(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 Bilibili 2023 年第四季及財年財務業績和業務更新電話會議。今天的會議正在錄製中。現在，我想把會議交給投資者關係執行董事朱麗葉·楊（Juliet Yang）。請繼續。

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.

謝謝你，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期望。由於存在許多風險和不確定性，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性，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財務指標僅供比較之用。這些措施的定義和調節表可在我們今天早些時候發布的新聞稿中找到。提醒一下，本次會議正在錄製中。此外，投資者介紹和本次電話會議的網路直播重播將在 Bilibili IR 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.

今天就加入我們的 Bilibili 高階管理層包括： 董事長兼執行長陳銳先生；李嘉莉女士，董事會副主席兼營運長；范先生，財務長。

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

我現在把電話轉給范先生，由范先生代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，謝謝大家參加我們的 2023 年年終電話會議，討論我們的財務和經營績效。我很高興能代表陳先生致今天的開幕詞。

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，我們應對挑戰與機會並存，在社區發展、商業化效率提高、利潤擴張和削減損失方面取得了一系列重要里程碑。讓我們更詳細地回顧一下這些成就。

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 DAU、3.36 億的 MAU 和其他全面健康的社區指標結束了這一年。第四季度，每日用戶花費的平均時間仍然強勁，超過 95 分鐘。我們持續強調並投入資源來加強我們的內容生態系統、支持我們的創作者並培養一個鼓舞人心的社群。 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%。進一步幫助有才華的內容創作者擴大粉絲群並賺錢，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.

今年的另一個亮點是我們在提高商業化效率方面取得的進展。我們加大力度，以內容生態系統固有的方式整合廣告和加值服務業務。在強勁的效果廣告推動下，我們的廣告收入第四季成長了 28%，全年成長了 27%。第四季增值服務營收年增 22%，全年成長 14%。以此成長，我們全年總收入達到人民幣225億元，其中廣告收入貢獻較高，從2022年的23%上升到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.

高利潤的廣告業務收入貢獻增加以及有效的成本控制推動毛利年增33%，第四季毛利率達到26.1%，連續第六個季度實現毛利率改善。全年毛利成長41%，毛利率從2022年的17.6%增加至24.2%。

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.

因此，我們第四季調整後淨虧損年減 58%，全年調整後淨虧損年減 49%。值得注意的是，我們在第四季度產生了人民幣6.4 億元的正經營現金流，而我們的全年經營現金流也在2023 年轉為正。這些收益為我們實現盈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，並為我們 2024 年的成功奠定了堅實的基礎。在我們實現盈利的同時，我們牢記我們的基本目標：為用戶創造價值。我們透過擴大我們的內容產品、支持我們的創作者並培育一個充滿活力、不斷發展、深受人們喜愛的社群來實現這一目標。

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

我們的產業仍受惠於視訊化浪潮，並以快速發展的生成式人工智慧為順風。這給我們留下了很長的成長跑道。我們仍然相信，用戶擴張和商業能力的良性成長循環將為我們的用戶、創作者和股東創造越來越多的價值。透過這項概述，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。不斷增長的內容生態系統對於我們社區的健康和活力至關重要。第四季度，每日活躍內容創作者年增 16%，每月新內容提交量年增 31%。隨著我們繼續促進優質內容和創作者與粉絲之間的聯繫，第四季度粉絲數超過 10,000 的內容創作者同比增長 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Bilibili POWER UP 2023頒獎典禮上表彰了前100名內容創作者，以表彰他們的創作和對社區的貢獻，其中39名內容創作者首次獲獎。這些排名前 100 名的內容創作者在我們的平台上表現出色，成功累積了超過 4 億的粉絲。

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 carry 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的青睞平台。第四季度，我們的活躍用戶群的平均年齡為24歲。隨著我們現有用戶的逐漸成熟，他們的興趣發生變化，消費增加。 2023年，母嬰、汽車、旅遊、時尚和服裝類別的影片觀看次數成長最快。這些類別中的每一個都具有重大的商業價值。

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.

基於興趣的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100萬的商業相關內容數量較去年同期成長一倍以上。同時，2023年，超過300萬名內容創作者透過我們的各種管道賺錢，其中透過影片和直播商業賺取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%.

隨著更多的內容創作者和更好的內容生態系統，我們的用戶保持高度參與，社群繼續蓬勃發展。 2023 年全年，我們的日均影片觀看次數較去年同期成長 25%，達到 43 億次。同期，我們的用戶每天在平台上花費 97 分鐘。 2023 年，月均互動量也年增 14%，達到 150 億次以上。截至 2023 年底，我們擁有 2.3 億正式會員，比上年增長 18%，12 個月留存率保持不變強在80%左右。

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，我們也以第五屆跨年晚會《2023 年最美的夜晚》結束了這一年，成為年輕人必看的線上新年慶祝活動。該活動在24小時內獲得了1億次播放，並獲得了有史以來最多的行業贊助商參與。

Lastly, I'd like to talk about commercialization and dive into each of our business lines. Our thriving, interactive community is the cornerstone of our commercialization model. In the fourth quarter, our VAS revenue 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.

最後，我想談談商業化並深入探討我們的每個業務線。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%至人民幣29億元，全年成長14%至人民幣99億元。這些成長主要是由我們的直播收入的強勁成長所推動的。

Our live broadcasting universe continues to be more diverse as we convert more host talents 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引更多的主持人人才，我們的直播世界將繼續變得更加多樣化。 2024年，我們將繼續將直播融入我們的視訊生態系統。透過引入更多優質主機並增強各種工具和推薦演算法，我們的目標是在我們的平台上轉換更多的付費用戶。同時，我們的特色直播內容和產品，如Vtubers及其慶典系統，將繼續提升支付活動，為我們提供更多的變現機會。

In terms of membership, 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 increasing spending power on other featured products and experiences.

會員方面，截至2023年底，我們擁有2,190萬高級會員。我們的會員繼續表現出高度的品牌忠誠度和信任，超過 80% 的會員訂閱了年度或自動續訂套餐。此外，使用者繼續在其他特色產品和體驗上發揮越來越大的消費能力。

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.

轉向我們的廣告業務。我們取得了一些令人興奮的進展。 2023年，我們第四季廣告總營收年增28%至19億元人民幣，全年廣告總收入較去年同期成長27%至64億元。效果廣告收入的強勁成長是最重要的貢獻因素，該季度年增超過 60%，全年成長超過 50%。我們全年的品牌和原生廣告收入也實現了年比正成長。

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人口最稠密的社區的獨特地位，以及我們用他們自己的語言與他們聯繫的能力。同時，我們持續加強廣告基礎設施，包括產品最佳化和演算法改進。這使得廣告主不僅能夠提高品牌資產、影響用戶的購買決策，還能直接轉換B站的銷售量。第四季度，我們前五名的廣告垂直產業是遊戲、電子商務、數位產品和家電、汽車和護膚化妝品。其中，電商和遊戲領域表現突出，成績斐然。

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 purchase, enhancing our ad conversion efficiency and user experience. Meanwhile, our deeper data collaboration with key e-commerce platforms further improved 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，我們加深了與電商廣告商的合作。我們進一步將直銷轉換工具整合到我們的影片和直播商務廣告產品中。這使我們的用戶能夠從觀看內容無縫過渡到進行相關購買，從而提高了我們的廣告轉換效率和用戶體驗。同時，我們與主要電商平台進行更深入的數據合作，進一步提高了廣告推薦演算法的準確性和效率。 2023年，從事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那裡獲得了更多行銷預算，因為他們推出了新遊戲並推廣了現有遊戲更新。由於我們的綜合廣告策略和遊戲生態系統中的廣泛資源，我們保持了作為轉化遊戲玩家的有效管道和打造遊戲 IP 的必投資社群的地位。

While we are encouraged by the progress we made in our advertising business in 2023, we believe there are 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.

雖然我們對 2023 年廣告業務的進展感到鼓舞，但我們相信仍有巨大的潛力和充足的成長空間。 2024年，我們將以更原生、自然、無縫的方式進一步將廣告與我們的內容生態系統整合。我們將優先將資源用於改善廣告基礎設施，包括升級和完善我們的廣告產品，以進一步優化廣告演算法的準確性和效率。

We will also actively explore generative AI for ad material creation, supporting productivity for advertisers. Industry-wise, we'll 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.

我們也將積極探索廣告素材創作的生成式人工智慧，為廣告主的生產力提供支援。從業界來看，我們將繼續擴大在領先的遊戲和電商領域的份額，並在數位產品和家電、護膚和化妝品以及汽車垂直領域獲得更大的影響力。

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, Wuhua Mixin.

轉向我們的遊戲業務。第四季遊戲總收入季增2%至10億元人民幣，全年為40億元。目前，我們正在籌備的三款遊戲已獲准在未來幾季在國內市場發行：一款日系卡牌遊戲《天燎赤》、《赤焰天穹》；一款國產SLG遊戲，三國：謀定天下；還有另一款國產卡牌遊戲Artifacters、五花密信。

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，我們能夠透過越來越多地將我們的廣告產品與我們的遊戲發行能力結合，為更廣泛的遊戲合作夥伴創造價值。至於我們的自研遊戲，我們在2023年精簡了資源，採取了更有選擇性的遊戲開發策略。細化的策略將使我們能夠在2024年減少研發費用，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年的優先事項與2023年是一致的。我們將透過加強技術基礎設施和改善我們的產品供應，特別是廣告和直播業務，進一步提高我們的商業化能力。在全公司範圍內，我們的目標是透過嚴格且有針對性的費用結構進一步提高營運效率。總體而言，我們致力於發展內容生態系統，使我們的內容創作者能夠賺更多的錢並進一步擴大我們的用戶群。我們相信，這些努力將引導我們實現獲利目標，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. 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.

陳先生的發言到此結束。我現在將簡要概述我們 2023 年第四季度的財務業績。由於時間關係，在今天的電話會議上，我將回顧我們第四季度的亮點，因為陳先生的講話觸及了我們的全年業績高水平。我們鼓勵您參閱今天早些時候發布的新聞稿，以更仔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，隨著社區的發展和生態系統的擴展，我們的財務狀況顯著改善。特別重要的是我們在收入、毛利潤和調整後淨虧損方面取得的收益，我們連續第六個季度收窄了調整後的淨虧損。

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%。我們第四季的總淨收入按收入來源細分約為 45% 的增值服務； 30% 廣告費； 16% 手機遊戲； 9%來自我們的智慧財產權衍生性商品和其他業務。

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，我們的營收成本年減4%至人民幣47億元，帶動毛利至人民幣17億元，較去年同期成長33%。第四季我們的毛利率超過26%，高於去年同期的20%。我們預計 2024 年毛利率將持續提高。

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.

第四季我們的總營運費用年減 17% 至人民幣 30 億元。我們的銷售和行銷費用年減 11% 至 11 億元。銷售和行銷費用佔總收入的 18%，而去年同期為 21%。一般及行政費用為 5.12 億元，年減 37%。研發費用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，第四季調整後營業虧損和調整後淨虧損年減 53% 和 58%。我們在第四季調整後的淨虧損率為 9%，較去年同期的 21% 有所改善。

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6.4億元的正經營現金流，顯示我們的業務已步入永續發展的健康軌道。我們預計，透過我們持續的營收成長和毛利率改善，將在 2024 年第三季實現正的非公認會計準則營業利潤。

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. 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，我們的現金及現金等價物、定期存款及短期投資為150億元人民幣（約21億美元）。截至2023年12月31日，我們的可轉換債券未償還本金總額為8.62億美元。我們相信我們的現金狀況足以支付我們所有剩餘的可轉換債券。

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

感謝您的關注。我們現在想開始回答您的問題。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)

（操作員說明）為了今天電話會議所有參與者的利益，如果您想用中文向管理層提出問題，請立即用英語重複您的問題。公司將在問答環節對管理階層的發言進行交替傳譯。請注意，英文翻譯僅供方便之用。如有任何差異，以管理層的原始語言聲明為準。 （操作員說明）

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的產品、使用者成長和商業化的想法和策略？

(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.

【解讀】在回答2024年的問題之前，我想先回顧一下我們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】那麼首先我們的DAU突破了1億，說明了我們社區的持續健康發展。其次是我們的廣告開始加速，實現了27%的年成長。這標誌著，即使對我們的同行來說，也應該是廣告收入成長率最高的之一。

(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】我們的毛利率在過去6季持續成長，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了近一半，即 49%。值得注意的是，我們全年也實現了正營運現金流。

(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】其實我們很高興看到我們的社區生態已經和我們的商業價值更加契合了。商業努力不會損害我們社區的發展。但相反，它正在幫助我們的社群內容生態系統在 2023 年變得更加強大。超過 300 萬個內容創作者在 Bilibili 上獲得了收入。這正在加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 over -- via advertising services almost doubled year-over-year.

[解讀]此外，超過180萬創作者透過嗶哩嗶哩的直播服務獲得了收入。透過廣告服務賺取收入的創作者數量幾乎比去年同期翻了一番。

(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，主要有兩個任務。首先是關注我們的獲利能力。我們將繼續加強我們的商業能力，同時提高我們的商業化效率，以提高我們的毛利率並管理我們的成本。我們預計將實現非 GAAP 營業利潤—我們的非 GAAP 營業利潤將在 2024 年第三季轉正。

(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，我們將繼續透過擴大內容豐富度和培育非常具體的內容類別來加強我們的內容生態系統，以確保嗶哩嗶哩成為最高品質內容的首選地。

(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，我們會專注於發現頂尖內容創作者的發展，支持他們賺更多的錢。

(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 change -- users' change of consumption demand such as baby and maternity, travel, automotive and home decorations.

【解讀】在內容品類方面，我們將繼續鞏固二次元、遊戲、科技知識等品類的現有優勢，同時對因應變化——用戶的變化而增長的新品類提供更多的支持和幫助。母嬰、旅遊、汽車、家居裝飾等消費需求。

(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 our both community and our profitability.

【解讀】我們相信，透過這項努力，在實現盈利後，我們將進一步實現和增強社區生態的良性循環，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.

我們的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 development strategy for this business segment in '24 and then including business now including live broadcasting, premium membership and other value-added services?

（外語）我的問題是關於增值服務的。那麼您能否為我們介紹一下24年這個業務板塊以及現在包括直播、高級會員和其他增值服務在內的業務的發展策略？

(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】B站上聚集了海量的優質內容創作者。它也是各種興趣的歡迎之家。我們的用戶在嗶哩嗶哩上有強烈的歸屬感。所有這些綜合起來導致用戶非常願意為他們喜歡的內容花錢，為他們喜愛的內容創作者花錢。

(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 kind 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 creator 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，用戶為自己喜歡的內容和服務付費。這對我們來說是最自然的商業模式。當人們為他們喜歡的內容和服務付費時，他們實際上對這種體驗感到高興，並且對這種體驗感覺良好。對於內容創作者來說，當他們透過這些服務獲得收入時，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，他們還有更多——他們會更有動力繼續在嗶哩嗶哩上創作內容。例如，如果我們的內容創作者透過出售其專有的高級課程在嗶哩嗶哩上賺取更多收入，那麼這筆錢將比他在廣告中獲得的收入更有價值。

(foreign language)

（外語）

[Interpreted] Based on VAS 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】基於增值服務模式或社群連接，我們開發了直播、會員、漫畫、有聲劇、精品課程、粉絲收費等相結合的增值服務。而這一切都與目前的社區和我們的內容密切相關。第四季度，我們的整體增值服務收入較去年同期成長22%。

(foreign language)

（外語）

[Interpreted] Among all that services, we believe within VAS, live broadcasting probably has the most -- 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 this is -- it's universal and very low entry barrier monetization model for all content creators.

[解讀]在所有這些服務中，我們認為在加值服務中，直播可能是最具潛力、成長最快的。因為我們相信直播更加普及。任何人都可以成為直播主播。去年，180萬名內容創作者透過直播在嗶哩嗶哩上獲得收入。這對於所有內容創作者來說都是通用且入門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 creator/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】雖然做直播業務的平台很多，但嗶哩嗶哩的直播還是非常非常有特色的。這是因為我們直播的內容創作者/主持人以及內容類別有非常相似的產品或反映了我們在 PUGV 社群中的產品。

(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.

[解釋]我在這裡舉個例子。雖然很多人可能認為直播是一種衝動或激素驅動的付費，但是，如果你看看嗶哩嗶哩的直播收入組成部分，你會發現我們接近1/3 的收入實際上是通過稱為“大」的包月模式產生的。航程]。對於這筆特定的付款，它反映或代表了粉絲至少一個月內對我們的內容創作者的忠誠和讚賞。我們的許多付費用戶實際上已經提前幾個月訂閱了。他們的續訂率非常高。這個例子使我們與傳統的直播平台不同，因為我們與內容創作者、主播和用戶的聯繫是非常獨特且持久的。

(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】對於內容供應商，也就是主播來說，從第四季來看，B站活躍主播接近100萬人。其中只有一小部分來自職業行會。他們中的大多數實際上是來自我們 PUGV 生態系統的原生內容創作者。這也是我們與其他傳統直播平台的區別，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，從內容類別來看，我們PUGV生態中的內容品類也可以是我們的直播品類，尤其是B站有自己獨特優勢的品類，例如虛擬內容創作者。如果不是的話，我們也被認為是中國最領先的平台。還有，我們的知識類內容，例如法律相關的直播，很難想像這個品類在其他平台上是頂級垂直領域，但在嗶哩嗶哩上卻很受歡迎。

(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】對於我們2024年直播業務的重點，我們會在營收品質、毛利、毛利率等方面重點關注。我們希望2024年直播業務實現可持續、高品質的收入成長。

Our next question comes from Felix Liu from UBS.

我們的下一個問題來自瑞銀集團的 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）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呈現出強勁的成長勢頭。那麼我可以檢查一下這種良好表現背後的原因嗎？您對 2024 年廣告業務有何展望？這裡的主要成長動力是什麼？

(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超過人民幣64億元，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%。廣告收入佔比的提高直接得益於我們毛利率和毛利的提高。

(foreign language)

（外語）

[Interpreted] In the -- 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 the Yizong refers to our vertical industry strategies.

【解讀】請容許我回顧一下我們在2023年和第四季所做的工作以及成長動力。其實，在2023年伊始，我們就提出了「一橫一縱」的策略，同時也密切關注社區內活躍的商業活動帶來的機會。億恆指的是商業化的中間平台能力，包括我們的流量策略、演算法能力和資料力開發。而一縱是指我們的垂直產業戰略。

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。然後我們針對不同的垂直產業形成了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。在堅持開環策略的同時，我們計劃將嗶哩嗶哩與我們的電商合作夥伴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.

【解讀】由於我們在先前的電話會議中已經分享了許多關於儀橫、儀宗策略的資訊和案例，這裡不再贅述。然而，由於這項策略，我們的廣告收入也超出了 2024 年前 3 季的預期。現在我將分享一些第四季的額外亮點。

(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，我們能夠利用在特定垂直領域的大事件中的優勢，抓住新品上市階段的勢頭。我在這裡舉兩個例子。首先，在遊戲產業，我們在幾款新遊戲的公測階段就創造了歷史新高的收入，像是《夢幻之星》、《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子商務領域看到的。所以我們實際上在雙11、雙12和年貨節期間舉辦了幾場電商促銷活動，利用我們的視訊和直播電商能力。這裡有一些值得分享的有趣數字。雙11期間，直播及視訊電商總GMV年成長超250%。 B站電商直播場次也成長超100%。此外，這裡還有一些有趣的垂直領域，嬰兒和孕婦，對我們的用戶來說可能聽起來有點太成熟了。然而，我們仍然能夠透過我們的視訊和直播電商活動為母嬰客戶帶來超過 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】第二是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，已經逐漸完善和成熟。因此，我們能夠更準確地為客戶實現預算目標，從而從他們那裡獲得更多預算。第四季度，高轉換率廣告占我們成效廣告總收入的 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】第三是我們在組織架構和產品供應上整合了多條產品線。例如，透過將 Sparkle 廣告平台與其他廣告產品集成，我們進一步擴大了原生內容的數量和質量，從而增強和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，再加上我們所謂的一橫一縱策略，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 has 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】對於許多投資人都非常感興趣的影片和直播電商業務，我會詳細介紹一下。 2023年，我們進一步將商業場景融入內容生態，影響使用者從產品播種到交易轉換。 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重定向至外部平台的用戶數量成長超過200%。

(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, MrMiDeng, has generated over RMB 1.6 billion GMV through Bilibili. This demonstrates Bilibili's unique advantage in that -- 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】所以實際上，另一方面，視訊和直播電商產品也為我們的內容創作者帶來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11期間，我們的家居裝修內容創作者米鄧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全面、深入的長篇內容方面的獨特優勢，尤其是在耐用消費品和零售領域，如家居裝飾、科技和數位產品。

(foreign language)

（外語）

[Interpreted] And another example would be our -- one of our female content creators, [Yuli], In December, the total GMV of her single live e-commerce session (inaudible) were over RMB 50 million. And this also represents the significant consumption potential of Bilibili's female user base. And with MrMideng and [Ms. Yuli], 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]再舉個例子，我們的－我們的一位女性內容創作者，[Yuli]，12月份，她的單場電商直播場（聽不清楚）的總GMV超過了5000萬元人民幣。而這也代表著嗶哩嗶哩女性用戶群的巨大消費潛力。還有米登先生和[女士。 Yuli]，這兩個案例，我們認為這是業界領先的案例，也展示了嗶哩嗶哩社區的巨大潛力－商業化潛力。

(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，嗶哩嗶哩視訊直播電商總GMV超百億元。我們相信嗶哩嗶哩用戶群的商業價值才剛開始實現，未來還有龐大的成長空間。

(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 it's 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年的廣告業務保持非常樂觀的展望，並且對於實現廣​​告收入的高成長率非常有信心。那麼首先我們來回顧一下嗶哩嗶哩在廣告方面的核心優勢，這將是我們的用戶基礎。嗶哩嗶哩擁有中國年輕人口密度最高的平台。而我們廣告​​平台的價值就在於它自己的用戶群。隨著我們用戶的平均年齡為24歲，我們相信我們用戶的消費力、購買力正在逐漸增加——正在逐漸增加。如今，嗶哩嗶哩已成為廣告主的首選平台，無論是長期提高品牌資產，或是短期影響用戶購買決策和轉換銷售。嗶哩嗶哩已成為必投的廣告平台。

(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 multiterminal 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 multidimensional data placement. And we'll also be very 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億恆戰略。首先，我們會增強廣告投放能力，提升廣告投放效率。這包括整合我們的廣告投放系統，實現智慧、多終端的應用程式投放體驗。我們計劃在今年某個時候為我們的廣告商實現自動投放。我們將進一步開發資料視覺化工具，讓客戶透過多維資料投放來驗證廣告投放的結果。我們也會非常密切地關注並尋找 AIGC 能帶來什麼來幫助我們提高廣告效率。

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 Moments page research function and other community scenarios. Meanwhile, we will also looking 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 be effectively leveraging and increase our ad inventory and outlook in 2024.

其次是我們會深入社群場景，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、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研究功能和其他社群場景。同時，我們也將透過在推薦頁中以混合方式佈置廣告影片來提高變現效率，並進一步推廣原生廣告。總而言之，我們將有效利用並增加 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作為內容創作者的模式，鼓勵廣告客戶創作原生內容，並在嗶哩嗶哩上開設自己的品牌帳戶。另一方面，我們也會為這些廣告商開放私域，並推出更多的互動功能，讓他們與我們的用戶互動。透過這些努力，我們的目標是將單一的廣告投放轉變為長期運營，並增加客戶的品牌資產。

(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, finance 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 forging of our e-commerce ecosystem will bring us more pleasant surprises in advertising revenue in 2024.

【解讀】第三是我們的一宗戰略。我們相信我們可以複製去年在電子商務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行業，例如汽車、科技、家居和裝飾、線上服務、金融和教育等。我們相信我們也可以在這些垂直領域實現高速成長。但最後，總而言之，我們相信電商生態系統的進一步打造將為我們2024年的廣告收入帶來更多驚喜。

Our next question comes from Lei Zhang from Bank of America Securities.

我們的下一個問題來自美國銀行證券的張磊。

(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我們的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年的做法類似，主要是透過毛利的成長以及費用管理。讓我更詳細地討論一下。

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%。我們的毛利年增超過40%。到 2024 年，我們預計我們的收入成長將加速並實現兩位數的成長率，廣告收入的成長速度甚至更快。我們預計，隨著高利潤廣告業務貢獻的增加，我們的毛利率將進一步提高，2024年我們的毛利也將維持高成長。在費用方面，我們將持續提高營運效率。我們預計今年第三季將實現非 GAAP 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.

讓我分享更多關於我們的現金流和資產負債表方面的資訊。我們在2023年第三季和第四季實現了正的經營現金流。特別是在第三季度，我們產生了超過6億元人民幣的營運現金流。這意味著我們公司已經進入了發展的良性循環。我們預計將繼續這樣做，並在 2024 年保持正的營運現金流。

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，去年我們回購或償還了12億美元的CB。截至 2023 年 12 月 31 日，我們的資產負債表上有約 21 億美元的現金儲備。與 8.6 億美元的未償可換股債券相比，我們的現金儲備足以償還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 informations for IR in both China and the U.S. can be found on today's press release. Have a great day. That does conclude today's conference call. You may now disconnect your lines.

問答環節到此結束。再次感謝您今天參加 Bilibili 2023 年第四季及財年財務業績和業務更新電話會議。如果您還有任何疑問，請聯絡 Bilibili 執行 IR 總監 Juliet Yang 或 Piacente Financial Communications。您可以在今天的新聞稿中找到中國和美國 IR 的聯絡資訊。祝你有美好的一天。今天的電話會議到此結束。現在您可以斷開線路。

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

[本文字記錄中標記為[已翻譯]的部分是由現場通話中的口譯員朗讀的。]