Bilibili Inc (BILI) 2023 Q1 法說會逐字稿

Good day, and welcome to the Bilibili First Quarter 2023 Financial Results and Business Update Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.

大家好，歡迎參加嗶哩嗶哩2023年第一季財務業績及業務更新電話會議。今天的會議正在錄製中。現在，我想將會議交給投資者關係執行總監楊麗君。請開始。

Thank you, operator. During this call, we'll discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with the SEC and Hong Kong Stock Exchange. The non-GAAP financial measures we provide are for comparison purpose only. Definition of these measures and a reconciliation table are available in the news release we issued earlier today.

謝謝接線生。在本次電話會議中，我們將討論我們的業務前景並做出前瞻性陳述。這些評論是基於我們今天的預測和預期。由於一系列風險和不確定因素，包括我們最近向美國證券交易委員會和香港證券交易所提交的文件中提到的風險和不確定因素，實際事件或結果可能與今天的新聞稿和本次討論中提到的情況存在重大差異。我們提供的非公認會計準則財務指標僅供比較之用。這些指標的定義和對帳表可在我們今天早些時候發布的新聞稿中找到。

As a reminder, this conference call is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the Bilibili IR website at ir.bilibili.com.

溫馨提示：本次電話會議正在錄製中。此外，投資人簡報和本次電話會議的網路直播回放將在嗶哩嗶哩投資者關係網站 ir.bilibili.com 上提供。

Joining us today from Bilibili senior management are Mr. Rui Chen, Chairman of the Board and Chief Executive Officer; Ms. Carly Li, Vice Chairwoman of the Board and Chief Operating Officer; and Mr. Sam Fan, Chief Financial Officer. And I'll now turn the call over to Mr. Fan who will read the prepared remarks on behalf of Mr. Chen.

今天，嗶哩嗶哩的高層管理人員將與我們一同出席，包括董事會主席兼首席執行官陳睿先生、董事會副主席兼首席營運官李嘉莉女士以及首席財務官范志強先生。現在，我將把電話交給范志強先生，他將代表陳睿先生宣讀準備好的演講稿。

Thank you, Juliet, and thank you, everyone, for participating in our 2023 first quarter conference call. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen.

謝謝朱麗葉，也謝謝大家參加我們2023年第一季的電話會議。我很高興代表陳先生致今天的開場白。

Our top priority for 2023 is to improve our commercialization efficiency and narrow our losses. Our first quarter results demonstrate that we are making solid progress on these goals. First, we delivered over 20% year-on-year revenue growth from our advertising business. Our gross margin improved to 22% in the first quarter, up from 16% a year ago, driving gross profit to increase by 37% year-over-year.

2023年，我們的首要任務是提升商業化效率，並縮小虧損。第一季的業績表明，我們正在穩步推進這些目標。首先，我們的廣告業務收入年增超過20%。第一季度，我們的毛利率從去年同期的16%提升至22%，帶動毛利年增37%。

Second, we continue to take measures to strengthen the execution of our expense controls. As a result, we reduced the total operating expenses in first quarter by 11% year-over-year. Specifically, we cut our sales and marketing expenses by 30% year-over-year while continuing to expand our DAUs. These actions are proving effective in strengthening our bottom line.

第二，我們持續採取措施加強費用控制的執行。因此，第一季總營運費用較去年同期下降了11%。具體而言，在持續擴大每日活躍用戶（DAU）的同時，銷售和行銷費用較去年同期下降了30%。這些措施已被證明對提升我們的獲利能力有效。

In the first quarter, we narrowed our net loss by 72% year-over-year. The progress we have made give us confidence that we are on the right track to achieve our breakeven target.

第一季度，我們的淨虧損年減了72%。這些進展讓我們有信心，我們正朝著實現損益平衡目標的正確方向前進。

While we focus on improving our financial metrics, we continue to attract more users and enhance the engagement levels of our community. In the first quarter, our DAUs grew by 18% year-over-year to 93.7 million, while our MAUs reached 315 million, driving our D/M ratio up to 29.7% from 27% a year ago.

在專注於提升財務指標的同時，我們持續吸引更多用戶，並提升社群的參與。第一季度，我們的每日活躍用戶 (DAU) 年比成長 18%，達到 9,370 萬；每月活躍用戶 (MAU) 達到 3.15 億，每日活躍用戶/月活躍用戶比率 (D/M) 從去年同期的 27% 上升至 29.7%。

Our users continue to value our evolving and diverse content with the average user daily time spend on Bilibili reached 96 minutes in the first quarter. This brought the total time spent on our platform, up 19% year-over-year.

我們的用戶持續重視我們不斷發展和多樣化的內容，第一季用戶在嗶哩嗶哩的平均每日使用時長達96分鐘，這使得我們平台的總使用時長同比增長19%。

As we move through the year, we will continue to cultivate our DAUs in a cost-effective manner, streamline our organization and improve our overall commercialization efficiency. In this way, we can better allocate our resources to areas that further solidify our community, namely, we are working to expand our creator base and help our creators make more money. We will also continue to invest in commercialization capabilities, including improving our ad infrastructure, further integrating live broadcasting and video operations, developing high-quality in-house games as well as exploring AIGC opportunities in our content community, all of which will help us build a tighter community and unleash more commercial potential of our platform.

展望未來，我們將持續以經濟高效的方式提升每日活躍用戶 (DAU)，精簡組織架構，並提升整體商業化效率。如此一來，我們就能將資源更好地分配到進一步鞏固社區的領域，例如，我們正致力於擴大創作者群體，並幫助創作者創造更多收益。我們還將繼續投資商業化能力，包括改善廣告基礎設施、進一步整合直播和視訊營運、開發高品質的自研遊戲，以及探索內容社群中的 AIGC 機會。所有這些都將幫助我們建立更緊密的社區，並釋放平台的更多商業潛力。

With that overview of our progress, I'd now like to provide a brief update on our three core pillars: content, community and commercialization. Starting with content. Our content creators are essential component of our ecosystem. We are dedicated to building a community that enables them to recognized and be rewarded. As we provide more user-friendly editing tools, professional content operation support and improved traffic distribution mechanisms that favor long- to mid-tail content creators, we can increase the volume of content creation and attract more creators to our platform.

回顧我們的進展，我想簡單介紹一下我們的三大核心支柱：內容、社群和商業化。首先是內容。我們的內容創作者是我們生態系統的重要組成部分。我們致力於打造一個讓他們獲得認可和獎勵的社區。隨著我們提供更便利的編輯工具、專業的內容營運支援以及更有利於中長尾內容創作者的流量分配機制，我們可以提升內容創作量，並吸引更多創作者加入我們的平台。

In the first quarter, the number of our daily active content creators increased by 42% with a 79% increase in monthly content submissions, both on a year-over-year basis. By further integrating our commercial channels with our content ecosystem, we continue to empower more content creator to realize their commercial value through diverse avenues.

第一季度，我們的每日活躍內容創作者數量較去年同期成長42%，每月內容提交量較去年同期成長79%。透過進一步整合商業通路與內容生態系統，我們持續賦能更多內容創作者，使其能夠透過多元化途徑實現商業價值。

Different content creators can monetize their talent from what they are good at, such as advertising, live broadcasting, online paid courses and workshop. Leveraging our platform and support, over 1.5 million content creators, earned incomes through multiple channels in the first quarter, an increase of 50% year-over-year. Among them, the number of content creators who earn income by channels other than our cash incentive program increased by over 55% year-over-year. Going forward, we will continue to develop more channels and products to enable our content creators to achieve their commercial value.

不同的內容創作者可以透過各自擅長的領域實現變現，例如廣告、直播、線上付費課程和工作坊。透過我們的平台和支持，第一季超過150萬個內容創作者透過多種管道獲得收入，較去年同期成長50%。其中，透過現金獎勵計畫以外的管道獲得收入的內容創作者數量較去年同期成長超過55%。未來，我們將持續開發更多管道和產品，賦能內容創作者實現其商業價值。

Our multi-scenario products, such as Story Mode also contribute to attract broader attention from users and satisfy their diversified video watching preferences. For the first quarter, our total daily video views increased by 37% to 4.1 billion. Story Mode's daily video views grew by 82% and the PUGV video views were up 26% in the first quarter, both on a year-over-year basis. Solid consumption trends in Story Mode are ongoing and continue to present more opportunities for cultivating our DAUs, enhancing community engagement levels as well as increasing our commercialization potential.

我們的多場景產品，例如“故事模式”，也有助於吸引更廣泛的用戶關注，並滿足他們多樣化的影片觀看偏好。第一季度，我們的每日影片總觀看量成長37%，達到41億次。其中，故事模式的每日影片觀看量較去年同期成長82%，PUGV影片觀看量較去年同期成長26%。 「故事模式」的消費趨勢持續穩健，並將繼續為提升我們的每日活躍用戶（DAU）、提升社區參與度以及提升商業化潛力提供更多機會。

In addition, we are exploring the integration of AI applications into our content ecosystem. Utilizing AIGC can enhance both content creation efficiency and our user experience. We believe we hold great promise and a tremendous potential for the video industry.

此外，我們正在探索將人工智慧應用融入我們的內容生態系統。利用AIGC可以提升內容創作效率和使用者體驗。我們相信，視訊產業前景廣闊，潛力巨大。

Leveraging these evolving technology, we can further enrich our content supply, empowering our creators to bring their vision to life more easily and effectively. We are also beta testing new features powered by AIGC to further enhance user experience.

利用這些不斷發展的技術，我們可以進一步豐富內容供應，賦能創作者更輕鬆、更有效率地將他們的願景變成現實。我們也正在測試由 AIGC 提供支援的新功能，以進一步提升使用者體驗。

As for our community, our user base remains sticky and highly engaged. The users' average daily time spend on Bilibili continue to show stability at 96 minutes. Monthly interactions was also up 15% year-over-year to 14.2 billion. Our core user cohort of official members reached 205 million in the first quarter, showing a 29% increase year-over-year. The 12 months retainer rate for official members also remained around 80%. Our loyal and active community allow us to explore more diverse and community-based exclusive products and services further opening up more commercial opportunities.

就我們的社群而言，我們的用戶群保持著高度的黏著度和參與度。用戶在嗶哩嗶哩的平均每日使用時長持續保持穩定，維持在96分鐘。月互動量年增15%，達到142億次。我們的核心用戶－官方會員在第一季達到2.05億，年增29%。官方會員的12個月留存率也維持在80%左右。我們忠誠活躍的社群使我們能夠探索更多樣化、以社群為基礎的專屬產品和服務，從而進一步開拓更多商業機會。

Now let's review our commercialization where we are improving how we monetize our offerings to drive margin expansion and narrow our losses. For the first quarter, our total revenues reached RMB 5.1 billion. Specifically, revenue from advertising business increased by 22% year-over-year. We continue to take proactive steps to improve our commercialization efficiency to support our top line and increase our gross margin at the company level.

現在，讓我們回顧一下我們的商業化。我們正在改進產品變現方式，以提升利潤率並縮小虧損。第一季度，我們的總收入達到人民幣51億元。其中，廣告業務收入較去年同期成長22%。我們將繼續採取積極措施，提升商業化效率，以支撐我們的營收成長，並提升公司層面的毛利率。

Looking at this in more detail. First, revenue from our VAS business increased by 5% year-over-year to RMB 2.2 billion for first quarter, mainly driven by the growth of our live broadcasting business. We continue to integrate our live broadcasting capabilities within our video ecosystem. As one of the primary ways for creators to monetize their talent, more creators are making the transition to live broadcasting hosts. In the first quarter, the number of monthly active live broadcasting hosts increased by 34% year-over-year, and the number of live broadcasting paying users increased by 15% year-over-year. We have also improved the gross margin of live broadcasting business on both sequential and year-on-year basis, and we expect the trend will continue.

更詳細來看，首先，第一季我們的增值服務業務營收年增5%至人民幣22億元，這主要得益於直播業務的成長。我們持續將直播功能融入我們的視訊生態系統。作為創作者變現其才華的主要方式之一，越來越多的創作者正在轉型成為直播主播。第一季度，每月活躍直播主播數量年增34%，直播付費用戶數量較去年同期成長15%。我們的直播業務毛利率也實現了環比和同比雙增長，我們預計這一趨勢將持續下去。

By the end of March, we had 20.2 million premium members. Over 80% of these were annual or auto renew package subscribers, which represents users strong trust in our brand and content offerings.

截至3月底，我們擁有2,020萬付費會員，其中超過80%為包年或自動續費套餐用戶，體現了用戶對我們品牌和內容的強烈信任。

Turning to our advertising business. Our ad revenues increased by 22% year-over-year to RMB 1.3 billion in the first quarter, largely resulting from our ad infrastructure improvements. Over past year, we have expanded and optimized our ad product offerings. At the same time, we have been continuously building our commercial database and improving our ad algorithm to drive better ROI for our ad clients. The results are encouraging.

談到我們的廣告業務。第一季度，我們的廣告收入年增22%，達到人民幣13億元，主要得益於我們廣告基礎設施的改善。過去一年，我們擴展並優化了廣告產品線。同時，我們不斷建立商業資料庫，並改進廣告演算法，以提升廣告客戶的投資報酬率。這些成果令人鼓舞。

Performance-based ads revenue record nearly 50% year-on-year growth in the first quarter, while brand ads and native ads also recorded positive year-on-year growth.

第一季成效廣告營收年增近50%，品牌廣告、原生廣告也實現年比正成長。

Our top-performing verticals for the first quarter were game, digital products and home appliance, e-commerce, skin care and cosmetics and automotive. Users are showing increased spending power and diversified consumption needs as they grow to new live stages. This dynamic is attracting more advertisers from broader verticals to our platform such as automotive and home appliance.

我們第一季表現最佳的垂直領域包括遊戲、數位產品及家電、電商、護膚美妝以及汽車。隨著用戶逐漸進入新的活躍階段，他們的消費能力和消費需求也不斷提升，這吸引了更多來自更廣泛垂直領域的廣告主，例如汽車和家電。

Looking now at our game business. Revenues for the first quarter were RMB 1.1 billion, as the rate of game approvals begin to normalize, we welcome the more titles into our pipeline. We plan to release 8 new titles in the domestic markets in coming quarters. This includes Cygames' highly anticipated game Pretty Derby, (foreign language) our first self-developed game in the female romance genre and our self-developed ACG card game, Eruthyll. In addition, we successfully co-published the HonKai Star Rail (foreign language) in April and Reverse 1999 (foreign language) in May, demonstrating our strong distribution capabilities.

現在來看看我們的遊戲業務。第一季營收為人民幣11億元。隨著遊戲審批速度逐漸恢復正常，我們迎來了更多遊戲的儲備。我們計劃在未來幾季在國內市場發布8款新遊戲，其中包括Cygames備受期待的遊戲《Pretty Derby》（外語版），這是我們首款自主研發的女性向戀愛類遊戲，以及我們自主研發的ACG卡牌遊戲《Eruthyll》。此外，我們在4月成功聯合發行了《崩壞星軌》（外語版），並於5月成功聯合發行了《逆襲1999》（外語版），展現了我們強大的發行能力。

Turning to our IP derivatives and others, previously known as e-commerce and others. Revenues for the first quarter was RMB 510 million, a decrease of 15% year-over-year. The decrease in revenue was mainly due to a proactive strategy shift to focus on increasing profitability. In the first quarter, margin for IP derivatives and others improved meaningfully by this approach, and we expect it will continue to improve going forward.

談到我們的智慧財產權衍生性商品及其他業務（之前稱為電商及其他業務）。第一季營收為人民幣5.1億元，較去年同期下降15%。收入下降主要由於我們積極主動地將策略轉向專注於提升獲利能力。第一季度，透過此策略，智慧財產權衍生性商品及其他業務的利潤率顯著提升，我們預期未來利潤率將持續提升。

Lastly, we recently published our 2022 annual ESG report, which highlights the value we create and bring to young generations in China. We are committed to shouldering our social responsibilities, fostering a welcoming community for our users and creators and working towards a sustainable future for all.

最後，我們最近發布了2022年度ESG報告，重點介紹了我們為中國年輕一代創造並帶來的價值。我們致力於履行社會責任，為使用者和創作者打造一個充滿熱情的社區，並致力於為所有人創造永續的未來。

In summary, the actions we have taken are effectively improving our financial performance and operating capabilities. While we continue to grow our dynamic community, throughout this year, we will further execute our strategy and continue to expand our gross margin and narrow our losses.

總而言之，我們採取的措施正在有效提升我們的財務表現和營運能力。在持續壯大充滿活力的社區的同時，我們將在今年進一步執行我們的策略，繼續提升毛利率並縮小虧損。

This concludes Mr. Chen's remarks. I will now provide a brief overview of our financial results for the first quarter of 2023 and our outlook for the year.

陳總的發言到此結束。接下來，我將簡要介紹我們2023年第一季的財務表現以及全年的展望。

Total net revenues for the first quarter was RMB 5.1 billion, flat compared with the same period last year. Our total net revenue breakdown by revenue stream was approximately 43% VAS, 25% advertising, 22% mobile games and 10% for our IP derivatives and others. Our cost of revenues decreased by 7% year-over-year, driving our gross profit to RMB 1.1 billion, up 37% year-over-year. While our gross margin was 22%, up from 16% from the same period last year. With our tightly controlled cost structure we expect to show continued margin improvements throughout 2023.

第一季總淨收入為人民幣51億元，與去年同期持平。依收入來源劃分，我們的總淨收入組成約為：增值服務約43%，廣告約25%，手遊約22%，以及IP衍生性商品及其他約10%。我們的營業成本較去年同期下降7%，帶動毛利達到人民幣11億元，較去年同期成長37%。毛利率為22%，高於去年同期的16%。憑藉我們嚴格控制的成本結構，我們預計2023年全年利潤率將持續提升。

Our total operating expenses were down 11% year-over-year and 31% quarter-over-quarter. We are maintaining tight control of our expenses while we work to increase our commercial prospects. We cut sales and marketing expenses by 30% year-over-year, while our DAUs grew by 18% year-over-year. As a percentage of total revenue, sales and marketing was 17% compared with 25% in the same period last year. G&A expenses was RMB 572 million, up 7% year-over-year. R&D expenses was RMB 1 billion, representing a 2% increase year-over-year. We expect to continue strict control of our operating expense going forward.

我們的總營運費用年減11%，較上季下降31%。我們在努力提升商業前景的同時，嚴格控制費用。銷售和行銷費用較去年同期削減30%，而每日活躍用戶（DAU）較去年同期成長18%。銷售和行銷費用佔總收入的17%，而去年同期為25%。一般及行政費用為人民幣5.72億元，較去年成長7%。研發費用為人民幣10億元，較去年成長2%。我們預計未來將繼續嚴格控制營運費用。

Our net loss and adjusted net loss was RMB 630 million and RMB 1 billion, narrowing by 72% and 38% year-over-year, respectively. Our net loss ratio in the first quarter was 12%, narrowed from 45% for the same period a year ago.

我們的淨虧損和調整後淨虧損分別為人民幣6.3億元和人民幣10億元，較去年同期分別收窄72%和38%。第一季我們的淨虧損率為12%，較去年同期的45%有所收窄。

Turning to our capital allocation and liability management. We currently have three outstanding CBs that totaled USD 1.6 billion. Among these, a total principal amount of USD 746 million of 2027 CB has an upcoming put rights, which are exercisable through June of this year. As of March 31, 2023, we had cash and cash equivalents, time deposits and short-term investments of RMB 19.4 billion or USD 2.8 billion. We believe this amount is sufficient to cover all of our remaining convertible CBs and fund our future operations, including the put rights on our 2027 CBs.

談到我們的資本配置和負債管理。我們目前持有三張未兌現的可轉換債券，總額達16億美元。其中，一份本金總額為7.46億美元的2027年可轉換債券附有即將到期的看跌期權，可在今年6月之前行使。截至2023年3月31日，我們的現金及現金等價物、定期存款及短期投資總額為人民幣194億元（約28億美元）。我們相信，這筆資金足以涵蓋我們所有剩餘的可轉換可轉換債券，並支持我們未來的運營，包括2027年可轉換債券的看跌期權。

With that in mind, we iterate our expectation for net revenue for the full year of 2023 to be between RMB 24 billion and RMB 26 billion.

考慮到這一點，我們重申對 2023 年全年淨收入的預期，即在人民幣 240 億元至人民幣 260 億元之間。

Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.

謝謝您的關注。現在我們開始回答您的問題。接線員，請繼續。

Thank you. (Operator Instructions) Now we're to take our first question. And the question comes from the line of Daniel Chen from JPMorgan.

謝謝。 （操作員指示）現在我們來回答第一個問題。這個問題來自摩根大通的Daniel Chen。

(foreign language) I will translate myself. So I have a question related to the user growth. So we saw that we have -- under the situation that of lower sales and marketing expense in the first quarter, we actually have a sustainable growth of daily active user in the first quarter and a higher DAU to MAU ratio in the first quarter. So could management maybe share a little bit on the future user growth, outlook and also strategy?

（外語）我自己翻譯一下。我有一個關於用戶成長的問題。我們看到，在第一季銷售和行銷費用較低的情況下，我們的每日活躍用戶實際上在第一季實現了永續成長，第一季度的DAU與MAU的比率也更高了。那麼管理階層能否分享一下未來的使用者成長、前景和策略呢？

[Interpreted] Like I said on previous earnings calls, we have adopted a more quality-oriented approach to user growth and by quality, I'm specifically referring to DAU growth.

[解釋] 正如我在之前的財報電話會議上所說的那樣，我們採取了更注重品質的用戶成長方式，我所說的品質具體是指 DAU 成長。

At this current stage, one of our top priorities is to improve the efficiency of commercialization. High-quality DAU growth and user engagement are the cornerstone of strengthening commercialization.

現階段，提升商業化效率是我們的首要任務之一，高品質的DAU成長和使用者參與度是加強商業化的基石。

This quality-oriented user growth strategy that we have to pivot away from MAU towards DAU. And over the last several quarters, we have achieved sales and marketing expense reductions while our DAU number continued to climb up. In Q1, sales and marketing expense was down by 30%, but our DAU increased by 18% to 93.7 million.

正是這種以品質為導向的用戶成長策略，讓我們不得不將重點從每月活躍用戶（MAU）轉向每日活躍用戶（DAU）。過去幾個季度，我們成功降低了銷售和行銷費用，而每日活躍用戶數量卻持續攀升。第一季度，銷售和行銷費用下降了30%，但每日活躍用戶數增加了18%，達到9,370萬人。

So compared to MAU, DAU is a better indicator of user engagement and commercialization potential. And our strategy will continue to focus more on DAU going forward. And will use this indicator to monitor our performance and drive our average user daily time spend and DAU/MAU ratio.

因此，與MAU相比，DAU更能體現用戶參與度和商業化潛力。未來我們的策略將繼續更加關注DAU，並利用該指標來監控我們的業績，並推動我們的平均每日用戶使用時間長度和DAU/MAU比率。

Building on a stable MAU, we now want to further improve retention and engagement. In Q1, DAU to MAU ratio grew to 29.7% and average user daily time spent at 96 minutes. Going forward, we expect to see further increase in the DAU to MAU ratio.

在每月活躍用戶數保持穩定的基礎上，我們希望進一步提升用戶留存率和參與度。第一季度，每日活躍用戶數與每月活躍用戶數之比成長至29.7%，用戶平均每日使用時長達96分鐘。展望未來，我們預期日活躍用戶數與月活躍用戶數之比將進一步提升。

Going forward, I think Bilibili's business model is one of a virtuous cycle because the content creators, the content supply and the quality of content here means that we're able to attract high-quality users. And the community here means that those users will stay and they will remain engaged and then that creates momentum to content creators to generate even better content. So this is a virtuous cycle. That's why looking at our user trend, I think we'll be able to continue to grow our DAU in the future.

展望未來，我認為嗶哩嗶哩的商業模式是一個良性循環，因為內容創作者、內容供應和內容品質意味著我們能夠吸引高品質的用戶。而嗶哩嗶哩的社群意味著這些用戶會留下來，他們會保持活躍，激勵內容創作者創造出更好的內容。所以這是一個良性循環。因此，從我們的用戶趨勢來看，我認為我們未來能夠繼續成長日活躍用戶 (DAU)。

And the next question comes from the line of Yiwen Zhang from China Renaissance.

下一個問題來自華興資本的張一文。

(foreign language) My question is regarding advertisement. You delivered 22% Y-o-Y growth in ads revenue, which was faster than industry average. Can you share more color on how we improve our ads products and efficiency? And what is our view on 2023 as market. Consequently, what kind of strategy shall we adapt in this market?

（外語）我的問題是關於廣告的。你們的廣告收入較去年同期成長了22%，高於業界平均。能否詳細介紹一下我們如何改善廣告產品和效率？我們對2023年的市場有何看法？因此，我們應該在這個市場採取什麼樣的策略？

And then lastly, recently, we observed many e-commerce exploration in either the video format or live streaming format. What is our progress there?

最後，最近我們觀察到許多電商平台在視訊和直播方面的探索。我們在這方面取得了哪些進展？

[Interpreted] So in Q1, we saw that advertising, marketing trend has started to warm up and is expected to achieve double-digit growth. But at Bilibili, our growth in Q1 was 22%, which I believe is greater than the industry average. And of course, we managed to capture more share.

[解讀] 在第一季度，我們看到廣告和行銷趨勢開始回暖，預計將實現兩位數成長。而嗶哩嗶哩第一季的成長率達到了22%，我認為這高於業界平均。當然，我們也成功地獲得了更多的市佔率。

If you look at performance ads specifically, the year-on-year growth for us was higher than 50%, 5-0.

如果你具體看成效廣告，我們的年成長率高於50%，達到5-0。

So just like Mr. Chen mentioned, in the context of healthy DAU growth, we're very confident that this will feed back into our advertising revenue growth. And specifically, I think our ad business is driven by both horizontal and vertical improvements as well as by new opportunities that come with vibrant transactions in our community.

所以，正如陳先生所提到的，在日活躍用戶健康成長的背景下，我們非常有信心這將轉化為廣告收入的成長。具體來說，我認為我們的廣告業務既受到橫向和縱向改進的推動，也受到社區活躍交易帶來的新機會的推動。

By horizontal improvement, I'm referring to strengthening technical and data capabilities on the middle platform for greater ad efficiency. First, algorithm optimization can help increase the ratio of so-called deep conversion, which commands higher eCPM than shallow conversion. Take game industry, for example, the ratio has now increased to 35%.

我所說的橫向提升，是指加強中台的技術與數據能力，進而提升廣告效率。首先，演算法最佳化可以提升所謂的深度轉換率，深度轉換的eCPM高於淺層轉換。以遊戲產業為例，深度轉換率目前已提升到35%。

Second, we want to increase the supply of commercial traffic. Users commercial behavior is now one of the indicators we monitor for traffic management. We want to ensure that sound user experience while leveraging the user LTV model to make dynamic adjustments in the ad load.

第二，我們希望增加商業流量的供給。使用者的商業行為現在是我們流量管理的監控指標之一。我們希望在確保良好用戶體驗的同時，利用用戶LTV模型動態調整廣告負載。

Thirdly, data structure is also essential. We've established a science-backed marketing methodology. In 2022, we put forward the MIX model, which helps clients refine their advertising plans prior to ad purchase and then help them measure the outcome afterwards. But this model was further validated in the auto and FMCG sector in Q1. And lastly, AIGC will also contribute to ad operation and conversion efficiency. So that's what I'm talking about when I said horizontal improvement to -- by the middle platform.

第三，資料結構也至關重要。我們建立了一套科學的營銷方法論。 2022年，我們推出了MIX模型，幫助客戶在廣告購買前完善廣告方案，並在購買後評估成效。該模型在第一季在汽車和快速消費品領域得到了進一步驗證。最後，AIGC也將提升廣告營運和轉換效率。這就是我之前提到的橫向改進——透過中台平台進行改進的意思。

As for vertical improvements, starting last year, we've been building and creating tailored models for six key industries so that their ads can target the right users at Bilibili. Here are some -- here are two examples.

至於垂直領域的改進，從去年開始，我們一直在為六個關鍵行業構建和創建定制模型，以便他們的廣告能夠精準地投放到嗶哩嗶哩平台上的精準用戶。以下是一些例子——以下是兩個例子。

For instance, gaming. Bilibili is known for our concentration of highly active high-value gamers. In Q1, more than 40% of our mobile users watched game videos or live broadcasting on a daily basis. And our team is responsible for game content, game distribution and game advertising, now work closely together towards shared goals, which paves the way for better-than-expected in-depth user conversion and branding outcomes.

比如游戲。嗶哩嗶哩以專注於高活躍度、高價值的遊戲玩家而聞名。第一季度，超過40%的行動用戶每天觀看遊戲影片或直播。我們負責遊戲內容、遊戲發行和遊戲廣告的團隊正緊密合作，朝著共同的目標邁進，這為實現超出預期的深度用戶轉換和品牌推廣成果奠定了基礎。

The video views for our latest game, HonKai Star Rail in the initial 2 weeks is 3.7x that of Genshin Impact for the same time frame. And as a result, the game distribution and ad revenue are also higher than Genshin Impact over that same time frame in the first week.

我們的最新遊戲《崩壞星軌道》在上線後前兩週的影片觀看量是《原神》同期的3.7倍。因此，遊戲發行和廣告收入在第一週也高於《原神》。

As for e-commerce, thanks to our data partnerships with Alibaba, PDD and JD, ad efficiency has improved meaningfully with Q1 revenue growing by more than 110% year-on-year. During the June 18th shopping festival with a well-rounded marketing metrics, including Sparkle, branding ads, e-commerce and performance ads, we project that our revenue could potentially triple or even quadruple.

電商方面，得益於我們與阿里巴巴、拼多多和京東的數據合作，廣告效率顯著提升，第一季營收年增超過110%。在618購物節期間，憑藉包括Sparkle廣告、品牌廣告、電商廣告和成效廣告在內的全面行銷指標，我們預期營收可望成長兩倍甚至四倍。

And for our verticals, electronics, FMCG and auto sector, we're confident that we'll be able to continue with the trend of healthy growth going forward.

對於我們的垂直產業、電子、快速消費品和汽車產業，我們有信心能夠持續保持健康成長的趨勢。

With regard to video and live broadcasting e-commerce, I think of it as incremental growth opportunities for both ad revenue and content creators income. This is the result of vibrant transactions in our community.

關於影片和直播電商，我認為這對廣告收入和內容創作者的收入都有增量成長的機會。這是我們社區活躍交易的結果。

Since last year, as all the other content platforms were building closed-loop e-commerce systems, we have remained committed to building an open ecosystem that is connected with all the other e-commerce sites out there. It is about shaping the user's mindset to view Bilibili as a place for shopping and to foster their capacity for transaction peer.

自去年以來，當其他內容平台都在建構閉環電商體系時，我們始終致力於建構一個開放的生態系統，與所有其他電商平台互聯互通。這是為了塑造用戶的心態，讓他們將嗶哩嗶哩視為一個購物平台，並培養他們的交易能力。

The performance in Q1 exceeded our expectations. In Q1, there were over 10 million users watching e-commerce related videos on Bilibili every day. And we also launched a dual performance product that facilitates both wish lifting and transactions, which accounted for about 30% of our performance ads in Q1.

第一季的表現超出了我們的預期。第一季度，每天有超過1,000萬用戶在嗶哩嗶哩上觀看電商相關影片。我們也推出了雙效產品，既能提升願望，又能促進交易，這佔了我們第一季效果廣告的30%左右。

E-commerce is also a new income stream for content creators. About 50,000 content creators engaged in e-commerce sales on a monthly basis in Q1, and there is now a smooth e-commerce workflow for categories such as cosmetics, food and electronics.

電商也為內容創作者帶來了新的收入來源。第一季度，每月約有5萬名內容創作者參與電商銷售，目前化妝品、食品和電子產品等品類的電商流程已趨於順暢。

Going forward, the momentum for consumption and transactions will get even stronger at Bilibili. So that's my take on how video and live broadcasting e-commerce will evolve on the platform.

展望未來，嗶哩嗶哩的消費和交易動能將更加強勁。以上就是我對嗶哩嗶哩視訊和直播電商未來發展的看法。

And the next question comes from the line of Lincoln Kong Goldman Sachs.

下一個問題來自林肯·孔高盛 (Lincoln Kong Goldman Sachs)。

(foreign language) So the question is about the live streaming business. We've been seeing a relatively quickly growing business for live streaming. How should we think about the future strategy and outlook, especially in terms of the integration of live streaming and on-demand as well as the overall gross margin trend for the live streaming business?

（外語）所以問題是關於直播業務的。我們看到直播業務成長相對較快。我們應該如何看待未來的策略和前景，尤其是在直播和點播的整合方面，以及直播業務的整體毛利率趨勢？

[Interpreted] We've always said that live streaming is a natural extension of our video ecosystem. So operationally, we have always considered live broadcasting as the integral whole of our total operation.

[翻譯] 我們一直說，直播是我們視訊生態系統的自然延伸。所以在營運上，我們一直將直播視為我們整體營運不可或缺的一部分。

So live broadcasting and videos on Bilibili sometimes -- often target the same demographics and there is a lot of overlap in category as well. And a lot of times, the live broadcasters are video creators. And last year -- since last year, we have been focusing on the fusion and integration between live broadcasting and the videos, so as to empower the live broadcasting business with momentum from the video ecosystem.

所以，嗶哩嗶哩上的直播和影片有時——通常針對相同的受眾群體，而且在類別上也有很多重疊。很多時候，直播者本身就是影片創作者。從去年開始，我們一直專注於直播和視訊的融合，以便利用視訊生態系統的動力來賦能直播業務。

I think the success we have been able to achieve with live broadcasting is precisely due to the efforts we have put in to integrate video and live streaming ecosystems. In Q1, the number of video creators who also do live streams increased by 38%, and 90% of new live streamers were either average users or video creators.

我認為我們在直播方面的成功正是源自於我們在整合視訊和直播生態方面所做的努力。第一季度，同時進行直播的影片創作者數量增加了38%，新增主播中90%都是一般用戶或影片創作者。

The video ecosystem is a source of vitality and content for our live streaming business. And in Q1, the number of active live streamers increased by 34% and the number of MPUs grew by 15%. That's how we are empowering live streaming through our video ecosystem.

視訊生態系統是我們直播業務的活力和內容來源。第一季度，活躍主播數量增加了34%，每月付費用戶數量增加了15%。這就是我們透過視訊生態系統賦能直播的方式。

So Bilibili, both very diversified categories of video content, and this has also contributed to the diversity of our live streaming content. One hallmark of that is our VTuber, which is Bilibili is now home to the largest group of Vtubers in China, and this is a natural extension of our ACG content from the video side. And today, VTubers are important source of income for live streaming.

所以，B站的視訊內容類別非常多樣化，這也促進了我們直播內容的多樣性。其中一個標誌就是我們的虛擬主播 (VTuber)，B站目前擁有中國最大的虛擬主播群體，這是我們ACG內容從視訊端的自然延伸。如今，虛擬主播是直播收入的重要來源。

The VTubers are very active group of live streamers on Bilibili. And with the help AIGC, I think they will be able to generate even more vivid and lively images and content for the users. And the whole experience can be more interactive for the users as well. So I'm personally very optimistic about prospects.

VTuber 是 Bilibili 上非常活躍的直播群組。在 AIGC 的幫助下，我相信他們將能夠為用戶創作更生動的圖像和內容。使用者的整個體驗也會更加互動。所以我個人對前景非常樂觀。

And Bilibili also aims to be diversified and cover as many verticals as possible. And you wouldn't believe that but lawyers and legal matters is a very popular category on Bilibili. Some lawyers, they also double as live streamers, our platform, answering legal questions to the viewers. Sometimes they have to answer very insignificant, inconsequential tiny questions, whatever the viewers want to ask them, and it's also something that Bilibili offers.

Bilibili 也致力於多元化發展，盡可能涵蓋更多垂直領域。你可能想不到，律師和法律事務在 Bilibili 上非常受歡迎。有些律師也兼任我們平台的直播主播，解答觀眾的法律問題。有時，他們也需要回答一些無關緊要、無關緊要的問題，無論觀眾想問什麼，Bilibili 都能提供類似的服務。

Another example would be Go. We have roughly thousands of Go players in China. And the vast majority of whom have already joined the Bilibili community as live streamers. And even though it's a very niche hobby, they somehow ended up together on our platform. We even have a lot of Go players from the province of Taiwan interacting with our users on the platform.

另一個例子是圍棋。我們在中國大約有數千名圍棋玩家。其中絕大多數已經加入了嗶哩嗶哩社區，成為主播。儘管圍棋是一個非常小眾的愛好，但他們最終還是聚集在我們的平台上。甚至有許多來自台灣的圍棋玩家也在我們平台上與使用者互動。

These examples goes to show that live streaming itself is very dynamic and diversified on Bilibili. It's not just another revenue stream for us. It actually has a lot of content to offer and holds tremendous potential. And as our video business grows stronger and bigger, I believe our live streaming, live broadcasting business will also be able to expand and improve.

這些例子表明，嗶哩嗶哩的直播本身就充滿活力且多元化。它不僅僅是我們的一個收入來源。它實際上擁有豐富的內容，並且潛力巨大。隨著我們視訊業務的不斷發展壯大，我相信我們的直播和主播業務也將能夠拓展和提升。

During previous earnings calls, I've said that live streaming business could potentially, at least double and I could say that again, at this call, I believe live streaming has, at least the potential to double at Bilibili. And the fusion between video and live streaming will continue to enhance.

在之前的財報電話會議上，我曾說過，直播業務至少有翻倍的潛力。這次我可以再次強調，我相信嗶哩嗶哩的直播業務至少有翻倍的潛力。而且，視訊和直播的融合將持續增強。

Theoretically, every user can be a video viewer as well as a live stream viewer, and every broadcaster can generate video content as well as live streaming content. And this is now also an important income stream for content creators. In Q1, 700,000 creators were able to make the income from live streaming.

理論上，每個用戶都可以觀看視頻，也可以觀看直播；每個主播都可以創作視頻內容，也可以製作直播內容。這現在也是內容創作者的重要收入來源。第一季度，有70萬創作者透過直播獲得了收入。

And fusion between videos and live streaming could also drive up our gross margin and reduce cost as more ordinary users are doing live streams on their own and the cost of bandwidth being spread out even further, we believe the gross margin for live streaming business will continue to improve.

而視訊與直播的融合也能提升我們的毛利率，降低成本，隨著越來越多的普通用戶自己進行直播，頻寬成本進一步分攤，我們相信直播業務的毛利率會繼續提高。

And the next question comes from the line of Lei Zhang from Bank of America Securities.

下一個問題來自美國銀行證券的張雷。

(foreign language) I want to ask mainly about the monetization of the content creator, which we noticed that previously have some wider discussion on the Internet. So can you share us more color on how we can improve either the total income or the commercial value for the content creators on Bilibili?

（外語）我主要想問內容創作者的獲利問題。我們注意到之前網路上對這個問題的討論比較廣泛。您能否詳細介紹一下，如何才能提高嗶哩嗶哩上內容創作者的總收入或商業價值？

[Interpreted] So I think you're referring to an article released in April about many -- the article claims that many creators on Bilibili stopped uploading new content to the platform. I read it myself, and I think this article is nothing but misleading. And this article mentioned three content creators who paused their update -- paused their video content updates. Out of millions of content creators we have on Bilibili, the article mentioned only 3, and 2 of those 3, you actually have released new content since then. And so I think even though the article has a quite clickbait title, the content and the reasoning in this article was misleading.

[解讀] 所以我認為你指的是一篇四月份發布的文章，文章聲稱嗶哩嗶哩上很多創作者停止了在平台上上傳新內容。我自己也讀過，我認為這篇文章完全是誤導的。文章提到有三位內容創作者暫停了更新——暫停了他們的影片內容更新。嗶哩嗶哩擁有數百萬內容創作者，但文章只提到了三位，而這三位中實際上有兩位在那之後發布了新內容。所以我認為，儘管這篇文章的標題很吸引人，但其內容和論證本身就具有誤導性。

I think this article was able to start a heated debate as proof that people are paying attention to Bilibili very closely and some media even went down to write derivative reports on this article. And that's why we -- and that discussion ended up on the hot topic list of Weibo. And internally, we have been making a lot of efforts to improve commercialization for content creators at Bilibili, and we have numbers to back that up.

我認為這篇文章能夠引發熱烈討論，證明大家非常關注嗶哩嗶哩，有些媒體甚至還就此文章進行了衍生報道。正因如此，我們——以及那場討論最終登上了微博熱搜榜。在嗶哩嗶哩內部，我們一直在努力提升內容創作者的商業化水平，數據也證明了這一點。

We have done a lot of work to help our content creators monetize. In Q1 alone, 1.5 million content creators earned income on Bilibili up by 50% year-on-year. And the amount they are making from advertising, live streaming and also user payment has also increased meaningfully.

我們為幫助內容創作者實現盈利做了許多工作。光是第一季度，就有150萬名內容創作者在嗶哩嗶哩上獲得收入，較去年同期成長50%。他們從廣告、直播和用戶付費中獲得的收入也顯著增長。

And in this article, it has also said that Bilibili is cutting incentives for content creation, which could have some ramifications. This is, again, very misleading because the incentive programs we have is only for content creators with fewer than 10,000 followers. Basically, we provide them the subsidy to help them tide over the initial period of content creation when they did not have the ability to generate the income for themselves. And for the content creators that have more than 10,000 followers, we help them find the tools to make money on their own. So this incentive program doesn't really matter for the vast majority of the creators on our platform.

這篇文章還提到嗶哩嗶哩正在削減內容創作者的激勵措施，這可能會產生一些影響。這同樣具有誤導性，因為我們的激勵計畫只針對粉絲少於1萬的內容創作者。我們基本上會給他們補貼，幫助他們度過內容創作初期，因為那時他們還沒有能力自己創造收入。而對於粉絲超過1萬的內容創作者，我們會幫助他們找到自己賺錢的工具。所以，這個激勵計畫對我們平台上的絕大多數創作者來說並不重要。

Helping our creators monetize has always been a priority in our work. And we have established the Sparkle system to help content creators get commercial deals. We have also been empowering video creators to switch to live stream so that they can make the income there. So this effort will never stop. We'll step up our efforts to help them make the income. That's why -- that's because we believe only when those content creators don't have to worry about money, they will be able to invest more energy into generating high-quality content.

幫助創作者獲利一直是我們工作的重中之重。我們建立了Sparkle系統，幫助內容創作者獲得商業合約。我們也一直在賦能影片創作者，讓他們能夠轉向直播，從而獲得收入。所以，這項工作永遠不會停止。我們會加大力度，幫助他們獲得收入。我們相信，只有當這些內容創作者不再為金錢煩惱時，他們才能投入更多精力創作高品質的內容。

So this article is able to trigger such a discussion and it shows that users actually care a lot about the creators and the Bilibili platform. And the reason why we're able to have such a high concentration of high-caliber creator is because we believe in the value of high-quality content and the power of creators. This has always been and will always be a guiding principle in our operation.

這篇文章能夠引發這樣的討論，顯示用戶確實非常關心創作者和嗶哩嗶哩平台。我們之所以能夠擁有如此高水準的創作者，是因為我們相信優質內容的價值和創作者的力量。這一直是、也將永遠是我們運作的指導原則。

We have always treated creators nicely because we understand their needs, and we are going to spare no effort in supporting those creators and helping them to earn an income that they deserve. This is a work will carry out continuously.

我們一直以來都善待創作者，因為我們理解他們的需求。我們將不遺餘力地支持這些創作者，幫助他們獲得應得的收入。這項工作將持續進行。

And the next question comes from the line of Xueqing Zhang from CICC.

下一個問題來自中金公司的張學慶。

(foreign language) And my question is mainly about the Bilibili. You mentioned in your prepared remarks that Bilibili has some newly approved games. So can management share with us the game pipeline and what's its strategy and outlook?

（外語）我的問題主要關於嗶哩嗶哩。您在準備好的發言中提到嗶哩嗶哩有一些新核准的遊戲。管理階層能否與我們分享嗶哩嗶哩的遊戲儲備，以及它的戰略和前景？

[Interpreted] This year is going to be a big year for the gaming industry. Licenses for domestic games are now issued regularly every month. For import games, two batches of licenses have been handed out since last year, which is great not just for our game distribution business, but also for advertising and live broadcasting as well.

[翻譯] 今年將是遊戲產業重要的一年。國產遊戲的版號現在每個月都會定期發放。對於進口遊戲，自去年以來已經發放了兩批版號，這不僅對我們的遊戲發行業務有利，而且對廣告和直播業務也大有裨益。

In the next several quarters, we have 13 games to be launched at home and abroad, 8 of which have acquired domestic game licenses and will be published in China. Five of them will be published overseas.

未來幾季，我們將在國內外推出13款遊戲，其中8款已獲得國內遊戲版號並將在中國發行，5款將在海外發行。

We are now preparing for the launch of the high-profile game we distribute called, Pretty Derby and we are now working around the clock to finish the last bits of localization work for this game before launch. And we also have two self-developed titles, Alkaidland Records, which is a female romance game and also Eruthyll, an ACG card game, which will be published later this summer.

我們目前正在籌備發行備受矚目的遊戲《Pretty Derby》，並加班加點地完成遊戲發行前的最後在地化工作。此外，我們還有兩款自主研發的遊戲：女性向戀愛遊戲《Alkaidland Records》和ACG卡牌遊戲《Eruthyll》，這兩款遊戲將於今年夏天晚些時候發行。

Bilibili is home to the largest group of ACG gamers and fans and also both a very young user base, which makes us the core channel for distributing ACG games. Since the beginning of the year, we've successfully distributed many ACG titles, proving our worth once again. HonKai Star Rail by miHoYo is a great example of that, which achieved a whopping 2.8 million first day download on Bilibili, setting a new record for our game distribution business. And just yesterday, our distribution game, Reverse 1999, was published with great initial feedback.

B站擁有全球最大的二次元遊戲玩家和粉絲群，用戶群非常年輕，這使得我們成為二次元遊戲發行的核心管道。自今年年初以來，我們成功發行了多款二次元遊戲，再次證明了我們的價值。米哈遊的《崩壞星軌》就是一個很好的例子，它在B站的首日下載量高達280萬次，創下了我們遊戲發行業務的新紀錄。就在昨天，我們發行的遊戲《逆轉1999》正式發布，並獲得了良好的初期反應。

Many people are interested in our self-developed games. Two examples I mentioned just now are Alkaidland Records and Eruthyll. And we have more pipeline games under development. But since self-developed games, we only want to be delivering high-quality games. So the cycle will be relatively long and each game will take 3 years for development. And the next self-developed game will probably be published around the year after next. We will stick to the strategy of self-developed quality games and global distribution.

很多人對我們的自研遊戲感興趣。我剛剛提到的兩個例子是Alkaidland Records和Eruthyll。我們還有更多正在開發的遊戲。但既然是自研遊戲，我們只想推出高品質的遊戲。所以周期會相對較長，每款遊戲的開發週期大概是3年。下一款自研遊戲大概會在後年左右發售。我們會堅持自研精品遊戲和全球發行的策略。

In terms of game genres, we will focus more on our forte such as ACG card games. Our goal is to develop top-ranking games in niche segments and manage them well over a long life cycle, and we're putting the hard effort needed to achieve that success on this front.

在遊戲類型方面，我們將更加專注於我們的強項，例如ACG卡牌遊戲。我們的目標是在細分領域開發出排名靠前的遊戲，並在其長期生命週期內保持良好的運營，為此我們付出了巨大的努力。

Now we're going to take our last question. Please stand by. And the question comes from the line of Felix Liu from UBS.

現在我們來回答最後一個問題。請稍候。這個問題來自瑞銀的Felix Liu。

(foreign language) And congratulations on the notable improvement on GP margin and overall bottom line. Can management elaborate a little bit on measures you have taken and your drivers for future GP margin and loss-narrowing drivers?

（外語）祝賀毛利率和整體獲利顯著提升。管理階層能否詳細介紹一下你們採取的措施，以及未來提高毛利率和減少虧損的驅動因素？

This is Sam. I will take your question. Our focus of this year is clear to improve the gross margin. In the same time, we will reduce our net loss. So in the first quarter, our gross profit year-over-year growth grew about 37% and net loss narrowed considerably about 72% year-on-year and 58% quarter-over-quarter.

我是Sam，我來回答你的問題。我們今年的重點很明確，就是提高毛利率。同時，我們會減少淨虧損。第一季度，我們的毛利年增約37%，淨虧損較去年同期大幅收窄約72%，較上季收窄58%。

From the revenue side, we continue to improve the quality of the revenue. The advertising business, as we mentioned, grew by 22% year-over-year. So it's a high-margin business. And at the cost end, we still keep improve our operational efficiency and achieve a year-on-year decrease of 7% of total cost. And so that results, the GP increased by 37%, and the GP margin improved to 22% compared with 16% last year.

從收入方面來看，我們持續提升收入品質。正如我們之前提到的，廣告業務年增了22%，因此這是一個高利潤率的業務。在成本方面，我們持續提升營運效率，總成本較去年同期下降了7%。因此，毛利率成長了37%，毛利率從去年的16%提升至22%。

So use the technology upgrading under operational management. The bandwidth cost, for example, continue to decline, down about 16% year-on-year and 12% quarter-over-quarter. And other fixed costs, for example, labor and other operational costs also fell about 13% year-on-year and quarter-over-quarter.

因此，在營運管理下利用技術升級。例如，頻寬成本持續下降，年減約16%，季減12%。其他固定成本，例如勞動力和其他營運成本，也較去年同期下降了約13%。

So from the expense side, you already saw the overall operating expenses decreased significantly, about 11% year-over-year and DAUs increased by 18% year-on-year. So we will keep actively control our operating expenses, especially the marketing expenses, which are already down about 30% year-on-year in Q1. I think that will be -- that trend will continue in the following quarter.

從費用方面來看，您已經看到整體營運費用大幅下降，年減約11%，每日活躍用戶較去年同期成長18%。因此，我們將繼續積極控制營運費用，尤其是行銷費用。第一季度，行銷費用已較去年同期下降約30%。我認為，這一趨勢將在下一季持續下去。

So we are quite confident that we've controlled the cost and expenses. Our gross profit margin will improve quarter-over-quarter and of this year. And the operating basis will also show a meaningful year-on-year decline and to achieve a further narrowing of our net loss.

因此，我們非常有信心控製成本和費用。我們的毛利率將環比和全年均有所提高。經營利潤也將出現年比顯著下降，淨虧損也將進一步收窄。

Thank you. And that concludes the question-and-answer session. Thank you once again for joining Bilibili's First Quarter 2023 Financial Results and Business Update Conference Call today. If you have any further questions, please contact Juliet Yang, Bilibili's Executive IR Director or Piacente Financial Communications. Contact information for IR in both China and the U.S. can be found on today's press release. Have a great day.

謝謝。問答環節到此結束。再次感謝您參加嗶哩嗶哩2023年第一季財務業績及業務更新電話會議。如有任何疑問，請聯絡嗶哩嗶哩投資者關係執行總監Juliet Yang或Piacente Financial Communications。中國和美國投資者關係的聯繫方式可在今天的新聞稿中找到。祝您擁有美好的一天。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[本記錄中標記為 [已翻譯] 的部分由現場翻譯人員朗讀。 ]