Bilibili Inc (BILI) 2023 Q4 法說會逐字稿

Good day, and welcome to the Bilibili's 2023 Fourth Quarter and Fiscal Year 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年第四季及全年財務表現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葉。請開始。

Thank you, operator. During this call, we'll discuss business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC and Hong Kong Stock Exchange.

謝謝接線生。在本次電話會議中，我們將討論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。

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

我們提供的非公認會計準則 (Non-GAAP) 財務指標僅供比較之用。這些指標的定義及對帳表可在我們今天稍早發布的新聞稿中找到。溫馨提示：本次電話會議正在錄製。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's 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.

今天與我們一起出席的 Bilibili 高級管理層成員有：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卡莉女士以及首席財務官范志軍先生。

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

現在我將把電話轉給范先生，他將代表陳先生宣讀準備好的演講稿。

Thank you, Juliet, and thank you, everyone, for participating in our 2023 year-end conference call to discuss our financial and operating results. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen.

謝謝茱麗葉，也謝謝大家參加我們2023年年終電話會議，討論我們的財務和營運績效。我很高興代表陳先生致今天的開場白。

In 2023, we navigated a landscape of challenges and opportunities and achieved a number of important milestones on community growth, commercialization efficiency improvement, margin expansion and loss cutting. Let's review these achievements in more detail.

2023年，我們克服了挑戰與機遇，在社區發展、商業化效率提升、利潤成長和虧損削減等方面取得了一系列重要里程碑。讓我們更詳細地回顧這些成就。

To begin with, we exited the year with over 100 million DAUs, 336 million MAUs and other healthy community metrics across the board. Daily user time spent remained robust at over 95 minutes on average in the fourth quarter. We continued to emphasize and dedicate resources to reinforce our content ecosystem, support our creators and foster an inspiring community. In 2023, over 3 million content creators earned income on our platform, up 30% year-over-year. Further enabling talented content creators to expand their fan base and make money will be one of our most important tasks for 2024.

首先，我們以超過1億的每日活躍用戶（DAU）和3.36億的月活躍用戶（MAU）以及其他各項健康社群指標的成績結束了這一年。第四季度，每日用戶平均使用時長保持強勁，超過95分鐘。我們持續強調並投入資源來強化我們的內容生態系統，支持我們的創作者，並打造一個充滿活力的社群。 2023年，超過300萬個內容創作者在我們的平台上獲得收入，較去年同期成長30%。進一步賦能才華洋溢的內容創作者，擴大粉絲群並創造收益，將是我們2024年最重要的任務之一。

Another highlight for the year was our progress in improving our commercialization efficiency. We stepped up our efforts to incorporate advertising and the VAS business in a way that's native to our content ecosystem. Driven by strong performance-based ads, our ad revenue grew by 28% in the fourth quarter and 27% for the full year. VAS revenues grew by 22% in the fourth quarter and 14% for the full year, all on year-over-year basis. With this growth, our total revenues for the full year came in at RMB 22.5 billion, among which ad revenue made a higher contribution, rising from 23% in 2022 to 28% in 2023.

本年度的另一個亮點是我們商業化效率的提升。我們加大力度，以更貼近內容生態系統的方式整合廣告和加值服務業務。在強勁的成效廣告推動下，我們的廣告收入在第四季度成長了28%，全年成長了27%。增值服務收入在第四季成長了22%，全年成長了14%，均較去年同期成長。得益於此，我們全年總收入達到人民幣225億元，其中廣告收入貢獻率更高，從2022年的23%上升至2023年的28%。

Increased revenue contribution from our high-margin advertising business and effective cost controls drove our gross profit up by 33% year-over-year and our gross profit margin reached 26.1% in the fourth quarter, marking the sixth consecutive quarter of margin improvement. For the full year, our gross profit grew by 41% and our gross profit margin increased to 24.2% from 17.6% in 2022. Consequently, we significantly narrowed our adjusted net loss by 58% year-over-year in the fourth quarter and by 49% for the full year. Notably, we generated RMB 640 million in positive operating cash flow in the fourth quarter and our full-year operating cash flow also turned positive in 2023. These gains place us on solid footing to reach our profitability goal.

高利潤率廣告業務收入貢獻的提升，以及有效的成本控制，推動我們的毛利年增33%，第四季毛利率達到26.1%，標誌著毛利率連續六季改善。全年毛利成長41%，毛利率從2022年的17.6%提升至24.2%。因此，我們第四季的調整後淨虧損較去年同期大幅收窄58%，全年則收窄49%。值得一提的是，我們在第四季實現了人民幣6.4億元的正經營現金流，2023年全年經營現金流也轉為正值。這些成長為我們實現獲利目標奠定了堅實的基礎。

2023 has shown the effectiveness of our strategy and provided a solid foundation for our success in 2024. As we approach profitability, we are keeping our fundamental goal in mind: to create value for our users. We do this by expanding our content offerings, supporting our creators and fostering a vibrant and growing community that people love.

2023 年證明了我們策略的有效性，並為 2024 年的成功奠定了堅實的基礎。在邁向獲利的過程中，我們始終牢記我們的根本目標：為用戶創造價值。為此，我們不斷擴展內容產品，支持創作者，並打造一個充滿活力、不斷發展的社區，深受使用者喜愛。

Our industry is still benefiting from the wave of videolization with the fast-evolving generative AI as a tailwind. This leaves us with a long runway for growth. We remain confident that our virtuous growth cycle of user expansion and the commercial capabilities will create increasing value for our users, creators and shareholders.

我們的產業仍在受益於視訊化浪潮，而快速發展的生成式人工智慧則成為順風。這為我們提供了長期的成長空間。我們堅信，用戶成長和商業能力的良性成長週期將為我們的用戶、創作者和股東創造更高的價值。

With that overview, I'd like to discuss our core pillars of content, community and commercialization in more detail.

透過這個概述，我想更詳細地討論我們的內容、社群和商業化的核心支柱。

Beginning with content and community. An ever-growing content ecosystem is vital for our community's health and vibrancy. For the fourth quarter, daily active content creators grew by 16% and the monthly new content submission rose by 31%， both year-over-year. As we continued to facilitate connections between high-quality content and creators with fans, content creators with over 10,000 followers were up 30% year-over-year in the fourth quarter.

從內容和社群開始。不斷發展的內容生態系統對我們社區的健康與活力至關重要。第四季度，每日活躍內容創作者數量較去年同期成長16%，每月新內容提交量較去年同期成長31%。隨著我們持續促進優質內容與擁有粉絲的創作者之間的聯繫，第四季度擁有超過1萬名粉絲的內容創作者數量同比增長了30%。

In January 2024, we honored top 100 content creators at our Sixth Annual Bilibili Power Up 2023 Award Ceremony to recognize their creations and contributions to our community, among which 39 content creators received the award for the first time. These top 100 content creators excelled on our platform, successfully accumulating a total of over 400 million followers.

2024年1月，我們在第六屆嗶哩嗶哩 Power Up 2023 年度頒獎典禮上，表彰了百強內容創作者，以表彰他們的創作成果以及對社區的貢獻。其中，有39位創作者首次獲此殊榮。這百強創作者在我們的平台上表現出色，累計粉絲超過4億人。

With a thriving content ecosystem, Bilibili has become a favored platform across different age groups and genders. In the fourth quarter, the average age of our active user base was 24. As our existing users gradually mature, their interests evolve and consumption increases. In 2023, baby and maternity, automotive, traveling, fashion and clothing categories demonstrated the highest growth in the video views. Each of these categories carries significant commercial value.

憑藉著蓬勃發展的內容生態系統，嗶哩嗶哩已成為不同年齡層和性別用戶喜愛的平台。第四季度，我們活躍用戶的平均年齡為24歲。隨著現有用戶逐漸成熟，他們的興趣與嗜好也不斷演變，消費也不斷增長。 2023年，母嬰、汽車、旅遊、時尚服飾等類別的影片觀看量成長最為顯著。這些類別都蘊含著巨大的商業價值。

The boundary between interest-based and commercial content has also blurred. In 2023, the number of commercial-related content with over 1 million video views more than doubled year over year. Meanwhile, over 3 million content creators made money through our various channels in 2023, among which the number of content creators who earned income via video and live commerce was up 133% year over year.

興趣內容和商業內容之間的界線也變得模糊。 2023年，影片觀看次數超過100萬次的商業內容數量較去年同期成長超過一倍。同時，2023年，超過300萬名內容創作者透過我們各種管道獲得收入，其中透過影片和直播獲得收入的內容創作者數量同比增長133%。

With more content creators and a better content ecosystem, our users remain highly engaged， and the community continues to thrive. For the full year 2023, our average daily video views increased by 25% year over year to 4.3 billion. Our users spent 97 minutes daily on the platform during the same period. Monthly average interactions also grew by 14% year over year to over 15 billion in 2023. By the end of 2023, we had 230 million official members, 18% more than in the prior year, and their 12-month retention rate remained strong at around 80%.

隨著內容創作者的增加和內容生態系統的完善，我們的用戶保持了高度參與度，社群也持續蓬勃發展。 2023年全年，我們日均影片觀看量年增25%，達到43億次。同期，我們的用戶每日在平台上的停留時間為97分鐘。 2023年，月均互動量也較去年同期成長14%，超過150億次。截至2023年底，我們擁有2.3億正式會員，比上一年增長18%，他們的12個月留存率保持在80%左右的強勁水平。

Additionally, we closed the year with our fifth New Year's Eve Gala, The Most Beautiful Night of 2023, emerging as the youth's must-watch online New Year's celebration. The event garnered 100 million playbacks within 24 hours and received the most industry sponsor participation ever in its history.

此外，我們以第五屆跨年晚會——「2023年最美之夜」——為新年畫下完美句點。這場晚會已成為年輕人不容錯過的線上跨年盛典。 24小時內，晚會播放量突破1億次，並創下了業界贊助商參與度的最高紀錄。

Lastly, I'd like to talk about commercialization and dive into each of our business lines.

最後，我想談談商業化並深入探討我們的每一條業務線。

Our thriving, interactive community is the cornerstone of our commercialization model. In the fourth quarter, our VAS revenues were up 22% year-over-year to RMB 2.9 billion and up 14% to RMB 9.9 billion for the full year. These increases were primarily driven by robust growth in our live broadcasting revenues.

我們蓬勃發展的互動社群是我們商業化模式的基石。第四季度，我們的增值服務收入較去年同期成長22%，達到人民幣29億元；全年增值服務收入較去年同期成長14%，達到人民幣99億元。這些成長主要得益於直播收入的強勁成長。

Our live broadcasting universe continues to be more diverse as we convert more host talent from our video content creator pool. In 2024, we will continue to integrate live broadcasting into our video ecosystem. By introducing more high-quality hosts and enhancing various tools and recommendation algorithms, we aim to convert more paying users on our platform. At the same time, our featured live broadcasting content and products, like Vtubers and its celebration system, will continue to elevate payment activities and offer more monetization opportunities for us.

隨著我們從影片內容創作者庫中吸收更多主播人才，我們的直播生態也日益多元化。 2024年，我們將繼續把直播融入我們的視訊生態系統。透過引入更多優質主播，並優化各種工具和推薦演算法，我們的目標是在平台上轉換更多付費用戶。同時，我們精選的直播內容和產品，例如Vtubers及其慶功宴系統，將繼續提升付費活躍度，並為我們提供更多變現機會。

In terms of memberships, by the end of 2023, we had 21.9 million premium members. Our members continue to demonstrate high brand loyalty and trust with over 80% subscribing annual or auto-renewal packages. Additionally, users continue to exert increased spending power on other featured products and experiences.

會員方面，截至 2023 年底，我們有 2,190 萬名高級會員。我們的會員持續展現出極高的品牌忠誠度和信任度，超過 80% 的會員訂閱了包年或自動續費套餐。此外，用戶在其他特色產品和體驗上的消費能力也持續提升。

Turning to our advertising business. We made some exciting progress. In 2023, our total advertising revenues increased by 28% to RMB 1.9 billion for the fourth quarter and were up by 27% to RMB 6.4 billion for the full year, both on a year-over-year basis. Robust revenue growth in our performance-based ads was the most significant contributor, increasing over 60% year-over-year for the quarter and over 50% for the full year. We also achieved positive year-on-year growth in brand and native ad revenues throughout the year.

談到我們的廣告業務。我們取得了一些令人振奮的進展。 2023年，我們的廣告總營收在第四季成長28%，達到人民幣19億元，全年成長27%，達到人民幣64億元，均較去年同期成長。效果廣告收入的強勁成長是最重要的貢獻因素，第四季年增超過60%，全年較去年同期成長超過50%。全年品牌廣告和原生廣告收入也實現了同比增長。

We credit our solid ad revenue growth to our unique position as the most densely populated community of the young generation and our ability to connect with them in their own language. In the meantime, we continued to enhance our ad infrastructure including product optimization and algorithms improvement. This enables advertisers not only to improve their brand equity, and influence users' purchasing decisions but also directly convert sales on Bilibili. In the fourth quarter, our top 5 advertising verticals were games, e-commerce, digital products and home appliance, automotive and skin care and cosmetics. Among these verticals, the e-commerce and game sectors stood out with impressive results.

我們將廣告收入的穩健成長歸功於我們作為年輕一代最密集群體的獨特地位，以及我們能夠用他們的母語與他們建立聯繫的能力。同時，我們持續增強廣告基礎設施，包括產品最佳化和演算法改進。這使得廣告主不僅能提升品牌資產，影響用戶的購買決策，還能直接轉換為嗶哩嗶哩的銷售額。第四季度，我們前五名的廣告垂直領域分別是遊戲、電商、數位家電、汽車以及護膚美妝。在這些垂直領域中，電商和遊戲領域表現尤為突出，並且取得了令人矚目的成就。

Over the course of 2023, we deepened our collaboration with e-commerce advertisers. We further integrated direct sales conversion tools into our video and live commerce ad products. And this enabled our users to seamlessly transition from viewing content to making relevant purchases, enhancing our ad conversion efficiency and user experience. Meanwhile, our deeper data collaboration with key e-commerce platforms further improved the accuracy and efficiency of our ad recommendation algorithms. In 2023, the number of users engaging in consumption-related behaviors increased by over 200% year-over-year.

2023年，我們深化了與電商廣告主的合作。我們進一步將直銷轉換工具整合到影片和直播廣告產品中，使用戶能夠從瀏覽內容無縫過渡到進行相關購買，從而提升了廣告轉換效率和用戶體驗。同時，我們與主要電商平台更深入的數據合作，進一步提升了廣告推薦演算法的準確性與效率。 2023年，參與消費相關行為的使用者數量較去年同期成長超過200%。

Meanwhile, we successfully gained more marketing budgets from key game developers during the fourth quarter, as they launched new games and promoted the existing game updates. We maintained our position as an effective channel to convert gamers and a must-invest-in community to build game IP, thanks to our integrated advertising strategy and extensive resources within our gaming ecosystem.

同時，我們在第四季度成功地從主要遊戲開發商手中獲得了更多行銷預算，助力他們推出新遊戲並推廣現有遊戲更新。由於我們整合的廣告策略以及在遊戲生態系統中豐富的資源，我們維持了作為有效玩家轉換管道和打造遊戲IP必投資社群的地位。

While we are encouraged by the progress we made in our advertising business in 2023, we believe there is still great potential and ample room for growth. In 2024, we will further integrate ads with our content ecosystem in a more native, natural and seamless way. We will prioritize our resources to improve ad infrastructure, including upgrading and refining our ad products, further optimizing the accuracy and efficiency of ad algorithms. We will also actively explore generative AI for ad material creation, spurring productivity for advertisers. Industry-wise, we will continue to expand our shares in our leading games and e-commerce sectors and gain more presence in digital products and home appliance, skin care and cosmetics and automotive verticals.

2023年廣告業務的進展令我們備受鼓舞，但我們相信其潛力巨大，成長空間巨大。 2024年，我們將進一步將廣告與內容生態系統以更原生、更自然、更無縫的方式整合。我們將優先投入資源，完善廣告基礎設施，包括升級和優化廣告產品，進一步提升廣告演算法的精準度與效率。我們也將積極探索生成式人工智慧在廣告素材創作中的應用，進而提升廣告主的生產力。在產業方面，我們將繼續擴大在領先遊戲和電商領域的份額，並進一步拓展數碼家電、護膚美妝和汽車等垂直領域的業務。

Turning to our game business. Total game revenues increased 2% quarter-over-quarter to RMB 1 billion in the fourth quarter, coming in at RMB 4 billion for the full year. Currently, three titles in our pipeline have been approved for release in the domestic market in the coming quarters: one Japanese card game, Heaven Burns Red, Chiyan Tianqiong; one domestic SLG game, San Guo: Mou Ding Tian Xia; and another domestic card game, Artifacters.

談到我們的遊戲業務。第四季遊戲總營收季增2%，達10億元，全年收入達 40億元人民幣。目前，我們已獲准在未來幾季在國內市場發行三款遊戲：一款日本卡牌遊戲《天火赤焰天穹》；一款國產SLG遊戲《三國：謀定天下》；以及另一款國產卡牌遊戲《神器》。

In addition, we are able to create value for our broader game partners by increasingly integrating our advertising products with our game distribution capabilities. As for our self-developed game, we streamlined our resources and adopted a more selective game development strategy in 2023. The refined strategy will enable us to reduce our R&D expenses in 2024 while keeping us lean and focused on top-quality projects.

此外，我們能夠透過不斷整合廣告產品與遊戲發行能力，為更廣泛的遊戲合作夥伴創造價值。至於自研遊戲，我們於2023年精簡了資源，並採取了更具選擇性的遊戲開發策略。優化後的策略將使我們能夠在2024年降低研發費用，同時保持精簡並專注於優質專案。

Looking forward, our priorities in 2024 are consistent with 2023. We will further improve our commercialization capabilities by strengthening our technology infrastructure and improving our product offerings, particularly for our advertising and live broadcasting business. Company-wide, we aim to further improve our operation efficiency with a tight and targeted expense structure. Overall, we are dedicated to developing content ecosystem, enabling our content creators to earn more money and further expanding our user base. We believe these endeavors will lead us to reach our goal of profitability and set the stage for sustainable growth for many years ahead.

展望未來，我們2024年的重點與2023年保持一致。我們將透過加強技術基礎設施和優化產品線，特別是廣告和直播業務，進一步提升商業化能力。在整個公司範圍內，我們的目標是透過嚴格且有針對性的支出結構，進一步提高營運效率。整體而言，我們致力於發展內容生態系統，賦能內容創作者創造更多收益，並進一步擴大用戶群。我們相信，這些努力將引領我們實現獲利目標，並為未來多年的永續成長奠定基礎。

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

陳總的發言到此結束。接下來，我將簡要介紹我們2023年第四季的財務表現。

In the interest of time, on today's call, I will be reviewing our fourth quarter highlights as Mr. Chen's remarks have touched on our full-year results at a high level. We encourage you to refer to our press release issued earlier today for a closer look at our full-year results.

由於時間原因，在今天的電話會議中，我將回顧我們第四季度的亮點，因為陳先生的演講已經高度提到了我們的全年業績。我們建議您參閱我們今天早些時候發布的新聞稿，以便更詳細地了解我們的全年業績。

Throughout 2023, our financial profile improved significantly alongside our community growth and ecosystem expansion. Of particular importance are the gains we made in our revenues, gross profit and the reduction in adjusted net loss, which we narrowed for the sixth consecutive quarter.

2023年全年，隨著社區發展和生態系統擴張，我們的財務狀況顯著改善。尤其重要的是，我們的營收和毛利潤均有所成長，調整後淨虧損也出現下降，連續六季收窄。

Total net revenues for the fourth quarter were RMB 6.3 billion, up 3% year-over-year. Our total net revenues breakdown by the revenue stream for the fourth quarter was approximately 45% VAS; 30% advertising; 16% mobile games; and 9% from our IP derivatives and other businesses.

第四季總淨收入為人民幣63億元，較去年同期成長3%。依收入來源劃分，第四季總淨收入約佔45%來自增值服務業務；30%來自廣告業務；16%來自手機遊戲業務；以及9%來自IP衍生性商品及其他業務。

Our cost of revenues decreased by 4% year over year to RMB 4.7 billion in the fourth quarter, driving our gross profit to RMB 1.7 billion, up 33% year-over-year. Our gross profit margin exceeded 26% in the fourth quarter, up from 20% in the same period last year. We expect our gross profit margin to continue to improve in 2024.

第四季，我們的營業成本年減4%至人民幣47億元，帶動毛利年增33%至人民幣17億元。第四季度，我們的毛利率超過26%，高於去年同期的20%。我們預計2024年我們的毛利率將持續提升。

Our total operating expenses were down 17% year over year to RMB 3 billion in the fourth quarter. We cut our sales and marketing expenses by 11% year-over-year to RMB 1.1 billion. Sales and marketing expenses were 18% of total revenues, compared with 21% in the same period last year. G&A expenses were RMB 512 million, down 37% year-over-year. R&D expenses were RMB 1.3 billion, down 11% year-over-year.

第四季度，我們的總營運費用年減17%，至人民幣30億元。銷售及行銷費用年減11%，至人民幣11億元。銷售及行銷費用佔總營收的18%，去年同期為21%。一般及行政管理費用為人民幣5.12億元，較去年同期下降37%。研發費用為人民幣13億元，較去年同期下降11%。

As a result, we narrowed our adjusted operating loss and adjusted net loss by 53% and 58% year over year in the fourth quarter, respectively. Our adjusted net loss ratio for the fourth quarter was 9%, improving from 21% for the same period a year ago.

因此，第四季我們的調整後營業虧損和調整後淨虧損年減了53%和58%。第四季我們的調整後淨虧損率為9%，低於去年同期的21%。

Notably, for the fourth quarter, we also generated RMB 640 million positive operating cash flow, demonstrating that our business has entered a healthy path for sustainable development. We expect to reach positive non-GAAP operating profit in Q3 2024 through our sustained top line growth and gross margin improvement.

值得注意的是，第四季我們也實現了人民幣6.4億元的正營運現金流，顯示我們的業務已步入永續發展的健康軌道。我們預計，憑藉持續的營收成長和毛利率提升，我們將在2024年第三季實現正的非公認會計準則營運利潤。

As of December 31, 2023, we had cash and cash equivalents, time deposits and short-term investments of RMB 15 billion, or USD 2.1 billion.

截至2023年12月31日，我們擁有現金及現金等價物、定期存款及短期投資150億元人民幣，或21億美元。

As of December 31, 2023, the aggregate outstanding principal amount of our convertible bonds was USD 862 million. We believe our cash position is sufficient to cover all of our remaining convertible bonds.

截至2023年12月31日，我們未償還的可轉債本金總額為8.62億美元。我們相信，我們的現金狀況足以涵蓋所有剩餘的可轉債。

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。

(Operator Instructions) For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. The company will provide consecutive interpretations for management's statements during the Q&A session. Please note that English interpretation is for convenience purposes only. In the case of any discrepancy, management's statements in their original language will prevail. (Operator Instructions)

（操作員指示）為了方便今天電話會議的所有參與者，如果您希望用中文向管理層提問，請立即用英語重複您的問題。公司將在問答環節為管理階層的發言提供交替傳譯。請注意，英文翻譯僅為方便起見。如有任何差異，以管理原文為準。 （操作員指示）

Our first question comes from Thomas Chong of Jefferies.

我們的第一個問題來自 Jefferies 的 Thomas Chong。

(foreign language) My question is about our 2024 outlook. Can management share about your thoughts and strategies on our product offerings, user growth and commercialization?

（外語）我的問題是關於我們2024年的展望。管理階層能否分享您對我們產品、使用者成長和商業化的看法和策略？

(foreign language)

（外語）

[Interpreted] Before I answer the question for 2024, I would like to take a moment to review our work done in 2023, which we have made decent progress in both community development and commercialization.

[翻譯] 在回答2024年的問題之前，我想花點時間回顧一下我們在2023年所做的工作，我們在社區發展和商業化方面都取得了不錯的進展。

(foreign language)

（外語）

[Interpreted] So first of all, our DAU surpassed 100 million, demonstrating our continuous healthy development of our community. Secondly is our advertising started to accelerate, achieved a 27% year-over-year growth. And this marks, even for the -- among our peers, should be the one of the highest advertising revenue growth rate.

[解讀] 首先，我們的每日活躍用戶突破1億，顯示我們的社區持續健康發展。其次，我們的廣告業務開始加速成長，較去年同期成長27%。即使在同業中，這也應該是廣告收入成長率最高的公司之一。

(foreign language)

（外語）

[Interpreted] Our gross profit margin continued to increase over the past 6 quarters, reaching 26% in the fourth quarter, up 6 percentage points year-over-year. And our adjusted net loss narrowed by almost half, 49% year-over-year for the full year of 2023. And notably, we've also achieved positive operating cash flow for the full year.

[解讀] 過去六個季度，我們的毛利率持續成長，第四季達到26%，較去年同期成長6個百分點。 2023年全年，我們的調整後淨虧損年減近一半，達到49%。值得注意的是，我們全年也實現了正的經營現金流。

(foreign language)

（外語）

[Interpreted] Actually, we are very delighted to see that our community ecosystem has become more aligned with our commercial value. The commercial effort does not hurt our community development. But in contrary, it's helping our community content ecosystem to be even stronger. In 2023, over 3 million of content creators earned income on Bilibili. This is reinforcing the development of our content creators.

[解讀] 事實上，我們很高興看到我們的社區生態系統與我們的商業價值更加契合。商業化的努力並沒有損害我們的社區發展，反而幫助我們的社區內容生態系統更強大。 2023年，超過300萬名內容創作者在嗶哩嗶哩處獲得了收入。這正在增強我們內容創作者的發展。

(foreign language)

（外語）

[Interpreted] And also, over 1.8 million creators earned income on Bilibili through our live broadcasting services. And the number of creators earning income via advertising services almost doubled year-over-year.

[解讀]此外，超過180萬創作者透過我們的直播服務在嗶哩嗶哩上獲得收入。透過廣告服務獲得收入的創作者數量較去年同期增加近一倍。

(foreign language)

（外語）

[Interpreted] Looking ahead into 2024, our focus remains consistent with 2023 with two main tasks. First of all is focus on our profitability. We'll continue to strengthen our commercial capabilities and improve our commercialization efficiency at the same time to improve our gross margin and manage our cost. We expect to achieve non-GAAP operating profit -- our non-GAAP operating profit will turn positive in Q3 2024.

[解讀] 展望2024年，我們的工作重點與2023年保持一致，主要有兩大任務。首先是提升獲利能力。我們將繼續增強商業能力，同時提升商業化效率，以提升毛利率並控製成本。我們預計非公認會計準則下的營業利潤將在2024年第三季轉為正值。

(foreign language)

（外語）

[Interpreted] While keeping our financial goal intact, we will continue to strengthen our content ecosystem by expanding our content richness and fostering very specific content categories to ensure the mindset of Bilibili being the go-to place for highest-quality content.

[解讀] 在保持財務目標不變的同時，我們將繼續加強我們的內容生態系統，擴大內容豐富度，培育非常具體的內容類別，以確保 Bilibili 成為最優質內容的首選之地。

(foreign language)

（外語）

[Interpreted] And in 2024, we'll focus on the discovering top content creators' development and supporting them to make more money.

[解讀] 2024年，我們將專注於發現頂級內容創作者的發展並支持他們賺取更多收入。

(foreign language)

（外語）

[Interpreted] In terms of content categories, we'll continue to solidify our existing advantages in ACG, gaming, tech knowledge and other categories while providing more support and assistance to new categories that have grown in response to users' change of consumption demand such as baby and maternity, travel, automotive and home decorations.

[解讀]在內容類別方面，我們將持續鞏固二次元、遊戲、科技等品類的既有優勢，同時對孕嬰童、旅遊、汽車、家裝等順應用戶消費需求變化而成長起來的新興品類給予更多的支持和幫助。

(foreign language)

（外語）

[Interpreted] We believe with this effort and after achieving profitability, we'll further achieve and enhance the virtuous cycle of our community ecosystem and to ensure sustainable growth in both community and our profitability.

[解讀]我們相信，透過這樣的努力，在實現盈利之後，我們將進一步實現和加強我們社區生態系統的良性循環，並確保社區和盈利能力的可持續增長。

Our next question comes from 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 about value-added services. So can you give us an update on what is now the development strategy for this business segment in 24 and then including business line including live broadcasting, premium membership and other value-added services?

(外語) 我的問題是關於增值服務的。您能否介紹一下24小時這個業務部門目前的發展策略，包括直播、高級會員和其他加值服務等業務線？

(foreign language)

（外語）

[Interpreted] On Bilibili, we have gathered a massive amount of high-quality content creators. And it's also a welcoming home for diverse interest. Our users feel a strong sense of belonging on Bilibili. All of this combined results in users very much willing to spend for content that they like, spend for content creators that they adore.

[解讀] 在嗶哩嗶哩，我們聚集了海量優質內容創作者。這裡也是多元化興趣的聚集地。我們的用戶在嗶哩嗶哩處擁有強烈的歸屬感。所有這些因素共同作用，使得使用者非常願意為自己喜歡的內容、為自己欣賞的內容創作者付費。

(foreign language)

（外語）

[Interpreted] On Bilibili, users pay for content and services that they love. It's the most natural business model for us. As people pay for the content and services they love, they actually -- they are happy for that experience and they feel good about that experience. As for content creators, when they earn the income through these kinds of services, they will have an even stronger sense of value and appreciation. And for our content creators, they have even more -- they will be even more motivated to continue to create content on Bilibili. For example, if our content creators are earning more income on Bilibili through selling his proprietary premium classes, this money will represent a much more sense of value over what he could have made in advertising.

[解讀] 在嗶哩嗶哩，使用者會為自己喜愛的內容和服務付費。這對我們來說是最自然的商業模式。當人們為自己喜愛的內容和服務付費時，他們實際上會為這種體驗感到高興，並且對這種體驗感到滿意。對於內容創作者來說，當他們透過這類服務獲得收入時，他們會有更強烈的價值感和欣賞感。而對於我們的內容創作者來說，他們會更有動力繼續在嗶哩嗶哩創作內容。例如，如果我們的內容創作者透過在嗶哩嗶哩上銷售其自有的高級課程賺取更多收入，那麼這筆錢所代表的價值感將遠遠超過他們原本可以透過廣告獲得的收入。

(foreign language)

（外語）

[Interpreted] Based on that service model or the connection within our community, we have developed our value-added services combining live broadcasting, premium membership, comics, audio drama, premium courses, fan charging, et cetera. And all of that is closely related to the current community and our content. In the fourth quarter, our overall VAS revenue grew by 22% year-over-year.

[解讀] 基於這種服務模式，或基於我們社群內部的聯繫，我們開發了結合直播、高級會員、漫畫、廣播劇、高級課程、粉絲付費等內容的增值服務。所有這些都與當前的社區和我們的內容緊密相關。第四季度，我們的整體增值服務收入較去年同期成長了22%。

(foreign language)

（外語）

[Interpreted] Among all that services, we believe within VAS, live broadcasting probably has the biggest potential and could grow the fastest. Because we believe live broadcasting is more universal. Anyone could be a live broadcasting host. Last year, 1.8 million of content creators earned income on Bilibili through live broadcasting. And it's universal and very low entry barrier monetization model for all content creators.

[解讀] 在所有加值服務中，我們認為直播可能是潛力最大、成長最快的。因為我們相信直播更加普及。任何人都可以成為主播。去年，有180萬名內容創作者透過B站直播獲得了收入。對於所有內容創作者來說，這是一種通用且門檻極低的獲利模式。

(foreign language)

（外語）

[Interpreted] Even though there are many platforms who's doing live broadcasting business, but Bilibili's live broadcasting is still very, very unique. That is because in terms of the content creators/host as well as the content categories of our live broadcasting has very much similar offerings or mirrors what we have in the PUGV community.

[解讀] 雖然現在有很多平台都在做直播，但B站的直播仍然非常非常獨特。因為就內容創作者/主播以及內容類別而言，我們的直播內容與PUGV社群非常相似，或者說是鏡像。

(foreign language)

（外語）

[Interpreted] I'll make an example here. While many others might think live broadcasting is an impulse or hormone-driven payment. However, if you're looking at Bilibili's live broadcasting revenue component, close to 1/3 of our revenue is actually generated from a monthly subscription model called the Great Voyage. And for this particular payment, it's a reflection or representation of a fan's devotion and appreciation for our content creator over at least a month. And many of our paid users are actually subscribing for several months ahead. Their renewal rate is very high. This example distinct us from the traditional live broadcasting platform because the connection with our content creators, the host and the user is quite unique and lasting.

[解讀] 我在這裡舉個例子。很多人可能認為直播是一種衝動消費或荷爾蒙驅動的付費方式。然而，如果你看看嗶哩嗶哩的直播收入組成，你會發現我們近三分之一的收入實際上來自一種名為「大航海」的包月訂閱模式。這種特殊的付費模式，反映了粉絲至少一個月對我們內容創作者的忠誠和欣賞。而且，我們的許多付費用戶實際上會提前幾個月訂閱。他們的續費率非常高。這個例子讓我們有別於傳統的直播平台，因為我們與內容創作者、主播和使用者之間的連結非常獨特且持久。

(foreign language)

（外語）

[Interpreted] As for the content supplier, which is the host, if we look at the fourth quarter, near 1 million hosts were active on Bilibili. Only a small portion of them were from professional guilds. Most of them are actually native content creators from our PUGV ecosystem. And this also sets us apart from other traditional live broadcasting platform is because that we're cultivating our own supply and demand within our PUGV ecosystem.

[解讀] 至於內容供應商，也就是主播，如果我們看一下第四季度，嗶哩嗶哩上有近100萬活躍主播。其中只有一小部分來自專業公會。他們中的大多數實際上是來自我們PUGV生態系統的本土內容創作者。這也是我們與其他傳統直播平台的不同之處，因為我們在PUGV生態系統中培育自己的供需。

(foreign language)

（外語）

[Interpreted] Similarly, in terms of content categories, the content category in our PUGV ecosystem can also be our live broadcasting categories, especially the categories where Bilibili has our own unique advantage, such as the virtual content creators. We are considered to be, if not, the most leading platform in China. And also, our knowledge-based content, such as legal-related live broadcasting, it's hard to imagine this category to be a top vertical on other platforms, but it is very popular on Bilibili.

[解讀] 同樣，就內容類別而言，我們PUGV生態系統中的內容類別也可以是我們的直播類別，尤其是B站擁有獨特優勢的類別，例如虛擬內容創作者。我們被認為是中國（即使不是）最領先的平台。此外，我們的知識類內容，例如與法律相關的直播，很難想像這個類別在其他平台上會成為頂級垂直領域，但在B站卻非常受歡迎。

(foreign language)

（外語）

[Interpreted] As for our priorities for live broadcasting business in 2024, we'll be putting a lot of priorities in terms of the quality of our revenues as well as the gross profit and gross profit margin of this business. We hope to achieve sustainable and high-quality revenue growth in live broadcasting in 2024.

[解讀] 關於2024年直播業務的重點，我們將非常重視收入品質以及該業務的毛利和毛利率。我們希望在2024年實現直播業務可持續、高品質的收入成長。

Our next question comes from Felix Liu from UBS.

下一個問題來自瑞銀的 Felix Liu。

(foreign language) Let me translate myself. My question is on the advertisement business. I noticed that your fourth quarter advertisement delivered a strong growth momentum. So may I check the reason behind this good performance? And what is your outlook for the advertisement business for 2024? What will be the key growth drivers from here?

（外語）讓我自己翻譯一下。我的問題是關於廣告業務的。我注意到你們第四季的廣告業務成長勢頭強勁。請問這種良好表現背後的原因是什麼？您對2024年的廣告業務有何展望？未來的關鍵成長動力是什麼？

(foreign language)

（外語）

[Interpreted] Our advertising revenue in 2023 totaled about over RMB 6.4 billion, marking a 27% year-on-year growth. And in the fourth quarter, advertising revenue grew by 28% year-over-year, contributing 30% of our total revenue, up from 25% in the same period last year. The increase in ad revenue in its proportion is directly a result of improving our gross margin and gross profit.

【解讀】2023年，我們的廣告收入總計約64億多元人民幣，較去年同期成長27%。第四季度，廣告收入年增28%，占我們總營收的30%，高於去年同期的25%。廣告收入佔比的提升直接源自於我們毛利率和毛利的提升。

(foreign language)

（外語）

[Interpreted] Please allow me to recap what we have done in 2023 and in the fourth quarter and the growth driver. Actually, in the beginning of 2023, we have put forward Yiheng & Yizong strategy, while paying close attention to the opportunity brought by the active commerce activities within our community. Yiheng refers to the middle platform capabilities for commercialization, including our traffic strategy, algorithm capabilities and our data power development. And Yizong refers to our vertical industry strategies.

[翻譯] 請容許我回顧我們在2023年和第四季所做的工作以及成長動力。實際上，在2023年初，我們就提出了「一橫」和「一縱」策略，同時密切關注我們社區活躍的商業活動所帶來的機會。 「一橫」指的是商業化的中台能力，包括我們的流量策略、演算法能力和資料賦能建置。 「一縱」指的是我們的垂直產業策略。

Our ultimate goal is to provide customers with a better ad placement experience and higher ROI. And then we have formed 10 vertical strategies for different industry verticals. We believe -- we also believe in the revenue potential that's brought from active commerce-related activities within our community. As we're sticking to the open-loop strategy, we plan to connect Bilibili into a more broader ecosystem with our e-commerce partners.

我們的最終目標是為客戶提供更好的廣告投放體驗和更高的投資報酬率。我們針對不同的產業垂直領域制定了10個垂直策略。我們相信－我們也相信我們社區內活躍的商業相關活動所帶來的收入潛力。我們堅持開放循環策略，計劃將嗶哩嗶哩與我們的電商合作夥伴一起連接到更廣泛的生態系統。

(foreign language)

（外語）

[Interpreted] As we have already shared a lot of information and cases about Yiheng & Yizong strategy in previous calls, I will not dive into more detail here. However, because of that strategy, our advertising revenue has also exceeded expectations for the first 3 quarters of 2024. And now I will share some additional highlights in fourth quarter.

[譯] 由於我們在先前的電話會議中已經分享了大量關於「一恆」和「一縱」策略的資訊和案例，我在此不再贅述。然而，正是由於該策略，我們的廣告收入在2024年前三個季度也超出了預期。現在，我將分享第四季度的一些其他亮點。

(foreign language)

（外語）

[Interpreted] First, we are able to leverage our advantage in the big events in specific verticals and to catch the momentum of the new product launch stage. I'll make two examples here. First of all, in the gaming industry, we have made record-high grossing during few new games' open beta testing stage, such as the Dream Star, as well as the Girls' Frontline 2.

[解讀] 首先，我們能夠利用垂直領域的大型活動優勢，抓住新品發表會的契機。我舉兩個例子。首先，在遊戲領域，我們在幾款新遊戲的公測階段都創造了收入紀錄，例如《夢幻之星》和《少女前線2》。

(foreign language)

（外語）

[Interpreted] Another example is what we've seen in the e-commerce sector. So we actually hosted several e-commerce promotion events during Double 11, Double 12 and our New Year's Shopping Festival, leveraging our video and live e-commerce capabilities. Here are some interesting numbers to share. During Double 11, the total GMV generated from our live and video e-commerce increased over 250% year over year. The number of live e-commerce sessions that happened on Bilibili also increased over 100%. And additionally, here are some interesting verticals, baby and maternity, it might sounds a little bit too mature for our users. However, we're still able to bring over 90% of new users to the baby and maternity clients through our video and live e-commerce campaigns.

[解讀] 另一個例子是我們在電商領域看到的情況。實際上，我們在雙十一、雙十二和新年購物節期間舉辦了多場電商促銷活動，充分利用了我們的視訊和直播電商能力。這裡有一些有趣的數據可以分享。在雙十一期間，我們直播和視訊電商產生的總成交額年增超過250%。嗶哩嗶哩的直播電商會談數量也增加了超過100%。此外，還有一些有趣的垂直領域，例如母嬰用品。對於我們的用戶來說，這聽起來可能有點太成熟了。但是，透過影片和直播電商活動，我們仍然能夠為母嬰用品客戶帶來超過90%的新用戶。

(foreign language)

（外語）

[Interpreted] Secondly is that we have strengthened our advertisement placement capabilities. In the fourth quarter, our deep conversion capabilities, including provide ROI and order information within 24 hours, has gradually improved and matured. As a result, we're able to achieve the budget target for our customers more accurately and, therefore, gain more budget from them. Advertising with deep conversion pocket contributed over 30% of our total performance ad revenue in the fourth quarter.

[解讀] 其次，我們加強了廣告投放能力。第四季度，我們的深度轉換能力，包括24小時內提供ROI和訂單訊息，逐漸完善和成熟。這使得我們能夠更精準地實現客戶的預算目標，從而從客戶那裡獲得更多預算。第四季度，高轉換率的廣告貢獻了我們整體效果廣告收入的30%以上。

(foreign language)

（外語）

[Interpreted] And thirdly is that we have integrated our multiple product lines in terms of organizational structure as well as the product offerings. And for example, by integrating our Sparkle ads platform with our other ad products, we have further expanded the quantity and the quality of our native content, therefore, enhanced and expanded our customers' lifespan and investment cycles on our platform. Those three reasons, combined with what we have said about the Yiheng & Yizong strategy, is the key drivers for our fourth quarter advertising revenue growth.

[解讀] 第三，我們在組織架構和產品組合方面整合了多條產品線。例如，透過將Sparkle廣告平台與其他廣告產品整合，我們進一步提升了原生內容的數量和質量，從而增強並延長了客戶在我們平台上的生命週期和投資週期。這三個原因，加上我們先前提到的「一恆」和「一縱」策略，是我們第四季廣告收入成長的關鍵驅動力。

(foreign language)

（外語）

[Interpreted] As for the video and live e-commerce business that many investors were very interested about, I will share more detail on that. In 2023, we further integrated the commercial scenarios into our content ecosystem, influencing our users from product seeding to transaction conversion. In 2023, on daily average, over 26 million users have viewed our video e-commerce-related content. And the number of users who clicked on the e-commerce-related videos and redirected to external platforms increased over 200%.

[解讀] 關於許多投資人非常感興趣的視訊直播電商業務，我會更詳細地分享。 2023年，我們進一步將商業場景融入內容生態，從產品種草到交易轉化，全方位影響使用者。 2023年，每日平均超過2,600萬用戶觀看了我們的視訊電商相關內容。點擊電商相關影片並跳轉至外部平台的用戶數量增加了200%以上。

(foreign language)

（外語）

[Interpreted] So actually, on the other side, the video and live e-commerce product also introduced new monetization and commercialization avenues for our content creators. In the fourth quarter, over 60,000 content creators have participated in video and live e-commerce-related activities on a daily basis. During Double 11, our home and decoration content creator, Mr. Mi Deng, has generated over RMB 1.6 billion GMV through Bilibili. This demonstrates Bilibili's unique advantage in comprehensive and in-depth long-form content, especially in durable consumer and retail sectors such as home and decoration and technologies and digital products.

[解讀] 事實上，另一方面，視訊和直播電商產品也為我們的內容創作者開闢了新的變現和商業化途徑。第四季度，每天有超過6萬名內容創作者參與影片和直播電商相關活動。雙十一期間，我們的家居裝飾內容創作者鄧米先生透過嗶哩嗶哩創造了超過16億元人民幣的GMV。這反映了嗶哩嗶哩在內容全面、深度豐富的長篇內容方面的獨特優勢，尤其是在家居裝飾、科技數位等耐用消費品和零售領域。

(foreign language)

（外語）

[Interpreted] And another example would be one of our female content creators, Yingwuli. In December, the total GMV of her single live e-commerce session were over RMB 50 million. And this also represents the significant consumption potential of Bilibili's female user base. And with Mr. Mi Deng and Ms. Yingwuli, these two cases, we believe this is considered to be the leading showcase across our industry peers and also showed the great potential -- commercialization potential of Bilibili's community.

[解讀] 另一個例子是我們的女性內容創作者英舞莉。 12月，她單場電商直播的總成交額超過5,000萬元。這也反映了嗶哩嗶哩女性用戶群的巨大消費潛力。米登先生和英舞莉女士這兩個案例，我們認為在業內同行中堪稱典範，也展現了嗶哩嗶哩社區巨大的商業潛力。

(foreign language)

（外語）

[Interpreted] In 2023, the total GMV on Bilibili's video and live e-commerce were over RMB 10 billion. We believe that the commercial value of Bilibili's user base has just started to be realized and there are enormous rooms for our future growth.

【解讀】2023年，B站視訊及直播電商總GMV超過100億元。我們認為，B站用戶的商業價值才剛開始釋放，未來成長空間龐大。

(foreign language)

（外語）

[Interpreted] We maintain a very positive outlook for our advertising business in 2024. And we are quite confident to achieve a high growth rate in terms of advertising revenue. So, first of all, let's review Bilibili's core advantage in advertising, which will be our user base. Bilibili has the highest density of young populations in China. And the value of our advertising platform lies within its own user base. With the average age of our user being 24 years old, we believe our users' consuming power, buying power has just gradually -- is gradually increasing. And Bilibili has now become the go-to platform for advertisers to whether to improve their brand equity in the longer term or influence users' purchasing decision and convert sales in the short term. Bilibili has become the must-invest advertising platform.

[解讀] 我們對2024年的廣告業務前景保持非常樂觀的態度，並且非常有信心實現廣告收入的高成長率。首先，我們來回顧一下嗶哩嗶哩在廣告上的核心優勢，那就是我們的用戶群。嗶哩嗶哩擁有中國最高的年輕人口密度。我們廣告平台的價值在於自身的用戶群。我們用戶的平均年齡為24歲，我們相信用戶的消費能力和購買力正在逐漸提升。嗶哩嗶哩現在已經成為廣告商的首選平台，無論是為了長期提升品牌資產，還是為了在短期內影響用戶的購買決策並實現銷售轉化，嗶哩嗶哩已經成為一個不容錯過的廣告平台。

(foreign language)

（外語）

[Interpreted] Additionally, for 2024, we plan to further upgrade our Yiheng strategy. First of all, we will enhance our ad placement capabilities and improve its efficiency. This includes integrating our ad placement system, achieving intelligent and multi-terminal app placement experience. And we plan to achieve automatic placement for our advertisers at some point this year. And we'll further develop our data visualization tools, allowing clients to validate the results of their ad placement through multi-dimensional data placement. And we'll also be paying close attention and looking to what AIGC can bring to help us to improve ad efficiency.

[解讀] 此外，2024年，我們計畫進一步升級「易恆」策略。首先，我們將提升廣告投放能力，提升投放效率。這包括整合我們的廣告投放系統，實現智慧化、多終端應用的投放體驗。我們計劃在今年內為廣告主實現自動化投放。此外，我們將進一步開發資料視覺化工具，使客戶能夠透過多維度的資料投放來驗證廣告投放效果。同時，我們也將密切關注AIGC平台能夠如何幫助我們提升廣告效率。

Secondly is that we will penetrate more community scenarios and upgrading our traffic strategies to improve our ad load effectively. For example, building on our last year's expansion into multi-scenarios like Story Mode, PC and OTT, we will focus on integrating those scenarios as well as the Moment page research function and other community scenarios. Meanwhile, we will also look to enhance our monetization efficiency by arranging ad videos in a hybrid mode in the recommendation page and further promote native ads. To summarize, we'll effectively leverage and increase our ad inventory and outlook in 2024.

其次，我們將滲透更多社群場景，並升級流量策略，有效提升廣告投放量。例如，在去年拓展故事模式、PC 和 OTT 等多場景的基礎上，我們將專注於整合這些場景以及朋友圈搜尋功能和其他社群場景。同時，我們也將透過在推薦專頁以混合模式排列廣告影片來提升變現效率，並進一步推廣原生廣告。總而言之，我們將有效利用並提升 2024 年的廣告庫存和前景。

(foreign language)

（外語）

[Interpreted] Lastly, we'll actively explore the client as content creator model to encourage our advertising clients to create native content and open their own brand accounts on Bilibili. On the other hand, we will also be releasing the private domains for those advertisers and launch more interactive functions for them to interact with our users. Through those efforts, we aim to convert a single ad placement into a long-term operation and increase our client brand equity.

[解讀] 最後，我們將積極探索「客戶即內容創作者」的模式，鼓勵我們的廣告客戶創作原生內容，並在嗶哩嗶哩開設自己的品牌帳號。另一方面，我們也將為這些廣告主開放私域，並推出更多互動功能，方便他們與使用者互動。透過這些努力，我們的目標是將單一廣告位轉化為長期運營，提升客戶的品牌資產。

(foreign language)

（外語）

[Interpreted] Thirdly is on our Yizong strategy. We believe we can replicate the successful experience we had in e-commerce and games last year and replicate that model into other fast-growing sectors such as automotive, tech, home and decoration, online services, finances and education, et cetera. And we do believe we can achieve high-speed growth rate in those verticals as well. But lastly, to summarize, we believe the further flourishing of our e-commerce ecosystem will bring us more pleasant surprises in advertising revenue in 2024.

[解讀] 第三點是關於我們的「一縱」策略。我們相信，我們可以複製去年在電商和遊戲領域的成功經驗，並將該模式複製到其他快速成長的領域，例如汽車、科技、家居裝飾、線上服務、金融和教育等等。我們也相信，在這些垂直領域也能高速成長。最後，總結一下，我們相信，隨著電商生態系統的進一步繁榮，2024 年的廣告收入將為我們帶來更多驚喜。

Our next question comes from 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) Can you give us more color on your financial outlook for 2024, including revenue breakeven path and our cash flow trend?

(外語) 您能否向我們詳細介紹一下 2024 年的財務前景，包括營收損益平衡路徑和現金流趨勢？

Thank you. I will take this question. As Mr. Chen mentioned earlier, one of our most important tasks for 2024 is to improve our financials and achieve profitability. The way we plan to achieve the target will be similar to what we have done in 2023, largely through the growth of the gross profit as well as expense management. Let me go through this in more detail.

謝謝。我來回答這個問題。正如陳先生之前提到的，我們2024年最重要的任務之一是改善財務狀況並實現盈利。我們計劃實現這一目標的方式將與2023年類似，主要透過提高毛利和控制費用來實現。讓我更詳細地講一下。

In 2023, our top line grew by 3% year over year. Our gross profit increased by over 40% year-over-year. In 2024, we expect our top line growth will accelerate and achieve double-digit growth rate, with ad revenue growing at even faster rates. We expect our gross profit will also maintain high growth in 2024, as we further improve our gross profit margin, attributed by higher contribution from high-margin ad business. Expense-wise, we will keep improving our operational efficiency. We expect to reach non-GAAP operating breakeven in Q3 this year.

2023年，我們的營收年增3%。毛利較去年同期成長超過40%。我們預計2024年，我們的營收將加速成長，實現兩位數成長，其中廣告收入的成長速度將更快。我們預計，隨著高利潤率廣告業務貢獻的增加，我們的毛利率將進一步提高，2024年的毛利也將維持高成長。在費用方面，我們將持續提升營運效率。我們預計今年第三季將實現非公認會計準則下的營運損益平衡。

And let me share more color on our cash flow and balance sheet side. We have achieved positive operating cash flow in Q3 and Q4 2023. Especially in Q3, we have generated over RMB 600 million operating cash flow. That means our company has entered into a positive cycle for development. We expect to keep doing that and maintain positive operating cash flow throughout 2024.

接下來，我想進一步介紹一下我們的現金流量和資產負債表。我們在2023年第三季和第四季實現了正的經營現金流。尤其是在第三季度，我們創造了超過6億元的營運現金流。這意味著我們公司已經進入了良性發展週期。我們預計這種勢頭將持續下去，並在2024年全年保持正的經營現金流。

From the liability side, we have repurchased or repaid USD 1.2 billion CB last year. Now on December 31, 2023, we had approximately USD 2.1 billion cash reserve on our balance sheet. Compared with outstanding CB of USD 860 million, our cash reserves are significant to cover all of our company debt. Thank you.

從負債方面來看，我們去年回購或償還了12億美元的可轉換債券。截至2023年12月31日，我們的資產負債表上約有21億美元的現金儲備。與8.6億美元的未償還可轉換債券相比，我們的現金儲備足以涵蓋我們公司的所有債務。謝謝。

And that concludes the question-and-answer session. Thank you once again for joining Bilibili's Fourth Quarter and Fiscal Year 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.

問答環節到此結束。再次感謝您參加嗶哩嗶哩2023財年第四季及全年財務表現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絡方式請參閱今天的新聞稿。祝您擁有美好的一天。

That does conclude today's conference call. You may now disconnect your lines.

今天的電話會議到此結束。各位現在可以掛斷電話了。

[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。 ]