Youdao Inc (DAO) 2023 Q4 法說會逐字稿

Good day, and welcome to the Youdao 2023 fourth quarter and full-year earnings conference call. Today's conference is being recorded.

大家好，歡迎參加有道2023年第四季及全年財報電話會議。今天的會議正在錄製中。

At this time, I would like to turn the conference over to Mr. Jeffrey Wang, Investor Relations Director of Youdao. Please go ahead.

這次我想把會議交給有道投資者關係總監王傑先生。請繼續。

Thank you. Operator.

謝謝。操作員。

Please note that discussion today will contain forward-looking statements related to future company performance, which are intended to qualify for the Safe Harbor from liability as established by the US Private Securities Litigation Reform Act. Such statements are not guarantees of the future performance and are subject to certain risks and uncertainties, assumptions, and other factors.

請注意，今天的討論將包含與未來公司業績相關的前瞻性陳述，這些陳述旨在符合美國私人證券訴訟改革法案規定的免責安全港的資格。此類陳述並非對未來績效的保證，並受到某些風險和不確定性、假設和其他因素的影響。

Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect Youdao's business and financial results is included in certain filings of the company with the US Securities and Exchange Commission. The company does not undertake any obligation to update this forward-looking information except as required by law.

其中一些風險超出了公司的控制範圍，可能導致實際結果與今天的新聞稿和本次討論中提到的結果有重大差異。該公司向美國證券交易委員會提交的某些文件中包含了對可能影響有道業務和財務業績的風險因素的一般討論。除法律要求外，本公司不承擔更新此前瞻性資訊的任何義務。

During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For the definitions of non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial results, please see the 2023 fourth-quarter and full-year financial results news release issued earlier today. As a reminder, this conference is being recorded. Besides, a webcast replay of this conference call will be available on Youdao's corporate website at ir.youdao.com.

在今天的電話會議上，管理階層還將討論某些非公認會計準則財務指標，僅供比較之用。有關非 GAAP 財務指標的定義以及 GAAP 與非 GAAP 財務業績的調整表，請參閱今天早些時候發布的 2023 年第四季度和全年財務業績新聞稿。提醒一下，本次會議正在錄製中。此外，本次電話會議的網路直播重播將在有道公司網站ir.youdao.com上提供。

Joining us today on the call from Youdao's senior management is Dr. Feng Zhou, our Chief Executive Officer; Mr. Lei Jin, our President; Mr. Peng Su, our VP of Strategy and Capital Markets; and Mr. Wayne Li, our VP of Finance.

今天，我們的執行長週峰博士參加了有道高階管理層的電話會議。我們的總裁雷進先生；蘇鵬先生，我們的策略與資本市場副總裁；以及我們的財務副總裁 Wayne Li 先生。

I will now turn the call over to Dr. Feng Zhou to review some of our recent highlights and strategic direction.

現在我將把電話轉給週峰博士，回顧我們最近的一些亮點和戰略方向。

Thank you, Jeffrey, and thank you all for participating in today's call.

謝謝傑弗裡，也謝謝大家參加今天的電話會議。

Before we begin, I would like to remind everyone that the financial information, non-GAAP financial information mentioned in this release is presented on a continuing operations basis and all numbers are based on Renminbi unless otherwise specifically stated.

在開始之前，我想提醒大家，本新聞稿中提到的財務資訊、非公認會計準則財務資訊是在持續經營的基礎上提供的，除非另有說明，所有數字均以人民幣為單位。

We had a solid financial performance in Q4, producing an all-time high income from operations and operating cash inflow. Net revenues reached RMB1.5 billion in Q4, up 1.8% year over year. Income from operations reached RMB76.3 million, increasing 209.2% year over year. In terms of cash flow, we achieved an operating cash inflow of RMB160.6 million, rising by 91% year over year.

我們第四季的財務表現穩健，營運收入和營運現金流入創歷史新高。第四季淨收入達15億元，年增1.8%。營業收入達人民幣7,630萬元，較去年成長209.2%。現金流方面，實現營運現金流入人民幣1.606億元，較去年成長91%。

For the full-year 2023, our key financial indicators improved significantly. Net revenues reached RMB5.4 billion, up 7.5% year over year. Loss from operations was RMB466.3 million, narrowed by 39.8% year over year. Operating cash outflow amounted to RMB438.1 million, improving 17.6% year over year.

2023年全年，我們主要的財務指標顯著改善。淨收入達人民幣54億元，較去年成長7.5%。經營虧損為人民幣4.663億元，較去年收窄39.8%。經營性現金流出為人民幣4.381億元，較去年成長17.6%。

We executed on our strategy of growing our businesses in key growth areas, including digital content services and online marketing services, while at the same time building product leadership and future growth through AI technology. We continue to drive towards profitability and have already delivered two major versions of our large language models, our solid foundations for both 2024 and AI-driven future.

我們執行在數位內容服務和線上行銷服務等關鍵成長領域發展業務的策略，同時透過人工智慧技術建立產品領先地位和未來成長。我們繼續努力實現盈利，並已經交付了大型語言模型的兩個主要版本，為 2024 年和人工智慧驅動的未來奠定了堅實的基礎。

Now I would like to share more color on our progress in the fourth quarter. First of all, our large language model projects. Last month, we released our second language model for education Ziyue 2 with major upgrades to conversational abilities, knowledge-based question answering capabilities, and text processing capabilities.

現在我想分享更多有關我們第四季度進展的資訊。首先是我們的大型語言模型專案。上個月，我們發布了教育第二語言模型子曰2，在會話能力、知識問答能力、文本處理能力等方面進行了重大升級。

Utilizing this new model, we launched Hi Echo 2 with extensive upgrades to digital human characters scenarios, conversational abilities, and the all-new teaching mode. We also introduced a major new LLM application, Mr. P AI Tutor, a conversation and camera-based tutoring app for all K-12 subjects. The AI tutor extends the application of Ziyue from language learning to real-time and multi-modality tutoring and covers one of the largest scenarios in K-12 learning. We are thrilled to be the first in China to deliver an all-subject AI tutor and look forward to serving more and more users with this technology. Additionally, we have open sourced two technologies, EmotiVoice and QAnything since Q4, which have so far garnered over 10,000 stars on GitHub, showcasing our technology ability.

利用這一新模式，我們推出了Hi Echo 2，對數位人物場景、對話能力以及全新的教學模式進行了全面升級。我們還推出了一個重要的新法學碩士應用程序，Mr. P AI Tutor，這是一款適用於所有 K-12 科目的基於對話和攝像頭的輔導應用程序。AI導師將子閱的應用從語言學習延伸到即時、多模態輔導，涵蓋K-12學習中最大的場景之一。我們很高興成為中國第一個提供全科目人工智慧導師的人，並期待透過這項技術服務越來越多的用戶。此外，我們從第四季度開始開源了 EmotiVoice 和 QAnything 兩項技術，目前在 GitHub 上已經獲得了超過 10,000 顆星，展示了我們的技術能力。

LLM technology is already driving concrete business growth. For example, our translation subscription fees have grown quickly since we launched LLM features with over 100% year-over-year growth for three consecutive quarters. Most of the growth comes from the LLM-driven AIBox and recently launched LLM Translation features.

LLM 技術已經在推動具體的業務成長。例如，自從我們推出LLM功能以來，我們的翻譯訂閱費用成長迅速，連續三個季度年增超過100%。大部分成長來自於法學碩士驅動的 AIBox 和最近推出的法學碩士翻譯功能。

As for the learning services segment, our net revenues reached RMB784 million, largely stable on a year-over-year basis. Momentum from our digital content services is strong, with net revenues of a RMB508.3 million, an increase of 13.4% year over year in Q4. The gross profit margin was above 70%. Furthermore, the net operating cash inflow of digital content services reached over RMB200 million.

學習服務板塊淨收入達人民幣7.84億元，年比基本穩定。我們的數位內容服務勢頭強勁，第四季淨收入為人民幣5.083億元，較去年同期成長13.4%。毛利率在70%以上。此外，數位內容服務經營現金流淨流入超過人民幣2億元。

Additionally, net revenue in Q4 could cover the cost and operating expenses. Departments primarily including -- includes our [Lingshi] and Youdao Literature continue to improve their products and services for users.

此外，第四季度的淨收入可以覆蓋成本和營運費用。主要部門包括－包括我們的【靈石】和有道文學，不斷為使用者改進他們的產品和服務。

In terms of business updates, I'm glad to share that the retention rate of our consultation service for the plan for strengthening basic academic disciplines (Spoken in Chinese) was around 75% in Q4. Moreover, since the introduction of AI writing refinement in the third quarter, we have efficiently provided over 25,000 high-quality refinements garnering widespread praise from our users.

在業務更新方面，我很高興與大家分享，第四季度基礎學科建設規劃（中文）諮詢服務的留存率約為75%。此外，自第三季推出AI寫作精修以來，我們已高效提供超過25,000條高品質精修，受到用戶的廣泛好評。

For 2023, net revenues from digital content services reached the RMB2 billion, up 11.7% year over year. Also covering the full-year cost and operating expenses. Regarding the STEAM courses, ours CSP score prediction system for competitive programming had 200% year-over-year user growth. The retention rates for advanced level programming courses and GO courses reached approximately 70%.

2023年，數位內容服務淨收入達20億元人民幣，較去年同期成長11.7%。也涵蓋全年成本和營運費用。在STEAM課程方面，我們的競技節目CSP分數預測系統的用戶較去年同期成長了200%。高級程式設計課程和GO課程的保留率達到約70%。

In 2023, 340 students of our programming courses received awards in the CSP competition. Among them, 106 students won the first prize. This achievement highlights the quality of our courses and services. In addition, Youdao Zongheng was awarded the second prize in the China new information consumption competition of 2023.

2023年，本校340位程式設計課程學生在CSP競賽中獲獎。其中，106名學生獲得一等獎。這項成就凸顯了我們課程和服務的品質。此外，有道縱橫榮獲2023中國新資訊消費大賽二等獎。

As for online marketing services, in the fourth quarter, the net revenues surged to a historic peak of RMB474.1 million and extraordinary year-over-year growth of 96.9%. Online marketing services have recorded over 50% year-over-year revenue growth for five consecutive quarters. This was primarily attributed to our cutting edge AI technology and enhanced data infrastructure, empowering us to provide to upgrade our RTA technology capabilities, broadening our client base and expand the range of applications.

在網路行銷服務方面，第四季淨收入飆升至人民幣4.741億元的歷史峰值，較去年同期成長96.9%。網路行銷服務營收連續五個季度年增超過50%。這主要歸功於我們尖端的人工智慧技術和增強的數據基礎設施，使我們能夠升級我們的RTA技術能力，擴大我們的客戶群並擴大應用範圍。

AI is playing a larger and larger role in our advertisement service. In fact, about 20% of our current advertising materials have already incorporated AI workflow. In addition, net revenues from online marketing services of gaming, entertainment, sports, and O2O industries in Q4 rose by over 200% year over year.

人工智慧在我們的廣告服務中發揮著越來越大的作用。事實上，我們目前大約 20% 的廣告素材已經融入了人工智慧工作流程。此外，遊戲、娛樂、運動、O2O產業線上行銷服務第四季淨收入年增超200%。

With regard to the smart devices segment, net revenues amounted to RMB222.4 million, declining 45.3% year over year. Our efforts to optimize low return of investments, sales channels continued to reduce overall channel inventory, impacting the fourth-quarter revenue. At the same time, the overall financial health of the segment has improved on a quarter-over-quarter basis. We have finished our sales channel reshuffling so that is behind us.

智慧設備板塊淨收入為人民幣2.224億元，較去年同期下降45.3%。我們努力優化投資報酬率較低，銷售通路持續減少整體通路庫存，影響了第四季的營收。同時，該部門的整體財務狀況較上季有所改善。我們已經完成了銷售管道的重組，所以這一切都已經過去了。

Product wise, we recently launched the Smart Learning Pad X20 featuring Mr. P AI Tutor powered by our LLM, Ziyue. This is the industry's first learning pad with an LLM-based all-subject AI tutor. We believe the headwinds of the devices segments are temporary. In fact, on February 21, we launched Youdao Dictionary Pen A6 Pro with more AI and LLM features. I'm happy to report that A6 Pro sold over 50,000 units in the first week, making it our number one launch with the most units in the first week in our history. As you can see, we are accelerating our product launches.

在產品方面，我們最近推出了智慧學習墊 X20，由我們的法學碩士 Ziyue 提供支援的 P 先生 AI 導師。這是業界首款配備法學碩士全學科人工智慧導師的學習墊。我們認為設備領域的阻力是暫時的。事實上，2月21日，我們推出了有道字典筆A6 Pro，具有更多AI和LLM功能。我很高興地向您報告，A6 Pro 在第一周就售出了超過 50,000 台，成為我們歷史上第一周銷售量最多的產品。正如您所看到的，我們正在加速我們的產品發布。

In past years, our new products were mostly launched in the summer. This year, we started the year strong with A6 Pro and E6, and our work on AI is paying off. Our devices have more attractive features and differentiations than any time before because of AI technology. Exclusive features like AI Grammar instruction, AI Word instruction, and Mr. Mr. P AI Tutor are liked by more and more users. And only Youdao products have them. These features are driving high user satisfaction and growth. This is why the new products are selling well. So we remain confident in the future of learning devices.

往年，我們的新產品大多在夏季推出。今年，我們以 A6 Pro 和 E6 強勢開局，我們在人工智慧方面的工作正在取得回報。由於人工智慧技術，我們的設備比以往任何時候都具有更有吸引力的功能和差異化。AI文法教學、AI單字教學、P先生AI家教等專屬功能受到越來越多使用者的喜愛。而且只有有道產品才有。這些功能正在推動高用戶滿意度和成長。這就是新產品暢銷的原因。因此，我們對學習設備的未來仍然充滿信心。

For education, digitalization solutions, we reached a major milestone in 2024 of RMB -- of over RMB100 million contract sales. Additionally, since the launch of Youdao Fun sports, it has been adopted by over 100 schools with a current utilization rate of over 95%.

在教育、數位化解決方案方面，我們在 2024 年實現了人民幣合約銷售額超過 1 億元人民幣的重要里程碑。此外，有道趣運動上線以來，已被百餘所學校採用，目前使用率超過95%。

Looking ahead, let's take a high-level view of the business. First, we see that users demand for digital learning content and services across subjects and across age groups are increasingly -- are increasing steadily since last year after COVID. Youdao is in a good position to capture this opportunity.

展望未來，讓我們從高層次來看業務。首先，我們看到，自去年新冠疫情爆發以來，用戶對跨學科、跨年齡層的數位學習內容和服務的需求日益增長。有道正好抓住了這個機會。

With our experienced teams and established content, our digital learning content business is already on a multi-quarter growth trajectory. This year, we continue to drive growth by focusing on key strong content areas, many including Lingshi and literature and developing new content.

憑藉我們經驗豐富的團隊和成熟的內容，我們的數位學習內容業務已經走上多個季度的成長軌道。今年，我們透過專注於關鍵的強勢內容領域（包括靈石和文學）以及開發新內容來繼續推動成長。

Another important factor at a high level is our unique strengths in AI technology. We continue to build upon our leadership in educational LLM in 2024. For a technological tidal wave like the LLM, first movers enjoy significant leverage and its impact on business shows in the accelerating fashion over time.

高水準上的另一個重要因素是我們在人工智慧技術方面的獨特優勢。到 2024 年，我們將繼續鞏固我們在教育法學碩士領域的領導地位。對於像法學碩士這樣的技術浪潮，先行者享有巨大的影響力，並且隨著時間的推移，其對商業展覽的影響力會不斷加速。

We are a first mover here and had a quick ramp-up in 2023 for our LLM technology and products. We released our own model and multiple industry-first products quickly as we gained more understanding of the technology. This year, we believe LLM will contribute more to product leadership of our products, including learning devices, online marketing services, and learning apps.

我們是這方面的先行者，並在 2023 年快速提升了我們的法學碩士技術和產品。隨著對科技的了解越來越多，我們很快就發布了自己的模型和多個行業第一的產品。今年，我們相信法學碩士將為我們產品的產品領先地位做出更多貢獻，包括學習設備、線上行銷服務和學習應用程式。

From this high-level view, we believe we are in a good position to lead in building a new generation of AI-powered, high-quality content-based learning and other experiences for people around the country and over the world.

從這個高層次的角度來看，我們相信我們處於領先地位，可以為全國和世界各地的人們建立新一代人工智慧驅動的、基於內容的高品質學習和其他體驗。

Thank you, and now is Peng Su to give you an update on our financials.

謝謝，現在請蘇鵬向您介紹我們的最新財務狀況。

Thank you, Dr. Zhou, and hello, everyone. Today I will be presenting some financial highlights from our fourth quarter and full-year of 2023. We encourage you to read through our press release issued earlier today for further details.

謝謝週醫生，大家好。今天，我將介紹 2023 年第四季和全年的一些財務亮點。我們鼓勵您閱讀我們今天早些時候發布的新聞稿以了解更多詳細資訊。

As Dr. Zhou mentioned, for the fourth quarter, total net revenue were RMB1.5 billion or USD208.5 million, representing a 1.8% increase from the same period of 2022. Net revenue for our learning services were RMB784 million or USD110.4 million, representing a 2.8% decrease from the same period of 2022.

如同週博士所提到的，第四季淨收入總額為15億元人民幣（2.085億美元），較2022年同期成長1.8%。學習服務淨收入為人民幣 7.84 億元（1.104 億美元），較 2022 年同期下降 2.8%。

Net revenue from our smart devices were RMB222.4 million or USD31.3 million, down 45.3% from the same period of 2022, primarily due to our continuous efforts to a streamlined marketing channel with low return on investments for the intelligence learning products in the fourth quarter of 2023.

我們的智慧設備淨收入為人民幣222.4百萬元或31.3百萬美元，較2022年同期下降45.3%，主要是由於我們不斷努力簡化智慧學習產品的營銷管道，投資回報率較低。2023 年 第四季度。

Net revenue for our online marketing services were RMB474.1 million or USD66.8 million, representing a 96.9% increase from the same period of 2022. The year-over-year increase in revenue from the online marketing services were mainly attributable to the increased demand for the performance-based advertisements through the third-party Internet properties. For the fourth quarter, our total gross profit was RMB738.8 million or USD104.1 million, representing a 4.6% decrease from the fourth quarter of 2022.

我們的網路行銷服務淨收入為人民幣4.741億元（6,680萬美元），較2022年同期成長96.9%。網路行銷服務收入年增主要由於透過第三方網路資產投放成效廣告的需求增加。第四季度，我們的總毛利為人民幣 7.388 億元人民幣（1.041 億美元），較 2022 年第四季下降 4.6%。

Gross margin for learning services was 63.6% for the fourth quarter of 2023 compared with 64.1% for the same period of 2022. Gross margin for smart devices was 38.3% for the fourth quarter of 2023 compared with 46.2% for the same period of 2022.

2023 年第四季學習服務毛利率為 63.6%，而 2022 年同期為 64.1%。2023年第四季智慧型設備毛利率為38.3%，而2022年同期為46.2%。

Gross margin for online marketing services was 32.7% for the fourth quarter of 2023 compared with 29.2% for the same period of 2022. For the fourth quarter, total operating expense were RMB662.5 million or USD93.3 million, compared with RMB750 million for the same period of last year.

2023年第四季網路行銷服務毛利率為32.7%，而2022年同期為29.2%。第四季度，總營運費用為人民幣 6.625 億元（即 9,330 萬美元），而去年同期為 7.50 億元。

Looking at our expense in more detail. Our sales and marketing expense were RMB441.4 million compared with RMB515.9 million in the fourth quarter of 2022. Research and development expense were RMB168.1 million compared with RMB179.5 million in the fourth quarter of 2022. Our operating income margin was 5.2% in the fourth quarter of 2023 compared with 1.7% for the same period of last year.

更詳細地了解我們的費用。我們的銷售和行銷費用為人民幣 4.414 億元，而 2022 年第四季為 5.159 億元。研發費用為人民幣1.681億元，2022年第四季為人民幣1.795億元。2023 年第四季我們的營業利益率為 5.2%，去年同期為 1.7%。

For the fourth quarter of 2023, our net income from continuing operations attributable to ordinary shareholder was RMB56.5 million or USD8 million compared with RMB12.3 million for the same period of last year.

2023年第四季，歸屬於普通股股東的持續經營淨利為人民幣5,650萬元（800萬美元），而去年同期為人民幣1,230萬元。

Non-GAAP net income from continuing operations attributable to ordinary shareholders for the fourth quarter was RMB69.3 million or USD9.8 million compared with RMB31.1 million for the same period of last year.

第四季非美國通用會計準則歸屬於普通股股東的持續經營淨利為人民幣 6,930 萬元（即 980 萬美元），而去年同期為 3,110 萬元。

Basic and diluted net income from continuing operation per ADS attributable to ordinary shareholders for the fourth quarter of 2023 was RMB0.47 or USD0.07. Non-GAAP basic and diluted net loss -- net income from continuing operations per ADS attributable to ordinary shareholders for the fourth quarter was RMB0.58 or USD0.08. Our net cash provided by the continuing operating activities was RMB160.6 million or USD22.6 million for the fourth quarter.

2023年第四季歸屬於普通股股東的每股ADS持續經營基本和稀釋淨利為人民幣0.47元或0.07美元。非 GAAP 基本和稀釋淨虧損－第四季歸屬於普通股股東的每份美國存託股持續經營淨利為人民幣 0.58 元或 0.08 美元。第四季持續經營活動提供的淨現金為 1.606 億元人民幣（2,260 萬美元）。

Turning to our full-year result, our total revenue for 2023 increased by 7.5% to RMB5.4 billion or USD759.1 million. Net revenue for our learning services for 2023 were RMB3.1 billion or USD443.4 million, keeping flat for 2022.

談到我們的全年業績，我們 2023 年的總收入成長了 7.5%，達到 54 億元（7.591 億美元）。2023 年學習服務淨收入為 31 億元人民幣（4.434 億美元），與 2022 年持平。

Net revenue from our smart devices for 2023 down by 27.6% year over year to RMB909.2 billion or USD128.1 million. Net revenue of our online marketing services for 2023 were up 98.1% year over year or RMB1.3 billion or USD187.6 million. Total gross profit for 2023 was RMB2.8 billion or USD389.8 million compared with RMB2.6 billion in 2022.

2023 年我們的智慧設備淨收入年減 27.6% 至 9,092 億元（1.281 億美元）。2023 年我們的網路行銷服務淨收入年增 98.1%，達到 13 億元人民幣（1.876 億美元）。2023 年毛利潤總額為 28 億元人民幣（3.898 億美元），而 2022 年為 26 億元。

Total operating expense for 2023 decreased to the RMB3.2 billion or USD455.5 million compared with RMB3.4 billion in the 2022. Net loss from continuing operations attributable to ordinary shareholders for 2023 was RMB549.9 million or USD77.5 million. And the basic and diluted net loss per ADS from continuing operations attributable to ordinary shareholders for the 2023 was RMB4.53 or USD0.64.

2023 年的總營運費用從 2022 年的 34 億元減少至 32 億元（4.555 億美元）。2023年歸屬於普通股股東的持續經營淨虧損為人民幣5.499億元或7,750萬美元。2023年歸屬於普通股股東的持續經營每股美國存託股份基本及攤薄淨虧損為人民幣4.53元或0.64美元。

Looking at our balance sheet as of December 31, 2023, our contract liabilities, which mainly consists of the deferred revenue generated for our learning services were RMB1.1 billion or USD148.3 million, compared with RMB1.1 billion as of December 31, 2022.

截至2023年12月31日，我們的資產負債表顯示，我們的合約負債（主要包括學習服務產生的遞延收入）為11億元人民幣（1.483億美元），而截至12月31日的合約負債為11億元， 2022 年。

At the end of the period, our cash, cash equivalents, restrictive cash, time deposits, and short-term investments totaled RMB527.1 million or USD74.2 million.

期末，我們的現金、現金等價物、限制性現金、定期存款及短期投資總計5.271億元人民幣（7,420萬美元）。

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

我們準備好的演講到此結束。感謝您的關注。我們現在想開始回答我們的問題。接線員，請繼續。

(Operator instructions) Brian Gong, Citigroup.

（操作員指示）Brian Kong，花旗集團。

Thanks, management, for taking my question.

謝謝管理層回答我的問題。

I have a question on our large language model. Youdao is pretty committed to AI, and we also launched our own large language model, Ziyue. Can management share main monetization channels for Ziyue? Thank you.

我對我們的大型語言模型有疑問。有道非常致力於人工智慧，我們也推出了自己的大型語言模式——子曰。管理階層能否分享子閱的主要獲利管道？謝謝。

Hello, Brian. Yeah, I'll take this question.

你好，布萊恩。是的，我會回答這個問題。

Yeah. First, there is a consensus in the AI industry that education is one of the most important areas for large language module applications. Sam Altman talks about it. Bill Gates also talks about education and healthcare and the most important areas.

是的。首先，人工智慧產業有一個共識，教育是大語言模組應用最重要的領域之一。薩姆·奧爾特曼談到了這一點。比爾蓋茲也談到了教育和醫療保健以及最重要的領域。

So the overall focus is, I think, to capture really important use scenarios in education and then monetize that. We basically think about this in two ways. Two kinds of LLM projects. One is value adding projects to our existing businesses. One is completely new things. So for the first category, we have a couple of channels, so obviously, one of them, very important one is smart devices.

因此，我認為總體重點是捕捉教育中真正重要的使用場景，然後將其貨幣化。我們基本上以兩種方式思考這個問題。兩種LLM項目。一是為我們現有業務增值的項目。一是全新的事物。因此，對於第一類，我們有幾個管道，所以顯然，其中一個非常重要的管道是智慧型裝置。

I think one trend is quite clear. So LLM features are quickly becoming major selling points for our devices. So for example, AI -- features like AI Grammar instruction, Youdao Zongheng, for explaining sentences and word instruction (Spoken in Chinese) for explaining separate words or phrases. These features have become the most used features and our major selling points for Youdao Dictionary Pen since last year.

我認為有一個趨勢是非常明顯的。因此，LLM 功能很快就成為我們設備的主要賣點。例如，人工智慧——諸如人工智慧語法指令、有道縱橫等功能，用於解釋句子和單字指令（中文口語），用於解釋單獨的單字或短語。這些功能已經成為去年以來我們有道字典筆最常用的功能和主要賣點。

I compare this to Youdao Dictionary, not the Dictionary Pen, the app Youdao Dictionary, how we won the dictionary market. So that was done with the two features. One is web interpretation, (Spoken in Chinese). The other is machine translation. So when you have something that really works for specific learning scenario that users really care. And also when you -- only you have that and the other payers don't, then it is a very good way to gain more market share and also monetize the technology.

我把它比作有道字典，而不是字典筆，有道字典這個應用程序，我們是如何贏得字典市場的。這樣就完成這兩個功能了。一種是網路解釋，（用中文說）。另一個是機器翻譯。因此，當你擁有真正適合用戶真正關心的特定學習場景的東西時。而且，當你——只有你擁有這一點而其他付款人沒有時，那麼這是獲得更多市場份額並透過技術貨幣化的好方法。

Of course, we also have the more recent Mr. P AI Tutor [circular]. We think that will also be a popular, so this is one way we monetize the technology through smart devices. Of course, we also monetize through app subscriptions. We talked about for our dictionary and translation AIBox has become a key feature to driving over 100% growth in subscription year over year for the last three quarters. And it also contributed to our growth of online marketing significantly.

當然，我們還有最近的P老師AI導師[圓]。我們認為這也會流行，所以這是我們透過智慧型裝置將該技術貨幣化的一種方式。當然，我們也透過應用程式訂閱來獲利。我們在字典和翻譯中談到，AIBox 已成為推動過去三個季度訂閱量年增超過 100% 的關鍵功能。這也極大地促進了我們在網路上行銷的成長。

Yeah, right now, over 20% of our advertising materials, they go through somewhere in the process. They go through a generative AI workflow. Yeah, so that's already pretty significant. One out of five add materials are generated from using AI technology or is processed using AI technology.

是的，現在，我們超過 20% 的廣告素材都經歷了這個過程的某個地方。他們經歷生成式人工智慧工作流程。是的，所以這已經非常重要了。五分之一的添加材料是使用人工智慧技術產生或使用人工智慧技術處理的。

Yeah, so that's the first category how we apply AI to our existing businesses. The other one, maybe more important for the longer term is completely new products. Yeah, so of course, we have [higher call] the English learning app, so and also, yeah, we will have Mr. P AI Tutor as a stand-alone product too. Yeah, so Mr. P AI Tutor as a standalone product is upcoming. It's a future product.

是的，這是我們將人工智慧應用到現有業務的第一類。從長遠來看，另一個更重要的問題是全新產品。是的，當然，我們有[更高的要求]英語學習應用程序，所以，是的，我們也會有 Mr. P AI Tutor 作為獨立產品。是的，所以P先生AI導師作為一個獨立的產品即將推出。這是一個未來的產品。

If we look at these apps, these products, I think they cover large use scenarios. For example, the English language learning, spoken English language learning scenario is a pretty significant business in itself. And in fact, if we look at our peers, the [Korean app speak] has I think USD120 million annual revenue already. Yeah, so I think there's a bright future for AI-powered language learning there.

如果我們看看這些應用程式、這些產品，我認為它們涵蓋了很大的使用場景。例如，英語學習、英語口說學習場景本身就是一項非常重要的業務。事實上，如果我們看看我們的同行，我認為[韓國應用程式發言]的年收入已經達到 1.2 億美元。是的，所以我認為人工智慧驅動的語言學習有著光明的未來。

Yeah. And if you look at Mr. P AI Tutor, it covers an even larger scenario. Yeah, that is the home tutoring scenario. If the student is learning at home and doing drills and exercises and has a question then the AI tutor can answer that question much better than parents or the students herself. So I think it is a profound idea. I would say it's a profound idea because this is one of the most important scenarios in home education.

是的。而如果你看P先生AI導師，它涵蓋了一個更大的場景。是的，這就是家庭輔導場景。如果學生在家學習、進行練習和練習時遇到問題，那麼人工智慧導師可以比家長或學生本人更好地回答這個問題。所以我認為這是一個深刻的想法。我想說這是一個深刻的想法，因為這是家庭教育中最重要的場景之一。

Yeah, so if we can have an AI to answer questions for all of the subjects that the students learn and if the AI can answer that question in a really instructional and high-quality fashion, then I think that will create a lot of value. So in summary, I think the two channels, the two categories are the ones that we are looking at. One has an immediate impact on the business, the other one longer term, but probably larger in scope. Yeah, so I'm very optimistic about the impact LLM will have on our business going forward.

是的，所以如果我們可以讓人工智慧來回答學生學習的所有科目的問題，並且如果人工智慧能夠以真正的教學和高品質的方式回答這個問題，那麼我認為這將創造很多價值。總而言之，我認為這兩個管道、兩個類別是我們正在關注的。一種對業務有直接影響，另一種則為長期影響，但範圍可能更大。是的，所以我對法學碩士對我們未來業務的影響非常樂觀。

[Kelly] Wang, CICC.

[Kelly] 王，中金公司。

(Spoken in Chinese) Thank you for taking my questions. So my question is whether we can see that our learning services revenue in 2023 is flat compared to 2022. And so I'm just wondering what is the focus for the -- our learning services segment in 2024? Thank you.

（中文）謝謝您回答我的問題。所以我的問題是，我們是否可以看到 2023 年我們的學習服務收入與 2022 年持平。所以我只是想知道 2024 年我們學習服務領域的重點是什麼？謝謝。

Yeah. I'll take this too.

是的。我也拿這個吧

So in 2023, yeah, if you look at digital content services, so this is the major contributor of net revenue in our learning services content. So we will define digital content services within the learning services sector by any new service that's launched after and according to the policy change.

所以到 2023 年，是的，如果你看看數位內容服務，那麼這是我們學習服務內容淨收入的主要貢獻者。因此，我們將透過在政策變更之後推出的任何新服務來定義學習服務領域內的數位內容服務。

So these primarily include Lingshi and Youdao Literature and some other smaller classes, not including things like adult courses. So in 2023, net revenues from video content services reached RMB2 billion. So it is up 11.7 year over year.

所以主要包括靈石、有道文學等一些小班，不包括成人課程之類的。預計到2023年，視訊內容服務淨收入將達到20億元。所以年比成長了11.7。

And gross margin was around 70%. So this part of the business met our expectations. So in 2024, we think digital content services will be the focus of our learning services.

毛利率在70%左右。所以這部分業務符合我們的預期。所以到2024年，我們認為數位內容服務將是我們學習服務的重點。

So let me give you a few points regarding our priorities. So first is consumer needs are quite strong in this area, and we are improving the services to satisfy different user needs. So our [Youdao Lingshi] is already leading in the industry. Our Youdao Literature course is also quite popular as we gain more and more users.

因此，讓我就我們的優先事項向您介紹幾點。首先是消費者在這方面的需求比較強烈，我們正在完善服務來滿足不同使用者的需求。所以我們的【有道靈石】已經是業界領先的了。我們的有道文學課程也很受歡迎，使用者越來越多。

So one of the key area is we will provide more personalized services to users. So Lingshi recently introduced the small-class course format for students with more advanced training needs. So this is actually different from the past small class experiences. The new format is offered with mostly pre-recorded video content and our experienced tutors to provide the service. So feedback is very good for this new format.

所以關鍵之一是我們將為用戶提供更個人化的服務。因此靈石最近針對有更高級培訓需求的學生推出了小班課程形式。所以這其實和以往的小班體驗是不一樣的。新格式主要提供預先錄製的影片內容，並由我們經驗豐富的導師提供服務。因此，對於這種新格式的回饋非常好。

Youdao Literature, Youdao [Borland] also launched a new major revision of the course broadening to more age groups and provide more choices with how much the user wants to -- how much time the user wants to spend on the course. So essentially, as these products established leadership positions in the industry, we can improve the products to cater to more personalized needs and different cities, different age groups, and different spending plans. So we think we have good opportunities on this front.

有道文學、有道[Borland]也對課程進行了新的重大改版，拓寬了更多年齡段，並為用戶想要多少——用戶願意花多少時間在課程上提供了更多選擇。所以本質上，隨著這些產品在產業中確立了領先地位，我們可以改進產品，以滿足更個人化的需求，滿足不同城市、不同年齡層、不同消費計畫。所以我們認為我們在這方面有很好的機會。

Second, yeah, there will be new SKUs this year. The learning needs of families in China have been changing very quickly in the last two years because of the macro environment, the policy, and trends like AI. So naturally, our teams we see opportunities of new SKUs. The focus will be on non-curriculum learning of K-12 students.

其次，是的，今年會有新的 SKU。由於宏觀環境、政策以及人工智慧等趨勢的影響，中國家庭的學習需求近兩年發生了非常快速的變化。因此，我們的團隊自然會看到新 SKU 的機會。重點將放在 K-12 學生的非課程學習。

The services aim to provide high-quality learning content and services to broaden their learners scope and cultivate interests in important stem and humanitarian areas strengthening their lifelong competencies. So for new projects, we take a agile and lean approach, so start small and grow organically. So there are a few of these new projects already going on and going through the incubation process right now. So we will see fruits from these projects in the coming quarters.

這些服務旨在提供高品質的學習內容和服務，以擴大學習者的範圍並培養對重要科學和人道主義領域的興趣，從而增強他們的終身能力。因此，對於新項目，我們採取敏捷和精益的方法，從小規模開始並有機增長。因此，其中一些新項目已經在進行中並且正在經歷孵化過程。因此，我們將在未來幾季看到這些項目的成果。

Thirdly, one important area we put our efforts in is we apply AI to differentiate our products and increase our productivity. With our large language model technology, there's a lot in this area we can do like AI diagnosis, AI tutoring, AI personalized exercises, and on and on.

第三，我們努力的一個重要領域是應用人工智慧來差異化我們的產品並提高我們的生產力。憑藉我們的大語言模型技術，我們可以在這個領域做很多事情，例如AI診斷、AI輔導、AI個人化練習等等。

The key thing of applying AI, of course, is to focus on learning results and productivity. So we believe the most fundamental challenge in learning apart from motivation. Motivation is obviously one area that human teacher is really, really good at to make the students more motivated, want more to learn. But the other very, very important area is the teachings, is a very labor-intensive activity. So we focus on activities that are really important for learning results and also require a lot of labor from teachers. If we can do that then we can get good results.

當然，應用人工智慧的關鍵是專注於學習結果和生產力。因此，我們認為學習中最根本的挑戰除了動機之外。動機顯然是人類教師真正非常擅長的領域之一，它可以讓學生更有動力，想要更多學習。但另一個非常非常重要的領域是教學，是一項非常勞力密集的活動。因此，我們專注於對學習成果真正重要、也需要教師投入大量精力的活動。如果我們能做到這一點，那麼我們就能取得好的結果。

For example, that is the idea behind the AI writing refinement. For Youdao Literature, we already refined 25,000 writings from students in just one quarter. So if each one saves like half an hour, then that is over 12,000 hours saved for the teachers. So that's really significant.

例如，這就是人工智慧寫作細化背後的想法。有道文學僅用了一個季度就提煉了25,000篇學生的作品。因此，如果每個人節省半小時，那麼就為教師節省了 12,000 多個小時。所以這真的很重要。

A lot of writing skills improvements delivered. So this is a very important win-win both for the unique value we can add to the cost and also increase the productivity from the company's perspective. So we have more projects like this going on and so I think it'll have a more and more important impact on the [business] this year.

寫作技巧得到了很大的提升。因此，從公司的角度來看，這對我們可以增加成本的獨特價值和提高生產力來說都是非常重要的雙贏。所以我們有更多這樣的項目正在進行，所以我認為它會對今年的[業務]產生越來越重要的影響。

So that's -- yeah, Su Peng, if you have anything to add.

那麼，蘇鵬，如果您有什麼要補充的話。

Yeah, I can add more color after those comments and answer digital content services. And I think most people know a news about important has confirmed the implementation of the reform (inaudible) for the college entrance exam in this year. And the reform including reduction in the number of questions, adjustments in the question score, and other innovate approach in the problem solving.

是的，我可以在這些評論和回答數位內容服務之後添加更多色彩。我想大多數人都知道一個重要的消息已經證實了今年高考改革（聽不清楚）的實施。改革包括減少試題數、調整試題分數等創新解題方式。

So I think if you see the trend in the past and every single time when the college entrance exam has been updated for the new format (inaudible) and we expect about the demand for the consulting for how to deal with new test format. We will go up in the following years.

所以我認為，如果你看到過去的趨勢，以及每次高考更新為新格式（聽不清楚）時，我們預計會有關於如何應對新考試格式的諮詢需求。我們將在接下來的幾年裡上升。

And internally, we have upgraded our digital content services, including consulting and otherwise. And teach them how to prepare in the family scenarios and for this update for the college entrance exam. And in addition, we think with efforts also the further opportunities for the plan for the stressing basic academic discipline (Spoken in Chinese).

在內部，我們升級了我們的數位內容服務，包括諮詢等。並教導他們如何在家庭場景和高考更新中做好準備。另外，我們認為透過努力，重點學科規劃還有進一步的機會。（用中文說）。

We are such a sophisticated in this consultation services and everything we have built a very strong reputations in domestic top universities and high schools. And we think that will be the filings of the growth of digital content services in 2024. Thank you.

我們在諮詢服務和一切方面都非常成熟，我們在國內頂尖大學和高中中建立了非常良好的聲譽。我們認為這將是 2024 年數位內容服務成長的記錄。謝謝。

Thomas Chong, Jefferies.

托馬斯莊，杰弗里斯。

Hi, thanks, management for taking my questions.

您好，謝謝管理層回答我的問題。

For growth for online marketing services in 2023, what are the new growth drivers that we should expect in 2024? Thank you.

對於2023年網路行銷服務的成長，2024年我們應該期待哪些新的成長動力？謝謝。

Hi. This is [Lei Jin]. In 2023, the advertising market has publishing. There is major domestic player like [Tencent, Bytedance, Baidu]. They are all growing maybe 20% or 25% in their [AD] business. (inaudible) there is a significant driver of this trend.

你好。這是[雷金].2023年，廣告市場有發布。國內主要玩家有這樣的[騰訊、位元組跳動、百度]。他們的 [AD] 業務都在成長 20% 或 25%。 （聽不清楚）這趨勢有一個重要的驅動因素。

As a result of during the development of the AD market where we have integrated AI into our AD business without being much higher growth compared this is (inaudible) in the market. We achieved a continuous quarter over quarter growth in every quarter in 2023 and the net revenue on RMB1.3 billion for the whole year, an increase of nearly 100% of growth year over year. (inaudible) we have a deep understanding of highly demand, effective utilization of the data, and our strong focus on AD performance.

由於在廣告市場的發展過程中，我們將人工智慧整合到我們的廣告業務中，但與市場上（聽不清楚）相比，並沒有取得更高的成長。2023年，我們實現了各季度連續環比成長，全年淨收入達到13億元人民幣，較去年同期成長近100%。 （聽不清楚）我們對數據的高需求、有效利用以及我們對 AD 性能的高度關注有著深刻的理解。

Internal capabilities are the key drivers together with results. In 2024, we will focus on digital advertising, paying attention to the AD performance continue to strengthen our advantage just mentioned about. And the (inaudible) the new growth in the following two areas.

內部能力和結果是關鍵驅動因素。2024年，我們會專注於數位廣告，專注於廣告表現，並持續強化我們剛才提到的優勢。以及（聽不清楚）以下兩個領域的新增長。

First is our oversea market. Youdao ADs provides digital marketing solution for the brand promotion of the Chinese enterprises. Global influencer marketing and lower fees AD placements is our extensive new business and exercise.

首先是我們的海外市場。有道廣告為中國企業的品牌推廣提供數位行銷解決方案。全球影響力行銷和較低費用的廣告投放是我們廣泛的新業務和活動。

In the translation field. Youdao ADS itself in providing translation services for 908 languages. Moreover, our self-developed AI technology, (inaudible) the unusual networks translation enable us to connect with over 1 million high quality influencers in various industries worldwide. It allows us to ultimately reached more than 2 billion users over 75 countries already. Translating the global growth of the Chinese brands. Notably, we have recently become authorized advertising agency for the TikTok which will further support our expansion in the international markets in the future.

在翻譯領域。有道ADS本身提供908種語言的翻譯服務。此外，我們自主研發的人工智慧技術，（聽不清楚）不尋常的網路翻譯使我們能夠與全球各行業超過100萬的優質影響者建立聯繫。它使我們最終能夠覆蓋 75 個國家/地區超過 20 億的用戶。轉化中國品牌的全球成長。值得注意的是，我們最近成為了TikTok的授權廣告代理，這將進一步支持我們未來拓展國際市場。

Certainly, the latest flow potential of the vertical industry, just like online games. They have several advantages in (inaudible) clients, including capabilities in AD material production even as (inaudible) bigger players in company marketing.

當然，垂直行業的最新流量潛力，就像網路遊戲一樣。他們在（聽不清楚）客戶中擁有多種優勢，包括廣告材料生產能力，甚至是公司行銷中（聽不清楚）的更大參與者。

In the later half of last year, we began to collaborate more closely with Nike's games. Moving forward, we will continue to leverage our investor AI capabilities, aforementioned brands to provide more comprehensive and tailored affiliates for the client in vertical industries.

去年下半年，我們開始與耐吉的遊戲進行更緊密的合作。展望未來，我們將繼續利用我們的投資者人工智慧能力和上述品牌，為垂直行業的客戶提供更全面、更量身定制的聯營公司。

And then (inaudible). Feng Zhou?

進而（聽不清楚）。週峰？

Yes, this is Zhou Feng. I'd like to add a point. So we got asked a lot recently about why and how we achieve this significant growth in the advertisement business. Yeah, let me try to answer the question here.

是的，這就是周峰。我想補充一點。因此，最近很多人問我們為什麼以及如何在廣告業務中實現如此顯著的成長。是的，讓我嘗試在這裡回答這個問題。

I believe the key to our past and future success in ads is our ability to combine strong business operations and deep advertisement technology. Youdao's ad business is unique. We are not a monetization team of our own traffic, nor a brand advertisement agency. We are a technology-based performance ad platform business.

我相信我們過去和未來在廣告領域取得成功的關鍵是我們將強大的業務運作與深厚的廣告技術結合的能力。有道的廣告業務是獨一無二的。我們不是自有流量變現團隊，也不是品牌廣告代理商。我們是一家以科技為基礎的效果廣告平台企業。

So in addition to our own and operated assets and traffic, we also deliver performance ads for third party. So every page view and every click contributes a tiny bit of revenue. So in this business, efficiency is key to business. That's why our AI and large language model capability is a good fit for this and it is very useful in learning and adapting the app delivery process to maximize the efficiency and value creation.

因此，除了我們自己和營運的資產和流量之外，我們也為第三方投放成效廣告。因此，每次頁面瀏覽和每次點擊都會貢獻一點點收入。所以在這個產業，效率是業務的關鍵。這就是為什麼我們的人工智慧和大型語言模型功能非常適合這一點，並且它對於學習和調整應用程式交付流程以最大限度地提高效率和價值創造非常有用。

So a lot of app companies on the market. They have a strong business ability, good rep sales, and acquiring customers, but not necessarily good at technology. On the other hand, a lot of [OPAC] teams do not really have strong business operations.

所以市場上有很多應用程式公司。他們業務能力強，銷售代表好，獲客能力強，但技術不一定好。另一方面，許多 [OPAC] 團隊並沒有真正強大的業務運作能力。

So through the years of experience, our team have, so I think we have acquired about skills, so business operations and deep understanding of ad technology. So that is why we have seen such growth in the past year. And I believe also whether if we can do those skills better, that also will determine whether we can continue to be successful in the future.

因此，透過多年的經驗，我們的團隊已經獲得了關於技能、業務運營和廣告技術的深刻理解。這就是我們在過去一年中看到如此增長的原因。我也相信，我們能否更能掌握這些技能，這也將決定我們未來能否繼續取得成功。

I hope this is helpful in understanding how we think about the ad business.

我希望這有助於了解我們如何看待廣告業務。

[Bo Zang], Huatai Securities.

[臧博]，華泰證券。

Hello. Good evening, management. This is (inaudible), thanks for taking my questions.

你好。晚上好，管理層。這是（聽不清楚），感謝您提出我的問題。

In 2023, smart device business (inaudible). In 2024, how to reach and to grow. Thank you.

2023年，智慧型設備業務（聽不清楚）。2024年，如何到達成長。謝謝。

I've discussed recent progress on devices in the prepared remarks. So let me provide some more details on the most recent product launch and some thoughts on the future directions. The A6 Pro Dictionary and the launch exceeded our expectations as we've talked about with over 50,000 units sold in the first week.

我在準備好的評論中討論了設備的最新進展。因此，讓我提供有關最近產品發布的更多詳細資訊以及對未來方向的一些想法。A6 Pro Dictionary 的發布超出了我們的預期，第一周就售出了 50,000 多台。

In terms of the product itself, the A6 Pro Pen has the best screen and best content within the price range and supports high quality offline translation and AI features like grammar instruction and word instruction.

就產品本身而言，A6 Pro Pen擁有同價位範圍內最好的螢幕和最好的內容，並支援高品質的離線翻譯和語法指導、單字指導等AI功能。

So moreover, our supply chain team did a really good job of delivering very good quality and good value for a relatively affordable price. Also live video selling on (inaudible) contributed to the launch momentum. So that's a rough breakdown of the A6 Pro launch.

此外，我們的供應鏈團隊做得非常好，以相對實惠的價格提供了非常好的品質和良好的價值。現場視訊銷售（聽不清楚）也為發布勢頭做出了貢獻。這就是 A6 Pro 發布的粗略細分。

It is worth pointing out that although the A6 Pro is more affordable for consumers than our higher end of products. It actually has a similar gross margin ratio for us compared to our higher priced products. So we are not sacrificing margin for selling more units.

值得指出的是，雖然A6 Pro對消費者來說比我們的高階產品更實惠。與我們價格較高的產品相比，它實際上對我們來說具有相似的毛利率。因此，我們不會為了銷售更多單位而犧牲利潤。

We are able to maintain a competitive gross margin ratio for this product because of our strong in-house design abilities and also our close collaboration with our IC supplier with our other supply chain partners. The other product, the Listening Pod, E6, also met our expectations. It is the number one selling product in its category right now. So this is a good start for the devices team this year, and I expect the team to keep delivering good launches in the coming months.

由於我們強大的內部設計能力以及我們與 IC 供應商和其他供應鏈合作夥伴的密切合作，我們能夠維持該產品具有競爭力的毛利率。另一款產品 Listening Pod E6 也滿足了我們的期望。它是目前同類產品中銷售第一的產品。因此，這對今年的設備團隊來說是一個良好的開端，我希望團隊在未來幾個月內繼續推出良好的產品。

Going forward, we have more device launches in Q1 and Q2 planned. If you look at our products last year and before, we have been mostly focused on higher priced products compared to our peers. The plan going forward is to cover both higher and a little bit lower price points, but both with leading products in their category.

展望未來，我們計劃在第一季和第二季推出更多設備。如果你看看我們去年和之前的產品，你會發現與同行相比，我們主要關注價格較高的產品。未來的計劃是涵蓋更高和更低的價格點，但兩者都具有各自類別中的領先產品。

We were able to do this because it is finally possible to deliver premium quality and experience for these slightly lower price products because of experience of our team accumulated over time over the years and maturity of the supply chains. So now we believe is the right time to reach more users with this product combination.

我們之所以能夠做到這一點，是因為我們的團隊多年來累積的經驗以及供應鏈的成熟度，最終使得這些價格略低的產品能夠提供優質的品質和體驗。因此，我們認為現在是透過該產品組合吸引更多用戶的最佳時機。

For future premium products, let me say a few words. I believe AI and the hardware features -- unique hardware features provide a lot of opportunity for creating value for users for more premium products. For example, running large language models on the device itself is a very attractive because now that LLM features like grammar instruction become popular with our users. Naturally, users to run them on device as it is more convenient and the response time is better.

對於未來的優質產品，我多說幾句。我相信人工智慧和硬體功能——獨特的硬體功能為用戶創造更多優質產品的價值提供了許多機會。例如，在設備本身上運行大型語言模型非常有吸引力，因為現在像語法指令這樣的 LLM 功能已受到我們用戶的歡迎。當然，用戶在設備上運行它們，因為它更方便並且響應時間更好。

So one of the most asked questions we got for the Dictionary Pen is actually whether it supports offline translation. Yeah, of course, our all our Dictionary Pen supports offline translation, but that reflects thinking of the user that the key deciding factor in their purchase is whether it can support these offline operations. So on-device (inaudible) very interesting. So we think -- yeah, we will have more to share when we have them.

因此，我們收到的關於字典筆最多的問題之一實際上是它是否支援離線翻譯。是的，當然我們所有的字典筆都支援離線翻譯，但這體現了使用者的思考，決定購買的關鍵因素是它是否支援這些離線操作。所以在設備上（聽不清楚）非常有趣。所以我們認為——是的，當我們擁有它們時，我們將會有更多的東西可以分享。

So lastly, the sales channel reorganization is done. So we've transitioned to a more online focused, more agile sales and supply structure. The recent launches first testament to the team's ability that the (inaudible) live video sales, the POL recommendations brought significant momentum to the launch that the team still has a lot of work ahead of them and they need to build out more sales, new sales, and marketing channels and also optimize to get good ROIs from the sales channels. So nonetheless, the launch is a very good start. So hope that answers your question. Thank you.

最後，銷售通路重組完成。因此，我們已經轉向更加重視線上、更靈活的銷售和供應結構。最近的發布首先證明了團隊的能力（聽不清楚）即時視訊銷售，POL 的建議為發布帶來了巨大的動力，團隊還有很多工作要做，他們需要建立更多的銷售、新的銷售和行銷管道，並進行最佳化以從銷售管道獲得良好的投資回報率。儘管如此，此次發布仍然是一個非常好的開始。希望這能回答您的問題。謝謝。

(inaudible) Citic.

（聽不清楚）中信。

Hello, management. Thank you for taking my question.

你好，管理層。感謝您回答我的問題。

Well, I have only one question. With the improved cash flow observed in 2023. Could management provide an outlook for the cash flow in 2024? Thank you.

嗯，我只有一個問題。2023 年現金流有所改善。管理階層能否提供2024年現金流的展望？謝謝。

Thank you for your question. This is Wayne. I will take your question.

謝謝你的問題。這是韋恩。我會回答你的問題。

Operating cash flow is always treated as a key healthy indicator for our company. And we are pleased to note a remarkable improvement in our operating cash flow of 2023 compared with prior periods. The operating cash outflow in 2023 was narrowed by near 20% year over year. Notably in the fourth quarter, the operating cash inflow, which record around RMB161 million, rising by 91% year over year. This indicates that the business is progressing towards a healthy direction.

經營現金流始終被視為我們公司的關鍵健康指標。我們很高興地註意到 2023 年我們的經營現金流較之前時期有了顯著改善。2023年經營性現金流出年減近20%。尤其是第四季，經營現金流入約人民幣1.61億元，較去年成長91%。這顯示公司業務正朝著健康的方向發展。

On the settlement basis, both the learning services and online marketing services helped achieve the positive operating cash flow -- cash inflow, which makes us more confident in the further improved operating cash flow in 2024. We expect to maintain such good momentum for our operating cash flow in 2024.

在結算基礎上，學習服務和網路行銷服務均有助於實現了正的經營現金流－現金流入，這讓我們對2024年經營現金流進一步改善更有信心。我們預計2024年我們的經營現金流將保持良好的勢頭。

Firstly, we will continue to enhance our ability to generate cash inflow through leveraging AI technology and optimizing business operations. In addition, as to the smart devices segment, improvements in product performance and the sales channel management are expected to boost the cash generation capability for this segment.

首先，我們將繼續透過人工智慧技術和優化業務營運來增強現金流產生能力。此外，在智慧型設備領域，產品效能和銷售通路管理的改善預計將提升該領域的現金產生能力。

It is also worth noting that the cash flow exhibits quarterly but vary with a stronger seasonality in the second and the fourth quarter, preliminary due to user acquisition and the retention activity in the learning services segment during this period.

另外值得注意的是，現金流按季度呈現，但隨著第二季和第四季的季節性較強而變化，初步歸因於這一時期學習服務領域的用戶獲取和保留活動。

Furthermore, from a long-term perspective, NetEase has been providing financial support to, for instance, three years through revolving loan facility amounting to $300 million as disclosed in our annual release with maturity dated on March 31, 2027. We should facilitate the development of Youdao's business, especially in the area of our long-term investment in core technologies and the results.

此外，從長遠角度來看，網易一直在提供為期三年的財務支持，例如，我們在年度新聞稿中披露了總額為 3 億美元的循環貸款融資，到期日為 2027 年 3 月 31 日。我們應該促進有道業務的發展，特別是在核心技術和成果方面的長期投入。

In sum, we are very confident in our cash flow for 2024. Thanks.

總而言之，我們對2024年的現金流非常有信心。謝謝。

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

問答環節到此結束。我想將會議轉回管理層以徵求任何補充意見或結束意見。

Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Youdao directly or reach out to Piacente Financial Communications in China or the US. Have a great day.

再次感謝您今天加入我們。如果您還有任何疑問，請隨時直接透過有道聯絡我們，或聯絡中國或美國的Piacente Financial Communications。祝你有美好的一天。

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.

女士們先生們，感謝您的加入。會議現已結束。您可以斷開電話。謝謝。