Bilibili Inc (BILI) 2022 Q1 法說會逐字稿

Good day, and welcome to the Bilibili 2022 First Quarter Financial Results and Business Update Conference Call. Today's conference is being recorded.

大家好，歡迎參加嗶哩嗶哩2022年第一季財務業績及業務更新電話會議。今天的會議正在錄製中。

At this time, I would like to turn the conference over to Juliet Yang, Executive Director of Investor Relations. Please go ahead.

現在，我想將會議交給投資者關係執行總監Juliet Yang。請您發言。

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

謝謝接線生。在本次電話會議中，我們將討論我們的業務前景並做出前瞻性陳述。這些評論是基於我們今天的預測和預期。由於一系列風險和不確定因素，包括我們最近提交給美國證券交易委員會和香港證券交易所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 the reconciliation table are available in the news release we issue earlier today.

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。

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.

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

Joining us today from Bilibili senior management are Mr. Rui Chen, Chairman of the Board and Chief Executive Officer; Ms. Carly Lee, 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嗶哩嗶哩高層管理人員包括董事會主席兼首席執行官陳睿先生、董事會副主席兼首席營運官李凱莉女士以及首席財務官範志軍先生。

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

現在我將電話轉給范先生，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 2022 First Quarter Results Conference Call. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen.

謝謝朱麗葉！也感謝大家參加我們2022年第一季業績電話會議。我很高興代表陳先生致今天的開場白。

In the first quarter, the unexpected outbreak of COVID-19 struck China nationwide, impacting people's everyday lives. Shanghai, where our headquarters are based, were particularly impacted by the strict lockdowns.

第一季度，突如其來的新冠肺炎疫情席捲全國，對人們的日常生活產生了影響。我們總部所在地上海尤其受到嚴格封鎖措施的影響。

During this challenging time, our top priority is to the health and the safety of our employees. Over 8,000 of our staff members have been working from home since mid-March, and we arranged essentials to be delivered to our employees in Shanghai when it was the most difficult to get supplies. In addition, we opened our documentary library to the public free of charge during the May holidays and donated 2 million premium Bilibili memberships to Shanghai Citizens. We are glad to see that the lockdown just ended last week and hope everyone's life and our daily business can return to normal order soon.

值此艱難時期，我們的首要任務是保障員工的健康與安全。自3月中旬以來，我們已有超過8,000名員工居家辦公，並在物資最匱乏的時期安排將必需品配送至上海的員工手中。此外，我們在五一假期期間免費向公眾開放了紀錄片庫，並向上海市民捐贈了200萬個嗶哩嗶哩高級會員。我們很高興看到疫情封鎖於上週結束，並祝福大家的生活和日常業務都能盡快恢復正常。

Confronting the challenges, our business foundation remains strong and resilient. In the first quarter, our vibrant community continued to grow at a fast pace. Total MAUs grew by 31% year-over-year to 294 million, and the DAUs grew even faster at 32% year-over-year, reaching 79 million.

面對挑戰，我們的業務基礎依然強勁且富有韌性。第一季度，我們充滿活力的社區持續快速成長。月活躍用戶較去年同期成長31%，達2.94億；每日活躍用戶較去年同期成長32%，達7,900萬。

Total user traffic, which we calculate as DAUs multiplied by daily time spent per user, grew 52% year-over-year. During this period, each user spent an average of 95 minutes on Bilibili per day, the longest we have seen in our operating history. These strong user metrics represent our solid business fundamentals, and we are seeing the momentum continue as we move through the second quarter.

總用戶流量（我們用每日活躍用戶數乘以每位用戶每日使用時長來計算）較去年同期成長52%。在此期間，每位用戶平均每日在嗶哩嗶哩的停留時間為95分鐘，這是我們營運史上最長的停留時間。這些強勁的用戶指標體現了我們穩固的業務基礎，而隨著第二季的到來，我們預計這一勢頭將持續下去。

Despite the short-term impact from the COVID lockdowns, our total net revenue for the first quarter came in at RMB 5.05 billion, up 30% year-over-year. In the first quarter, both our paying ratio and MPUs reached a record high of 9.3% and 27.2 million, respectively. Live broadcasting was a major driver during the period with paying user numbers growing 60% year-over-year.

儘管新冠疫情封鎖措施帶來了短期影響，但我們第一季的總淨收入仍達人民幣50.5億元，年增30%。第一季度，我們的付費率和每月活躍用戶數均創歷史新高，分別達到9.3%和2,720萬人。直播是本季的主要成長動力，付費用戶數量較去年同期成長60%。

Despite soft industry demands, we continue to gain market share in advertising and grew our ad revenue by 46% year-on-year in Q1. Improving our ads efficiency and exploring new products, such as ads in Story Mode, are a few of the initiatives we expect to leverage as we work our way through the challenging macro environment in the coming quarters.

儘管產業需求疲軟，但我們的廣告市佔率仍在持續成長，第一季廣告營收年增46%。提升廣告效率並探索新產品（例如「故事模式」廣告）是我們在未來幾季應對充滿挑戰的宏觀環境時將採取的舉措之一。

User growth, effective spending control and improving our operating efficiency are our top goals. We have made some progresses on each of these fronts in Q1. Sales and marketing expenses decreased by 29% quarter-over-quarter, accounting for 25% of total revenue, down from 31% in the previous quarter. Server and bandwidth costs decreased by 2% quarter-over-quarter, which was no small feat given our daily video views increased by 36% sequentially. We continued to invest in R&D in Q1, which we believe is essential for long-term and sustainable growth.

用戶成長、有效控制支出、提升營運效率是我們的首要目標。第一季度，我們在這些方面都取得了一些進展。銷售和行銷費用較上季下降29%，佔總營收的25%，低於上一季的31%。伺服器和頻寬成本較上季下降2%，考慮到我們每日影片觀看量較上季成長36%，這已屬不易。第一季度，我們繼續在研發方面投入，我們認為這對於長期可持續的成長至關重要。

Regardless of the pandemic impacts to our short-term financial metrics, we remain committed to our mid- and long-term goal of narrowing our loss ratio and reaching breakeven. Moving forward, we will further strengthen our commercialization capabilities, control costs and improve human capital efficiency.

無論疫情如何影響我們的短期財務指標，我們仍將致力於實現中長期目標，即縮小虧損率並實現損益平衡。未來，我們將進一步增強商業化能力，控製成本，並提高人力資本效率。

With that overview, I'd like to go through some details of our first quarter operations across our content, community and commercialization. Bilibili's unique content and community offerings provide our users an irreplaceable experience in the online video space. Since 2021, we have successfully expanded to a multiterminal video community by launching our Story Mode and the Smart TV app. These have effectively brought our rich content to users in more formats that resonate with them across different viewing preferences.

基於上述概述，我想詳細介紹我們第一季在內容、社群和商業化方面的運作。嗶哩嗶哩獨特的內容和社群服務為用戶提供了線上影片領域無可取代的體驗。自2021年以來，我們透過推出故事模式和智慧電視應用程序，成功擴展至多終端視訊社群。這些功能有效地將我們豐富的內容以更多形式帶給用戶，以滿足不同觀看偏好的用戶。

User response to our short-form video Story Mode has been very inspiring. This short form video with Bilibili features provides a unique watching experience to satisfy users' on-the-go entertainment needs. Story Mode brought an incremental increase in total video consumption, contributing more than 20% of our total video views in the first quarter. And these numbers have continued to grow in Q2. In addition to more views and creating deeper community bonds, Story Mode has also opened up a new avenue for commercialization opportunities with advertisers as well as our live broadcasting services.

用戶對我們短片「故事模式」的反應非常熱烈。這款融合了嗶哩嗶哩特色的短片提供了獨特的觀看體驗，滿足了用戶隨時隨地的娛樂需求。 「故事模式」帶來了影片總觀看量的增量成長，在第一季貢獻了我們影片總觀看量的20%以上。這一數字在第二季度持續成長。除了增加觀看量和建立更深厚的社區聯繫外，故事模式還為廣告商和我們的直播服務開闢了新的商業化途徑。

During the period, users primarily engaged with content in the lifestyle, games, entertainment, ACG and knowledge categories. Across these top verticals and others, content creation remained robust. Monthly average content submissions were 12.6 million, increasing by 63% compared with the same period last year. Monthly active creators during the quarter were 3.8 million, up 75% year-over-year.

本季度，使用者主要參與生活風格、遊戲、娛樂、二次元和知識類內容。在這些熱門垂直領域及其他領域，內容創作依然保持強勁。月均內容提交量為1260萬，年增63%。本季月活躍創作者數為380萬，較去年同期成長75%。

The deep value we place on our creators is one of the reasons we are able to maintain our robust content and healthy community. The key to motivate their continuous creation to help them gain recognition and provide monetary rewards. We are providing them with both. Content creators with more than 10,000 followers increased by 44% in the first quarter. Beyond our cash incentive program, content creators are encouraged to realize their commercial value more fully through multiple avenues, including live broadcasting, our Sparkle ad platform, creator-recommended ads and direct tips from users. In the first quarter, a total of 1.1 million content creators had received monetary compensation for their work, up 90% year-over-year.

我們對創作者的深切重視是我們能夠維持豐富內容和健康社群的原因之一。激勵他們持續創作的關鍵在於幫助他們獲得認可並提供金錢獎勵。我們正同時為他們提供這兩項服務。第一季度，擁有超過1萬名粉絲的內容創作者數量增加了44%。除了現金獎勵計劃外，我們還鼓勵內容創作者透過多種途徑更充分地實現其商業價值，包括直播、我們的Sparkle廣告平台、創作者推薦廣告以及用戶直接打賞。第一季度，共有110萬名內容創作者因其作品獲得了金錢獎勵，年增90%。

As for our community, we continue to foster an active environment for our users to get closer to the content and interact with creators and each other. We can see this not only with the record average daily time spent on our platform of 95 minutes in the first quarter, but also in the increased average daily video views, which grew by impressive 84% year-over-year to nearly 3 billion.

至於我們的社區，我們持續營造活躍的社區環境，讓使用者更貼近內容，並與創作者互動。我們不僅從第一季平台平均每日使用長度創下95分鐘的新高，還從日均影片觀看量的成長中可見一斑，日均影片觀看量年增84%，達到近30億次。

The number of interactions in Q1 reached 12.3 billion, up an impressive 87% year-over-year. The bond between our users and community have continued to grow. By the end of March, we had 158 million official members, up 41% with a stable 12-month retention rate of 83%. Both our Story Mode and the Smart TV have played a positive roles in driving engagement levels.

第一季互動次數達到123億次，較去年同期成長87%，令人印象深刻。使用者與社群之間的聯繫持續增強。截至3月底，我們的正式會員數已達1.58億，年增41%，12個月留存率穩定在83%。我們的故事模式和智慧電視在提升用戶參與度方面發揮了積極作用。

Now let's take a look at our commercialization efforts. Accelerating our commercialization efforts is our most important target this year. Despite the macro headwinds, our business is resilient. While advertising and e-commerce businesses have and will be particularly impacted in the near term, we are paying more attention to the quality of our revenue growth, particularly the margin contribution of each business segment.

現在，我們來看看我們的商業化工作。加速商業化進程是我們今年最重要的目標。儘管面臨宏觀經濟逆風，但我們的業務依然保持韌性。雖然廣告和電商業務已經並將在短期內受到特別大的影響，但我們更加關注收入成長的質量，尤其是各業務部門的利潤率貢獻。

For our game business. In the first quarter, net revenues from our game business increased 16% year-over-year to RMB 1.36 billion. We continued to invest in in-house game development by acquiring a new studio in the first quarter. At the same time, we're closely monitoring our existing projects and conducting agile testing to keep our pipeline ahead of the fast-evolving industry. We're also working to improve our industrialized development capabilities, which is equally important in landing an idea that works.

就遊戲業務而言，第一季度，遊戲業務淨收入年增16%，達到人民幣13.6億元。我們繼續投資內部遊戲開發，並於第一季收購了一家新工作室。同時，我們密切關注現有項目，並進行敏捷測試，以確保我們的產品線在快速發展的行業中保持領先地位。我們也努力提升工業化開發能力，這對實現可行的創意同樣重要。

Turning to our pipeline. Three games have already been approved and some others are in the late approval stage. As for our game operation in the overseas market, we have 3 titles slated for launch in the second quarter, more for the second half of this year.

談到我們的遊戲儲備。目前已有三款遊戲獲得審批，其他一些遊戲正處於審批後期階段。至於我們在海外市場的遊戲運營，我們有三款遊戲計劃在第二季推出，更多遊戲計劃在今年下半年推出。

Turning to our VAS business. Net revenues for VAS were RMB 2.05 billion, an increase of 37% year-over-year, beyond the pandemic, we see a lot of monetization opportunity in this segment, particularly in live broadcasting and other innovative community-related value-added services.

談到我們的加值服務業務。增值服務淨收入為人民幣 20.5 億元，較去年同期成長 37%。疫情過後，我們看到該業務領域存在大量獲利機會，尤其是在直播和其他創新社區增值服務方面。

Our powerful PUGV video library and the pool of talented creators give us a unique advantage to leverage and reinforce our live broadcasting business. In the first quarter, the number of active live broadcasters on Bilibili increased by 88% year-over-year.

我們強大的PUGV影片庫和許多優秀的創作者，為我們拓展和強化直播業務提供了獨特的優勢。第一季度，嗶哩嗶哩活躍主播數量較去年同期成長88%。

We continue to roll out more tools and functions to let creators showcase their talent, and introduce new forms of interactive virtual gifting programs. Meanwhile, the popularity of Story Mode opened a new gateway for users to discover interesting live broadcasting content. With these initiatives, a seamless and natural conversion to a paid user arises. In the first quarter, NPUs in live broadcasting increased by 60% year-over-year.

我們持續推出更多工具和功能，幫助創作者展現才華，並推出全新形式的互動虛擬禮物贈品計畫。同時，故事模式的流行為用戶探索有趣的直播內容開闢了新的途徑。這些舉措促成了用戶向付費用戶的無縫自然轉換。第一季度，直播業務的NPU年增60%。

As for our premium membership. By the end of the first quarter, we had 20.1 million premium members, a 25% increase year-over-year. Nearly 80% of these were annual or auto-renew packages subscribers, representing their strong trust in us. In 2022, we will continue to add exciting content to attract members, including series of Bilibili-produced Chinese anime, variety shows and documentaries.

至於我們的高級會員。截至第一季末，我們擁有2010萬高級會員，年增25%。其中近80%是包年或自動續訂套餐的訂閱用戶，這反映了他們對我們的高度信任。 2022年，我們將繼續推出精彩內容來吸引會員，包括嗶哩嗶哩製作的中國動漫系列、綜藝節目和紀錄片。

Looking at our advertising services. Revenue from this segment were RMB 1.0 billion, an increase of 46% year-over-year. In the first quarter, our top 5 advertising industry verticals were games, skincare and cosmetics, 3C products, automobiles and food and beverage. In March, the unexpected COVID lockdown caused travel restrictions and logistics difficulties in major cities in China. Some advertising dollars were delayed or placed on hold. Confronting the headwinds, we are pressing forward to expand our advertising scenarios with more innovative ad products and increase our ad efficiency with a better conversion toolkit.

我們的廣告服務業務收入為人民幣10億元，較去年同期成長46%。第一季度，我們廣告業務的五大垂直產業分別為遊戲、保養品及美妝、3C產品、汽車以及食品飲料。 3月份，突如其來的新冠疫情封鎖措施導致中國主要城市出行受限，物流運輸困難，部分廣告投放被延後或擱置。面對挑戰，我們正努力拓展廣告場景，推出更具創新性的廣告產品，並透過更強大的轉換工具提升廣告投放效率。

We launched our Story Mode ads in April, and the initial feedback is encouraging. Compared with text or picture-based ads, ads in the Story Mode has higher ROI to ad customers and bring an incremental increase to our ad inventory as well as our eCPM. We plan to allocate more resources to improve its performance, including algorithms and product abilities.

我們在四月推出了「故事模式」廣告，初步回饋令人鼓舞。與基於文字或圖片的廣告相比，故事模式的廣告為廣告客戶帶來了更高的投資回報率，並帶來了廣告庫存和有效每千次展示費用（eCPM）的增量增長。我們計劃投入更多資源來提升其效果，包括演算法和產品能力。

E-commerce is another area deeply impacted by the logistic disruption caused by the pandemic. As we believe our customer trust is our most valuable asset, we offered our customers our free delivery delay services and [automatic] (corrected by company after the call) refund option. As recovery begins, our May GMV sales were again on the rise. Going forward, we will continue to explore new innovative models to maximize our IP value and achieve synergy with our leading content verticals.

電商是另一個深受疫情物流中斷影響的領域。我們堅信客戶信任是我們最寶貴的資產，因此我們為客戶提供了免費的延遲配送服務和自動退款選項（公司會在您聯繫後進行更正）。隨著業務復甦，我們5月的商品交易總額（GMV）再次呈現成長態勢。未來，我們將繼續探索新的創新模式，以最大化我們的IP價值，並與我們領先的內容垂直領域實現協同效應。

Confronting the macro challenges, our action plan is clear for the rest of the year. First, we aim to take all necessary steps to resume normal business operations. Second, we will be focusing on the quality of our users and our revenue growth, particularly DAU metrics and our business segments' margins. Lastly, we will take essential action to further control our cost and expenses.

面對宏觀挑戰，我們在今年剩餘時間的行動計畫非常明確。首先，我們計劃採取一切必要措施，恢復正常的業務運作。其次，我們將專注於用戶品質和收入成長，尤其是每日活躍用戶指標和各業務部門的利潤率。最後，我們將採取必要措施，進一步控製成本和費用。

This concludes Mr. Chen's remarks. I will now provide a brief overview of our financial results for the first quarter of 2022 and the outlook for the second quarter of 2022.

陳總的發言到此結束。接下來，我將簡要介紹我們2022年第一季的財務業績，並對2022年第二季的業績進行展望。

Total net revenue for the first quarter was RMB 5.05 billion, up 30% from the same period of 2021. Cost of revenues increased by 43% year-over-year to RMB 4.2 billion. Server and bandwidth cost as part of the relative fix cost component decreased 2% quarter-over-quarter. Server and bandwidth cost per video views decreased 27% quarter-over-quarter, showing our ongoing efforts and progress in cost saving.

第一季總淨收入為人民幣50.5億元，較2021年同期成長30%。營收成本年增43%，達到人民幣42億元。伺服器和頻寬成本作為相對固定成本的一部分，環比下降2%。每影片觀看次數的伺服器和頻寬成本較上月下降27%，這反映了我們在成本控制方面的持續努力和取得的進展。

Our gross profit in the first quarter was RMB 807.2 million and gross margin was 16%. Total operating expenses was RMB 2.8 billion, up 42% from the same period in 2021, which represents a 9% quarter-over-quarter decrease from Q4 2021.

第一季毛利為人民幣8.072億元，毛利率為16%。總營運費用為人民幣28億元，年增42%，季減9%。

Sales and marketing expenses were RMB 1.3 billion, representing a 25% increase year-over-year and RMB 507.7 million decrease quarter-over-quarter. Selling and marketing expenses as a percentage of total revenue was 25%, down from 30% in previous quarter. G&A expenses were RMB 535.3 million, representing a 38% increase year-over-year and keep flattish quarter-over-quarter. R&D expenses was RMB 1.0 billion, representing a 74% increase year-over-year. The increase was primarily due to increased headcount in research and development and share-based compensation expenses. We will closely monitor the progress and ROIs of our investments and make ongoing adjustment when necessary.

銷售及市場推廣費用為人民幣13億元，較去年成長25%，較上季減少人民幣5.077億元。銷售及市場推廣費用佔總營收的25%，低於上一季的30%。一般及行政管理費用為人民幣5.353億元，較去年成長38%，較上季持平。研發費用為人民幣10億元，較去年成長74%。研發費用成長主要由於研發人員規模增加以及股權激勵費用。我們將密切關注投資進度和投資回報率，並在必要時進行持續調整。

Net loss was RMB 2.3 billion for the first quarter of 2022 compared with a net loss of RMB 904.9 million in the same period of 2021. Adjusted net loss, which is a non-GAAP measure, was RMB 1.65 billion compared with RMB 891.0 million in the same period of 2021. Basic and diluted net loss per share for the first quarter was RMB 5.80 compared with RMB 2.54 in the same period of 2021. Adjusted basic diluted net loss per share was RMB 4.20 compared with RMB 2.50 in Q1 2021.

2022年第一季淨虧損為人民幣23億元，2021年同期淨虧損為國幣9.049億元。調整後淨虧損（非美國通用會計準則）為人民幣16.5億元，2021年同期為人民幣8.91億元。第一季每股基本及攤薄淨虧損為人民幣5.80元，2021年同期為2.54元。調整後每股基本稀釋淨虧損為人民幣4.20元，2021年第一季為2.50元。

Turning to our capital allocation and the liability management. We announced our USD 500 million share repurchase program in early March. As of March 31, 2022, approximately 1.4 million ADSs have been purchased under this program for a total cost of USD 30 million. We are also optimizing our liability level. In Q1, the Company repurchased and cancelled an aggregate principal amount of USD 204 million of convertible senior notes with a total cash consideration of USD 147.9 million and recorded cash saving of RMB 338.8 million.

談到我們的資本配置和負債管理。我們在3月初宣布了5億美元的股票回購計畫。截至2022年3月31日，該計畫已回購約140萬股美國存託憑證，總成本為3,000萬美元。我們也在優化負債水準。第一季度，公司回購並註銷了本金總額為2.04億美元的可轉換優先票據，總現金對價為1.479億美元，現金節省人民幣3.388億元。

As of March 31, 2022, we had cash and cash equivalents, term deposits and short-term investment of RMB 24.7 billion. As for our intent to convert to do primary listing on the Main Board of Hong Kong Stock Exchange and the NASDAQ, the Hong Kong Exchange had acknowledged our application, setting October 3, 2022, as the proposed effective date for our conversion to primary listing. It will expand our access to a wider investor base while we expect to maintain our listing status on NASDAQ.

截至2022年3月31日，我們的現金及現金等價物、定期存款及短期投資為人民幣247億元。關於我們擬轉至香港聯合交易所主機板和納斯達克進行第一上市的意向，香港交易所已確認我們的申請，並確定2022年10月3日為擬定的轉至第一上市的生效日期。此舉將擴大我們接觸更廣泛投資者的機會，同時我們預計仍將維持在納斯達克的上市地位。

With that in mind, we are currently projecting net revenues for the second quarter of 2022 to be between RMB 4.85 billion and RMB 4.95 billion.

考慮到這一點，我們目前預計 2022 年第二季的淨收入將在人民幣 48.5 億元至 49.5 億元之間。

Thank you for your attention. We will like now 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) Our first question comes from Lei Zhang with Bank of America.

（操作員指示）我們的第一個問題來自美國銀行的張雷。

(foreign language) My question is mainly about the of COVID lockdown impact to our business in first half. And then how should we look at our second half user trend and overall business outlook post the lockdowns?

（外語）我的問題主要是關於新冠疫​​情封鎖對我們上半年業務的影響。那麼，封鎖結束後，我們該如何看待下半年的使用者趨勢和整體業務前景呢？

(foreign language)

（外語）

[Interpreted] Well, I believe the pandemic is one of the question that most people cared about for the first half of this year. And it indeed has bought severe impact to macro economy and people's everyday life, especially in Shanghai, as one of the cities was particularly impacted.

[翻譯] 嗯，我相信疫情是今年上半年大家最關心的問題之一。疫情確實為宏觀經濟和人們的日常生活帶來了嚴重的影響，尤其是上海，它是受影響最嚴重的城市之一。

(foreign language)

（外語）

[Interpreted] Taking Bilibili, for example. Over 8,000 of our Shanghai employees have been working from home since 14th of March, and we are just now starting to gradually returning back to office this week. Until 13th of June, all the employees will be fully back to work. This is a total 3 full months. You can imagine how it does to every day -- people's everyday life in Shanghai.

[解讀] 以嗶哩嗶哩為例。自3月14日起，我們上海的8,000多名員工就開始在家辦公，本週我們才開始逐步復工。到6月13日，所有員工將全面復工。這整整三個月。你可以想像，這對上海人民的日常生活將產生怎樣的影響。

(foreign language)

（外語）

[Interpreted] And how do we see this impact -- COVID impact to Bilibili? Indeed, it has bought short-term impact to our business, particularly for advertising and e-commerce. However, we do not think -- we don't think there's any impact to Bilibili's long-term growth.

[解讀] 我們如何看待新冠疫情對嗶哩嗶哩的影響？確實，疫情確實為我們的業務帶來了短期影響，尤其是在廣告和電商方面。但是，我們認為疫情不會對嗶哩嗶哩的長期成長造成任何影響。

(foreign language)

（外語）

[Interpreted] For example, for our advertising business, there are some short-term impact. For example, in many cities in China in the first half of this year, people are in some sort of lockdown or stay-at-home mode, making a lot of the advertisers, putting their advertising plan on hold or delaying their advertising dollars. And that's the facts.

[解讀] 例如，對於我們的廣告業務來說，確實有一些短期影響。例如，今年上半年，中國很多城市都處於某種封鎖或居家狀態，導致許多廣告商暫停了廣告計劃，或延後了廣告支出。這些都是事實。

(foreign language)

（外語）

[Interpreted] As for Bilibili's e-commerce business, because starting from March, especially in April and May, a lot of logistics disruption due to the lockdowns or staying at home measures across different cities in Shanghai -- in China, and that's impacting people's willingness to purchase as well as the deliver services. So we do expect this impact will continue in second quarter.

[解讀] 至於嗶哩嗶哩的電商業務，由於從3月開始，尤其是4月和5月，由於中國上海等多個城市實施的封鎖或居家隔離措施，導致物流中斷，這影響了人們的購買意願和配送服務。因此，我們預計這種影響將持續到第二季​​。

(foreign language)

（外語）

[Interpreted] And all this impact to our ad business and e-commerce business, we do think it's temporary. Especially after June, when we reach certain milestones, to combating the COVID situation, a lot of the impact is starting to mitigate and disappear.

[解讀] 我們認為，所有這些對我們廣告業務和電商業務的影響都是暫時的。尤其是在6月之後，當我們在對抗新冠疫情方面取得某些進展時，許多影響就會開始減輕甚至消失。

(foreign language)

（外語）

[Interpreted] As for Bilibili's fundamental, we don't think there's any impact brought by the pandemic. For example, the visualization is an unstoppable trend. And we see the young generations, their needs towards entertainment and cultural products, is still very, very strong, and their comfunction towards cultural-related product has become even stronger. So that's why we do not -- we do think that there's no impact to our fundamentals.

[解讀] 至於嗶哩嗶哩的基本面，我們認為疫情不會帶來任何影響。例如，可視化是一個不可阻擋的趨勢。我們看到年輕一代對娛樂和文化產品的需求仍然非常強烈，他們對文化相關產品的依賴也變得更加強烈。所以，我們認為疫情不會對我們的基本面造成任何影響。

(foreign language)

（外語）

[Interpreted] And looking at the specific user metrics, for example, in Q1, our MAU grew 31% year-on-year, DAU grew 32% year-on-year. Both of the metrics is accelerating compared to Q1 last year.

[解讀] 從具體的使用者指標來看，例如第一季度，我們的每月活躍用戶 (MAU) 年比成長 31%，每日活躍用戶 (DAU) 年比成長 32%。這兩個指標與去年第一季相比都在加速成長。

(foreign language)

（外語）

[Interpreted] As for the quality of our user growth for this quarter, our DAU's growth rate outpaced the MAU growth rate. And for our paying user growth rate, outpaced the DAU's growth rate. And we achieved a record-high paying ratio of 9.3. So we have not only experienced a very fast user growth rate, the quality of those user is also very strong. And this is all done under the scenario that we have not increased any of our sales and marketing budget.

[解讀] 就本季用戶成長品質而言，我們的DAU成長率超過了MAU成長率。付費用戶成長率也超過了DAU成長率。我們的付費比率創下了9.3的歷史新高。因此，我們不僅經歷了非常快速的用戶成長，而且這些用戶的品質也非常高。而這一切都是在我們沒有增加任何銷售和行銷預算的情況下實現的。

(foreign language)

（外語）

[Interpreted] Bilibili have the business model of a typical platform, Internet platform business model. Whether it's DAU or paying ratio or this record-high time spent of 95 minutes, and the engagement level grew 87% year-on-year. All those metric can be translated to commercialization. And that's why we think the COVID, for Bilibili, has no long-term impact.

[解讀] B站的商業模式是典型的平台型網路平台商業模式。無論是每日活躍用戶 (DAU) 還是付費率，抑或是創紀錄的 95 分鐘用戶使用時長，以及同比增長 87% 的互動水平，所有這些指標都可以轉化為商業化。因此，我們認為新冠疫情對 B站來說不會產生長期影響。

(foreign language)

（外語）

[Interpreted] As for the outlook for the second half of this year, for Q2, there's still impact lingering and perhaps the impact to Q2 is even greater than Q1. But since June this year, we can see there's a sudden change of the environment, different cities in the country starting to recover from the lockdowns. And that's why we do think, for the second half of this year, things will start to recover.

[解讀] 至於今年下半年的前景，對於第二季而言，影響仍然存在，甚至可能比第一季更大。但自今年6月以來，我們可以看到環境發生了突然變化，全國不同城市開始從封鎖中恢復。因此，我們認為，今年下半年情況將開始復甦。

(foreign language)

（外語）

[Interpreted] As for the user growth, we have delivered step-by-step of our user growth target. At the same time, we're playing more -- we're paying more attention to the quality of the user. At the same time, closely monitor the expense we spend on sales and marketing.

[解讀] 在使用者成長方面，我們已經逐步實現了使用者成長目標。同時，我們也更加重視用戶品質。同時，我們也密切監控銷售和行銷方面的支出。

(foreign language)

（外語）

[Interpreted] As for the business side, as I mentioned, June is the month we're starting to walk out of the COVID impact. And we also believe this is the time we're starting to pick up our growth rate for each of our business line.

[翻譯] 至於業務方面，正如我所提到的，6月是我們開始擺脫新冠疫情影響的月份。我們也相信，這也是我們各條業務線開始加速成長的時期。

Our next question comes from even Yiwen Zhang with China Renaissance.

我們的下一個問題來自華興資本的張一文。

(foreign language) So my question is regarding Story Mode. So can management share more color or its latest update? Such as what role it plays in our broader content ecosystem? And what's the progress on the commercialization ratio around that?

（外語）我的問題是關於故事模式的。管理層能否分享更多關於它的細節或最新更新？例如它在我們更廣泛的內容生態系統中扮演什麼角色？以及它的商業化比例進展如何？

(foreign language)

（外語）

[Interpreted] Indeed, since we released earnings, a lot of people are asking about the progress of Story Mode because the Story Mode total video views has now contributing more than 20% of our total video views. This is a very tangible new format of content that's playing a bigger role.

[翻譯] 確實，自從我們發布財報以來，很多人都在詢問故事模式的進展，因為故事模式的視頻總觀看量現在已經占到我們總視頻觀看量的20%以上。這是一種非常切實的全新內容形式，正在發揮更大的作用。

(foreign language)

（外語）

[Interpreted] First of all, I have 3 points I wanted to emphasize on Story Mode. First of all, it is a pure incremental traffic for Bilibili. It's not like the Story Mode traffic is replacing some of the old PUGV traffic. But while users are watching more few PUGVs, they are watching even more Story Mode.

[解讀] 首先，關於故事模式，我想強調三點。首先，它對嗶哩嗶哩來說是一個純粹的增量流量。故事模式的流量並不會取代一些舊的PUGV流量。但是，雖然用戶觀看的PUGV越來越少，但他們觀看的故事模式卻越來越多。

(foreign language)

（外語）

[Interpreted] And from a statistic perspective, our video views has grown 84% year-on-year and Story Mode is contributing over 20% of the total traffic. And if we are excluding the Story Mode contribution, the PUGV growth rate is still around 50% to 60%, which is the similar rate we have kept in the past. That means the Story Mode is a pure incremental addition to our Bilibili ecosystem.

[解讀] 從統計數據來看，我們的影片觀看量年增了84%，故事模式貢獻了超過20%的總流量。即使剔除故事模式的貢獻，PUGV的成長率仍在50%到60%左右，與我們過去維持的成長率大致相同。這意味著故事模式對嗶哩嗶哩生態系統來說是一個純粹的增量。

(foreign language)

（外語）

[Interpreted] As for the Story Mode, the vertical short form -- short video format, this is not something new. As a matter of fact, we have this type of content starting from 2 to 3 years ago. And to our daily operation, the most important thing is to make sure, for this type of content, is adding an incremental traffic instead of replacing old traffic. And from the results, we have done a very good job.

[解讀] 至於“故事模式”，這種垂直短視頻形式並不是什麼新鮮事。事實上，我們從兩、三年前就開始做這類內容了。對於我們的日常營運來說，最重要的是確保這類內容能帶來增量流量，而不是取代原有的流量。從結果來看，我們做得非常好。

(foreign language)

（外語）

[Interpreted] Why we can build an incremental user traffic growth from Story Mode? Because we have built the Story Mode, a very Bilibili, unique flavor, type of content. If we look at the Story Mode's video creator, many of those are our content creator. And for the consumer of the Story Mode are Bilibili existing users. But those user are consuming this type of content during their fragmented time on a more light scenario.

[解讀] 為什麼我們能夠透過故事模式實現用戶流量的增量成長？因為我們打造了故事模式，這是一個非常Bilibili特色的內容類型。如果我們看看故事模式的影片創作者，會發現他們中的許多人都是我們的內容創作者。故事模式的消費者是Bilibili的現有使用者。但這些用戶是在碎片時間裡，以更輕鬆的場景消費這類內容。

So we believe, for the Story Mode, actually, it is comprehensive as a whole product, supplement to our original PUGV content. And it's actually expanding a new consumption scenario for our users.

所以我們認為，故事模式其實是個全面的產品，是對我們原有PUGV內容的補充。它實際上正在為我們的用戶拓展一個新的消費場景。

(foreign language)

（外語）

[Interpreted] And for our content creator who's very good at making long-form videos, it's actually very easy for them to create a short vertical format of content. It's like asking Yu Hua to post a Weibo, but it's very difficult to ask a Weibo user to write a long article.

[解讀] 而對於我們擅長製作長影片的內容創作者來說，創作短小的垂直內容其實非常容易。這就好比讓餘華發一條微博，但讓一個微博用戶寫一篇長篇文章卻非常困難。

(foreign language)

（外語）

[Interpreted] And asking our content creator to make more shorter vertical format of content, it actually help us to increase the video submission and also is helping our user to expand their video consumption scenario, making them more -- become more active and engaged on our platform. It's a win-win situation for us.

[解釋] 要求我們的內容創作者製作更多短視頻垂直格式的內容，實際上有助於我們增加視頻提交量，也有助於我們的用戶拓展他們的視頻消費場景，使他們在我們的平台上更加活躍、更加投入。這對我們來說是雙贏的局面。

(foreign language)

（外語）

[Interpreted] And thirdly, I want to emphasize, for Bilibili, we are not a tool type of product. It's very easy for people to see some of the Internet platform or product as a tool. This particular product is for player for long-form video. This is a product for a short video player. This is a platform for live broadcasting. But for Bilibili, we have it all. Because instead of being a tool, Bilibili is actually a content, a community platform that gathers people.

[解讀] 第三，我想強調的是，對嗶哩嗶哩來說，我們不是工具類的產品。人們很容易把某些網路平台或產品視為工具。這個產品是長視訊播放器，這個產品是短視頻播放器，這個產品是直播平台。但對於嗶哩嗶哩來說，我們什麼都有。因為嗶哩嗶哩並非工具，而是一個內容平台，一個聚集用戶的社群平台。

(foreign language)

（外語）

[Interpreted] For the industry player, we are used to separate users by the product names. However, from a user perspective, they choose product by the content verticals, not by their industry categories.

[解讀] 對於業界玩家來說，我們習慣用產品名稱來區分使用者。然而，從使用者角度來看，他們選擇產品的依據是內容垂直領域，而不是產業類別。

For example, a game lover will not only watch the PUGV, game PUGV, they will watch the game-related live broadcasting. He or she might also play Bilibili produced or licensed games.

例如，一個遊戲愛好者不僅會看PUGV、遊戲PUGV，還會看遊戲相關的直播，甚至可能玩嗶哩嗶哩出品或授權的遊戲。

As for our knowledge sector users, he or she might both consume the knowledge-related PUGV and also watch the documentary on Bilibili.

對於我們知識領域的使用者來說，他/她可能既會消費知識相關的PUGV，也會在Bilibili上看紀錄片。

(foreign language)

（外語）

[Interpreted] And so as for story, there are massive content supply on story, is related to lifestyle, foodie, pet. And those content category are actually mirroring the PUGV categories on Bilibili.

[解讀] 至於Story，Story上有大量內容供應，涉及生活方式、美食、寵物等。這些內容類別其實與B站上的PUGV類別相對應。

(foreign language)

（外語）

[Interpreted] Many years ago, when Bilibili started to do live broadcasting business, people would ask if we want to compete with certain live broadcasting platform. The answer has been no. Because this is expanding our users' needs and expanding our content offerings. And so as for Story Mode, we're not competing with the short-form video platforms out there. We're actually satisfying our users' existing need and expand their content consumption scenario, giving what they need.

[解讀] 很多年前，B站剛開始做直播的時候，就有人問我們想不想跟其他直播平台競爭。答案一直是否定的。因為直播能拓展用戶的需求，也能豐富我們的內容。至於Story Mode，我們不是跟其他短影音平台競爭，而是在滿足用戶現有的需求，拓展他們的內容消費場景，滿足他們的需求。

(foreign language)

（外語）

[Interpreted] Lastly, on commercialization. The beauty of the short-form videos are -- its model has been very, very mature. And there are so many very successful precedents in the industry. It has been proven to be -- have very high efficiency of ad conversion rate. And its conversion for live broadcasting is also very good. And from our practice, it's also being proven, this model works. And this will bring incremental commercialization opportunity to Bilibili.

[解讀] 最後，關於商業化。短片的魅力在於它的模式已經非常成熟，業界有很多非常成功的先例。事實證明，它的廣告轉換率非常高，而且直播的轉換率也很高。從我們的實踐來看，這種模式也得到了證明。這將為嗶哩嗶哩帶來增加商業化機會。

(foreign language)

（外語）

[Interpreted] We're starting to make a lot of trial runs with Story Mode product. Until now, so far, the progress has met with our expectations. And we'll continue to allocate more resource to develop Story Mode. And we believe it will bring incremental traffic to our Bilibili ecosystem. Essentially, it could be even bigger than the incremental PUGV traffic that bring -- has brought to Bilibili.

[翻譯] 我們開始對故事模式產品進行大量測試。到目前為止，進展符合我們的預期。我們將繼續投入更多資源開發故事模式。我們相信它將為嗶哩嗶哩生態系統帶來增量流量。實際上，它帶來的流量甚至可能比PUGV流量的增量還要大。

(foreign language)

（外語）

[Interpreted] And rest assured, the launch of Story Mode will not change how the Bilibili ecosystem works. It will actually become a new highlight of the Bilibili ecosystem.

[解讀]請放心，故事模式的推出不會改變嗶哩嗶哩生態系的運作方式。它實際上會成為嗶哩嗶哩生態系統的一個新的亮點。

As like many years ago, we started to do live broadcasting, and some of the user expressed concern whether we're going to change to a live broadcasting platform. As a matter of fact, now live broadcasting has become an essential element embedded within our ecosystem. I believe the same thing will happen with the Story Mode.

就像很多年前我們開始做直播一樣，有些用戶擔心我們是否會轉型成為直播平台。事實上，現在直播已經成為我們生態系統中不可或缺的一部分。我相信故事模式也會發生同樣的事情。

Bilibili will not become a short video platform. However, this will be part of our ecosystem, serving users' different needs and expanding our content offerings, bringing incremental traffic.

B站不會變成一個短視頻平台，但它會成為我們生態的一部分，服務用戶的不同需求，拓展我們的內容供給，帶來增量流量。

(foreign language)

（外語）

[Interpreted] We believe, in the near future, we'll have more and more high-quality mid- to longer-form video being born on Bilibili. There will be even more high-quality short-form video born and spread on Bilibili.

[解讀] 我們相信，不久的將來，B站上會有越來越多優質的中長影片誕生，也會有更多優質的短影片在B站上誕生和傳播。

That concludes Mr. Chen's answer.

陳先生的回答到此結束。

Our next question comes from Alex Yao with JPMorgan.

下一個問題來自摩根大通的 Alex Yao。

(foreign language) I would like to ask some questions on advertising. Fundamentally, we agree with Mr. Chen Rui. The long-term determinator to advertising monetization includes: Number one, the total platform usage; number two, user demographic; and number three, the ad tech, none of which has anything to do with the short-term COVID impact. But we, as the investment community, follows the company and track the company on a quarterly basis. So we would like to understand the near-term trends of our advertising.

（外語）我想問一些關於廣告的問題。從根本上來說，我們同意陳睿先生的觀點。廣告變現的長期決定因素包括：第一，平台總使用量；第二，使用者群體；第三，廣告技術，這些都與短期新冠疫情的影響無關。但作為投資界，我們會關注公司，並且會按季度進行追蹤。因此，我們希望了解我們廣告業務的短期趨勢。

For example, what are the advertiser categories that are more vulnerable to the COVID impact? And what are the categories who are more resilient?

例如，哪些類別的廣告主更容易受到新冠疫情的影響？又有哪些類別的廣告主更能抵禦疫情的影響？

Similarly, what are the advertising formats that are more resilient? And what are the more vulnerable advertising format?

同樣，哪些廣告形式更具韌性？哪些廣告形式又更脆弱？

Now that Shanghai has reopened, how do we see the advertising revenue growth rate into the next couple of quarters?

現在上海已經重新開放，我們如何看待未來幾季的廣告收入成長率？

(foreign language)

（外語）

[Interpreted] Thank you, Alex. I think you mastered the very essential advantage of Bilibili's advertising business. Like you said, due to macro economy slowdown and the pandemic impact, many advertisers' budget were delayed or placed on hold in the first half. At the same time, this is also making the advertising market reflecting the various reasons to invest for advertising.

[翻譯] 謝謝Alex。我認為你掌握了B站廣告業務的核心優勢。正如你所說，由於宏觀經濟放緩和疫情的影響，許多廣告商的預算在上半年被推遲或擱置。同時，這也使得廣告市場反映出各種廣告投資的原因。

We believe the platform that we have is -- the platform has high user value and the ability to influence users' mindset. And we've also continued to invest in technology that improve our conversion rate. We believe, in the longer term, Bilibili will be more favored by advertisers.

我們相信我們擁有的平台—它擁有很高的用戶價值，並且能夠影響用戶的心態。我們也持續投資於能夠提高轉換率的技術。我們相信，從長遠來看，嗶哩嗶哩將更受廣告商的青睞。

(foreign language)

（外語）

[Interpreted] The average age of Bilibili user is 23.5 years old, and 86% of our users are below 35 years old. More than half of our users are from first- and second-tier city. All of which metric represents the main cohort that's driving all kinds of consumption in China. By mastering this population, we have become the platform that all the advertisers crave.

[解讀] Bilibili 使用者平均年齡為 23.5 歲，其中 86% 的使用者年齡在 35 歲以下。超過一半的用戶來自一二線城市。這些指標代表了推動中國各類消費的主力。透過掌握這一群體，我們已成為所有廣告商夢寐以求的平台。

And if you look at past 2 to 3 years, our ad load has stayed 5%. We haven't increased any of our ad load. Our advertising has maintained relatively higher growth rate throughout the last 2 to 3 years. And this is an evidence that the advertiser really values Bilibili's user as well as the Bilibili brand. Even though that the ad dollar in the market might reduce in the short term, but we remain optimistic about Bilibili's advertising long-term growth.

回顧過去兩三年，我們的廣告投放量一直維持在5%左右，沒有增加任何廣告投放量。在過去兩三年裡，我們的廣告投放量一直保持著相對較高的成長率。這證明廣告主確實重視嗶哩嗶哩的用戶以及嗶哩嗶哩的品牌。儘管短期內市場廣告收入可能會減少，但我們仍然對嗶哩嗶哩的廣告長期成長持樂觀態度。

(foreign language)

（外語）

[Interpreted] As for the industry vertical that's especially resilient in the first quarter, game, 3C, food and beverage, skincare and cosmetics, has been pretty strong and resilient, especially for games and automotive. In first quarter, without any game approval being issued, we have delivered a better-than-expected game advertising dollar increase.

[解讀] 至於第一季表現特別強勁的垂直產業，遊戲、3C、食品飲料、保養品和化妝品等產業表現強勁且富有韌性，尤其是遊戲和汽車產業。在第一季度，儘管沒有任何遊戲審批，但我們的遊戲廣告收入成長仍優於預期。

As for automotive, because Bilibili's user is growing with the platform, their consumption power is also growing. This has been captured by a lot of the automotive advertisers. They are willing to spend more advertising dollars to attract and influence Bilibili users.

就汽車領域而言，由於嗶哩嗶哩的用戶規模隨著平台的擴張而不斷增長，他們的消費能力也不斷提升。這一點被許多汽車廣告商所抓住。他們願意投入更多廣告費來吸引和影響嗶哩嗶哩的用戶。

(foreign language)

（外語）

[Interpreted] Confronting the macro uncertainties and short-term fluctuations, we will be focusing on doing the right things, the right thing that serves for long term. We will be focusing on developing more standardized and industrialized, integrating marketing ability. This will be our long-term growth engine. And relying on the rapid iteration of our product capabilities and data capabilities, we'll continue to strengthen the construction of our middle platform for commercialization.

【解讀】面對宏觀不確定性和短期波動，我們將專注於做正確的事，做服務長遠的正確事。我們將專注於發展更標準化、產業化的整合行銷能力，這將是我們長期的成長引擎。同時，依托產品能力與資料能力的快速迭代，我們將持續加強商業化中台的建置。

And among the ad customers who invested in Q1, [47%] (corrected by company after the call) of them bought across different products -- across different ad products. Ad customer who brought integrated marketing campaign, namely brand performance and native ads, also grew significantly year-over-year.

在第一季進行投資的廣告客戶中，[47%]（公司在電話會議後進行了更正）購買了不同的產品－不同的廣告產品。帶來整合行銷活動（即品牌績效和原生廣告）的廣告客戶也較去年同期大幅成長。

(foreign language)

（外語）

[Interpreted] On top of what we are good at, that area, we're also expanding our ad scenario, integrate multiple products and multiple scenario, including PC, mobile apps, iPads, Smart TV as well as PUGV, OGV, live broadcasting and moment pages, making sure, whenever the users are, our advertiser can reach them.

[解讀] 除了我們擅長的領域之外，我們也在拓展我們的廣告場景，整合多產品、多場景，包括PC、手機APP、iPad、智慧電視以及PUGV、OGV、直播、朋友圈等，確保用戶無論身在何處，我們的廣告主都能觸達他們。

And for the smart TV devices in Q1, the total MAU has reached over 50 million. And for those TV user, it serves a nice addition to our existing user base. It's a supplement to our existing user cohort. A lot of them are from third- and fourth-tier city and their time spend has been very good. And we'll continue to invest in those smart TV and help us to convert more living room and family scenarios. And we aim to further enhance this multiterminal integration to optimize our marketing solutions.

第一季度，智慧電視設備的月活躍用戶總數已超過5,000萬。對於這些電視用戶來說，這無疑豐富了我們現有的用戶群。他們中的許多人來自三四線城市，他們的使用時間非常可觀。我們將繼續在智慧電視領域投入，幫助我們拓展更多客廳和家庭場景。我們的目標是進一步增強多終端集成，以優化我們的行銷解決方案。

On top of all that, we will further expand and invest in the Story Mode commercialization initiatives. And from our initial data for the Story Mode, advertising eCPM has been quite significantly higher compared to our traditional advertising scenarios, and its conversion rate is also improving.

除此之外，我們將進一步拓展並投資故事模式的商業化專案。從我們最初的故事模式數據來看，廣告的eCPM相比我們傳統的廣告場景已經有了顯著的提升，轉換率也不斷提升。

So on top of that, we will first do what we are good at and add more scenarios and continue to invest in the Story Mode commercialization.

因此在此基礎上，我們首先會做我們擅長的事情，增加更多的場景，並繼續投資故事模式的商業化。

(foreign language)

（外語）

[Interpreted] And further leveraging our content creators' creativity, we'll launch more ad products that fits with Bilibili ecosystem. Now more than 24,000 content creator and more than 6,500 advertisers has joined our Sparkle ad platform. We believe this number will double this year.

[解讀] 我們將進一步發揮內容創作者的創造力，推出更多契合嗶哩嗶哩生態系統的廣告產品。目前，已有超過 24,000 名內容創作者和超過 6,500 名廣告主加入了我們的 Sparkle 廣告平台。我們相信，今年這個數字將會翻倍。

And for Sparkle ad platform, is one of the advantageous Bilibili advertising has, it essentially is a reservoir for advertisers. Content creators' creative ideas will help us to retain advertisers to stay in our ecosystem.

而Sparkle廣告平台，是嗶哩嗶哩廣告的優點之一，本質上是廣告主的蓄水池。內容創作者的創意，能夠幫助我們留住廣告主，讓他們留在我們的生態裡。

For the second half of this year, we will aim to expedite the process of connecting native ads with more standardized ad products. For example, in the first quarter, more than 40% of our ad customer purchased other standardized ad product to pair with their Sparkle orders.

今年下半年，我們將致力於加速原生廣告與更多標準化廣告產品的對接。例如，在第一季度，超過40%的廣告客戶購買了其他標準化廣告產品來配合他們的Sparkle訂單。

(foreign language)

（外語）

[Interpreted] Lastly, we aim to combine the industry trends with our ecosystem advantages. Riding on the waves of visualization trend and leveraging the power of our content ecosystem, we have achieved healthy and quality growth of users. And we've also discovered the video-based ad has much better conversion rate than the traditional ads. Over 65% of our performance ads revenue came from video-based ads. And our eCPM has grown significantly year-over-year in the quarter. And the Story Mode, on the other hand, also serves a very incremental traffic and revenue growth for advertising business.

[解讀] 最後，我們致力於將產業趨勢與我們的生態系統優勢結合。乘著視覺化趨勢的浪潮，並藉助我們內容生態系統的力量，我們實現了使用者健康、高品質的成長。我們也發現影片廣告的轉換率遠高於傳統廣告。我們超過65%的效果廣告收入來自影片廣告。本季度，我們的有效每千次曝光費用（eCPM）較去年同期大幅成長。另一方面，故事模式也為廣告業務帶來了非常顯著的流量和收入成長。

So for the -- as we look for the second half of the year, we'll continue to do the right thing and to invest for the future, and the results will speak for itself.

因此，展望下半年，我們將繼續做正確的事情，為未來投資，結果將不言而喻。

Our next question comes from Alex Poon with Morgan Stanley.

我們的下一個問題來自摩根士丹利的 Alex Poon。

(foreign language) My question is related to live streaming business. Regarding the recent new regulation, can management share with us the impact of this regulation? And what's our expectation for development of this in future?

（外語）我的問題是關於直播業務的。關於最近的新規，管理階層能否分享一下這項規定的影響？我們對未來直播業務的發展有何期待？

(foreign language)

（外語）

[Interpreted] So for the recent regulation update, it actually has no impact to Bilibili's live broadcasting business. And the full year target for our live broadcasting business remain unchanged.

[解讀] 所以，最近的監管更新其實對嗶哩嗶哩的直播業務沒有影響。我們全年直播業務的目標保持不變。

(foreign language)

（外語）

[Interpreted] We've always mentioned that live broadcasting serves a very important part of our ecosystem. It's a natural extension of our video platform. Our growth will not be relying on attracting outside live broadcaster to the platform, attracting outside user to Bilibili's live broadcasting. As a matter of fact, there's a very strong overlap between the live broadcasters and content creators, a lot of the overlap with the video users and live broadcasting users. So my confidence in live broadcasting long term and sustainable growth remain unchanged.

[解讀] 我們一直提到，直播是我們生態系統中非常重要的一環。它是我們視訊平台的自然延伸。我們的成長不會依賴吸引外部直播主播加入平台，也不會吸引外部用戶加入嗶哩的直播。事實上，直播主播和內容創作者之間存在著很大的重合度，而視訊用戶和直播用戶也有很多重疊。因此，我對直播長期可持續成長的信心保持不變。

Our next question comes from Xueqing Zhang with CICC.

下一個問題來自中金公司的張學慶。

(foreign language) I would like to ask questions related to gross margin and the cost control and the ongoing COVID-19 pandemic.

(外語)我想問一些與毛利率、成本控制以及正在發生的 COVID-19 疫情有關的問題。

Firstly, with the latest strategic focus, will you place higher priority on gross margin improvement and cost control? And we proposed a target to achieve a breakeven point on a non-GAAP basis by 2024 in last quarter's earnings call. Is there any change? And how do you balance the target with user growth?

首先，鑑於最新的策略重點，你們是否會更加重視毛利率提升和成本控制？我們在上個季度的財報電話會議上提出了2024年實現非GAAP損益平衡的目標。現在有什麼改變嗎？你們如何平衡這個目標和使用者成長？

And last, what's the gross margin trend for the second quarter and the second half of the year? Appreciate a lot if you could share more color on the segment gross margin trend.

最後，第二季和下半年的毛利率趨勢如何？如果您能分享更多關於各部門毛利率趨勢的細節，我將不勝感激。

(foreign language)

（外語）

[Interpreted] So the target of achieving non-GAAP operating breakeven by 2024 remain unchanged. As I mentioned, the COVID impact for Bilibili is short term and temporary. It doesn't hurt our fundamentals or -- nor our long-term target.

[解讀] 因此，2024年實現非公認會計準則營運損益平衡的目標維持不變。正如我所提到的，新冠疫情對嗶哩嗶哩的影響是短期和暫時的。它不會損害我們的基本面，也不會損害我們的長期目標。

(foreign language)

（外語）

[Interpreted] The margin pressure you see in first quarter is mainly due to COVID that resulted in slowdown of our revenue growth. And if you look at the expense side, we're actually not spending more money.

[解讀] 您在第一季看到的利潤率壓力主要是因為新冠疫情導致我們的營收成長放緩。而從支出方面來看，我們其實並沒有增加支出。

(foreign language)

（外語）

[Interpreted] And you asked about the relationship between user growth and expense control. As a matter of fact, Bilibili's user growth model was never purely driven by the sales and marketing expense. It's actually driven by our content ecosystem, by this in natural brought good content. Those good content is essentially attracting user growth.

[解讀] 您問到使用者成長和費用控制之間的關係。事實上，B站的用戶成長模式從來都不是純粹由銷售和行銷費用所驅動的。它實際上是由我們的內容生態系統所驅動的，這自然帶來了優質內容。這些優質內容本質上是在吸引用戶成長。

And the expense we spend on sales and marketing is only helping people to quickly realize there's a very good platform called Bilibili. So it's never about just spending sales and marketing to drive user growth. As a matter of fact, our users' engagement level and retention level has remained a very healthy nature. And in the future, we'll be paying more attention on the sales and marketing ROI. And -- but for this effort, it will not impact our user growth trend as well as the retention rate.

我們在銷售和行銷上投入的資金只是為了幫助人們快速意識到嗶哩嗶哩是一個非常優秀的平台。所以我們從來不僅僅依靠銷售和行銷來推動用戶成長。事實上，我們的用戶參與度和留存率一直保持著非常健康的水平。未來，我們會更專注於銷售和行銷的投資報酬率。而且——但這方面的努力不會影響我們的用戶成長趨勢和留存率。

(foreign language)

（外語）

[Interpreted] As to the question whether we're going to put expense control on top of the everything else. I had mentioned in last earnings call, starting from 2022, there's a lot of macro changes domestically and internationally, even though there's, in addition, COVID impact. But a lot of the difficulties we're facing is not just brought because of the COVID. And in nature, to control costs and improve efficiency, is the most important job for Bilibili and also for the industry as well.

[解讀] 關於我們是否會將費用控制置於一切之上的問題。我在上次財報電話會議上提到，從2022年開始，國內外都會發生許多宏觀變化，儘管新冠疫情也帶來了影響。但我們面臨的許多困難並非僅僅因為新冠疫情。本質上，控製成本、提高效率是嗶哩嗶哩乃至整個產業最重要的工作。

And for the specific action points, we wanted to be very, very focused strategically to go deep with our business, not go broad. And yes, this is -- this has come to a stage for Bilibili, as well as the industry player, to be all focused on cost control and efficiency improvement.

至於具體的行動要點，我們希望在策略上非常專注，深入發展我們的業務，而不是泛泛而談。是的，現在B站以及整個產業都已經到了專注於成本控制和效率提升的階段。

(foreign language)

（外語）

[Interpreted] As for the gross margin, the margin pressure that we're facing in first quarter is mainly because the COVID impact resulted in the revenue growth slowdown. As I mentioned, as the COVID starting to ease in the second half of this year, our revenue growth rate will return to a normal trajectory. And also, the gross margin level will come along with it.

[解讀] 關於毛利率，我們第一季面臨的利潤率壓力主要是因為新冠疫情的影響導致營收成長放緩。正如我之前提到的，隨著今年下半年新冠疫情開始緩解，我們的收入成長率將恢復到正常水準。毛利率水準也會隨之回升。

Yes. I just want to add some points. First of all, when we were talking about the breakeven, everyone prioritize the cost control, efficiency improvement. But we think, for Bilibili, as mentioned by Mr. Chen, it's equally important to expand our top line.

是的。我只想補充幾點。首先，當我們談到損益平衡時，每個人都優先考慮成本控制和效率提升。但我們認為，對於B站來說，正如陳先生所提到的，擴大營收也同樣重要。

So first of all, we still believe there's still room for us to improve our monetization efficiency. So we are aiming to improve our paying ratio and expand our ad market share to improve our segment margin throughout the second half of this year. Even in the first quarter, we still saw the gross profit margin for live broadcasting and our ad business improve quarter-over-quarter. So that trend will continue in the remaining of this year.

首先，我們仍然相信我們的獲利效率還有提升空間。因此，我們的目標是提高付費率，擴大廣告市場份額，從而在今年下半年提升我們的細分利潤率。即使在第一季度，我們的直播和廣告業務的毛利率也較上季有所提升。因此，這一趨勢將在今年剩餘時間內持續下去。

And for the cost control side, we also made some progress in the first quarter. But in the second quarter, there are some pandemic. So the result of the cost control actually will be more reflected in the second half of this year.

在成本控制方面，我們在第一季也取得了一些進展。但第二季受到了一些疫情的影響。因此，成本控制的效果實際上會在今年下半年反映更多。

And we -- there are some highlights to the numbers. First of all, you saw the selling and marketing expenses decrease by 29% quarter-over-quarter. Now it's just flat to 25% of total revenues. Last quarter was 30%. And for the server and bandwidth cost, it's down like 2% quarter-over-quarter while our total user traffic grow like 28% quarter-over-quarter. And for R&D expenses, we primarily invest in game development, data, ad efficiency and product-related abilities.

這些數字有一些亮點。首先，銷售和行銷費用較上季下降了29%。現在，它佔總收入的比例持平於25%。上一季是30%。伺服器和頻寬成本較上月下降了2%，而我們的總用戶流量則較上季成長了28%。至於研發費用，我們主要投資於遊戲開發、數據、廣告效率和產品相關能力。

We still believe it's essential to improve our productivity and to improve our monetization efficiency. But we thought it's also important to invest in the future and also look at the ROI of those investment. So this year, we plan to continue and selectively invest in this area, but we will very closely monitor the progress of each product -- project and make adjustment if necessary, and to improve our total capital efficiency.

我們仍然認為提高生產力和貨幣化效率至關重要。但我們認為投資未來並專注於這些投資的投資報酬率也同樣重要。因此，今年我們計劃繼續並有選擇地投資於該領域，但我們將密切關注每個產品項目的進展，並在必要時進行調整，以提高我們的總資本效率。

So we expect the selling and marketing, G&A and R&D as a percentage of total revenue will be gradually decline from Q3 as our top line expand, and the loss margin will be naturally narrow.

因此，我們預計，隨著我們營收的擴大，銷售和行銷、一般及行政費用和研發費用佔總收入的百分比將從第三季開始逐漸下降，虧損幅度自然也會縮小。

For Q2, yes, the overall spending will be flat quarter-over-quarter. So that will be the outlook for the margin side. Yes, that's all.

是的，第二季的整體支出將與上一季持平。利潤率的前景就是這樣。是的，就這些。

And that concludes the question-and-answer session. I would like to turn the conference call back over to management for additional or closing comments.

問答環節到此結束。我想將電話會議交還給管理階層，請他們發表補充或總結性評論。

Well, thank you once again for joining us today. If you have further questions, please contact me, Juliet Yang, Bilibili's Executive IR Director, or TPG Investor Relations. Our contact information for IR in both China and U.S. can be found on today's press release. Have a great day. Bye-bye.

好的，再次感謝您今天的到來。如果您還有其他問題，請聯絡我，Bilibili 投資者關係執行總監 Juliet Yang，或 TPG 投資者關係部門。我們中國和美國投資者關係部門的聯絡方式可以在今天的新聞稿中找到。祝您擁有美好的一天。再見。

This concludes the program. You may now disconnect.

程式到此結束。您現在可以斷開連線了。

[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。 ]