iQIYI Inc (IQ) 2021 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to iQIYI Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

美好的一天，感謝您的支持。歡迎來到愛奇藝第四季度和 2021 財年財報電話會議。 （操作員說明）請注意，今天的會議正在錄製中。 （操作員說明）

I would now like to hand the conference over to your first speaker today, Ms. Chang You, IR Director of the company, to read the opening remarks and the safe harbor statement. Please go ahead.

我現在想把會議交給今天的第一位發言人，公司投資者關係總監常友女士，宣讀開幕詞和安全港聲明。請繼續。

Thank you, operator. Hello, everyone, and thank you for joining iQIYI's Fourth Quarter and Fiscal Year 2021 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，接線員。大家好，感謝您參加愛奇藝 2021 年第四季度及財年財報電話會議。該公司的業績今天發布，可在公司的投資者關係網站 ir.iqiyi.com 上查閱。

On the call today are Mr. Yu 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; Ms. Vivian Wang, our CMO, Chief Marketing Officer; Mr. Youqiao Duan, Senior Vice President of our Membership business; and Mr. Xianghua Yang, Senior Vice President of Movies and Overseas 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, Vivian, Youqiao and Xianghua will join Mr. Gong and Jun in the Q&A session.

今天的電話是我們的創始人、董事兼CEO龔宇先生；我們的首席財務官王軍先生；我們的 CCO、首席內容官王曉輝先生；我們的CTO、首席技術官劉文峰先生；我們的CMO、首席營銷官Vivian Wang女士；會員業務高級副總裁段友橋先生；電影與海外業務高級副總裁楊向華先生。龔先生將簡要介紹公司的業務運營和亮點，隨後將介紹財務狀況。準備好的發言結束後，小慧、文峰、Vivian、尤喬和向華將與龔先生和君先生一起進行問答環節。

Before we proceed, please note that the discussion today will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks 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 our public filings with the SEC. iQIYI does not undertake any obligations 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。前瞻性陳述受到可能導致實際結果不同的風險和不確定性的影響與我們目前的預期大相徑庭。潛在風險和不確定性包括但不限於我們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. Thank you for joining us today. 2021 was a unique year for iQIYI. One year ago, we shared with investors in our shareholder letter that iQIYI deliver its core value by producing and distributing premium entertainment content. [We believe the premium long-form video content is a fundamental need for human beings, and iQIYI has established solid leadership in this space. We delivered what we said. In the past year, despite turbulence in the macro environment, we still consistently delivered blockbusters quarter over quarter], including My Heroic Husband, Feng Qi Luo Yang and Who is The Murderer (foreign language), just to name a few, and we continued to rank #1 in various user metrics according to third-party data.

大家好。感謝您今天加入我們。 2021年對於愛奇藝來說是不平凡的一年。一年前，我們在股東信中與投資者分享，愛奇藝通過製作和分發優質娛樂內容來實現其核心價值。 【我們相信優質的長視頻內容是人類的基本需求，愛奇藝在這一領域已經確立了穩固的領導地位。我們兌現了我們所說的。在過去的一年裡，儘管宏觀環境動盪，但我們仍然一季度一季度地推出了大片]，包括《我的英雄丈夫》、《風起落陽》和《誰是兇手》（外文）等等，我們繼續根據第三方數據在各種用戶指標中排名第一。

Today, we would like our shareholders to recognize that iQIYI is leading the opening of a new chapter in the Chinese long-form video industry, which involves a number of structural changes. The market competition shifts from quantity to quality; the operational priority shifts from market share to business efficiency. Everyone within the industry is now taking a more balanced approach that results in higher business efficiency, profitability, and positive social impacts. These changes are positive; these changes are the consensus of industry leaders, including iQIYI, and they would help the entire industry to achieve sustainable growth in the long term.

今天，我們希望我們的股東認識到，愛奇藝正在引領中國長視頻行業開啟新的篇章，這涉及到許多結構性變化。市場競爭從數量轉向質量；運營重點從市場份額轉向業務效率。行業內的每個人現在都在採取更加平衡的方法，從而提高業務效率、盈利能力和積極的社會影響。這些變化是積極的；這些變化是包括愛奇藝在內的行業領導者的共識，它們將有助於整個行業實現長期的可持續增長。

These structural changes also brought near-term benefits, resulting in a healthy fourth quarter for iQIYI. For instance, we proactively dropped projects that generated low ROI and had limited value creation. Meanwhile, we were more disciplined when investing in the non-core business and initiatives with long pay-back periods. Our organization became slimmer and nimbler. We are more focused on our core businesses than ever, resulting in significant improvement on cost-structure and operating efficiency. The initial results have been very encouraging. In the fourth quarter of 2021, the non-GAAP operating loss, a key measure for our business performance, decreased significantly by 45% annually and 52% sequentially, exceeding our expectations.

這些結構性變化也帶來了短期利益，為愛奇藝帶來了健康的第四季度。例如，我們主動放棄了投資回報率低且價值創造有限的項目。同時，我們在投資非核心業務和回報期較長的計劃時更加自律。我們的組織變得更加苗條和靈活。我們比以往任何時候都更加專注於我們的核心業務，從而顯著改善了成本結構和運營效率。初步結果非常令人鼓舞。 2021 年第四季度，作為衡量我們業務績效的關鍵指標，非美國通用會計準則營業虧損每年顯著下降 45%，環比下降 52%，超出了我們的預期。

The benefits from these changes will extend beyond Q4. We expect the non-GAAP operating loss to be further narrowed significantly in the first quarter of 2022. Our goal is to reach operating break-even for the full year of 2022 on the non-GAAP basis, and we hope to reach quarterly non-GAAP operating breakeven as soon as possible. We believe that we are in the right direction in reaching our goal. We will continue to increase our operating efficiency and improve the quality of our diversified content portfolio through content innovation, production refinement, industrialization of video production, and diversified monetization methods.

這些變化帶來的好處將延伸到第四季度之後。我們預計 2022 年第一季度非 GAAP 經營虧損將進一步顯著收窄。我們的目標是在非 GAAP 基礎上實現 2022 年全年的經營盈虧平衡，我們希望實現季度非 GAAP GAAP 盡快實現盈虧平衡。我們相信，我們在實現目標方面正朝著正確的方向前進。我們將通過內容創新、製作精細化、視頻製作產業化、多元化變現方式，不斷提高運營效率，提升多元化內容組合的質量。

We firmly believe premium long-form video content is one of the core needs for human beings. Through the execution of our short-term strategy and the rich experience we have accumulated in the industry, we will continue to produce and deliver more high quality and diversified premium content to expand our member and user base over the long term.

我們堅信優質的長視頻內容是人類的核心需求之一。通過我們短期戰略的執行和我們在行業中積累的豐富經驗，我們將繼續製作和提供更多高質量和多樣化的優質內容，以擴大我們的會員和用戶群。

Now let's go through the performance of business segments in the fourth quarter and the full year of 2021. Let's start with memberships. Our core business strategy remains focused on the 3 aspects that drive membership service growth: first, increasing average revenue per membership as known as ARM; second, improving retention of paying members; and the third, continue attracting new members and reconverting inactive members.

現在讓我們回顧一下2021年第四季度和全年業務部門的表現。讓我們從會員開始。我們的核心業務戰略仍然專注於推動會員服務增長的三個方面：首先，增加每個會員的平均收入，即 ARM；第二，提高付費會員的保留率；三是繼續吸納新會員，重新轉化非活躍會員。

In the fourth quarter, our membership revenue grew by 7% annually and the full year 2021 membership revenue grew slightly from last year, mainly driven by ARM improvement. For the fourth quarter, monthly ARM was RMB 14.16, up 14% annually and 4% sequentially. The improvement of ARM was mainly attributable to more premium services provided for our users, the success of our innovative operating initiatives and efficient promotional efforts and the successful price adjustment that we rolled out in November 2020. For example, we launched many innovative marketing campaigns for a number of highly-anticipated content launched in December, such as our original drama series, Feng Qi Luo Yang, and Who is The Murderer from Mist Theater, bringing exclusive perks to our members. Benefiting from the success of last year's Mist Theater, the membership revenue of Who is The Murderer recorded historical high among all Mist Theater dramas.

第四季度，我們的會員收入每年增長 7%，2021 年全年會員收入比去年略有增長，主要受 ARM 改進的推動。第四季度，月平均 ARM 為 14.16 元，同比增長 14%，環比增長 4%。 ARM 的提升主要得益於為用戶提供更多優質服務，創新運營舉措和高效促銷的成功，以及我們在 2020 年 11 月推出的成功價格調整。例如，我們推出了許多創新營銷活動12月推出原創劇集《風起洛陽》、《迷霧劇場兇手是誰》等備受期待的內容，為會員帶來專屬福利。得益於去年迷霧劇場的成功，《誰是兇手》的會員收入創下了迷霧劇場所有劇種的歷史新高。

During the first 2 months of the quarter, we faced great uncertainty in content scheduling and many key titles were delayed towards the end of the quarter. The average daily number of total subscribing members for the fourth quarter was 97 million compared to 102.7 million for Q4 2020 and 104.7 million for Q3 2021. As we launched many premium titles since December, the current number of subscribers is now back at an ideal level.

在本季度的前 2 個月，我們在內容安排方面面臨很大的不確定性，許多關鍵作品在本季度末被推遲。第四季度的日均訂閱會員總數為 9700 萬，而 2020 年第四季度為 1.027 億，2021 年第三季度為 1.047 億。由於我們自 12 月以來推出了許多優質遊戲，目前的訂閱人數現已恢復到理想水平.

Despite the sequential fluctuation in average daily subscribers for the quarter, we are happy to see that subscriber growth on large screen devices maintained good momentum. The user time spent on TV devices continued to increase, showing the appreciation of content distribution via big screen is growing. This trend presents us with greater monetization potential on big screens. In the future, we will continue to improve the acquisition and retention of paying subscribers through refined operational strategies. And at the same time, the penetration into large screens will be another driving force to the continuous growth of business.

儘管本季度日均用戶數連續波動，但我們很高興看到大屏幕設備的用戶增長保持良好勢頭。用戶在電視設備上花費的時間持續增加，顯示通過大屏幕分發內容的欣賞度正在增長。這一趨勢為我們提供了在大屏幕上更大的貨幣化潛力。未來，我們將通過精細化運營策略，不斷提升付費用戶的獲取和留存。同時，大屏的滲透將成為業務持續增長的又一動力。

Moving on to overseas business. Our overseas business made great progress with user base and revenue achieved significant growth year-over-year. The influence of our overseas platform continues to increase, bringing a wider recognition of Eastern culture amongst overseas users. First, the user base recorded explosive growth and the average DAU in 2021 tripled from last year. We saw the best growth momentum in Thailand with annual growth of nearly 700%. Meanwhile, the growth rate in many other regions exceeded 100% such as countries in the Southeast Asia, the U.S., Korea and Australia.

轉戰海外業務。我們的海外業務在用戶基礎上取得了長足的進步，收入同比大幅增長。海外平台影響力不斷提升，海外用戶對東方文化的認知度越來越高。首先，用戶群出現爆發式增長，2021 年的平均 DAU 比去年增長了兩倍。我們看到泰國的增長勢頭最好，年增長率接近 700%。同時，東南亞、美國、韓國、澳大利亞等多個地區增速均超過100%。

Second, the overall revenue growth of the overseas platform was also encouraging. Membership revenue grew by over 40% sequentially in the fourth quarter and over 80% for the full year. Advertising revenue grew by about 10% sequentially in the fourth quarter and over 100% for the full year. Thirdly, continuous releases of hit titles successfully won recognition from overseas users, driving a rapid increase in the ability to continuously expand our user base. During the year, a wide variety of Chinese mainland content such as original and licensed dramas and original variety shows achieved top trend ranking in 14 countries, including Malaysia, Thailand, Japan, Korea and the U.S. Lastly, we continued to improve our platform capabilities and expand cooperations with local partners. We launched our app on Amazon Fire TV and Roku TV in North America and also on many TV devices, such as Samsung, Hisense and LG TV.

其次，海外平台的整體收入增長也令人鼓舞。第四季度會員收入環比增長超過 40%，全年增長超過 80%。第四季度廣告收入環比增長約 10%，全年增長超過 100%。三是持續發布熱播，成功獲得海外用戶認可，推動用戶持續擴大能力快速提升。年內，中國內地原創及授權劇、原創綜藝等多元化內容在馬來西亞、泰國、日本、韓國、美國等14個國家均創下趨勢榜首。擴大與當地合作夥伴的合作。我們在北美的 Amazon Fire TV 和 Roku TV 以及三星、海信和 LG 電視等許多電視設備上推出了我們的應用程序。

During the year, we also launched an overseas ad platform to expand our cooperation with overseas brand advertisers and agencies. In the future, we will continue to focus on expanding the scale of our user base and revenue. By leveraging the premium content on iQIYI main APP and continuous improvement of operation efficiency, we are striving to maximize our monetization capability for our overseas platform.

年內，我們亦推出海外廣告平台，擴大與海外品牌廣告商及代理機構的合作。未來，我們將繼續專注於擴大用戶群規模和收入。通過愛奇藝主APP的優質內容和運營效率的不斷提升，我們正在努力發揮我們海外平台的變現能力。

Moving on to advertising. The advertising revenue decreased 10% year-over-year during the quarter, mainly due to the decline in brand ads. The decline in brand ads was mainly attributable to, first, the lack of hit content, both for the dramas and variety shows in the first 2 months of Q4. Second, weak overall macro environment. Despite the decline in brand ads, we were pleased to see that ad revenue from the Mist Theater doubled in 2021, highlighting the success and the importance of our vertical theater model strategy. For 2022, we are targeting to secure more key accounts and increase their revenue contribution driven by continuous content innovation and development of sequels to our successful titles.

繼續做廣告。本季度廣告收入同比下降10%，主要是由於品牌廣告的下降。品牌廣告下降的主要原因是：第一，第四季度前兩個月的電視劇和綜藝節目都缺乏熱播內容。二是整體宏觀環境疲軟。儘管品牌廣告有所下降，但我們很高興地看到，迷霧劇場的廣告收入在 2021 年翻了一番，凸顯了我們垂直影院模式戰略的成功和重要性。到 2022 年，我們的目標是確保更多的關鍵客戶，並通過持續的內容創新和成功遊戲續集的開發來增加他們的收入貢獻。

Revenue from performance ads achieved steady growth, both annually and sequentially during the quarter. iQIYI Lite was the major driving force. The operating metrics of iQIYI Lite increased significantly, specifically ad inventory increase benefited from strong traffic increase. The annual growth of performance ad also benefited from the improvement of our ad products as we continue to optimize our algorithm.

效果廣告收入在本季度實現了年均和環比的穩定增長。愛奇藝精簡版是主要推動力。愛奇藝精簡版的運營指標顯著增長，特別是廣告庫存的增長得益於流量的強勁增長。隨著我們不斷優化算法，效果廣告的年度增長也得益於我們廣告產品的改進。

Moving over to content. We experienced turbulence and faced many uncertainties that directly impacted content launch during the year, and especially in the first 2 months of the fourth quarter. As we gained a deeper understanding of the latest industry policies, we were able to better comprehend the boundaries of content production and the scheduling. Thus, we proactively managed the process and the increased our resilience relative to content scheduling uncertainties. We launched many premium content towards the end of the fourth quarter.

轉到內容。我們經歷了動盪，並面臨許多直接影響年內內容髮布的不確定性，尤其是在第四季度的前兩個月。隨著我們對最新行業政策的深入了解，我們能夠更好地理解內容生產和調度的邊界。因此，我們主動管理流程並增加了我們對內容調度不確定性的彈性。我們在第四季度末推出了許多優質內容。

Optimization of the overall content cost is the foremost aspect of our recent operational strategy. For the fourth quarter, the content-related cost ratio continued to improve. This ratio, as we introduced in the last call, it effectively reflects the operating efficiency of the content we invested in. So far, the ratio has improved over 20 percentage points annually for the fourth quarter as the number of low-performing titles decreased both annually and sequentially. Meanwhile, we have utilized our intelligent production technology to increase our data analytical and forecasting capabilities, which in return increased our content success rate. We believe we have a team of content professionals that have the best industry know-how. By executing the aforementioned initiatives, the overall quality of our content team will further be improved.

優化整體內容成本是我們近期運營戰略的首要方面。第四季度，內容相關成本比繼續改善。正如我們在上次電話會議中介紹的那樣，這個比率有效地反映了我們所投資內容的運營效率。到目前為止，由於表現不佳的遊戲數量減少每年和順序。同時，我們利用我們的智能生產技術來提高我們的數據分析和預測能力，從而提高我們的內容成功率。我們相信我們擁有一支擁有最佳行業知識的內容專家團隊。通過執行上述舉措，我們的內容團隊的整體素質將進一步提高。

Now let's go through the key titles during the quarter and in 2021. During the quarter, we ranked #1 for the number of new dramas launched in the industry according to Enlightent (foreign language). And we maintained the leading position in terms of market share of variety shows, cartoons and animation. For the full year 2021, our market share of movies, dramas, variety shows, cartoons and animations all ranked #1 and the number of new dramas launched was the highest in the industry.

現在讓我們回顧一下本季度和 2021 年的主要劇目。在本季度，我們根據 Enlightent（外語）在行業新劇推出數量方面排名第一。綜藝、動漫、動漫市場佔有率保持領先。 2021年全年，我們的電影、話劇、綜藝、動漫、動漫市場佔有率均排名第一，新劇上線數量位居行業第一。

One, for dramas, we focused on enriching and diversifying our IP monetization capabilities. For example, we are building the iQIYI Chinese Historic City Universe franchise, developing content, which is based on the traditional Chinese culture, showcasing the history of rich Chinese culture to the global user through diversified original productions. We debuted our first work in the franchise, as the original TV drama Feng Qi Luo Yang which generated immediate buzz among viewers. The popularity index of Feng Qi Luo Yang broke 9,000 on the second day of launch, become one of the top ranking hit dramas that achieved such high index score on our platform. In the future, we anticipate to develop a series of productions under the same concept to expand the franchise.

一是電視劇方面，我們專注於豐富和豐富我們的IP變現能力。例如，我們正在打造愛奇藝中國歷史名城宇宙系列，開發以中國傳統文化為基礎的內容，通過多元化的原創作品向全球用戶展示豐富的中國文化歷史。我們推出了我們的第一部作品，作為原創電視劇《風起洛陽》，立即引起了觀眾的熱烈反響。風起洛陽的熱度指數在開播第二天就突破了9000，成為我們平台上獲得如此高指數的頂級熱播劇之一。未來，我們預計將在同一概念下開發一系列產品以擴大特許經營權。

For the second season of Mist Theater, a number of titles were debuted in fourth quarter further enforced its brands influence among viewers. The monetization capability for the Mist Theater series has become an important growth driver for our membership service. Who is The Murderer generated the highest membership revenue among all titles. The success also attracted more advertising budget to our platform and demonstrated great flexibility in working with advertisers under the vertical theater model.

迷霧劇場第二季第四季度多部作品首映，進一步強化了其品牌在觀眾中的影響力。迷霧劇場系列的變現能力已成為我們會員服務的重要增長動力。 Who is The Murderer 在所有遊戲中產生了最高的會員收入。這一成功也為我們的平台吸引了更多的廣告預算，並展示了在垂直影院模式下與廣告商合作的極大靈活性。

Two, for variety shows, we continue to explore new genres and received praise from both industry professionals and audiences. For Q4, our original production, the Super Sketch Show (foreign language) maintained solid #1 in user time spent for the variety genre.

二是在綜藝節目方面，我們不斷探索新的類型，得到了業內人士和觀眾的一致好評。對於第四季度，我們的原創作品《超級素描秀》（外語）在用戶花費在綜藝類型上的時間保持穩定排名第一。

Three, for films, we continue to build our cloud cinema during the quarter, aiming to further expand monetization possibility and establishing a new online ecosystem for film distribution. For example, part of our original films were only released online via PVOD model and the initial success was encouraging. In 2021, we launched a total of 9 films under the PVOD model, among which our original film, Northeastern Brother (foreign language) was released in Q4 and was the second best performing PVOD film of the year [in terms of viewership and revenue contribution. For the full year 2021, we have launched diversified films in Cloud Cinema across different genres including comedy, action, suspense, thriller and others. Cloud cinema provides an open and fair platform for film distribution, which] significantly increase the supply of premium content and give talented content creators better exposure, thus achieving a win-win result for both film makers and our platform.

三、電影方面，本季度我們繼續建設雲影院，旨在進一步擴大變現可能性，建立新的電影發行在線生態系統。例如，我們的部分原創電影僅通過 PVOD 模式在線發布，初步成功令人鼓舞。 2021年，我們共推出了9部PVOD模式的電影，其中我們的原創電影《東北兄弟》（外語）於第四季度上映，是年度表現第二好的PVOD電影[在收視率和收入貢獻方面. 2021年全年，我們在雲影城推出了喜劇、動作、懸疑、驚悚等不同類型的多元化電影。雲影院為電影發行提供了一個公開、公平的平台，顯著增加了優質內容的供給，為優秀的內容創作者提供了更好的曝光度，從而實現了電影製作人和我們平台的雙贏。

For cartoons and animation, we also achieved substantial success in the fourth quarter. We introduced animation, Feng Qi Luo Yang, Shen Ji Shao Nian a project within the iQIYI Chinese Historic City Universe franchise and a good example that demonstrates our diversified IP monetization strategy. Its popularity index broke 4,000 within 13 hours of its launch, topping the chat on our platform.

在卡通和動畫方面，我們在第四季度也取得了實質性的成功。我們介紹了愛奇藝中國歷史名城宇宙系列中的動畫、風起落陽、沉記少年，這是展示我們多元化 IP 貨幣化戰略的一個很好的例子。上線 13 小時內，人氣指數突破 4000 點，位居平台熱度榜首。

Looking into 2022, one, for dramas. We will continue to improve the quality of our content portfolio, especially for our premium original production and build competitive barriers for our content ecosystem. The key is enforcing brand awareness, explore the brand value of vertical content and extend the content lifecycle by producing multi-season dramas and short series under the vertical theater model. We will continue to pursue achievements with our iQIYI Chinese Historic City Universe franchise. We now have 3 vertical theaters that provides differentiated content and services to our users, namely the suspense and mystery themed Mist Theater, the Romance themed Sweet On Theater and our newly launched comedy themed Laugh On Theater. We recently launched A Lifelong Journey (foreign language) on January 28, our first key drama for the year, and it has maintained a leading position in terms of effective viewership according to the latest Enlightent data.

展望 2022 年，一是電視劇。我們將繼續提高我們內容組合的質量，特別是我們的優質原創作品，並為我們的內容生態系統建立競爭壁壘。關鍵是強化品牌知名度，挖掘垂直內容的品牌價值，通過垂直影院模式下的多季劇集和短劇，來延長內容生命週期。我們將繼續通過我們的愛奇藝中國歷史名城宇宙專營權追求成就。我們現在擁有3個垂直影院，為用戶提供差異化的內容和服務，分別是懸疑和懸疑主題的迷霧影院、愛情主題的甜蜜劇場和我們新推出的喜劇主題的笑點劇場。我們最近在1月28日推出了年度第一部重點劇《一生的旅程》（外語版），根據最新的啟蒙數據，它在有效收視率方面一直保持領先地位。

Two, for variety shows, we will maintain our leadership position in this genre and focus on the categories that we have rich experiences with such as mystery style competition games, comedy, music and romance. And we will further innovate and develop shows in sports and performance competitions to meet the latest user demand.

二是綜藝節目，我們將保持在該類型的領先地位，並專注於我們有豐富經驗的類別，如神秘風格的競賽遊戲、喜劇、音樂和愛情。並且我們將進一步創新和發展體育和表演比賽的節目，以滿足最新的用戶需求。

Three, for films, we will upgrade the number of project, scales and genres of original films as compared to 2021. We anticipate to have 6 to 9 theatrical releases of our original films.

三是電影方面，我們將比2021年提升原創電影的項目數量、規模和類型。我們預計將有6至9部原創電影上映。

Four, for cartoons and animations, we will continue to cultivate and develop our IPs by making serialized productions. For example, our original cartoon Deer Squad (foreign language) is the first original Chinese animation broadcasted in Nickelodeon TV channel. It has become an instant hit and is already under multi-seasons development.

四、動漫方面，我們將繼續通過連載的方式來培育和發展我們的IP。例如，我們的原創動畫片《鹿小隊》（外語）是第一部在尼克國際兒童頻道播出的中國原創動畫。它已經一炮而紅，並且已經在多季節開發中。

Next, moving on to products and services. In the fourth quarter, iQIYI Lite achieved an outstanding performance across various operating metrics, in particular, peak DAU reached 5 million during the period. iQIYI Lite helps us in penetrating into lower-tier cities, and we are observing low user overlap between iQIYI Lite and our main APP and such overlap continues to decline. The consumption of library content is much higher on iQIYI Lite, showing different user behaviors between these 2 apps.

接下來，轉向產品和服務。第四季度，愛奇藝精簡版在各項運營指標上均取得了優異的成績，尤其是該期間的 DAU 峰值達到了 500 萬。愛奇藝精簡版幫助我們滲透到低線城市，我們觀察到愛奇藝精簡版與我們的主要應用程序之間的用戶重疊度較低，並且這種重疊度繼續下降。在愛奇藝精簡版上，圖書館內容的消費量要高得多，這兩個應用程序之間的用戶行為不同。

As for our interest-based community, Suike, continued to improve and enrich our content ecosystem. For the full year 2021, Suike contributed about 17% of user time spent on our platform. Interest-based video constitutes as one of the very important components of our content ecosystem. And since the cost of the content on Suike is relatively low, it eased out cost pressure to some extent. In addition, traffic generated by Suike contributed to the growth of the performance ads inventory, driving revenue growth. We hope the user-generated short-form videos will attract attention and drive consumption of respective long-form videos, creating a closed loop for our online video ecosystem.

至於我們的興趣社區，隨客不斷完善和豐富我們的內容生態系統。 2021 年全年，Suike 貢獻了大約 17% 的用戶在我們平台上花費的時間。基於興趣的視頻是我們內容生態系統中非常重要的組成部分之一。而穗客內容的成本相對較低，一定程度上緩解了成本壓力。此外，隨客帶來的流量促進了效果廣告存量的增長，推動了收入增長。我們希望用戶生成的短視頻能夠引起關注，帶動相應長視頻的消費，為我們的在線視頻生態系統打造一個閉環。

Special events in Q4. During the quarter, we optimized the organization structure and created a flatter organization structure that helped us to bring more focus back to our core business and increase the efficiency of our operations. As a result, there was a nonrecurring severance costs recorded in the fourth quarter. By optimizing the organization structure, we have assembled a more elite team, which enables us to better focus on our core business and improve operational efficiency.

第四季度的特別活動。本季度，我們優化了組織架構，打造了更扁平化的組織架構，幫助我們將更多的精力重新集中到核心業務上，提高了運營效率。因此，第四季度記錄了非經常性遣散費。通過優化組織架構，我們凝聚了更精銳的團隊，使我們能夠更好地專注於核心業務，提高運營效率。

To summarize, we have seen initial positive effects from our cost optimization and organizational alignment. Despite the turbulence in the past year, we still maintained our market leadership, while dramatically improved our business performances. We will keep enriching and improving the quality of our diversified content portfolio, refining operations of our vertical content theater model, improving the efficiency of content investment, and cultivating a content ecosystem that grows our community culture. In addition, we aim to continue increasing our penetration in different geographies and user cohorts through iQIYI Lite, large screens, and overseas business initiatives. As a result, our fundamentals will continue to improve. Again, our goal is to reach non-GAAP operating break-even for the full year of 2022 and to reach quarterly non-GAAP operating breakeven as soon as possible. We have strong confidence and looking forward to bring everyone a better and healthier iQIYI in 2022.

總而言之，我們已經從成本優化和組織調整中看到了初步的積極影響。儘管過去一年經歷了動盪，但我們仍然保持了市場領先地位，同時大幅提升了我們的業務表現。我們將不斷豐富和提升多元化內容組合的質量，完善垂直內容影院模式的運營，提高內容投資效率，培育社區文化的內容生態系統。此外，我們的目標是通過愛奇藝精簡版、大屏幕和海外業務計劃，繼續提高我們在不同地區和用戶群中的滲透率。因此，我們的基本面將繼續改善。同樣，我們的目標是在 2022 年全年實現非 GAAP 運營盈虧平衡，並儘快達到季度非 GAAP 運營盈虧平衡。我們有堅定的信心，期待在2022年為大家帶來更好、更健康的愛奇藝。

Now I will hand over to Mr. Jun Wang to go through our financials.

現在我將交給王軍先生來檢查我們的財務狀況。

Thanks, Tim. Now let me walk you through our key financials for the fourth quarter. In this quarter, we introduced the concept of non-GAAP operating loss for the very first time. We believe it will help our shareholders to better understand and track our business performances.

謝謝，蒂姆。現在讓我向您介紹我們第四季度的主要財務狀況。在本季度，我們首次引入了非公認會計準則營業虧損的概念。我們相信這將有助於我們的股東更好地了解和跟踪我們的業務表現。

So starting with revenues. In fourth quarter, our total revenues reached RMB 7.4 billion, a solid performance considering macro headwind. Our Membership Services revenue increased by 7% year-over-year, mainly driven by the growth of ARM, or average revenue per membership. Our fourth quarter ARM increased by 14% annually and 4% sequentially. We expect the momentum to continue going forward.

所以從收入開始。第四季度，我們的總收入達到人民幣 74 億元，考慮到宏觀逆風，表現穩健。我們的會員服務收入同比增長 7%，主要受 ARM 增長或每位會員平均收入的推動。我們的第四季度 ARM 每年增長 14%，環比增長 4%。我們預計這一勢頭將繼續向前發展。

Next, moving to the cost and expenses. With all initiatives previously explained, the fourth quarter cost of revenue decreased by RMB 277 million compared with the same time last year, the major contributor to the narrow of our operating losses. On the other hand, our operating expenses also decreased by RMB 125 million, down by 6% year-over-year, along with onetime severance costs. As a result, our fourth quarter non-GAAP operating loss decreased significantly, down 45% annually, from RMB 941 million to RMB 516 million, representing a saving of RMB 425 million. Compared with the previous quarter, the non-GAAP operating loss is also narrowed by RMB 557 million or 52% down sequentially.

接下來，轉移到成本和費用。綜合上述各項舉措，第四季度營收成本同比減少人民幣2.77億元，是我們經營虧損收窄的主要原因。另一方面，我們的營業費用也減少了1.25億元，同比下降6%，還有一次性遣散費。因此，我們第四季度的非公認會計準則營業虧損大幅下降，同比下降 45%，從人民幣 9.41 億元降至人民幣 5.16 億元，節省了人民幣 4.25 億元。與上一季度相比，非美國通用會計準則營業虧損也縮小了人民幣5.57億元，環比下降52%。

Heading into the first quarter of 2022, we expect to see further significant improvements in both GAAP and non-GAAP operating losses compared with the fourth quarter 2021. Again, this benefits from our initiatives in cost optimization and efficiency improvement. Our goal is to reach non-GAAP operating breakeven for the full year of 2022 and to reach quarterly non-GAAP operating breakeven as early as possible.

進入 2022 年第一季度，與 2021 年第四季度相比，我們預計 GAAP 和非 GAAP 運營虧損將進一步顯著改善。這再次受益於我們在成本優化和效率提高方面的舉措。我們的目標是在 2022 年全年實現非 GAAP 運營盈虧平衡，並儘早實現季度非 GAAP 運營盈虧平衡。

As of December 31, 2021, the company had a cash, cash equivalents, restricted cash and short-term investments of RMB 4.4 billion. For detailed financial data, please refer to our press release on our IR website.

截至2021年12月31日，公司持有現金、現金等價物、受限現金及短期投資人民幣44億元。有關詳細的財務數據，請參閱我們在 IR 網站上發布的新聞稿。

Now I will open the floor for Q&A.

現在我將開始問答環節。

(Operator Instructions) The first question comes from the line of Alicia Yap from Citi.

（操作員說明）第一個問題來自花旗的 Alicia Yap。

(foreign language) My questions is related to the cost and the profitability, it seems like you have successfully narrowed down your loss ratio over the past few quarters. Can management elaborate how the company has managed to effectively lower the operating losses. I mean you mentioned about the full year breakeven time frame. So is that indicating you it's possible that you can even achieve profitability as soon as even second quarter or even the third quarter?

（外語）我的問題與成本和盈利能力有關，看來您在過去幾個季度成功地縮小了虧損率。管理層能否詳細說明公司如何有效降低經營虧損？我的意思是你提到了全年盈虧平衡時間框架。那麼這是否表明您甚至有可能在第二季度甚至第三季度實現盈利？

(foreign language) [Interpreted] In the fourth quarter, we proactively adjusted our operating strategy, which focuses on optimizing cost and improving operating efficiency to reduce our operating loss overall. The results have been very encouraging, and we also optimized our organization alignment which will help to reduce our employee cost and also create a flatter operation and more elite team to help us to focus on the core business of iQIYI and also to improve the overall operating efficiencies.

（外語） 【解讀】第四季度，我們積極調整經營策略，重點優化成本，提高經營效率，整體降低經營虧損。結果非常令人鼓舞，我們還優化了組織架構，這將有助於降低員工成本，也將創建一個更扁平化的運營和更多的精英團隊，幫助我們專注於愛奇藝的核心業務，並提高整體運營效率。

On the content side, we are more focusing on the head premium high-quality content. And for that aspect, we won't decrease the number of head content, but we will use content-related cost ratio to help us to identify the low-performing content and proactively drop those content investments.

在內容方面，我們更注重頭部優質的內容。而在這方面，我們不會減少頭部內容的數量，但我們會使用內容相關的成本比來幫助我們識別表現不佳的內容，並主動放棄那些內容投資。

Overall, our process for investment, procurement and operations will be refined to overall increase the operating efficiency. We also built a promotional mechanism that focuses on increasing the revenue performance of the library content. It increases the content portfolio utilization also creating more inventory for the advertising side and also prolongs the life span of our content as well as increasing the subscriber revenue.

總體而言，我們將細化投資、採購和運營流程，全面提昇運營效率。我們還建立了一個推廣機制，專注於提高圖書館內容的收入表現。它增加了內容組合的利用率，也為廣告方面創造了更多的庫存，也延長了我們內容的生命週期以及增加了訂閱者收入。

And more importantly, for the video industrialization that we've been talking about, whether it's from the short-term and mid-term and long-term perspective, it's a core focus for our area. We'll continue to push for industrialization as it creates efficiency for content production and operations.

更重要的是，對於我們一直在談論的視頻產業化，無論是從短期、中期還是長期來看，都是我們這個領域的核心關注點。我們將繼續推動產業化，因為它為內容生產和運營創造了效率。

So the whole premise is to remain stable revenue performance and also remain stable market share as well as traffic, and we will lower the employee cost, also trying to reduce the content costs and also the marketing expenses.

所以整個前提是保持穩定的營收表現，同時保持穩定的市場份額和流量，我們會降低員工成本，同時努力降低內容成本和營銷費用。

Okay. So for Q4, all the investors will see, we have reduced our content costs as well as operating expenses, and narrowed our [non-GAAP Op loss by] (corrected by the company after the call) approximately RMB 500 million. And these positive impacts will continue to release in the next couple of quarters. As you mentioned about breakeven timetable, first, I would like to mention that we will deliver our goal for the year. Our goal for the year is being we'll try to reach non-GAAP operating breakeven for the full year of 2022 and to reach quarterly breakeven on a non-GAAP operating level as soon as possible. Yes. Operator?

好的。因此，對於第四季度，所有投資者都會看到，我們降低了內容成本和運營費用，並將我們的 [non-GAAP Op loss by]（由公司在電話會議後更正）縮小了約 5 億元人民幣。而這些積極影響將在未來幾個季度繼續釋放。正如你提到的盈虧平衡時間表，首先，我想提一下，我們將實現今年的目標。我們今年的目標是努力在 2022 年全年實現非 GAAP 運營盈虧平衡，並儘快在非 GAAP 運營水平上實現季度盈虧平衡。是的。操作員？

The next questions will come from the line of Thomas Chong of Jefferies.

接下來的問題將來自 Jefferies 的 Thomas Chong。

(foreign language) My question is about the competitive landscape for the long-form video market. Is management seeing any changes that we need to anticipate in 2022? And number two is more about the content production and procurement side. Are we getting more and more rational going forward? And finally, in -- on the policy or the regulatory environment side, are we seeing the sector is getting more stable? And what we should expect are any policies that may come out in the future?

（外語）我的問題是關於長視頻市場的競爭格局。管理層是否看到我們需要在 2022 年預期的任何變化？第二個更多是關於內容製作和採購方面。我們是不是越來越理性了？最後，在政策或監管環境方面，我們是否看到該行業變得更加穩定？我們應該期待的是未來可能出台的任何政策？

(foreign language) [Interpreted] Okay. So for the overall competitive landscape for online video industry, we think, is entering a new chapter. Within this chapter, we focus more on the efficiency aspect, and hoping to reduce our operating loss and increase the profitability. So this is kind of different compared to the competitive landscape from before. And before, driven by various reasons, the major players are more focused on the quantity of the content versus the quality and et cetera, et cetera. So -- and we think that the operating focus now is back to the operating efficiency, is much more healthy as compared to the market share-driven aspect.

（外語）[翻譯]好的。因此，我們認為在線視頻行業的整體競爭格局正在進入新的篇章。在本章中，我們更多地關注效率方面，並希望減少我們的經營虧損並增加盈利能力。因此，與以前的競爭格局相比，這有點不同。而在此之前，由於各種原因，主要參與者更關注內容的數量而不是質量等等。所以 - 我們認為現在的運營重點是運營效率，與市場份額驅動方面相比要健康得多。

For the content side, I think for content production, whether it's for the original production, is very different from the licensing content. Overall, the competitiveness within the industry should be relatively softer. Why? Because it -- for -- the process with this is much longer as compared to the procurement for the license content. So there are various key status or key points that we can hit among the lines of this whole process. It gives us more leeway in increasing the overall quality of our original production.

在內容方面，我認為對於內容製作來說，無論是原創製作，都與授權內容有很大的不同。整體來看，行業內的競爭力應該會相對軟一些。為什麼？因為它——因為——與許可證內容的採購相比，這個過程要長得多。因此，在整個過程中，我們可以找到各種關鍵狀態或關鍵點。它使我們在提高原始產品的整體質量方面有更多的餘地。

And third, regarding for the policies, right now, we think it's relatively stable. And as we have better comprehension of the whole online video regulation and industry and regulatory environment, we know the boundaries of content production as well as content scheduling. So the forecast capability increases overall. And that will help in terms of our subscriber growth as well as on the advertising revenue side.

第三，關於政策，目前我們認為是比較穩定的。隨著我們對整個網絡視頻監管和行業監管環境有了更深入的了解，我們知道了內容生產和內容調度的邊界。因此，預測能力總體上提高了。這將有助於我們的訂戶增長以及廣告收入方面。

And in the past 2 or 3 years, our strategy focus has been in expanding our original production scale and also improving the production capability. So in 2022, everyone will see our original production capability and as far as the supply will increase significantly compared to before. And I think we now have an industry-leading team and also a good number of highly-competitive original production in our pipeline. Thank you.

而在過去的兩三年裡，我們的戰略重點一直是擴大我們原有的生產規模，同時提高生產能力。所以在2022年，大家都會看到我們原有的生產能力，就供應而言，比以前有明顯的增加。而且我認為我們現在擁有一支行業領先的團隊，並且我們的管道中還有大量競爭激烈的原創作品。謝謝你。

Next question comes from Eddie Leung of Bank of America Merrill Lynch.

下一個問題來自美銀美林的 Eddie Leung。

(foreign language) So my question is about the membership growth. We have seen a bit of a slowdown last year probably related to regulation and content issues. Just wondering any outlook for the membership growth into this year and the future?

（外語）所以我的問題是關於會員的增長。去年我們看到了一些放緩，可能與監管和內容問題有關。只是想知道今年和未來的會員增長前景如何？

(foreign language) [Interpreted] Okay. For our overall member subscriber, we have seen some relatively pressures in growing the overall membership numbers because there's different aspects. One is there's the COVID impact as far as, second, the regulatory environment uncertainties and third is our overall video production capabilities. So all these are the negative impacts that will contribute somewhat to our overall membership growth.

（外語）[翻譯]好的。對於我們的整體會員訂戶，我們在增加整體會員數量方面看到了一些相對壓力，因為有不同的方面。一是 COVID 的影響，二是監管環境的不確定性，三是我們的整體視頻製作能力。因此，所有這些都是負面影響，將對我們的整體會員增長有所貢獻。

And secondly, I think for the overall online video -- long-form online video, the user time spent have been decreasing, that is a true factor for the market, but we want to raise that the importance of online video industry, the long-form video, we think, is a core need for human beings. And the importance is irreplaceable. I think for the overall Chinese online video market as well as the users, the market is being more mature, and this is a positive impact and positive factor for the overall industry.

其次，我認為對於整個在線視頻——長篇在線視頻，用戶花費的時間一直在減少，這是市場的一個真實因素，但我們要提出在線視頻行業的重要性，長我們認為，形式視頻是人類的核心需求。而且重要性是不可替代的。我認為對於整個中國網絡視頻市場和用戶來說，市場正在變得更加成熟，這對整個行業來說是一個積極的影響和積極因素。

And third, for the large screens as we see, namely the iPad, the screens in the car as well as the [smart displays] (corrected by the company after the call), the number of screens have been increasing. There are different user behaviors for different screens. For example, for the cell phone, the most frequent use aspect is communication. But versus the large screens, I think the most used feature is for video viewing experience. So overall, this is a very positive impact or a factor that would drive a future potential revenue growth as well as the subscriber growth as well as the ARM that we mentioned before.

第三，對於我們看到的大屏幕，即iPad、車載屏幕以及[智能顯示器]（由公司在電話後糾正），屏幕的數量一直在增加。不同的屏幕有不同的用戶行為。例如，對於手機來說，最頻繁的使用方面是通信。但與大屏幕相比，我認為最常用的功能是視頻觀看體驗。所以總的來說，這是一個非常積極的影響或一個因素，將推動未來潛在的收入增長以及用戶增長以及我們之前提到的 ARM。

And overall, lastly, for the IP production, we are seeing better improvement on this front, especially for the long-form video IP production. So all these will be beneficial factors to contribute to the overall growth of our revenue in the future. Thank you.

最後，總體而言，在 IP 製作方面，我們看到了這方面的更好改進，尤其是在長視頻 IP 製作方面。因此，所有這些都將成為有助於我們未來收入整體增長的有利因素。謝謝你。

Due to the time constraints, I would now like to hand the call back to the management for closing.

由於時間限制，我現在想將電話交回管理層以完成結案。

Thank you for joining us today. Feel free to reach out to us if you have further questions. Thank you.

感謝您今天加入我們。如果您還有其他問題，請隨時與我們聯繫。謝謝你。

That does conclude today's conference call. Thank you for your participation. You may now disconnect the lines.

這確實結束了今天的電話會議。感謝您的參與。您現在可以斷開線路。

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

[此成績單中標記為 [已翻譯] 的部分由現場通話中的口譯員朗讀。]