iQIYI Inc (IQ) 2022 Q4 法說會逐字稿

Thank you for standing by, and welcome to the iQIYI Fourth Quarter and Fiscal Year 2022 Earnings Conference Call. (Operator Instructions)

感謝您的支持，歡迎來到愛奇藝第四季度和 2022 財年財報電話會議。 （操作員說明）

I would now like to hand the conference over to Ms. Chang Hu, Investor Relations Director. Please go ahead.

我現在想把會議交給投資者關係總監胡常女士。請繼續。

Thank you, operator. Hello, everyone, and thank you for joining iQIYI's Fourth Quarter and Fiscal Year 2022 Earnings Conference Call. The company's results were released today and are available on the company's Investor Relations website at ir.iqiyi.com.

謝謝你，運營商。大家好，感謝大家參加愛奇藝2022財年第四季度財報電話會議。公司業績於今日發布，可在公司投資者關係網站 ir.iqiyi.com 查閱。

On the call today are Mr. Gong, our Founder, Director and CEO; Mr. Jun Wang, our CFO; Mr. Xiaohui Wang, our CCO, Chief Content Officer; Mr. Wenfeng Liu, our CTO, Chief Technology Officer; Mr. Youqiao Duan, Senior Vice President of our Membership business; and Mr. Xianghua Yang, Senior Vice President of Movie and Overseas business; and Mr. [Dan Hu], Senior Vice President of [the] Advertising business. Mr. Gong will give a brief overview of the company's business operations and highlights, followed by Jun, who will go through the financials. After the prepared remarks, Xiaohui, Wenfeng, Youqiao, Xianghua and Gong will join Mr. Gong and Jun in the Q&A session.

今天接聽電話的是我們的創始人、董事兼首席執行官龔先生；我們的首席財務官王軍先生；我們的 CCO、首席內容官 Xiaohui Wang 先生；劉文峰先生，我們的首席技術官，首席技術官；我們的會員業務高級副總裁段友橋先生；電影及海外業務高級副總裁楊向華先生；和 [the] 廣告業務高級副總裁 [Dan Hu] 先生。 Gong 先生將簡要介紹公司的業務運營和亮點，隨後 Jun 將介紹財務情況。準備好的發言結束後，小輝、文峰、遊喬、向華和龔將與龔老師和君一起參加問答環節。

Before we proceed, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risk and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but not limited to, those outlined in the public filings with the SEC. iQIYI does not undertake any obligation to update any forward-looking statements, except as required under applicable law.

在我們繼續之前，請注意今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款作出的前瞻性陳述。前瞻性陳述受風險和不確定因素的影響，可能導致實際結果不同實質上來自我們目前的期望。潛在風險和不確定性包括但不限於向美國證券交易委員會提交的公開文件中概述的風險和不確定性。除適用法律要求外，愛奇藝不承擔任何更新任何前瞻性陳述的義務。

With that, I will now turn the call over to Mr. Gong. Please go ahead.

有了這個，我現在將把電話轉給龔先生。請繼續。

Hello, everyone. We wrapped up a remarkable year of turnaround, with outstanding performance in 4Q '22. Our market share reached its oracle high, so rare are on membership revenues, operating profit and free cash flow to its perfect tick. In Q4, we launched 3 blockbuster dramas with subscribing members 10x, growing by over 40% annually and 30% sequentially, which is unprecedented. As a result, we continue to gain market share. Our leadership in terms of effective bill to bills in the drama category remained unchallenged, according to enlightened data.

大家好。我們在 22 年第四季度取得了出色的表現，結束了非凡的轉機之年。我們的市場份額達到了歷史最高點，會員收入、營業利潤和自由現金流都達到了完美的水平。在第四季度，我們推出了 3 部大片，訂閱會員數量增長了 10 倍，年增長率超過 40%，環比增長 30%，這是前所未有的。因此，我們繼續獲得市場份額。根據開明的數據，我們在戲劇類別的有效賬單對賬單方面的領導地位仍然沒有受到挑戰。

Strong content performance brought the highest quarterly membership revenues in our history, up 15% annually and 13% sequentially. In Q4, our average daily rate number of total subscribing members was 111.6 million, and represents a sequential net additions of more than 10 million. The number of subscribing numbers -- members as of the end of December was 119.7 million, represents a net addition of over 13 million compared with end of September. In the meantime, our Advertising business continued to recover, with a sequential growth rate of 25%.

強勁的內容表現帶來了我們歷史上最高的季度會員收入，每年增長 15%，環比增長 13%。第四季度，我們的訂閱會員總數的日均訂閱人數為 1.116 億，連續淨增超過 1000 萬。截至12月底，訂閱號——會員數為1.197億，較9月底淨增逾1300萬。與此同時，我們的廣告業務繼續復甦，環比增長率為 25%。

Now move on to profit. We had a record-setting quarter of RMB 979 million non-GAAP operating profit, up 87% compared with last quarter. The non-GAAP operating margin continued to expand for the fifth consecutive quarter and reached 13% in Q4, a showcase of operating leverage embedded in our business model. In Q4, free cash flow reached over RMB 840 million, grew by 4.7x compared with Q3. We are -- we have been generating positive free cash flow for 2 consecutive quarters.

現在繼續盈利。我們的非美國通用會計準則營業利潤達到創紀錄的 9.79 億元人民幣，比上一季度增長 87%。非 GAAP 營業利潤率連續第五個季度繼續擴大，並在第四季度達到 13%，展示了我們業務模式中嵌入的經營槓桿。第四季度，自由現金流達到人民幣8.4億元，比第三季度增長4.7倍。我們 - 我們已經連續兩個季度產生正的自由現金流。

The outstanding Q4 performance is not a surprise. In fact, our Q4 performance may jump with the gap if we look ahead for 2 or 2 years -- 4 months or 2 years. The driving force behind our talent and the future success is our ability to produce and deliver highly quality popular or new content, which is our unique -- unique core competence. iQIYI in now the master of Cheongsam. iQIYI's brand presentation has been evaluated from iQIYI as capable of creating blockbusters, so iQIYI is the blockbuster powerhouse.

出色的Q4表現不足為奇。事實上，如果我們展望未來 2 年或 2 年——4 個月或 2 年，我們的第四季度業績可能會隨著差距而跳躍。我們的人才和未來成功背後的驅動力是我們製作和提供高質量流行或新內容的能力，這是我們獨一無二的核心競爭力。愛奇藝現在的旗袍當家。愛奇藝的品牌呈現被愛奇藝評價為能夠打造大片，所以愛奇藝是大片強國。

As the perfect footnote to our statement, right after the closing of 4Q '22, we launched original drama, The Knockout (foreign language) has become another megahit, broke records across our key markets. The fastest to break iQIYI popularity index of 10,000 times peak popularity index, highest daily user time spent, largest with daily audience and highlight the membership revenue. The Knockout also generated tremendous social balance and become a true nationwide phenomenon. The success of the show demonstrates that the production and the operation of our original content has entered into a -- what true cycle of flywheel effect have been released. The stable premium common supply drive user growth improved cost efficiency and profitability, which supports a company to create more premium content. Therefore, we firmly believe the success is replicable, and we could exceed our past performance in the future.

作為我們聲明的完美註腳，在 22 年第 4 季度結束後，我們推出了原創劇集，The Knockout（外語）已成為另一大熱門，打破了我們主要市場的記錄。最快突破愛奇藝人氣指數10000倍峰值人氣指數，單日用戶時長最高，單日收視人數最多，會員收入凸顯。淘汰賽還產生了巨大的社會平衡，成為真正的全國性現象。節目的成功，說明我們原創內容的製作和運營進入了一個——什麼真正的飛輪效應循環釋放出來了。穩定的優質公共供應推動用戶增長，提高成本效率和盈利能力，支持公司創造更多優質內容。因此，我們堅信成功是可以復制的，未來我們可以超越過去的表現。

Why do we believe that our original term of production comparability is unique and cannot be easily covered? Because creating blockbuster has no cost cut to get where we are today. We invested in numerous resources including time, capital, talent and technology, which initiated our original content strategy backed in 2014 and made substantial performance in 2022, after almost a decade of persistent efforts. In the most recent 2 years, our investment in original content almost reached [RMB 7 Billion]. With time and money, we have established in-house studios that bring together the industry's most creative talent. We have also gradually established our compliant, data-driven and highly-efficient decision-making system that can capture every critical moment in the entire life cycle of content production.

為什麼我們認為我們原來的生產可比性術語是獨一無二的並且不容易被覆蓋？因為創造大片並沒有削減我們今天的成本。我們投入了包括時間、資金、人才和技術在內的大量資源，經過近十年的堅持不懈的努力，從 2014 年啟動了原創內容戰略，並在 2022 年取得了可觀的業績。最近兩年，我們在原創內容上的投入接近【70億元人民幣】。憑藉時間和金錢，我們建立了內部工作室，匯集了業內最具創造力的人才。我們也逐步建立了合規、數據驅動、高效的決策體系，可以捕捉到內容生產全生命週期中的每一個關鍵時刻。

As a result, we've witnessed the gradual record of high-quality renewal dramas. Among the key dramas we launched each year, the propulsion of original prevention increased from 20% in 2018 to over 50% in 2022. For 2022, the original content accounted for over 68% of blockbuster dramas and also contributed over 60% of the revenue during the newest window in Q4. The total subscribing members times on original content doubled year-over-year, and we conclude that we enjoy the structural advantages that are very difficult to others to imitate. The entry barrier is extremely high.

也因此，我們見證了優質更新劇的逐步記錄。在我們每年推出的重點劇中，原創預防的推進力從2018年的20%上升到2022年的50%以上。2022年，原創內容在重磅劇中的佔比超過68%，也貢獻了超過60%的收入。在第四季度的最新窗口期間。原創內容的訂閱會員總數同比翻了一番，我們得出的結論是，我們享有其他人難以模仿的結構性優勢。入門門檻極高。

In the past 12 months, we have completed 3 rounds of capital raising, with pre fleet totaled around USD 1.3 billion to remove debt overhang. We truly appreciate the generous support of our investors who are as confident as we are in the future of iQIYI. With a healthier balance sheet and cash generating business, the management will be able to focus on how accelerating the company's growth, creating more value for our investors.

在過去的 12 個月裡，我們已經完成了 3 輪融資，pre-fleet 總額約為 13 億美元，以消除債務積壓。我們非常感謝投資者的慷慨支持，他們和我們一樣對愛奇藝的未來充滿信心。憑藉更健康的資產負債表和產生現金的業務，管理層將能夠專注於如何加速公司的增長，為我們的投資者創造更多價值。

Looking ahead to 2023, we will start a brand new journey. We have upgraded our 2023 annual goal to achieve high-quality growth. Under this strategy, our goal is to achieve growth in revenue and operating profit. To realize high-quality growth, we will continue to invite in our core business, will remain cautious while assessing material new business opportunities. We will continue to invest in top premium content to maintain a high-quality yet worthy the common pipeline and to invest in high ROI marketing at members benefit.

展望2023年，我們將開啟全新的征程。我們升級了2023年度目標，實現高質量發展。在此戰略下，我們的目標是實現收入和營業利潤的增長。為實現高質量增長，我們將繼續引入核心業務，在評估重要的新業務機會時將保持謹慎。我們將繼續投資於頂級優質內容，以保持高質量但值得共同的渠道，並投資於會員利益的高投資回報率營銷。

Also, we have our close eye on industry opportunities powered by technical advancements such as artificial intelligence, generative content, AIGC, and other innovative technologies. We will explore AIGC application and scenarios in the long-form video industry together with our strategic partner, Baidu, in the areas such as improving content, production efficiency, company distribution and promotion. We believe the AIGC strategy will help iQIYI to unlock even more potential to further improve our overall business efficiency and generate greater value.

此外，我們密切關注由人工智能、生成內容、AIGC 和其他創新技術等技術進步推動的行業機遇。我們將與戰略合作夥伴百度一起，在內容提升、生產效率、公司發行推廣等方面探索AIGC在長視頻行業的應用和場景。我們相信 AIGC 戰略將幫助愛奇藝釋放更多潛力，進一步提升我們的整體業務效率並創造更大的價值。

Now, that goes from the detailed performance of our business segments, starting with membership services. Membership services revenue was RMB 4.7 billion, the highest in our corporate history, reflecting an increase of 15% annually and 13% sequentially as we had a very strong quarter of blockbuster content. We utilized the opportunity to attract and grow our subscriber base with a marginal increase environment.

現在，這從我們業務部門的詳細表現開始，從會員服務開始。會員服務收入為 47 億元人民幣，是我們公司歷史上最高的，反映出每年增長 15%，環比增長 13%，因為我們有一個非常強勁的季度大片內容。我們利用這個機會在邊際增長的環境下吸引和發展我們的用戶群。

Our subscriber base has a strong growth in Q4. The average daily user of total subscribing member was 111.6 million and an addition of 10.6 million compared with Q3. The total number of subscribing number was 119.7 million as of the end of December, a net initial of 13.5 million compared with the end of September. Very importantly, we are glad to see the improvement in membership structure with a propulsion of annual subscribers increased significantly in Q4 compared to the same period last year. We believe the higher subscription rate for annual packages will help to improve stickiness and the long-term monetization.

我們的用戶群在第四季度增長強勁。總訂閱會員日均用戶1.116億，較Q3增加1060萬。截至12月末總訂閱數1.197億，較9月末淨初1350萬。非常重要的是，我們很高興看到會員結構的改善與年度訂閱者的推動在第四季度與去年同期相比顯著增加。我們認為包年套餐較高的訂閱率將有助於提高粘性和長期貨幣化。

In Q4, our monthly ARM was RMB 14.17, up 2% sequentially. We further increased our membership pricing in December, which will drive our increase in the future.

第四季度，我們的月度 ARM 為 14.17 元人民幣，環比增長 2%。我們在 12 月進一步提高了會員價格，這將推動我們未來的增長。

For our membership business, we are committed to grow revenue. In the long term, we believe our ARM will have plenty of room to grow when we continue to upgrade content quality and bring more value to our users. In the short term, we strategically choose to optimize the growth of subscriber base and the membership duration so that more people can enjoy our content, and the relationship between the platform and the user becomes more enduring. A good example is that as the the monthly ARM of the annual package is lower than the monthly package, we will be enrolled more annual subscribers. Our average ARM might be impact in the short term, however, we value the relationship with subscribers and we believe the long-term trust we built with subscribers will bring more strategic value.

對於我們的會員業務，我們致力於增加收入。從長遠來看，我們相信當我們不斷升級內容質量並為我們的用戶帶來更多價值時，我們的 ARM 將有足夠的增長空間。在短期內，我們戰略性地選擇優化訂閱者基礎的增長和會員持續時間，以便更多的人可以享受我們的內容，並且平台與用戶之間的關係變得更加持久。一個很好的例子是，由於年度套餐的每月 ARM 低於每月套餐，我們將註冊更多的年度訂閱者。我們的平均 ARM 可能會在短期內受到影響，但是，我們重視與訂戶的關係，我們相信我們與訂戶建立的長期信任將帶來更多戰略價值。

In Q4, we continued to expand our inclusive membership benefit package, including exclusive iQIYI brand souvenirs and a limited-time discounted offers inclusve bank events.

第四季度，我們繼續擴大我們的包容性會員福利套餐，包括獨家愛奇藝品牌紀念品和限時折扣優惠，包括銀行活動。

Moving on to content. In Q4, we continue to lead the market with dominant market share. According to Enlightent data, we remain #1 in terms of factory we will built for both overall dramas and inclusive dramas categories, which incorporate new highs in the past 2 years. For variety shows, we also ranked #1 in terms of effective video bills with launch of popular or remote programs, including super natural tool (foreign language) and for 2022, (foreign language).

繼續內容。在第四季度，我們繼續以主導市場份額引領市場。根據 Enlightent 的數據，我們在為整體戲劇和包容性戲劇類別建造的工廠方面保持第一，這在過去 2 年中創下新高。對於綜藝節目，我們在有效視頻賬單方面也排名第一，推出了熱門或遠程節目，包括超自然工具（外語）和 2022 年（外語）。

2022 was the hardest year for our dramas. We had most number of blockbusters that covered the worst thing and even released across the year. First, we launched the 5 dramas with popularity in depth of over 10,000 in a single year, well, 4 of them are originals. Not only have we brought our content quality to the next level, we significantly improved our financial performance and generated on capability and large scale.

2022年是我們電視劇最艱難的一年。我們擁有最多的大片，涵蓋了最糟糕的事情，甚至全年上映。首先，我們推出了5部單年熱度過萬的劇集，嗯，其中4部是原創。我們不僅將內容質量提升到了一個新的水平，還顯著改善了我們的財務業績，並在能力和規模上產生了影響。

Second, our content releases convert that works. Since including Modern , A Life Long Journey, (foreign language) and (foreign language), the Asian cartoons epics.and New Life Beginning, (foreign language). Suspense for (foreign language) of Tang Dynasty, (foreign language), and the fantasy and use inspiration, The Heart of Genius, (foreign language).

其次，我們的內容髮布轉換有效。由於包括現代、A Life Long Journey、（外語）和（外語）、亞洲卡通史詩和 New Life Beginning（外語）。唐朝懸疑（外語），（外語），奇幻與運用靈感，天才之心，（外語）。

Third, the timing of all releases was evenly throughout the year, the 5 blockbusters with popularity index of 10,000 were released at the beginning of year during summer vacation and during winter. Other high-quality dramas were released as regular inflows during the year. Users can turn to iQIYI and watch the most current case shows at any time. We also maintained the best war of month in the industry. Among the top 10 highest-rated Chinese dramas, (foreign language) in 2022, 7 were iQIYI-hosted dramas and 4 were original production. Our original titles, Ordinary Greatness and White Bloom ranked first and the third with [past talent].

三是全年上映時間均勻，5部人氣指數10000的大片分別在年初暑假和寒假上映。年內其他優質劇集陸續上映，定期流入。用戶可以隨時轉到愛奇藝，觀看最新的案例展示。我們還保持了行業月度最佳戰績。 2022年收視率最高的10部華語劇（外語）中，愛奇藝主持的劇有7部，原創劇有4部。我們原來的稱號，平凡的偉人和白花，以【過往天賦】排名第一和第三。

As we move on to 2023, we will maintain our strong momentum and plan to launch a number of highly-anticipated dramas. Original production Unchained [Lust], (foreign language) and The Knockout were launched in Q1 on the high [play] plan by user. The Knockout become another market to nationwide phenomenon.

邁向2023年，我們將保持強勁勢頭，計劃推出多部備受期待的劇集。原創作品 Unchained [Lust]，（外語）和 The Knockout 在用戶的高 [play] 計劃中於第一季度推出。 Knockout成為又一個市場走向全國的現象。

Just to name a new highlight -- highlights. First, it has the highest auto new liability index call, and it's the drama that broke the popularity index of 10,000. Second, generated, fueled social brand and high reward of month score was 9.1, only very selected Chinese drama have such high scores. Third, the drama was broadcast on the national TV network, including CCTV and BRTV, all of which had outstanding viewership. Just on CCTV network alone, The Knockout has been watched by over 300 million audience so far.

僅舉一個新的亮點——亮點。首先，它是汽車新責任指數最高的，也是人氣指數破萬的劇。二是產生、助推社會品牌和高回報的月度評分為9.1，只有非常精選的國劇才有如此高的評分。三是該劇在全國電視網絡播出，包括央視、廣電衛視，收視率都非常突出。僅在央視網絡，《淘汰賽》就已經有超過3億觀眾觀看。

During 2023, a variety of key dramas will be launched such as Asian cartoon epics. the [Dinner Hunters], [romance], (foreign language), Story of [Huangyu] palace, (foreign language), The Fourth -- The Spirit Matchmaker, (foreign language). [Modern Scene] dramas such as [A month to go], (foreign language), Take Out Home, (foreign language), and We Are Here in [Your Palace], (foreign language).

2023年期間，將推出亞洲卡通史詩等多款重點劇集。 [夜宴獵手]，[言情]，（外語），[黃玉]宮故事，（外語），第四部——紅娘，（外語）。 [現代場景]戲劇，如[還有一個月]，（外語），外賣回家，（外語）和我們在[你的宮殿]，（外語）。

For our original variety shows, we will continue to launch multi-sales in shows and introduce new programs. We built a focus on building franchise value and enhancing synergy between dramas and variety shows. Please also anticipate to see a set of well-craft original movies, children content and animations.

對於我們的原創綜藝節目，我們將繼續在節目中推出多銷售並推出新節目。我們專注於建立特許經營價值和增強戲劇和綜藝節目之間的協同作用。還請期待看到一組製作精良的原創電影、兒童內容和動畫。

Advertising business recovered sequentially in Q4. Total ad revenue were RMB 1.6 billion in Q4, up 25% sequentially and down 7% annually, which was significantly narrowed from the 25% annual decline in Q3, exceeding our expectations at the beginning of the quarter. In particular for Q4, brand ads returned to double-digit [central] April and the year-over-year decline continued to narrow, better than our expectations.

廣告業務在第四季度環比復甦。第四季度廣告總收入為人民幣 16 億元，環比增長 25%，同比下降 7%，與第三季度 25% 的同比降幅相比大幅收窄，超出了我們本季度初的預期。特別是第四季度，品牌廣告在 4 月份恢復到兩位數 [中]，同比降幅繼續收窄，好於我們的預期。

The sequential growth was benefited from, first, field dramas and variety shows attract various. Second, the domestic reopening boosted advertising, advertisers' confidence and increased ad demand. Third, growth in sectors such as the internet services, communications and sales count.

環比增長，首先得益於田園劇和綜藝節目的吸引。其次，國內重新開放提振了廣告、廣告商的信心並增加了廣告需求。第三，互聯網服務、通信和銷售等行業的增長很重要。

Heading into 2023, we believe reopening will support economic recovery. We are positive about brand [apps] for the full year 2023, and expect to see healthy growth compared with 2022.

進入 2023 年，我們相信重新開放將支持經濟復甦。我們對 2023 年全年的品牌 [apps] 持樂觀態度，並預計與 2022 年相比將實現健康增長。

For performance apps, we achieved a strong revenue growth both sequentially and annually driven by algorithm of optimization and tailored official initiatives for advertisings from e-commerce, internet services and online game services. We believe that iQIYI's core user group is highly attractive for advertisers, and with our appealing content and advanced technology, we will be able to effectively help advertisers to increase their brand [improve].

對於性能應用程序，在電子商務、互聯網服務和在線遊戲服務的優化算法和量身定制的官方廣告計劃的推動下，我們實現了連續和每年的強勁收入增長。我們相信愛奇藝的核心用戶群對廣告主有很強的吸引力，憑藉我們有吸引力的內容和先進的技術，我們將能夠有效幫助廣告主提升品牌[improve]。

In the future, we will adopt multiple strategies to improve our ad business. We will focus on growing our brand new scale and offer tailor capaigns on large screens. Meanwhile, we will continue to develop the ad-supported basic subscription package on iQIYI Lite, which is similar to Netflix's low price, ad-supported initiative. We believe the solid growth in iQIYI Lite basic subscription package will drive ad inventory on our platform and lead to ad revenue growth.

未來，我們將採取多種策略來改善我們的廣告業務。我們將專注於擴大我們全新的規模，並在大屏幕上提供量身定制的活動。同時，我們將繼續在愛奇藝精簡版上開髮帶廣告的基本訂閱套餐，這類似於Netflix的低價帶廣告的舉措。我們相信愛奇藝精簡版基本訂閱套餐的穩健增長將推動我們平台上的廣告庫存並帶來廣告收入增長。

Moving on to technology and products. Technical innovation is 1 of our core values. Our continuous promote video industrialization and improve efficiency, incumbent production and distribution to innovative technologies. We start to explore AIGC-related opportunities since May, mid-2022, and have seen promising results. We believe our rich video entertainment resources, combined with cutting-edge technologies, will empower iQIYI to further improve efficiency in content production, distribution and other areas.

轉向技術和產品。技術創新是我們的核心價值觀之一。我們不斷推動視頻產業化和提高效率，在產和發行方面不斷創新技術。我們從 2022 年 5 月開始探索與 AIGC 相關的機會，並取得了可喜的成果。我們相信，我們豐富的視頻娛樂資源，結合尖端技術，將賦能愛奇藝在內容製作、發行等領域進一步提升效率。

On February 15, we announced the strategy of operation with Baidu and both companies will join the -- this form, the AIGC application scenario, soon Baidu's Ernie Bot. We anticipate that companys future and the promotion are 1 of the earliest areas to be in placement, and this cooperation will further accelerate our program in AIGC-related areas. We look forward to implement more applications as we strengthen our technology advancement in the future.

2 月 15 日，我們宣布了與百度的合作戰略，兩家公司將加入——這種形式，即 AIGC 應用場景，即將推出百度的 Ernie Bot。我們預計公司的未來和推廣是最早落地的領域之一，此次合作將進一步加速我們在 AIGC 相關領域的計劃。我們期待在未來加強技術進步的同時實施更多的應用程序。

Moving on to new business, first iQIYI Lite in Q4. iQIYI Lite reached a breakeven for the first time and recorded solid revenue growth, both annually and sequentially. We continued to develop monetization model of iQIYI Lite, and the new ads supported basic subscription package was well received by users.

繼續新業務，第四季度首先是愛奇藝精簡版。愛奇藝精簡版首次實現盈虧平衡，年度和環比收入均實現穩健增長。持續深耕愛奇藝精簡版變現模式，新增廣告支持基礎訂閱套餐，深受用戶好評。

Moving on to overseas business in Q4. Overseas membership revenue increased 30% year-over-year and the growth rate in America and Canada exceeded 70%. Original content, especially original dramas performed as well. Our original Chinese drama, New Life Begins, achieved the top rankings in Thailand, Philippines, Indonesia and the South Korea only 3 days after it launched. We are also delighted that our original dramas released in Q4 attract advertising budgets.

第四季度轉向海外業務。海外會員收入同比增長30%，美國和加拿大增速超過70%。原創內容，尤其是原創劇集也表現出色。我們原創的中國劇《新生活開始》上線僅3天就在泰國、菲律賓、印度尼西亞和韓國取得了榜首。我們也很高興我們在第四季度發布的原創劇集吸引了廣告預算。

In 2022, we successfully completed an iconic turnaround with substantial improvement in financial performance, business operations and market share. Meanwhile, our unique content production methodology helped up to produce a continual stream of blockbusters, embracing our core values. Our industry-leading original content production ability and superb operational capability are our core competitive strength and a key to our rapid growth in the long term.

2022 年，我們成功完成標誌性轉機，財務業績、業務運營和市場份額均有顯著改善。同時，我們獨特的內容製作方法幫助製作了源源不斷的大片，體現了我們的核心價值觀。我們行業領先的原創內容製作能力和卓越的運營能力是我們的核心競爭力，也是我們長期快速增長的關鍵。

As we move through 2023, we are committed to delivering high-quality growth. We firmly believe our best days are yet to come. We will further release the flywheel effect of our business and bring higher value to our users, partners and stakeholders.

邁向 2023 年，我們致力於實現高質量增長。我們堅信我們最好的日子還沒有到來。我們將進一步釋放業務的飛輪效應，為我們的用戶、合作夥伴和利益相關者帶來更高的價值。

Now, let me pass on to Jun to go through our financial performance.

現在，讓我轉告 Jun 來介紹我們的財務表現。

Thank you, Mr. Gong, and hello, everyone.

謝謝龔總，大家好。

Q4 was a representing quarter for our membership revenue, operating profit, operating cash flow and free cash flow. The operating margin continued to expand driven by operating leverage. In addition, we raised around USD 1.3 billion over the past 12 months to remove that overhead. With operational and financial performances in great conditions, a significant capital structure enhancement, the management will be able to focus on delivering high-quality growth in the long run.

第 4 季度代表我們的會員收入、營業利潤、營業現金流和自由現金流。在經營槓桿的推動下，經營利潤率繼續擴大。此外，我們在過去 12 個月中籌集了約 13 億美元以消除這些間接費用。憑藉良好的運營和財務業績，顯著改善資本結構，管理層將能夠專注於實現長期的高質量增長。

Now, I would also like to give this opportunity to review the overall performance for the year 2022 for iQIYI. First, we delivered what we promised earlier in the year. We set the goal of reaching non-GAAP operating profit -- operating breakeven for the full year of 2022 and ended up with a non-GAAP operating profit of RMB 2.2 billion, far exceeding our expectations. Then we shifted our operational focus from cost down in Q1 and Q2 to scale up in Q3 and Q4, and roll out our common growth strategy in the mid of the year, which resulted a very healthy expansion of market share, membership services revenue and profit in the second half. The momentum continues beyond December 31, 2022. In addition, we also promised to protect the interest of all stakeholders and fix the immense challenge of that overhead despite the extremely volatile market, and we made that as well.

現在，我也想藉此機會回顧一下愛奇藝2022年的整體表現。首先，我們兌現了今年早些時候的承諾。我們設定了實現非美國通用會計準則營業利潤的目標——2022 年全年實現營業收支平衡，最終實現非美國通用會計準則營業利潤 22 億元人民幣，遠超我們的預期。然後，我們將運營重心從第一季度和第二季度的成本降低轉移到第三季度和第四季度的擴大規模，並在年中推出我們的共同增長戰略，從而實現了市場份額、會員服務收入和利潤的非常健康的擴張在下半場。這一勢頭持續到 2022 年 12 月 31 日之後。此外，我們還承諾保護所有利益相關者的利益，並在市場極度動蕩的情況下解決間接費用帶來的巨大挑戰，我們也做到了。

Secondly, we humbly ask our investors to look beyond iQIYI specific achievements and revalued a long-form video industry as a whole. iQIYI continued to outperform to deliver alpha, but our entire industry was quickly recovering for the entire 2022 as well as to deliver beta, driven by the structural change on the supply side. This quantity, more quality, more concentrated supply of platform originated content leads to higher ratio and more efficient cost control.

其次，我們謙虛地要求我們的投資者超越愛奇藝的具體成就，重新評估整個長視頻行業。愛奇藝在交付 alpha 方面繼續跑贏大市，但在供給側結構性變化的推動下，我們整個行業在整個 2022 年都在迅速復蘇並交付 beta。這種數量更多、質量更高、平台原創內容更集中的供應導致更高的比率和更有效的成本控制。

On the demand side, as Mr. Gong mentioned, long-form video remains a fundamental entertainment needs for the mass market. Over time, the higher quality content naturally lead to the higher willingness to pay, hence the higher ARM, and we are in a merchant cycle, and we'll see a more promising future.

在需求方面，正如龔先生所說，長視頻仍然是大眾市場的基本娛樂需求。隨著時間的推移，更高質量的內容自然會導致更高的付費意願，因此更高的 ARM，我們處於商業周期，我們將看到更美好的未來。

Certainly, we would like to thank everyone who supported us in a very dramatic 2022, including our users, employees, content partners, our shareholders and supportive bondholders and creditors. Our commitment in achieving healthy business growth remains unchanged, and we are more confident than ever in our ability to generate value for our stakeholders in the long run.

當然，我們要感謝在充滿戲劇性的 2022 年支持我們的每一個人，包括我們的用戶、員工、內容合作夥伴、我們的股東以及支持我們的債券持有人和債權人。我們對實現健康業務增長的承諾保持不變，我們比以往任何時候都更有信心為我們的利益相關者創造長期價值。

For detailed financial data for Q4 end of year 2022, please refer to our press release on our IR website. Now, we will open the floor for Q&A.

有關 2022 年第四季度末的詳細財務數據，請參閱我們在 IR 網站上發布的新聞稿。現在，我們將開放問答環節。

(Operator Instructions) The first question is from Xueqing Zhang from CICC.

（操作員說明）第一個問題來自中金公司的張學慶。

[Interpreted] And I will translate myself.

[翻譯] 我會自己翻譯。

Congratulations to a remarkable performance, which means that the cards came -- were received in January. So how do management think about overall content stream in the first quarter? And as you mentioned in the letter to investors, people know iQIYI as a broadcaster tool house. Can management show us that how to make and more original blockbusters in the future? And last, how should we think about the number of subscribing members in the longer term?

祝賀您出色的表現，這意味著這些卡片是在一月份收到的。那麼管理層如何看待第一季度的整體內容流？正如你在給投資者的信中提到的，人們知道愛奇藝是一個廣播工具之家。管理層能否給我們展示一下，未來如何製作更多的原創大片？最後，從長遠來看，我們應該如何考慮訂閱會員的數量？

[Interpreted] First of all, the Q1 content was excellent. Exceeded our expectations. And for the overall content performance, we invite our CCO, Xiaohui, to answer the question. And in regards to the membership business, we will invite our Senior Vice President, Mr.Youqiao Duan, to answer your question.

【解讀】首先，Q1的內容非常棒。超出了我們的預期。而對於整體的內容表現，我們請來了我們的CCO小慧來回答這個問題。關於會員業務，我們將邀請我們的高級副總裁段友橋先生來回答您的問題。

[Interpreted] As a media platform, 1 of the main goals for iQIYI in the past 10 years is to systematically improve the success rate of operating blockbusters. Looking at the content performance in the past year, whether it's the drama Love Between Fairy and Devil, Wild Bloom, New Life Begins, Shaping Under Current, Homesick are the recent knockout. We can see the community and diversity of iQIYI blockbuster content.

【解讀】作為媒體平台，愛奇藝過去10年的主要目標之一就是系統性地提昇運營大片的成功率。縱觀近一年的內容表現，無論是話劇《仙魔戀》、《野花綻放》、《新生活開始》、《浪潮中的塑造》、《鄉愁》都是近期的爆款。我們可以看到愛奇藝大片內容的社區性和多樣性。

First, core competitiveness is talent. Under our in-house studio strategy, we have established a number of levers and distinctive in our studios, which gathered the most creative talents in this industry. These talents are also in line with the distinctive characteristics of the creative industry. At the same time, we have also established a strong supporting native platform which provides a sophisticated mechanism that is conducive to improving the efficiency in content production and increasing the probability of hit ratios.

第一，核心競爭力是人才。在我們的內部工作室戰略下，我們在我們的工作室中建立了多個槓桿和特色，聚集了這個行業最具創造力的人才。這些人才也符合創意產業鮮明的特點。同時，我們也建立了強大的配套原生平台，提供完善的機制，有利於提高內容生產效率，提高命中率。

The second is our internal development content management system. We have established a complex, data-driven and efficient decision-making content production management system which covers every critical moment in the entire cycle of content production.

第二個是我們的內部開發內容管理系統。我們建立了複雜的、數據驅動的、高效的決策內容生產管理體系，覆蓋了內容生產全週期的每一個關鍵時刻。

The third 1 is operations. We have won a strong content operational capability which runs through contemplation, production, scheduling, promotion and et cetera.

第三個1是操作。我們已經具備了貫穿構思、製作、排期、推廣等環節的強大內容運營能力。

The fourth is innovative and intelligent technology. We use intelligent production technology to effectively improve producton, efficiency and the [safe] cost, which provides strong guarantee for our content production.

四是創新智能科技。我們利用智能化生產技術，有效提升生產效率和[安全]成本，為我們的內容生產提供有力保障。

The fifth is in the treatment side. After years of experiences in the industry, we have clear insights in terms of the content creation and accurate graph of the appetite of the trained entertainment consumer budget. These are definitely our core competitive advantages.

五是在治療方面。經過多年的行業經驗，我們對受過訓練的娛樂消費者預算的胃口內容創作和準確圖表有清晰的洞察力。這些絕對是我們的核心競爭優勢。

Therefore, our current content production mechanism and strong operational capability will guarantee us with a stable and continuous supply of top premium content in the future.

因此，我們現有的內容生產機制和強大的運營能力將保證我們未來能夠穩定持續地提供頂級優質內容。

[Interpreted] In 2022, we continued to develop our membership business operations, membership sales and subscriber base, and have achieved healthy growth momentum. In 2022 Q4, the subscriber base made a breakthrough of the fluctuating subscriber range of the past 2 years. We are optimistic that the subscriber base will continue to grow in 2023.

[解讀]2022年，我們繼續發展會員業務運營、會員銷售和用戶基礎，並取得了健康的增長勢頭。 2022年Q4，用戶規模突破了過去2年波動的用戶規模。我們樂觀地認為用戶群將在 2023 年繼續增長。

Our number of subscribers reached nearly 120 million by the end of December, and thanks to the high-quality content, our subscriber base continues to maintain a high level and continue to grow since the beginning of the year.

截至 12 月底，我們的訂閱人數達到近 1.2 億，得益於高質量的內容，我們的訂閱人數自年初以來繼續保持高水平並持續增長。

The structure of our subscriber base is optimized. The annual membership package and the large team subscribers are growing well, which will help improving the platform's membership stickiness and long-term monetization ability.

用戶結構優化。年度會員套餐和大團隊訂閱用戶增長良好，有助於提昇平台的會員粘性和長期變現能力。

In the long run, resuming of domestic subscriber base depends on the number of people consuming the long-form digital content, the number of families and the industry's competitive landscape. Currently, the number of subscribers still have a lot of room to go compared with the number of internet population and the number of families in China.

從長遠來看，國內用戶群的恢復取決於消費長篇數字內容的人數、家庭數量和行業競爭格局。目前，與中國的網民數量和家庭數量相比，用戶數量還有很大的提升空間。

In the future, the membership business has good prospects in both direct-to-consumer sales and also channel sales market. In the direct-to-consumer to consumer sales market, there is a fundamental demand for long-form video membership in the mass entertainment market. In the channel sales market, video membership package has also become 1 of the preferred products favored by our partners and the telecommunication, internet services and financial sectors.

未來，會員業務無論在直銷市場還是渠道銷售市場都有良好的發展前景。在直接面向消費者的消費者銷售市場中，大眾娛樂市場對長視頻會員有基本需求。在渠道銷售市場，視頻會員套餐也成為我們的合作夥伴以及電信、互聯網服務和金融行業青睞的首選產品之一。

Last but not least, as our content quality continues to improve, it will definitely increase subscribers' willingness to pay and the improvement of our monetization ability in the future.

最後但並非最不重要的是，隨著我們內容質量的不斷提高，這肯定會增加訂閱者的付費意願以及未來我們變現能力的提升。

The next question comes from Lei zhang from Bank of America [Merrill Lynch].

下一個問題來自美國銀行 [Merrill Lynch] 的 Lei Zhang。

[Interpreted] Congrats on the strong results. My question is mainly on the online industry. We noticed that a major player have focusing on ROI and content quality in 2022. I'm wondering how should we see the industry development in the future?

[解讀] 恭喜你取得了優異的成績。我的問題主要是關於在線行業。我們注意到一個主要參與者在 2022 年關注投資回報率和內容質量。我想知道我們應該如何看待未來的行業發展？

[Interpreted] I think right now, it's the industry's consensus that we believe there is a fundamental demand for long-form video membership in the mass entertainment market. Maybe a few years ago, there were some players who doubted this, but I think right now, everybody in this market reaches a comment on customers on this.

[解讀]我認為現在，我們認為大眾娛樂市場對長視頻會員有基本需求，這是業界的共識。也許在幾年前，還有一些玩家對此表示懷疑，但我認為現在，這個市場上的每個人都對客戶發表了評論。

At the end of 2021, we think we were the first to foresee that there are changes in the online video market that will lead to a new stage of rational development for the entire industry. The focus of the long-form video competition will shift from repeating on content quantity to content quality, and more players will pursue the improvement in operational efficiency and facility. And based on the past 1 year and more experience, we can win and establish increasing quality of video content leads to higher RIO. And I think based on that, we think the results in 2022 also proves that our insight of the structural change of the industry is correct.

2021年底，我們認為我們是第一個預見到網絡視頻市場的變化，將引領整個行業進入理性發展的新階段。長視頻競爭的重心將從內容數量的重複轉向內容質量，更多玩家將追求運營效率和便利性的提升。根據過去 1 年和更多的經驗，我們可以贏得併確定視頻內容質量的提高會帶來更高的 RIO。我認為基於此，我們認為 2022 年的結果也證明我們對行業結構變化的洞察是正確的。

Our excess turnaround of the business performance last year, I think, was attributable to the improvement in original content production. And the same for the industry peers, I think there are more sufficient supply of content and also a higher hit ratios and better additional cost control. We think the high-quality content is evident will lead to higher willingness to pay, which enables us to form a virtue cycle for content production among divisions. And we also believe eventually, there is the chances for 1 single user to subscribe to multiple unleveraged packages among the video industry peers.

我認為，我們去年業務表現的超額轉機歸因於原創內容製作的改善。同業也一樣，我覺得內容供給更充足，命中率更高，附加成本控制更好。我們認為高質量的內容顯然會導致更高的付費意願，這使我們能夠在部門之間形成內容生產的美德循環。我們也相信最終，在視頻行業同行中，1 個單一用戶有機會訂閱多個無槓桿套餐。

We believe our -- we achieved our iconic turnaround last year as we continue to lead industry. And also at the same time, our goal for next year is achieving head quality growth, meaning that will achieve quality growth in terms of revenue and also for profit as well. I understand that this brings some of the pressure for our peers in the industry, but I think as a leader in this industry, it will decline and then increasing ROI will also lead the entire industry to recover better ROI performance quickly and driven by the structural changes as we mentioned earlier. And then I think this will eventually lead to a healthier industry and eventually, every player in the industry will benefit from it.

我們相信，隨著我們繼續引領行業，我們去年實現了標誌性的轉變。同時，我們明年的目標是實現頭部質量增長，這意味著將在收入和利潤方面實現質量增長。我理解這給我們行業同行帶來了一些壓力，但我認為作為這個行業的領導者，它會下降，然後增加ROI也會導致整個行業快速恢復更好的ROI表現，並在結構性驅動下正如我們前面提到的變化。然後我認為這最終會導致一個更健康的行業，最終，行業中的每個參與者都會從中受益。

Your next question comes from Lincoln Kong from Goldman Sachs.

你的下一個問題來自高盛的 Lincoln Kong。

[Interpreted] So my question is about AIGC-generated content, so especially the application in the video space. So how do management think about the potential TAM and the potential applications are going to operate this space? Especially we also noticed recently, our company has a written cooperation with Baidu. So in that sense, what aspects should we expect more concrete plan related to this cooperation?

[解釋] 所以我的問題是關於 AIGC 生成的內容，尤其是在視頻領域的應用。那麼管理層如何看待潛在的 TAM 和潛在的應用程序將運行這個空間？特別是最近我們還注意到，我們公司與百度有書面合作。那麼從這個意義上說，我們應該期待與本次合作相關的具體計劃在哪些方面？

I want to invite our CTO, Wenfeng, to answer this question. Please go ahead.

我想請我們的CTO文峰來回答這個問題。請繼續。

[Interpreted] Our iQYI corporate provision is to be a technology-based entertainment giant. We believe that technology innovation is also always 1 of the key factors to promote the evolution of the video industry. We have been investing in artificial intelligence for computing audio and video technology, and improve the efficiency and quality of content production and intense viewer experience.

【解讀】我們愛奇藝的企業定位是做科技娛樂巨頭。我們認為，技術創新也始終是推動視頻行業演進的關鍵因素之一。我們一直在投資用於計算音頻和視頻技術的人工智能，並提高內容製作的效率和質量以及強烈的觀看體驗。

AIGC is a powerful engine for data processing and also comes in production using the AI technology. By applying the AIGC technology to further expand iQIYI capabilities in content creativity, improve content production efficiency and [follow] and user experience. We have been exploring the application of AIGC in the video space since mid-2022.

AIGC 是一個強大的數據處理引擎，也使用 AI 技術投入生產。通過應用AIGC技術，進一步拓展愛奇藝在內容創意方面的能力，提升內容生產效率以及[關注]和用戶體驗。自 2022 年年中以來，我們一直在探索 AIGC 在視頻領域的應用。

We have been exploring in the following aspects. For the [increasive] stage in the future, content creators can use iQIYI's intelligent production system during the scripting process. Not only that it will trigger more creative inspiration, but it will also improve efficiency and reduce costs. In the production stage in the future, iQIYI's intelligent production system can intelligently analyze and process the script through the use of AIGC to essentially analyze the script and extract the story out. In addition, such technology not only can help the content producers in find the project, but it could also provide more valuable information regarding billing process for post-production and marketing, improving the overall efficiency and quality of video content production.

我們一直在以下幾個方面進行探索。對於未來的【增量】階段，內容創作者可以在腳本製作過程中使用愛奇藝的智能生產系統。不僅會引發更多的創作靈感，還會提高效率，降低成本。在未來的製作階段，愛奇藝的智能製作系統可以通過AIGC對劇本進行智能分析處理，從本質上分析劇本，提煉出故事。此外，這種技術不僅可以幫助內容製作者找到項目，還可以為後期製作和營銷提供更多有價值的計費信息，提高視頻內容製作的整體效率和質量。

In terms of content marketing and promotion, AIGC can produce a large number of marketing videos and marketing materials to improve the efficiency and effect of content marketing. In the future, content recreators can also use AI to automatically generate, did your commentary script further improve the efficiency and quality of the video [resolution]? This can briefly enrich short-form video content that promote our dramas, variety shows, films, et cetera, attracting more users to watch iQIYI's content. It will also especially benefit in promoting our extensive selection of library content, effectively extending the life record of these contents.

在內容營銷推廣方面，AIGC可以製作大量的營銷視頻和營銷素材，提升內容營銷的效率和效果。未來內容創作者也可以用AI自動生成，你們的解說詞有沒有進一步提升視頻的效率和質量[分辨率]？這可以簡單地豐富短視頻內容，宣傳我們的劇、綜藝、電影等，吸引更多用戶觀看愛奇藝的內容。它還將特別有利於促進我們對圖書館內容的廣泛選擇，有效地延長這些內容的生命記錄。

And also, AIGC can produce personalized poster images for any content, helps content to find its audience and the user will have improved content recommendation experience. The video search experience will also be improved. Through the [conversation] of AI capabilities, users can search a spot, find out a story of a particular team or binge watching recommendations et cetera, helping the users -- they can help the users to find content more effectively.

而且，AIGC可以為任何內容製作個性化的海報圖片，幫助內容找到它的受眾，用戶將獲得更好的內容推薦體驗。視頻搜索體驗也將得到改善。通過 AI 功能的 [對話]，用戶可以搜索一個地點，找出特定團隊的故事或狂看推薦等等，幫助用戶——他們可以幫助用戶更有效地找到內容。

We believe that the combination of AIGC's technology and iQIYI's rich online video entertainment resources can further promote the development of the video industry and improved user experience. We will continue to increase our investment in this area. On February 15, 2023, we announced a strategic cooperation with Baidu, and both companies were really exploring AIGC application scenarios through Baidu's learning bots in the areas such as content creation rules, company distribution of promotions, content search, novel creation, et cetera. We believe it will further expand iQIYI's production capabilities in content creativity, production efficiency and user experience.

我們相信，AIGC的技術與愛奇藝豐富的在線視頻娛樂資源相結合，可以進一步推動視頻行業的發展，提升用戶體驗。我們將繼續加大在這方面的投入。 2023年2月15日，我們宣布與百度達成戰略合作，雙方通過百度的學習機器人在內容創作規則、公司分發促銷、內容搜索、小說創作等方面真正探索AIGC應用場景。我們相信這將進一步擴大愛奇藝在內容創意、生產效率和用戶體驗方面的生產能力。

This is the last question for today. I'll now hand back to iQIYI's management for closing remarks. .

這是今天的最後一個問題。我現在將交還給愛奇藝管理層作結束語。 .

Thank you, everyone, for joining the call today, and please do not hesitate to reach out to us if you have further questions. Thank you.

謝謝大家今天加入電話會議，如果您有其他問題，請隨時與我們聯繫。謝謝。

Thank you. Bye-bye.

謝謝。再見。

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.

謝謝。我們今天的會議到此結束。感謝您的參與。您現在可以斷開連接。