once you see achieved also a woman tool kit that goes to the fold arching why that's what he says he honestly I'll tell you got to go with holding taxes.

Speaker Change: No no I would say you caught that.

Speaker Change: Okay Awesome yell at me, which I certainly can.

Speaker Change: Basically it's a QE that Shanghai.

Speaker Change: Regarding that the effective tax rate in Q1 with AT&T asking about 2019 point did I catch that.

Unknown Executive: Regarding the effective tax rate, and in Q1 of this year, it has been risen to 90.9%. The key reason is because the dividend payout needs to be made from the onshore company to the offshore company. So we're going to pay for the whole week-holding tax. So that's the reason in 2024, the effective tax rate in Q1 has been on the upward.

Speaker Change: But I think it comes back I can take that.

Speaker Change: Pay offs and Megafon.

Speaker Change: The onshore company to actual.

Speaker Change: So I'm not going to take what will probably be tax. So that's what we've done in plenty of time before the effective tax rate in Q Lucky mm Hmm.

Speaker Change: That's the only I entered the cumulative <unk>.

Speaker Change: Gotcha.

Speaker Change: I know you don't like you know an interesting number.

Speaker Change: So the other easy China, instead, Yugo Genie continued on something that you said.

Speaker Change: But generally speaking the sound was quite small and it's not an accident.

Speaker Change: And that's probably kind of that classic.

Speaker Change: That much.

Speaker Change: Looking at 244, Nashville and Knoxville.

Speaker Change: It's going to keep a lot of equipment.

Speaker Change: Yeah.

Thank you and our next question from Macquarie Alex Chang.

Alex Chang: Thank you so much management for taking my question and congrats on a great result, it's been very great to see the improvements in our music paying conversion. So if you compare the existing users versus the newly acquired users.

Alex Chang: Just wondering can management share some light on the average pricing gap between these two cohorts.

Unknown Executive: [inaudible]

Speaker Change: Also during the opening remark management shared some very exciting AI empowered initiatives.

Speaker Change: That had been driving better user engagement.

Speaker Change: Just wondering anything you can share on the recent trends for the next month retention and whether there could be more operating leverage or higher all customer I kind of liked high value down the road. Thank you.

Unknown Executive: But generally speaking, the sum is quite small, and it's not going to impact the net profit and the net profit rate that much. So, overall speaking, I do foresee for net profit and the net profit in 2024, it's going to keep coming into the market. Thank you. And the next question from Macquarie, Alex Jiang.

Alex C. Yao: Thank you so much, management, for taking my question and congratulations on the great results. It's been very great to see the improvements in our music paying conversion. So if you compare the existing users versus the newly acquired users, I just wonder if you can, management, shed some light on the average pricing gaps between these two cohorts. Also, during the opening remarks, management shared some very exciting AI-empowered initiatives that have been driving better user engagement. Just wondering anything you can share on the recent trends for next month's retention and whether there could be more operating leverage for higher customer lifetime value down the road. Thank you. [inaudible]

Speaker Change: Okay.

Alex C. Yao: I would like to thank the management team and congratulations to them for a good performance this quarter. As we can see, in fact, in the first quarter, we have gained a lot of confidence in the overall user conversion rate. Let's compare the current users with the new users. I would like to know if you can share with me the information on the price difference between the two groups. The management team also mentioned in our speech that we are looking for a lot of AI and AI-enabled projects to further improve our operations. In addition to improving user participation, can you also help us to share the basic trend of user memory over the next few months?

Speaker Change: Of course, if any signs of efficacy.

Speaker Change: Now let me take kind of all you said that can you just talk what's that.

Speaker Change: Uh huh.

Speaker Change: Yeah.

Speaker Change: I didn't calculate it for questions.

Speaker Change: I gotcha, Okay, both in terms of capturing the opportunities, which again to keep at that time.

Speaker Change: It's possible contact lens and tell me that that would be.

Speaker Change: Chris I don't want to be in Chicago.

Speaker Change: With that I'm going to answer.

Speaker Change: That can protect yourself on.

That's what I took out and you put up until some time ago.

Sure.

Chris: Thanks, Jacek you can actually go down to Florida.

Chris: It's interesting.

Chris: [noise] pedal and key choose you guys can sort of tongue in cheek.

Unknown Executive: The first question is similar to all the products. For new users, the old users have a relatively high flow rate. The main focus here is to make a continuous monthly payment, so the old users' payment transfer rate is relatively higher. For new users, as Karen said, [inaudible]

Chris: Philip do you need are you seeing with what I saw a trail of one person one integrated all Xiaomi and Oppo economy also your interim Antonio Josh I'll shoot so on industry volume.

So I'm going to shoot for so.

Laurie what would've been the Shiva convert all anybody who says she really suddenly I was wondering can you walk on Ghana, now Shimon will they bandwidth.

Chris: John I don't know well nobody else here.

Chris: Lisa.

Chris: Yes, which also is probably a.

Chris: No woman pace I know you don't hold all telephone audio anything also you also Panama.

Unknown Executive: Thank you very much. Thanks for the question. Regarding the existing customer, yes, indeed. For the existing customer or the user, we do have a very high retention rate. And because many of them are our long-term users, and if we're going to convert them, that means they just continue to renew our service. So, originally speaking, the conversion rate of our existing users would be very high. Well, for the newly acquired users, as we mentioned just now, in order to engage those users, we provide some discounts and some promotional activities. Even if we're already scaling back the discounts, the conversion rate of the new users will go in line with our promotional activities, and sometimes it's subject to the change in the promotional activity timeline.

Chris: Thank you very much thanks for the question regarding the existing customer, yes, indeed for the existing customer on the news that we can have a very high retention rates and cost and then with them a long time to get that.

Chris: That is what I need to convert and that means they just according to what you are savvy. So they can really speaking of conversion of our existing staff with very high well for our newly acquired assets.

Chris: As I mentioned, just now in order to engage the huge outweigh collect some discussion and some of the promotional activity.

Chris: Well that keeps coming back I think Scott, but actually the conversion rate of the new chipsets.

Chris: That said, let's go inside with promotional activity and sometimes it is subject to change about the promotional activity.

Unknown Executive: In terms of the growth of user memory in the AI part of the big model, we must first make it clear that the recommendation system of all music platforms is related to neural network models. It is also related to the current big language model. However, based on the current neural network model, we will introduce more parameters at the same time, which will be very helpful to our current recommendation and search ability. This is what we can see from the actual data. So for user memory, because of these parameters, [inaudible]

Speaker Change: Please go ahead.

Scott: Not much incremental Johan you also maybe on some of their own because you don't change Washington.

Scott: So listen I saw the New York and I repeat Mtc, though sure sure. So I don't know I'm watching someone telling me that I said that this is the time.

Scott: I'm wondering I'm sure you all saw she's in the bedroom woman controlled and wish him to your C&I. This anymore on Lauder Sycamore Sherlock Holmes, who can talk to on a painful.

Scott: So you're one of them, which and the pre generally if a cell phone I mean part of it.

Scott: And out of bundle with everyone. Unfortunately, the UK economy.

Scott: A man.

No you won't put and also I know you may see him.

Jeez with the Union.

Scott: Our metallic fuel you also need also it will be all of Houston.

Unknown Executive: The second part of the question is regarding how AI can empower user retention. I have to say that the AI large model indeed helped to grow retention, but let's be clear first. For the music platform, the recommendation system was based on a neural network model, and it is different from the large language model we're talking about today. But generally speaking, I do believe that as we have these great models and by introducing a large set of parameters into our existing platform, we will be able to continue to improve the recommendation capacity and search capacity. And you can see from our actual operations, that can help us to continue to grow and optimize user retention. So indeed, by leveraging those cutting-edge technologies, our overall retention rate is being improved.

Scott: How does that kind of answers. The question is regarding holiday by accounting policy user retention I have to say that.

Scott: I imagine a little tough to grab that retention, but that's typically a fast or a music platform recommendation.

Scott: The system was based upon the new the network model and.

Scott: And it is different from the market.

Scott: But it's kind of a sticky factor beneath that and we're having no surprise.

Scott: And by introducing a notch that havent meters into August because we are seeing that well not be able to continue to incur a recommendation capacity excess capacity.

You can see from our actual operational chip that can help us to continue to grow and optimize.

Scott: Retention so indeed.

Thinking about cognex to accommodate our overall retention rates improved.

Unknown Executive: Based on the current large-scale model and the generated technology, we focused on Q1 and launched a virtual video model drive that uses the open source virtual human language. This has received a good response in the open source community.

Scott: Okay.

Speaker Change: Good morning.

Speaker Change: Sometimes some of them into the downturn.

Speaker Change: One woman tire choice, it's Tom again.

Speaker Change: Tony a far below or so on <unk> I know you got a sheila lush of him more things you don't articulate he decided from a kind of show us really manage for the long haul that you're going to.

Speaker Change: Financial.

Unknown Executive: Actually, we talk about large and great models and generative technology. In Q1 of this year, we also launched an open-source, self-developed minicam video model drive, which has already received very positive feedback from the open-source community.

Speaker Change: Actually when you talk about Dodd, Frank like model, and degenerative Pathologies and Carolina markets.

Speaker Change: We also launched the Opentable yourself goodbye as many Ken. Thank you model try when you touch on that can be seen by the positive feedback from the OPEC meeting.

Unknown Executive: In addition, we have a new result, which is that we have developed a big model for audio. It can judge the relationship between two songs based on the characteristics of the audio. This is a conspicuous positive result for us in promoting songs.

Speaker Change: Meanwhile, EMEA you guys changed your thoughts here.

Speaker Change: Huge fireball.

Speaker Change: Yeah.

Speaker Change: You can imagine you go down much in Panama.

Speaker Change: You.

Speaker Change: Pamela young that'll go out again that you're going to summarize it.

Speaker Change: Do you want more than five times I'd tell you won't go through the only really go for it on schedule with your channel the army human table.

Unknown Executive: And something that we are truly proud of is that we have also newly introduced a large model. We call it the audio model. This audio model can help to distinguish the correlations between two notes and the sound based on the characteristics of the audio. And this is also a very good result that has been harvested from the cutting-edge technology.

Speaker Change: And something that'll actually proud I think absolutely awesome really into the Houston and knock on wood, all went Kuwait automobile methode on mental health.

Speaker Change: Congrats on the quarter HFC tend to now.

Speaker Change: On the characteristics of the whole thing and I think that's also a vertical to adopt that's been harvested from the car to watch technology.

Speaker Change: So anyway that may own form of event or.

Unknown Executive: In terms of content creation, we have already achieved good results in terms of AI-generated singing across the entire platform. Both in terms of user scale and user income, the results are developing as expected. Through such AI-generated singing, we can discover more interesting new songs and new content.

Speaker Change: Women or men so elements.

Hey, either Samsung or.

Speaker Change: Some of them in are you going to young sorry, attempting to actual that'd be oncology women's home yogurt Guillermo you almost always on the oil you go though under all women and children with my father.

Speaker Change: Sorry about that.

Speaker Change: Yeah of course, I'm clay, if I say I'm going to assure the schindler true core question the needle.

Unknown Executive: Well, regarding content creation, we have already received very good results from artificial intelligence-generated models. No matter from the user scale or from the revenue of the users, we are all seeing very good progress being made. In that way, it can actually facilitate the users in identifying new lyrics and new songs and new content.

Speaker Change: Well they got on the content creation, we have bought back and we think about it because it lays out from artificial intelligence trying to make it work.

Speaker Change: No matter from that use a scalpel from that revenue.

Speaker Change: We are all C met pro Praxis.

Speaker Change: And that way it can actually.

Speaker Change: He says I can't keep by Neogenomics shops, maybe content.

Speaker Change: I don't want.

Speaker Change: Typically what you told me on enrollment.

And I actually answered a formula you go Amanda.

Speaker Change: Yeah.

Unknown Executive: [inaudible] a music generation model for folk music. At the same time, using this model, we also worked with Shanghai Folk Orchestra to create the first AI music festival in China.

Speaker Change: So I'm into either you go a year or so I'm talking about it now.

Speaker Change: Marshall I'm curious your thoughts on I mean, do we acquire I don't know term book shorthand anyway, I agree with you in a unique way.

Speaker Change: And another milestone that you mentioned in Q1 that they can flex well working with Tencent beyond that.

Unknown Executive: And another milestone I would like to mention in Q1 of this year was that we worked with Tencent AI Lab and introduced the first music generation model for folk music. Through this model, we worked with Shanghai National Orchestra to organize the first AI-empowered concert in China.

Marshall: And introduced the fact that music generation model for the Falcon zinc and silver based model, while working with China National Orchestra to automatic.

However.

Marshall: I can tolerate the concept in China.

Unknown Executive: Recently, we have been paying more attention to the leading models in the industry. One is Sono, and the other is UDIO. How can they have a better combination with our platform?

Marshall: I don't think I don't see a woman.

Marshall: I cut you off one rule from the higher but all in Chandler take emotion Eagle Fone all.

Marshall: You're going to you'll be Iot <expletive>, one on glaucoma looking like Oklahoma to you.

Unknown Executive: And besides that, we are also keeping an eye on the leading models in the industry. One is Sona, and another one is UPIO. And we are exploring those new models to see how they can fit into our platform.

Marshall: And besides that we're also keeping an eye on that statement.

Speaker Change: Right right.

Speaker Change: And another one.

Speaker Change: Oh antibiotics clothing does mean models to see how they cascade into other platform.

Speaker Change: Thank you and then next question comes from far away from Mizuho family Pete.

Wei Xiong: Thank you. And the next question comes from Fan Wei from Mizuho. Fan Wei, please. Are you with us, Fan Wei? Okay, let's, um, hello. Yes, we can hear you. Go ahead, please.

Speaker Change: Are you with us.

Pete: Okay like that.

Hello.

Yes, we can hear you go ahead. Please thank you sorry about that yeah. Thank you for taking the question. So I want to vote click on the offline concert sorry, So we see pretty good coming back last year and so far this year.

Speaker Change: Just wondering if management can help reminds of your position and just strategy for this segment and also what's the business model is there other than sponsored advertising. Thank you.

Wei Xiong: Okay, thank you so much for the questions.

Speaker Change: Okay. Thank you so much for your questions.

Wei Xiong: Thank you very much. Thank you for giving me this opportunity to ask this question. My question is more about our offline performance, as well as offline performances. We can see that offline performances have recovered. The overall performance in the past 23 and 24 years has been very good. Can you briefly introduce to me, in the current offline performance atmosphere market, the positioning of the company's business, as well as the strategy, in addition to third-party advertising, is there any other good business model? Thank you.

Speaker Change: Okay.

Speaker Change: So again, just like how much is that.

Speaker Change: When you go into it but I didn't want to go back on.

Speaker Change: That's a bunch of it would make us think that debacle like him.

Speaker Change: Okay got it seems like it's really important that I found out absolutely.

Speaker Change: Perpetual life again number one.

Speaker Change: That came back in children.

Speaker Change: Yeah.

It's about time to talk about your electrical hydrogen challenge.

Unknown Executive: Thanks so much for your questions. And basically, I think 2023 is a big year for the live performance businesses. And we are also seeing that it will continue to trend this year, but definitely, it's going to be normalized and will not have such a big growth when compared to last year's performances. I think from a T&E point of view, we have different pillars of strategy in order to support our overall strategies.

Speaker Change: Thanks, so much for my questions and because basically I think 2020 free is a big year for the life performance businesses and we are also seeing that you continue to trend in this year, but definitely is going to be normalized and do not have such a big growth when compared to last years.

Our performances I think from <unk> point of view, we have discipline.

Speaker Change: Pillars of strategy to in order to support our overall strategies.

Unknown Executive: First of all, we are committed to building our own IP, for example, like the TMEA music festivals and also the award ceremony. This year is going to be the fifth year for us, and we have already received a lot of very good results from our partnerships as well. And we are focusing on not just bringing local artists but also international artists to our stage as well. Besides our own IP music festival and awards, we have teamed up with and also helped to organize and produce top-tier artists' live tours in China and also in Southeast Asia that we successfully launched out in the year 2023, and we are continuing to do that.

Speaker Change: First of all we are committed to build our own IP for example, like <unk> music festivals and also the awards ceremony.

Speaker Change: He is going to be the 50 years of us and we have already received a lot of very good we saw.

And.

Speaker Change: From our partnerships as well and we are focusing on not just bringing the local artist, but also the international artist to our stage as well.

Speaker Change: Size of our own IP Music Festival in Las We also came up and also help to organize and produce top tier artist like too as well in China and also in southeast Asia that we have successfully launched our in year 2000, and country and we are continuing to doing that and the last one.

Unknown Executive: And the last one, which we will continue, besides the top-tier artists, we will be focusing on building some of the smaller stages, for example, like the Live House event for Tencent musicians, which will help us to incubate a lot of younger generations of musicians in order to continue to improve through the live performance event. Besides the strategies that we have, the different types of concerts that we are organizing, we will have different business models as well.

Speaker Change: One which is we will continue besides of top tier assets, we will be focusing on building some of the smaller stages. For example, like live hopes event for the Tencent musician, which will help us to incubate a lot of younger generation of musicians in order to.

Speaker Change: We continue to improve food a flat performance E band.

Speaker Change: Besides the strategies that we are the different types of concepts that we are organizing we will have different business model is well first of all we have to ticketing. We can also have the advertising sponsorship model and Thats. What we have mentioned before we are also working on defense based economy like the merchandize and all these kind of things.

Unknown Executive: First of all, we have the ticketing, we can also have the advertising sponsorship model, and as we have mentioned before, we are also working on the fan-based economy, like merchandise and all these kinds of things that we are working on. We will also continue to collaborate with our live event, not just offline, but together with online with different privileges with our Super VIP panel as well. So we have an exciting journey that we are looking forward to, and we will continue to put in more resources in order to grow the live performance business in TME.

Speaker Change: We are working on we will also continue to collaborate our life you went on not just offline, but together with online with different purposes, with our Super VIP pen as well. So we have an exciting journey that we are looking forward and we will continue to pull in more resources in order to grow.

Speaker Change: Lots of them in specific <unk>.

Thomas Chong: Okay, in the interest of time, we'll take the last question from Thomas Chong. Jeffrey Thomas. Hi, good evening.

Unknown Executive: Okay, in the interest of time, we'll take the last question from Thomas Chong. Jeffrey, please, Thomas. Hi, good evening. Thanks, management, for taking my question. My question is about our new initiatives, such as long-form audio, IOS.

Okay in the interest of time, we take the last question from Thomas Chong Jefferies Suite Thomas.

Thomas Chong: Thanks, management, for taking my question. My question is about our new initiatives, such as long-form audio and IoT. Can management comment on our thoughts about the outlook in these areas? And my second question is about our long-term targets. Given we have talked about our 2024 outlook on the top line and the bottom line, can management comment on how we should imagine TME in three to five years' time down the road? Thank you. I would like to thank you for answering my question.

Thomas Chong: Hi, Good evening, Thanks management for taking my question. My question is about our initiative such as long form audio Iot can management comment about our thoughts about our MBS.

Thomas Chong: In these areas and my second question is about.

Our long term target.

Thomas Chong: We have to talk about our trend in trying to fill our outlook on the top line and the bottom line 10 minutes from when Congress, probably should and Michele <unk> in a three to five years' time around the world. Thank you.

Thomas Chong: I can't think of any topic that was Wednesday.

Thomas Chong: My first question is about some new strategies that we have proposed before, such as long-term IoT. I would like to know your thoughts on the future development of IoT in this area. The second question is about the company's long-term development goals. We have just mentioned the company's outlook on revenue and profit in 2027. I would like to ask, if we give you a three to five-year plan, [inaudible]

Thomas Chong: Richard.

Yeah sure Shawn Jenkins our economy.

Speaker Change: What kind of architecture.

Speaker Change: Okay.

Speaker Change: Kathryn can you change that you're not going to take time.

Kathryn: Yeah Okay.

Speaker Change: Okay.

Speaker Change: Absolutely.

Speaker Change: That was great.

Kathryn: Yeah Jonathan.

Kathryn: By this time should look like.

Unknown Executive: Let me answer the first question first. The second question is... As for Chang Yiping's question, from a strategic point of view, it has always been a supplement to our music content. It is mainly to meet the diversified listening needs of users of different ages. So we are currently continuing to introduce new content to the market, especially in vertical content such as children.

Kathryn: Well there are a lot of people in Hema Duncan on the.

Kathryn: The kind of the time.

If I can.

Kathryn: I saw you on the phone China as our meeting with each of those from a year and they don't know you can put phone charger and reminds lobotomy anymore. I know you don't want a doing a lot of sodium as usual.

Kathryn: And so I actually see the usual Sean Paul Wogan seen other needle Youll see you said that one five times.

Kathryn: Art home control today, and we don't know what we're talking about here.

Unknown Executive: Thank you very much. Thanks for your question.

Speaker Change: Thank you very much. Thanks for your question regarding the loan portfolio from a business strategy perspective, it's kind of a comprehensive July you can think about.

Unknown Executive: Regarding the long-form forging, from the business strategy perspective, it's going to complement our existing online music service. It will help us meet the needs of a diversified customer base, especially including users from different agencies. For that reason, we'll now continue to introduce top content and new content in the market. Essentially, we do see some very good performance in the children-related music market.

Speaker Change: And that is exciting.

Speaker Change: How that's tracking.

Speaker Change: I think that rescue by the cost of that.

Speaker Change: It's especially encouraging to us that from different banks.

Speaker Change: But that's a ways out right now until we introduced the top content and a new contents Milwaukee essentially we do see some of that agree with that.

Performance in the children's Medicaid, we make money.

Unknown Executive: The key point is that we need to maintain a closer connection with Tencent, especially with Tencent Music Entertainment Group. We should pay more attention to Q2. If Q2 corresponds to Q1, I believe that the content of our long video will also provide a better result for the user's memory.

Speaker Change: I'm, telling them until now until you see the two onshore Marcellus you can.

Speaker Change: Function he was here.

Speaker Change: Sure can you then Portugal from Johnson.

Speaker Change: Hey, guys.

Speaker Change: Particularly Florida man, you're gonna be onto the Guangzhou auto tune yards inquired ruble towards <unk> no.

Speaker Change: No I'm not trying to say what they've been telling me that they don't go away.

Speaker Change: So you won't go to the auto industry that you're gonna be all hologic.

Unknown Executive: And the second point is that we are going to keep a very close collaboration with Tencent Group, especially with Xueqing Zhang. And I do believe in Q2 of this year, a key event we are going to see is the rollout or release of Qing Music in a second phase. If that is to be successfully rolled out, I believe it is also going to help us to continue to improve user retention for the long-form board.

Speaker Change: And the second point, you back to what I need to keep that acreage cooperation with Tencent group, especially wage reopen and activity in Q2 of <unk> a key benchmark.

Speaker Change: No absolutely East <unk>, Louisiana second stage, if that ought to be successful and stupid.

Speaker Change: It's also going to help us to continue to encourage the user retention for example.

Speaker Change: Got it.

Speaker Change: Okay.

Speaker Change: Okay.

Unknown Executive: Thank you. It's been 3 to 5 years since I last saw you.

Speaker Change: Amazon O&M.

Unknown Executive: Thank you. (inaudible)

Speaker Change: Okay.

Unknown Executive: I think for the entire overall strategy of the entire company, I think that we are right now on a really good pace in driving the online music services in a really good form. So we will do it one by one, for example, to continue to improve our overall subscribers and also our ARPBU as well.

Speaker Change: I think for the entire overall strategy often the entire company I think that we are right now on a really good pace in driving the online music services really.

Speaker Change: Really quick form so we will do it going to be one by one for example to continue to improve our.

Speaker Change: The overall subscribers and also our AWP as well, but at the same time. This is the quarter that most of our company. I think is very important is we have to continue to build our content ecosystem, which ensures that we will have a good coverage of all of the news.

Unknown Executive: But at the same time, this is the core, the most important part of our company, I think it's very, very important that we have to continue to build our content ecosystem, which ensures that we will have good coverage of all of the music libraries that we should have. And also, we will continue to pull in more resources in doing content co-productions. Besides that, we will also extend our footprint, not just locally, but we can do some of the international development, for example, according to not just the business side of the platform side but also the content side as well.

Speaker Change: Music Library that we should have and also we will continue to pull in more resources in doing content co productions.

Speaker Change: Besides <unk>, we will also extend our footprint not just locally but we also can doing somewhat.

Speaker Change: No.

Speaker Change: Development for example, according to not just the size of the platform side, but also the content side as well. So I think that is definitely going to be a lot of interesting and exciting projects ahead I think from our company point of view I think it definitely is not just doing 100 meter sprint we are doing a marathon. So I think that we should.

Unknown Executive: So I think that there are definitely going to be a lot of interesting and exciting projects ahead. I think from our company point of view, I think we are definitely not just doing a hundred meter sprint. We are doing a marathon.

Unknown Executive: So I think that we should strike a balance. At the same time, we should continue to have a quarter by quarter goal. But at the end of the day, we will be focusing on the long-term sustainable development of the entire group, and we are ensuring that we are going to have to ensure good investor returns for all of our investors as well. So we would like to share our success, not just doing the business well but also ensuring that we have a good dividend policy and also some of continue to have our share buyback program at the right moment. Okay, I think that's it for today. Thank you.

Speaker Change: Should strike the balance at the same time, we continue to have a quarterback Quantico.

Speaker Change: At the end of day, we will be focusing on a long term sustainable development of the entire group and we are ensuring that we are going to have to ensure that drive a good investor returns to all of our industrial as well. So we would like to share our success not just doing the business well, but also ensuring that we have a good.

Speaker Change: Dividend policy and also some of them continue to have our share buyback.

Speaker Change: Program at the right moment, Okay, I think that's it for today. Thank you.

Speaker Change: Thank you everyone for joining us today, if you have any further questions. Please feel free to contact our IR team and this concludes today's call and thank you. So much again and look forward to speaking to you next quarter.

Operator: Thank you everyone for joining us today. If you have any further questions, please feel free to contact our IR team. And this concludes today's call. And thank you so much again, and I look forward to speaking to you next quarter.

Operator: Okay, thank you very much. Thank you. Thank you. Bye.

Speaker Change: Okay. Thank you very much. Thank you. Thank you.

Speaker Change: Right.

Speaker Change: [noise].