(IQ) 2023 Q4 法說會逐字稿

Good day and welcome to the iQIYI Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

大家好，歡迎參加愛奇藝第四季及 2023 財年財報電話會議。 （操作員說明）請注意，正在記錄此事件。

I would now like to turn the conference over to Ms. Chang Yu, IR Director. Ms. Yu, the floor is yours, ma'am.

現在我請IR總監張宇女士主持會議。於女士，女士，地板是您的。

Thank you, operator. Hello, everyone, and thank you for joining iQIYI's Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. The company's results were released earlier today and available on the company's Investor Relations website at ir.iqiyi.com.

謝謝你，接線生。大家好，感謝您參加愛奇藝第四季及2023財年獲利電話會議。該公司的業績於今天稍早發布，並可在該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; 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, the management team will participate in the Q&A section.

今天參加電話會議的是我們的創辦人、董事兼執行長龔宇先生；王軍先生，我們的財務長；王曉輝先生，我們的 CCO、首席內容長；劉文峰先生，我們的CTO、技術長；段友橋先生，會員業務資深副總裁；楊向華先生，電影及海外業務資深副總裁。龔先生將簡要介紹公司的業務運作和亮點，隨後由君介紹財務狀況。準備好的發言結束後，管理團隊將參加問答環節。

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 risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our 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做出的前瞻性陳述。前瞻性陳述受到風險和不確定性的影響，可能導致實際結果有所不同與我們目前的預期相差很大。潛在風險和不確定性包括但不限於我們向 SEC 公開提交的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聲明的義務。

I will now pass the floor to Mr. Gong. Please go ahead.

現在請龔先生發言。請繼續。

Hello, everyone. Thank you for joining us today. After an iconic turnaround in 2022, we continued our success in 2023, delivering the best-performing year in the Company's history by focusing on high-quality growth. Both total revenue and non-GAAP operating profit in 2023 increased double-digit year-over-year and reached historical-high despite macro headwind. More importantly, our growth in profits substantially surpassed that of revenues. This demonstrated the resilience of our businesses and our operational excellence.

大家好。感謝您今天加入我們。在經歷了 2022 年標誌性的轉變之後，我們在 2023 年繼續取得成功，透過專注於高品質成長，實現了公司歷史上表現最好的一年。儘管面臨宏觀阻力，2023 年總營收和非 GAAP 營業利潤均較去年同期成長兩位數，並創下歷史新高。更重要的是，我們的利潤成長大大超過了收入的成長。這證明了我們業務的彈性和卓越的營運能力。

Let’s take a closer look at the key metrics in 2023: total revenues reached RMB31.9 billion, up 10% annually. Non-GAAP operating profit reached over RMB3.6 billion, up 68% annually; and non-GAAP net profit exceeded RMB2.8 billion, up 121% annually. We generated a sizable total free cash flow of RMB3.3 billion in 2023, which improved our liquidity position, allowing us to make investment to drive future growth. All four above-mentioned key metrics hit record-setting high. It became very clear that the Company was following the right course, offering sustainable value growth for our stakeholders.

讓我們仔細看看2023年的關鍵指標：總收入達到人民幣319億元，較去年同期成長10%。非美國通用會計準則營業利潤超過人民幣36億元，較去年同期成長68%；非美國通用會計準則淨利超過人民幣28億元，較去年同期成長121%。 2023年，我們產生了33億元的可觀自由現金流，這改善了我們的流動性狀況，使我們能夠進行投資以推動未來成長。上述四項關鍵指標均創歷史新高。很明顯，公司正在走正確的道路，為我們的利害關係人提供可持續的價值成長。

Our exceptional financial results mirror our solid leadership in China’s long-form video industry. Our capacity for consumer engagement, viewership market share, creative content production and technological innovation is second-to-none. Indeed, in consumer surveys, iQIYI stood out as the signature brand for providing "top-tier content." This was supported by viewership market data as well. According to Enlightent, we were ranked #1 in drama viewership share for 3 consecutive years. Notably in 2023, we broadcasted 7 out of the top 10 most viewed new dramas in the market. In addition to drama category, we also dominated the online movie streaming segment with a total viewership share of 47%.

我們卓越的財務表現反映了我們在中國長視訊產業的穩固領導地位。我們在消費者參與度、收視率市場份額、創意內容製作和技術創新方面的能力是首屈一指的。事實上，在消費者調查中，愛奇藝因提供「頂級內容」而脫穎而出。收視率市場數據也支持了這一點。根據Enlightent的數據，我們連續三年在電視劇收視份額中排名第一。值得注意的是，2023 年，市場收視率最高的 10 部新劇中有 7 部是我們播出的。除電視劇類別外，我們還在線上電影串流領域佔據主導地位，總收視份額達到 47%。

Our market share leadership is deeply rooted in our unique capacity to produce original, premium content. In 2023, iQIYI Originals accounted for over 65% of our key dramas released, an annual record in our history. The original production capability not only guaranteed us a steady, exclusive supply of premium content, it also optimized our cost efficiency, measured by an operational metric known as the "content-related cost ratio." For drama category in 2023, this ratio improved 12 percentage points compared to 2022. The notable increase in efficiency translated directly into an increase in our profits. That is why our original capability is often recognized as the most important defensive barrier protecting our business.

我們的市佔率領先地位深植於我們製作原創優質內容的獨特能力。 2023年，愛奇藝原創播出的重點影集佔比超過65%，創歷史新高。原有的製作能力不僅保證了我們穩定、獨家地供應優質內容，還優化了我們的成本效率（透過稱為「內容相關成本比」的營運指標來衡量）。對於2023年的戲劇類別，這一比率比2022年提高了12個百分點。效率的顯著提高直接轉化為我們利潤的增長。這就是為什麼我們的原始能力經常被認為是保護我們業務的最重要的防禦屏障。

Meanwhile, we are also the leader driving technology innovation in long-form video industry, industrializing the content production process, and upgrading users’ entertainment experiences. For example, we developed "iQIYI Content Production Management System," a highly efficient data-driven system that recorded every crucial aspect of the entire content production process. This system, together with Generative AI, would meaningfully improve the hit ratio while enhancing the production and operation efficiency.

同時，我們也是推動長影片產業技術創新、內容生產流程工業化、升級使用者娛樂體驗的領導者。例如，我們開發了“愛奇藝內容生產管理系統”，這是一個高效的數據驅動系統，記錄了整個內容生產過程的每個關鍵環節。該系統與生成式人工智慧一起，將有意義地提高命中率，同時提高生產和營運效率。

One more example of our technology leadership is "eXave MAX," a standard we pioneered to deliver the ultimate cinematic like experiences on certified TV devices, covering more than 19,000 episodes of content across 157 TV models.

我們技術領先地位的另一個例子是“eXave MAX”，這是我們首創的一項標準，旨在在經過認證的電視設備上提供終極電影般的體驗，涵蓋 157 種電視型號的 19,000 多集內容。

Being a leader means constantly having our eyes on what's ahead, not the past, and thinking more about long-term strategies, rather than short-term gains. As the management team, what really matters to us is the potential returns our entire content portfolio could yield in the next several years, and whether we can find systematic approach to improve that ROI either by technological advancement or by upgrading our content creation and management process.

成為領導者意味著我們必須不斷關注未來，而不是過去，更多地考慮長期策略，而不是短期收益。作為管理團隊，對我們來說真正重要的是我們的整個內容組合在未來幾年內可能產生的潛在回報，以及我們是否可以找到系統的方法來透過技術進步或升級我們的內容創建和管理流程來提高投資報酬率。

This perspective is a sharp departure from the public's conventional way of measuring our success by the number of hit titles in a specific quarter. But we firmly believe that this perspective best upholds our long-term leadership in the industry. Likewise, when we notice quarterly a fluctuation in our subscriber numbers, it motivates us to boost the quality of our content and better our services, to further engage underserved demographics like seniors and youth, so as to improve long-term retention and ARM. We firmly believe that by addressing these fundamental, long-term challenges, we would be able to grow our value to users, partners and investors in a sustainable manner.

這種觀點與大眾透過特定季度的熱門遊戲數量來衡量我們成功的傳統方式截然不同。但我們堅信，這種觀點最能維護我們在業界的長期領導地位。同樣，當我們注意到訂戶數量的季度波動時，它會激勵我們提高內容品質和更好的服務，進一步吸引老年人和青少年等服務不足的人群，從而提高長期保留率和 ARM。我們堅信，透過解決這些根本性的長期挑戰，我們將能夠以永續的方式為用戶、合作夥伴和投資者增加價值。

Looking forward to 2024, we remain committed to our long-term vision and continue to focus on high-quality growth. Our key priorities include strengthening our current market position in core content categories such as dramas and movies, improving our competencies in additional vertical genres such as kid's cartoon and animations to enhance our capabilities in incremental areas, integrating cutting-edge technologies to increase efficiency in content production and operational execution, enriching the user experience, and last but not least, exploring new markets and business opportunities.

展望2024年，我們依然堅定長遠願景，持續聚焦高品質成長。我們的重點工作包括鞏固目前在電視劇、電影等核心內容品類的市場地位，提高在兒童卡通、動漫等其他垂直類型領域的能力，增強增量領域的能力，整合前沿技術以提高內容效率生產和運營執行，豐富使用者體驗，最後但並非最不重要的是，探索新的市場和商機。

Now let me walk you through the details of our core business segments, starting with membership services. Our goal for the membership services business is to drive long-term and sustainable membership revenue growth, and our focus extends beyond merely the quarterly net additions. Membership revenue is driven by three components, namely, ARM, subscriber life-time and subscriber base. ARM and subscriber life-time are our current key focus in driving the long-term economic value of membership services.

現在讓我向您介紹我們的核心業務部門的詳細信息，從會員服務開始。我們的會員服務業務目標是推動長期、可持續的會員收入成長，我們的重點不僅僅是季度淨增量。會員收入由三個組成部分驅動，即 ARM、訂閱者生命週期和訂閱者基礎。 ARM 和用戶生命週期是我們目前推動會員服務長期經濟價值的重點。

In 2023, our membership services revenue exceeded RMB20 billion, up 15% compared to 2022, driven by increases in both ARM and subscriber base. For Q4, membership services revenue reached RMB4.8 billion, up slightly year over year. ARM maintained sequential growth for five consecutive quarters, and hit record high of RMB15.98 in Q4, up 13% annually and 3% sequentially.

2023年，在ARM和用戶群成長的推動下，我們的會員服務收入超過200億元人民幣，較2022年成長15%。第四季，會員服務收入達人民幣48億元，較去年同期小幅成長。 ARM連續五個季度保持季增，並在第四季度創下人民幣15.98元的歷史新高，較去年同期成長13%，季增3%。

We believe our ARM has ample room to grow in the future. First, the monthly membership fee for the industry is still very affordable compared with other affordable discretionary spending, such as movie tickets, coffee, and a Happy Meal in quick-service restaurants.

我們相信我們的ARM未來有足夠的發展空間。首先，與電影票、咖啡和快餐店的開心樂園餐等其他可負擔的可自由支配支出相比，該行業的每月會員費仍然非常實惠。

With more premium content, and higher perceived value, users' willingness to pay would increase, allowing us to strategically scale back on discounts. Additionally, our innovative value-added services, including Express Package, offline events, and merchandise benefits show promising potential. In Q4, we launched Express Package for 6 drama series, and saw a nearly 50% sequential increase in the number of participants. Members redeeming points for access increased by 40% sequentially, and cash purchases by members increased by 250% sequentially.

隨著更多優質內容和更高的感知價值，用戶的支付意願將會增加，使我們能夠策略性地縮減折扣。此外，快遞包裹、線下活動、商品福利等創新加值服務也展現出巨大的潛力。第四季度，我們推出了 6 部劇集的特快套餐，參與人數較上季成長近 50%。會員兌換積分訪問的數量環比增加了 40%，會員現金購買的數量環比增加了 250%。

Furthermore, our premium membership options are designed to entice users to higher tiers, tapping into greater monetization potential. For example, in Q4, events like the Story of Kunning Palace, fan meeting and the 2023 iQIYI Scream Night provided opportunities for loyal, long-term members particularly those on the S-Diamond plan, to win event tickets through exclusive draws. This has led to a shift with members upgrading from the standard Gold plan to the higher-end Platinum and S-Diamond plans which, although more expensive, offer enhanced privileges.

此外，我們的高級會員選項旨在吸引用戶進入更高級別，並挖掘更大的貨幣化潛力。例如，第四季度，坤寧宮故事、粉絲見面會和2023年愛奇藝尖叫之夜等活動為忠實的長期會員，特別是S-鑽石計劃的會員，提供了通過獨家抽獎贏得活動門票的機會。這導致會員從標準黃金計劃升級到更高端的白金和 S-鑽石計劃，這些計劃雖然價格更高，但提供更多特權。

The average daily subscribers for Q4 was 100.3 million, with the quarter-end number higher than the daily average for the quarter. Our content continued to captivate subscribers, the subscriber mix has improved compared to the same period last year, with a substantial increase in the proportion of annual plans. With a strong content slate for 2024, we are confident that the number of dramas breaking the 10,000 popularity index score will surpass that of 2023. Premium content should naturally set to fuel our revenue growth.

第四季日均訂閱用戶數為 1.003 億，季末數字高於當季日均訂閱用戶數。我們的內容持續吸引訂閱者，訂閱者結構較去年同期有所改善，包年套餐佔比大幅提升。憑藉 2024 年的強勁內容，我們有信心突破 10,000 部人氣指數的劇集數量將超過 2023 年。優質內容自然會推動我們的收入成長。

For 2024, we are taking a number of steps to strengthen our membership services business. First, we will offer more differentiated products tailored to different user cohorts, and provide value-for-money member experience. Second, to optimize content scheduling, marketing and operations to attract new members while increasing member retention. Third, keep improving the loyalty program to incentivize users to choose long-term, premium, and auto-renewing plans. Such initiatives will further boost member stickiness and increase life-time value.

2024 年，我們將採取一系列措施來加強我們的會員服務業務。一是針對不同用戶群推出更多差異化產品，提供物超所值的會員體驗。其次，優化內容安排、行銷和運營，以吸引新會員，同時提高會員保留率。第三，不斷完善忠誠度計劃，激勵用戶選擇長期、優質、自動續費的套餐。此類措施將進一步增強會員黏性並增加終身價值。

Moving on to content. Our consistent market leadership in core content genres has solidified our reputation as "a diversified and high-quality premium content powerhouse." Original programming remains the cornerstone of our content strategy and a key revenue driver. We have made remarkable advancements in the quality of our original productions. In 2023, original content contributed 80% of the total revenue from key new dramas during the new-release period. And that's not all. For 7 straight quarters, over half of our revenue for new key dramas has come from original titles.

繼續內容。我們在核心內容類型上持續的市場領先地位鞏固了我們作為「多元化、高品質優質內容巨頭」的聲譽。原創節目仍然是我們內容策略的基石和關鍵的收入驅動力。我們在原創產品的品質方面取得了顯著的進步。 2023年，原創內容貢獻了重點新劇新上映期間總收入的80%。這還不是全部。連續 7 個季度，我們新重點劇集的收入中有一半以上來自原創作品。

Additionally, our content efficiency has largely improved. Our "content-related cost ratio" for dramas has improved for the third consecutive year, decreasing by 12 percentage points since last year. That's a clear mark of progress in enhancing our cost structure and ultimately, our bottom line. This is underpinned by our sophisticated content production and operation mechanism, which maximize the efficiency of our content investments while sparking the creation of innovative new titles. Our "iQIYI Content Production Management System" lies at the heart of this process, empowering our teams to deliver top-tier programming with remarkable efficiency with effective resource allocation and program management at every step.

此外，我們的內容效率也大大提高了。電視劇的「內容成本率」連續第三年改善，比去年下降了12個百分點。這是在改善我們的成本結構並最終改善我們的利潤方面取得進展的明顯跡象。這是由我們複雜的內容生產和營運機制所支撐的，它最大限度地提高了我們內容投資的效率，同時激發了創新新遊戲的創作。我們的「愛奇藝內容製作管理系統」是這項流程的核心，使我們的團隊能夠透過每一步的有效資源分配和節目管理，以驚人的效率交付頂級節目。

In addition, we give our creative talent enough flexibility to really push the envelope with their innovative ideas. The blend of robust content management and creative liberty allows us to consistently deliver high-quality content so efficiently, it's the secret sauce to our content strategy.

此外，我們也為我們的創意人才提供足夠的靈活性，讓他們能夠透過創新想法真正突破極限。強大的內容管理和創意自由的結合使我們能夠持續有效地提供高品質的內容，這是我們內容策略的秘密武器。

Accordingly, we have seen a consistent flow of premium content, and hit ratio for our entire content portfolio improved. For example, in 2023, there were more titles with popularity index scores of 9,000 and above, up 71% compared to 2021, reflecting a steady improvement in content quality. Additionally, over 70% of our key drama releases in 2023 met or surpassed our expectations.

因此，我們看到優質內容的持續流動，並且我們整個內容組合的點擊率有所提高。例如，2023年，人氣指數9000及以上的圖書數量增多，較2021年增加71%，反映出內容品質的穩定提升。此外，我們在 2023 年發布的重點劇集中有超過 70% 達到或超越了我們的預期。

Moving on to detailed content performance in Q4 2023. For dramas, Story of Kunning Palace (foreign language) was a great success as our first fully in-house produced original to reach a popularity index score of 10,000, leading the industry viewership during its run. Another drama that also reached a popularity index of 10,000 was A Journey to Love (foreign language), which set the record for the best opening-day viewership in 2023. During the quarter, the new season of Mist Theater returned. The success of Lonely Warrior (foreign language) consolidated our leadership in the suspense genre, reaching a peak popularity index of more than 9,800, a record high for the Mist Theater and the 24-episode short drama category. Other premium titles in Q4 included The Fearless (foreign language), Romance of the Farm (foreign language), and Tiger Crane (foreign language), showcasing the diverse range of our drama portfolio.

接下來是2023年第四季的詳細內容表現。電視劇方面，《坤寧宮故事》（外語）取得了巨大成功，成為我們第一部完全自主製作的原創劇，熱度指數達到10,000，播出期間收視率領先產業。另一部熱度指數同樣破萬的劇是《愛情之旅》（外語），創下2023年首日最佳收視紀錄。本季，迷霧劇場新一季回歸。 《孤獨的戰士》（外語）的成功鞏固了我們在懸疑類型片中的領先地位，最高人氣指數達到9800以上，創下了迷霧劇場和24集短劇類別的歷史新高。第四季度的其他優質劇目包括《霍元甲》（外語）、《農莊奇緣》（外語）和《虎鶴》（外語），展示了我們戲劇作品的多元化。

For movies, we maintained a leading viewership share in Q4 as per Enlightent. Our movie channel featured 20 major releases, many topping the box office charts. Additionally, we are happy to see the recovery of the offline movie market, and four of iQIYI's original theatrical films garnered box office revenues of over RMB100 million in 2023.

對於電影，根據 Enlightent 的數據，我們在第四季度保持了領先的收視率份額。我們的電影頻道精選了 20 部主要影片，其中許多都名列票房榜首。此外，我們欣喜地看到線下電影市場的復甦，愛奇藝原創院線電影2023年有四部票房過億元。

Our original strategy extends across all content genres. In animation, we largely scaled up original content in 2023, doubling the number of original titles launched and posting a 90% increase in revenue contribution compared to 2022. For kid's cartoon, we now have 11 original IPs, 8 of which were multi-season. Notably, Princess Doremi Season 3 was named the Best 3D Animated Program at the 28th Asian Television Awards, which is one of the largest entertainment, content, and broadcast awards in the Asia Pacific, demonstrating our expanded influence in overseas markets.

我們最初的策略涵蓋所有內容類型。在動畫方面，我們在2023年大幅增加了原創內容，推出的原創作品數量增加了一倍，收入貢獻比2022年增長了90%。在兒童卡通方面，我們現在擁有11個原創IP，其中8個是多季的。值得注意的是，《哆來米公主》第三季榮獲第28屆亞洲電視獎最佳3D動畫節目獎，該獎項是亞太地區最大的娛樂、內容和廣播獎項之一，體現了我們在海外市場影響力的不斷擴大。

Next, let's take a look at our content pipeline in 2024. For dramas, our goal is to deliver diversified and high-quality content on continuous basis. We are increasing investments in premium programs while keeping the total number of titles relatively stable. Our content slate includes ancient costume dramas such as the highly-anticipated Fox Spirit Matchmaker (foreign language) series, Burning Flames (foreign language), Follow Your Heart (foreign language), Moon Embracer (foreign language), the second season of Strange Tale of Tang Dynasty (foreign language), and others. In addition, Mist Theater will debut new titles in 2024 with Tell No One (foreign language), Breaking the Shadows (foreign language) and Lost in the Shadows (foreign language).

接下來我們來看看我們2024年的內容管道。對於電視劇來說，我們的目標是持續提供多元化、高品質的內容。我們正在增加對優質節目的投資，同時保持節目總數相對穩定。我們的內容包括備受期待的《狐妖紅娘》（外語）系列、《烈焰》（外語）、《隨心而行》（外語）、《抱月》（外語）、《聊齋誌異》第二季等古裝劇唐代（外語）等。此外，迷霧劇場也將在2024年推出新作品《告訴誰都沒有》（外語）、《打破陰影》（外語）和《迷失在陰影》（外語）。

In the reality genre, the premiere of Always On the Move (foreign language), known for its top-notch production and strong audience appeal as its peak popularity score reached as high as 9,959, another example showcasing our strong content capability. Viewers can also look forward to the upcoming City of the City (foreign language), Ball Lightning (foreign language), adapted from the famous science fiction novel written by Liu Cixin, as well as In the Name of the Brother (foreign language).

真人秀節目《永遠在路上》（外語）首播，製作精良，觀眾號召力強，最高熱度高達9959分，再次體現了我們強大的內容能力。觀眾還可以期待即將上映的《都市之城》（外語）、改編自劉慈欣著名科幻小說的《球狀閃電》（外語）以及《以兄弟之名》（外語）。

For movies, we expect several iQIYI originals to hit theaters in 2024. Our line-up includes the action comedy Rob & Roll (foreign language), which premiered in January and garnered a total box office of RMB236 million. Also, we anticipate to release the eagerly awaited crime suspense Samayou Yaiba (foreign language), adapted from the renowned novel written by Keigo Higashino (foreign language). For our online movie segment Cloud Cinema, we have introduced "Action Master," our new brand that brings together a diverse lineup of action movies for our viewers. We have debuted 3 titles so far and earned high praise from audiences. Additionally, we look forward to the upcoming release of The Wild Blade of Strangers (foreign language), the latest addition to our "Action Master" catalog.

電影方面，我們預計多部愛奇藝原創作品將於 2024 年上映。我們的陣容包括動作喜劇《羅布與滾》（外語），該片於 1 月首映，總票房為人民幣 2.36 億元。此外，改編自東野圭吾（外語）著名小說的犯罪懸疑片《矢葉三馬》（外文）也即將上映。對於我們的線上電影部分雲端影院，我們推出了“動作大師”，這是我們的新品牌，為觀眾提供了多樣化的動作電影陣容。到目前為止，我們已經推出了3部作品，並獲得了觀眾的高度評價。此外，我們期待即將發布的《The Wild Blade of Strangers》（外語），這是我們「動作大師」目錄中的最新成員。

For variety shows, in addition to new seasons of established IPs like The Detectives' Adventures 2024 (foreign language) and The Rap of China 2024 (foreign language). We will continue to develop new programs spanning different themes, such as Player One In Wonderland (foreign language), Youth Choir (foreign language) and others.

綜藝方面，除了《神探奇遇記2024》（外語）、《中國新說唱2024》（外語）等老牌IP的新一季。我們將繼續發展不同主題的新節目，如《一號仙境》（外語）、《少年合唱團》（外語）等。

For kid's cartoon and animation, we are actively expanding our production capacity. We will introduce brand new IPs and new seasons of classic IPs of original kid's cartoon. And for Animation, we are planning to release around 20 seasons of original animations, with enhanced quality and thematic diversity.

對於兒童動漫，我們正在積極擴大產能。我們將推出原創兒童動畫片的全新IP和經典IP新季。對於動畫，我們計劃推出約 20 季的原創動畫，以提高品質和主題多樣性。

To sum up our 2024 content strategy, we aim to reinforce our drama leadership and achieve breakthroughs in other genres. Our focus will remain on premium titles, increasing their supply, quality, and monetization. We'll also optimize our content scouting to cater to our diverse user base and their varied preferences.

總結我們2024年的內容策略，我們的目標是加強戲劇領導力並在其他類型上實現突破。我們的重點仍然是優質遊戲，增加其供應、品質和貨幣化。我們還將優化我們的內容搜索，以滿足我們多樣化的用戶群及其不同的偏好。

Moving on to the advertising business. In 2023, we recorded an annual increase of 17% in our advertising revenue. Both brand and performance ads booked healthy growth over the previous year. In Q4, advertising revenue increased by 6% annually to RMB1.65 billion, beating our expectations thanks to our growing content influence among brand advertisers. Revenue from content targeted ads accounted for over 50%, as advertisers flocked to top dramas and shows like Story of Kunning Palace, A Journey to Love and We Never Stop.

轉向廣告業務。 2023年，我們的廣告收入年增率為17%。品牌廣告和成效廣告均較前一年實現健康成長。第四季度，廣告收入年增 6%至人民幣 16.5 億元，超出我們的預期，這得益於我們在品牌廣告主中不斷增強的內容影響力。內容定向廣告收入佔比超過50%，廣告商紛紛湧向《坤寧宮故事》、《愛情之旅》、《我們永不止步》等熱門影集。

Broken down by sectors, the annual growth in Q4 came mainly from the recovery of brands in industries including food and beverage, communications, and healthcare. Performance ads continued to show annual growth, despite the high baseline set in Q4 last year. We expanded our customer base to attract new advertising budget, such as new e-commerce platforms and short-form dramas. Our solid performance also capitalized on our technology upgrade, as we made effective use of generative AI to improve ad creation and ROI.

分產業來看，第四季年增主要來自食品飲料、通訊、醫療保健等產業品牌的復甦。儘管去年第四季設定了較高的基準，但效果廣告仍繼續呈現年度成長。我們擴大客戶群以吸引新的廣告預算，例如新的電子商務平台和短片戲劇。我們的穩健表現也得益於我們的技術升級，因為我們有效利用生成式人工智慧來提高廣告創作和投資報酬率。

Looking ahead to 2024, we remain cautiously optimistic about the ad market, and we are closely monitoring the dynamics of macro economy and advertisers' sentiment. With that said, our performance in 2023 once again proved that we remained as the go-to platform for advertisers, thanks to our unmatched content quality, extensive user profile and strong sales ability.

展望2024年，我們對廣告市場保持謹慎樂觀態度，並密切關注宏觀經濟動態和廣告主情緒。儘管如此，我們在 2023 年的表現再次證明，憑藉我們無與倫比的內容品質、廣泛的用戶檔案和強大的銷售能力，我們仍然是廣告商的首選平台。

For brand ads in 2024, we will retain key clients in food and beverage, cosmetics and toiletries, and communications, while striving for breakthroughs in healthcare, entertainment and other promising sectors. We expect that domestic brands will experience a faster recovery compared with their international peers. Furthermore, we are positioned to tap into more opportunities as we observed a higher demand for ads visible to subscribers and on key dramas.

2024年品牌廣告方面，我們將保留食品飲料、美妝、通訊等重點客戶，同時力求在醫療保健、娛樂等有前景的領域取得突破。我們預計，與國際品牌相比，國內品牌將經歷更快的復甦。此外，隨著我們觀察到對訂閱者可見的廣告和關鍵電視劇的廣告需求增加，我們準備好抓住更多機會。

For performance ads, our strategy is to strengthen our offerings for key clients in established areas like internet services, e-commerce, and gaming. Meanwhile, we're set to boost revenues in new growth areas, such as live-streaming e-commerce and short-form dramas. Technological innovation is a priority. We need to provide cutting-edge ad solutions to maintain our privileged edge -- competitive edge.

對於成效廣告，我們的策略是加強為網路服務、電子商務和遊戲等成熟領域的主要客戶提供的服務。同時，我們將增加直播電商和短劇等新增長領域的收入。技術創新是當務之急。我們需要提供尖端的廣告解決方案來保持我們的優勢——競爭優勢。

Moving on to technology and products. Our commitment is centered around fostering technology innovation to push the industrialization of content production, improve the user experience and boost operating efficiency. We have integrated the latest technology into our top original productions. For example, our major original drama, The Story of Mystics (foreign language), leveraged virtual production to achieve remarkable results, capturing over 3,000 minutes of footage.

轉向技術和產品。我們致力於培育技術創新，推動內容生產產業化，改善使用者體驗，提升營運效率。我們將最新技術融入我們的頂級原創作品中。例如，我們的主打原創劇《神秘人的故事》（外語），利用虛擬製作取得了顯著的效果，拍攝了3000多分鐘的鏡頭。

This pioneering technology marks a paradigm shift in filmmaking, enabling immersive, efficient, and creatively boundless storytelling for the future. Another example, for many iQIYI original productions on-set footage could be immediately uploaded to our proprietary cloud, enabling remote production oversight and content quality checks, as well as swift real-time editing to expedite the post-production phase. This boosts our efficiency in both production and program management.

這項開創性技術標誌著電影製作的典範轉移，使未來能夠實現身臨其境、高效且創意無限的故事敘述。另一個例子，對於許多愛奇藝原創作品來說，現場片段可以立即上傳到我們的專有雲，從而實現遠端製作監督和內容品質檢查，以及快速即時編輯以加快後期製作階段。這提高了我們生產和專案管理的效率。

We are leveraging technologies to refine our products and enhance user experience as well. Our deployment of AI to filter out poor-quality comments and spoilers creates a better community environment and boosts user engagement. In addition, we are broadening the reach of our technology to allow more audiences to indulge in the ultimate viewing experience through our pioneering eXave MAX. In terms of Generative AI, we are advancing every stage of content creation, from planning, development to promotion, enhancing both efficiency and creativity. These efforts not only improve content production and operation efficiency, but also unleash creative potentials.

我們正在利用技術來完善我們的產品並增強用戶體驗。我們部署人工智慧來過濾低品質的評論和劇透，創造更好的社區環境並提高用戶參與度。此外，我們正在擴大技術的覆蓋範圍，讓更多觀眾透過我們開創性的 eXave MAX 享受終極觀看體驗。在生成式人工智慧方面，我們正在推動內容創作的各個階段，從策劃、開發到推廣，提高效率和創造力。這些努力不僅提高了內容生產和營運效率，也釋放了創作潛力。

Over the past year, we used AI for mass-producing quality marketing materials, which outperformed manual designs in click-through rates and viewership. Additionally, AI’s capability to comprehend video content at minute level enable detailed plot summaries for each playlist. Now available for over 3,000 dramas.

過去一年，我們利用人工智慧批量製作優質行銷材料，在點擊率和收視率方面優於人工設計。此外，人工智慧能夠在分鐘層級理解影片內容，從而為每個播放清單提供詳細的情節摘要。現已推出 3,000 多部電視劇。

Finally, for our business performance in regions outside of Mainland China. We achieved our first full-year operating profit in 2023. Additionally, we continued to expand the influence of C-pop, with C-dramas contributing more than 50% of revenue. In Q4, membership revenue and ad revenue both recorded double-digit annual growth, driven by the growing popularity of premium content among users and advertisers. Membership revenue increased by over 80% in Japan, Hong Kong and the UK, and over 50% in Mexico and South Korea. Ad revenue grew 20% annually and 49% sequentially.

最後，我們在中國大陸以外地區的業務表現。我們在2023年實現了首次全年營業利潤。此外，我們繼續擴大華語流行的影響力，華劇貢獻了超過50%的收入。第四季度，在優質內容在用戶和廣告商中日益受歡迎的推動下，會員收入和廣告收入均錄得兩位數的年增長。日本、香港和英國的會員收入成長了 80% 以上，墨西哥和韓國的會員收入成長了 50% 以上。廣告收入較去年同期成長 20%，較上季成長 49%。

Our C-dramas have continued to captivate international audiences. Story of Kunning Palace (foreign language) led rankings in many markets, setting record high metrics for Chinese content on our overseas platform. Meanwhile, A Journey to Love also dominated many charts in South East Asia, North America, and Australia during the broadcasting period.

我們的C劇繼續吸引國際觀眾。 《坤寧宮故事》（外文）在多個市場排名領先，創下海外平台中文內容的新高。同時，《愛情之旅》在播出期間也霸占了東南亞、北美、澳洲等多個排行榜。

We are also exploring ways to bring overseas local content to the domestic Chinese market. In January this year, we debuted our original Malaysian drama Rampas Cintaku (foreign language) in China, marking a solid step in further amplifying the synergies between domestic and overseas content. Our pursuit of collaborative opportunities remains strong. We have introduced bundled plans through partnerships with telecommunications providers in Thailand and Hong Kong. We also worked with tourism authorities in Thailand, Singapore, and Hong Kong to craft specialized commercial content and advertisements.

我們也正在探索如何將海外本土內容引入中國國內市場。今年1月，我們的馬來西亞原創電視劇《Rampas Cintaku》在中國首播，為進一步擴大國內外內容的協同效應邁出了堅實的一步。我們對合作機會的追求依然強烈。我們透過與泰國和香港的電信提供商合作推出了捆綁計劃。我們也與泰國、新加坡和香港的旅遊部門合作，製作專門的商業內容和廣告。

Looking into 2024, we have prepared an exciting slate of C-pop to key markets while ramping up original production of premium content for local users. Notably, we are set to debut an international version of the iQIYI original music show Youth with You. Meanwhile we will continue our efforts to promote C-dramas and local content in partnership with Southeast Asian TV stations. Alongside increasing our brand influence in key markets, we also aim to explore diverse IP monetization opportunities.

展望 2024 年，我們已為主要市場準備了一系列令人興奮的中國流行音樂，同時為本地用戶增加優質內容的原創製作。值得注意的是，我們即將推出愛奇藝原創音樂節目《青春有你》的國際版。同時我們將繼續與東南亞電視台合作推廣國劇和本土內容。除了提高我們在主要市場的品牌影響力外，我們還致力於探索多樣化的智慧財產權變現機會。

In Summary, the year 2023 marked a milestone for iQIYI. It's exciting to see that the transformation we started back in 2022 really paid off. We celebrated the record-high revenue, profits and cash flow. In 2024, we aim to sustain this high-quality growth trajectory, and further grow our revenue and profits. We are confident that our efficient content production and robust operations will drive further success. We will also continue to integrate advanced technologies to increase productivity and support our strategy of long-term sustainable growth. We are enthusiastic about collaborating with our stakeholders for a prosperous 2024.

綜上所述，2023年對愛奇藝來說是個具有里程碑意義的一年。令人興奮的是，我們在 2022 年開始的轉型真正獲得了回報。我們慶祝創紀錄的收入、利潤和現金流。 2024年，我們的目標是維持這種高品質的成長軌跡，並進一步增加我們的收入和利潤。我們相信，我們高效的內容製作和穩健的營運將推動進一步的成功。我們也將繼續整合先進技術以提高生產力並支持我們的長期永續成長策略。我們熱衷於與利害關係人合作，共創繁榮的 2024 年。

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

現在，讓我向 Jun 介紹一下我們的財務表現。

Thanks Mr. Gong and hello everyone. We maintained our strong momentum in 2023. The impressive financial results once again demonstrated the resilience and scalability of our business model. With increased profits and enhanced liquidity, we have an even greater capacity to sustain long-term value creation for our stakeholders.

謝謝龔先生，大家好。 2023年，我們保持了強勁的勢頭。令人印象深刻的財務表現再次證明了我們業務模式的彈性和可擴展性。隨著利潤的增加和流動性的增強，我們有更大的能力為利害關係人持續創造長期價值。

Now, let me walk you through the key numbers: In 2023, total revenues increased by 10% from 2022 and reached RMB31.9 billion. The revenue growth was driven by membership and online advertising services, as both recorded double-digit annual growth. Membership services revenue hit RMB20.3 billion, up 15% annually. The growth was driven by the increase in Average Revenue per Membership, i.e., ARM, and a rise in average daily subscribers. Online advertising revenue grew by 17% annually and reached RMB6.2 billion. The rise was primarily fueled by the growth in performance-based ads, and to a lesser extent, brand ads. Notably, performance-based ad revenue actually reached historic high in 2023.

現在，讓我帶您了解關鍵數字：2023年，總收入較2022年成長10%，達到319億元。收入成長主要由會員服務和線上廣告服務推動，兩者均實現了兩位數的年度成長。會員服務收入達203億元，較去年成長15%。這一增長是由每個會員平均收入（即 ARM）的成長以及平均每日訂閱者的成長所推動的。網路廣告收入每年增長17%，達到人民幣62億元。這一成長主要是由基於效果的廣告以及較小程度上的品牌廣告的成長所推動的。值得注意的是，基於效果的廣告收入實際上在 2023 年達到了歷史新高。

Turning to our topline performance in Q4, total revenues increased 1% annually to RMB7.7 billion. Membership services revenue was RMB4.8 billion, up 1% annually. Our ARM strategy proved highly successful, achieved sequential growth for 5 consecutive quarters. Online advertising services revenue was RMB1.65 billion, up 6% annually, and exceeded our expectations. The growth was largely driven by the growing attractiveness of our premium content among advertisers.

至於我們第四季的營收表現，總營收年增 1% 至 77 億元人民幣。會員服務收入48億元，較去年成長1%。事實證明，我們的 ARM 策略非常成功，連續 5 個季度實現環比成長。網路廣告服務收入為人民幣16.5億元，年增6%，超出我們預期。這一增長主要是由於我們的優質內容對廣告商的吸引力不斷增強。

Now moving to the costs and expenses. For 2023, content cost was RMB16.2 billion, down 2% annually. Total operating expenses was RMB5.8 billion, up 8% annually. For Q4, the content cost was RMB3.7 billion, down 5% annually, mainly due to our improvement in content strategy and operating efficiency, and fewer number of major variety shows launched in the quarter as well. The total operating expenses was RMB1.4 billion, down 1% annually.

現在轉向成本和費用。 2023年，內容成本為162億元，年減2%。總營業費用為人民幣58億元，較去年成長8%。第四季度，內容成本為人民幣37億元，年減5%，主要是由於內容策略和營運效率的改善，以及本季推出的主要綜藝節目數量減少。總營業費用為人民幣14億元，較去年同期下降1%。

Turning to profits and cash flows. For 2023, we successfully delivered what we promised for profit growth earlier in the year. Our non-GAAP operating income surged to over RMB3.6 billion, up 68% annually. For Q4 alone, the non-GAAP operating income was RMB928 million, positive for eight consecutive quarters. Furthermore, our free cash flow in 2023 totaled RMB3.3 billion, achieving its first full-year positive, with Q4 contributing RMB614 million.

轉向利潤和現金流。 2023年，我們成功實現了年初的獲利成長承諾。我們的非公認會計準則營業收入飆升至 36 億元以上，年增 68%。光是第四季度，非美國通用會計準則營業收入就達到人民幣9.28億元，連續八個季度為正。此外，2023年我們的自由現金流總計人民幣33億元，首次實現全年正值，其中第四季貢獻人民幣6.14億元。

Strong cashflow improved the healthiness of the balance sheet and leading to value creation from deleveraging and derisking. As of the end of Q4, we had cash, cash equivalents, restricted cash, short-term investments and long-term restricted cash included in prepayments and other assets totaling RMB6.2 billion.

強勁的現金流改善了資產負債表的健康狀況，並透過去槓桿化和去風險創造了價值。截至第四季末，預付款項及其他資產中所包含的現金、現金等價物、限制性現金、短期投資及長期限制性現金合計人民幣62億元。

In terms of the future use of the cash, the Company has a total of USD 396 million of convertible bonds puttable on August 1, 2024. After meeting this potential repayment obligation, the management would be able to actively explore various shareholder value enhancement initiatives, such as the commonly used share buybacks, on top of our investment for future business growth. The implementation of the plan is contingent upon the financial condition of the company and market condition at that specific point of time and is subject to our board discussion and approval.

就未來現金用途而言，公司共有3.96億美元可於2024年8月1日回售的可轉換債券。在履行這一潛在償還義務後，管理層將能夠積極探索各種股東價值提升舉措，例如常用的股票回購，除了我們對未來業務成長的投資之外。此計劃的實施取決於公司的財務狀況和特定時間點的市場狀況，並須經董事會討論和批准。

To conclude, echoing with Mr. Gong’s earlier remarks, we are now, with substantially strengthened fundamentals, remain deeply committed to creating enduring value for all stakeholders and to continue leading industry evolution. As we just celebrated the Chinese New Year, I would like to take this moment to extend our sincere thanks to our investors and analysts for your consistent support throughout our path.

最後，與龔先生先前的言論相呼應，我們現在在基本面大幅增強的基礎上，仍然堅定地致力於為所有利益相關者創造持久的價值，並繼續引領行業發展。在我們剛慶祝中國新年之際，我想藉此機會向我們的投資者和分析師致以誠摯的謝意，感謝你們在我們一路走來的一貫支持。

For detailed financial data, please refer to our press release on our IR website.

有關詳細財務數據，請參閱我們在 IR 網站上的新聞稿。

Now, we will open the floor for Q&A.

現在，我們將開始問答環節。

(Operator Instructions) And the first question will come from Xueqing Zhang of CICC.

（操作員說明） 第一個問題將由中金公司的張學慶提出。

(foreign language) Given that other players have strong pipelines this year, what's your strategy on KPI for 2024 and the indicator is more constant? In the long term, is there anything can become a new driver?

（外文）考慮到今年其他公司的管道都很強，你們2024年的KPI策略是什麼，指標更加穩定？從長遠來看，有什麼東西可以成為新的驅動力嗎？

(foreign language)

（外語）

[Interpreted] Our CEO Gong Yu is answering this question. So our target for 2024 is to maintain high-quality growth. With that is that revenue and profits will both grow and the profit will outpace the growth of revenue. And this target was set by 2023 Q4, and that hasn't changed.

【解讀】我們的CEO龔宇正在回答這個問題。所以我們2024年的目標是維持高品質成長。這樣一來，收入和利潤都會成長，而且利潤的成長將超過收入的成長。這個目標是在 2023 年第四季設定的，並且沒有改變。

(foreign language)

（外語）

[Interpreted] It comes in different aspects of (inaudible). The first is related to content. First is we're recruiting the top-notch talent and producing a very high-quality content. That's the first one. And then the second one is by using very effective evaluation and decision-making process and also the management process to systematically increase the hit rate of our entire content offerings. And third is to utilize our content management program to really to improve the efficiency of our contract production and operations.

[解釋] 它有不同的面向（聽不清楚）。第一個是與內容相關的。首先，我們正在招募頂尖人才並製作非常高品質的內容。這是第一個。第二個是透過使用非常有效的評估和決策流程以及管理流程來系統化地提高我們整個內容產品的命中率。第三是利用我們的內容管理程序來真正提高我們的合約生產和營運的效率。

(foreign language)

（外語）

[Interpreted] In addition to what I just mentioned, we're also focusing on new business areas. Hopefully, that will become our second growth curve in the future include but not limited to first overseas business and also IP derivatives including both online and offline segment and also to utilize generate generative AI to really improve our operating efficiency and content capability.

【解讀】除了我剛才提到的以外，我們也關注新的業務領域。希望這將成為我們未來的第二個成長曲線，包括但不限於第一筆海外業務以及包括線上和線下在內的IP衍生品，以及利用生成式AI來真正提高我們的營運效率和內容能力。

(foreign language)

（外語）

[Interpreted] And then in terms of financial aspect, we'll invite our CFO Wang Jun to add on.

【解讀】然後財務方面，我們會請我們的CFO王軍補充一下。

Sure. I will answer the question in English and thanks, Xueqing Zhang, for the question. I think that when we are looking at our financial numbers for 2024, we always focus on 2 key words, which are growing and health. Then the pursuit of the high-quality growth has been repetitively mentioned during our comments and is itself evidenced. Due to the time constraint, we will not get into details on this call, but we'll be happy to share color in future occasion.

當然。我會用英文回答這個問題，感謝張學清提出的問題。我認為，當我們審視 2024 年的財務數據時，我們總是關注兩個關鍵字，那就是成長和健康。那麼追求高品質成長，我們在發言中一再提到，也是有目共睹的。由於時間限制，我們不會詳細介紹本次通話，但我們很樂意在以後的場合分享顏色。

But in this call, we'd also like to highlight that in 2024, what you will observe the further improvement of the financial healthy net because we have a very solid growth in our opening cash flow, which deleveraged our balance sheet and actually offers 2 critical benefits. And first, in my view, I think it gives us a clear road map to decrease the average cost of the capital. The steady stable cash inflows actually gives us the ability not only to pay down existing debt, but also to tap into the low-cost capital pool such as long-term loans or investment-grade credit products which would otherwise not be available and such low-cost capital could be used gradually to replace the previous high-cost debt and mathematically is translating to a possible decrease of the total discount rate for the long-term model.

但在這次電話會議中，我們還想強調，到2024 年，您將觀察到財務健康淨值的進一步改善，因為我們的期初現金流量增長非常穩健，這使我們的資產負債表去槓桿化，實際上提供了 2關鍵的好處。首先，在我看來，它為我們提供了降低平均資本成本的清晰路線圖。穩定的現金流入實際上使我們不僅有能力償還現有債務，而且有能力利用低成本的資金池，例如長期貸款或投資級信貸產品，否則這些資金池將無法獲得且成本如此之低。- 成本資本可以逐漸用來取代以前的高成本債務，從數學上講，這意味著長期模型的總折現率可能會下降。

So if our shareholders can agree with such argument, and I think starting from 2024 and going forward, you should probably increasingly take reference to our net income instead of opening profit to check the progress because our net income won't be able to capture and reflect this from the value creation from the derisking and deleveraging. And on top of that, as we previously discussed, it also offers us more tools, I think, to enhance the shareholders' returns. And this is the second critical benefit. I will not explain in this call and will be (inaudible). So as a result in summary, I think our goal -- our financial goal for 2024 is to deliver a healthier balance sheet and a stronger P&L to our investors.

因此，如果我們的股東能夠同意這樣的論點，我認為從2024 年開始以及未來，您可能應該更多地參考我們的淨利潤，而不是期初利潤來檢查進度，因為我們的淨利潤將無法捕捉和反映從去風險和去槓桿化的價值創造中可以反映出這一點。最重要的是，正如我們之前討論的，我認為它也為我們提供了更多工具來提高股東的回報。這是第二個關鍵好處。我不會在這次電話會議中進行解釋，而且將會（聽不清楚）。總而言之，我認為我們的目標——我們 2024 年的財務目標是為我們的投資者提供更健康的資產負債表和更強勁的損益表。

The next question we have comes from Lincoln Kong of Goldman Sachs.

我們的下一個問題來自高盛的林肯孔。

(foreign language) Congrats on the solid 2023 result. So my question is about AIGC. How would the management view the latest generative AI technology, especially (inaudible), how would the implication you will have to movie or drama industry as well as to themselves? And what's the company's spend in terms of the investment and strategy in this front?

（外語）恭喜 2023 年取得優異成績。我的問題是關於 AIGC 的。管理階層如何看待最新的生成式人工智慧技術，特別是（聽不清楚），您對電影或戲劇產業以及他們自己有何影響？公司在這方面的投資和策略支出是多少？

(foreign language)

（外語）

[Interpreted] We'll invite our CTO, Wenfeng, to answer this question.

【解讀】我們請我們的CTO文峰來回答這個問題。

(foreign language)

（外語）

[Interpreted] We are very bullish on the opportunities that the development of generated AI technology and bring to the long-form video industry and believe that actively applying the technology can significantly intense creative efficiency and elevate the levels of creation and decision-making. It can also play a very important role in the planning, development plus production and promotion of content. In addition, the rapid advancement of generative AI technology enables artists to use this technology to create higher quality works with greater efficiency. This is particularly true for the creation and production of animated content powered by generative AI, which has the potential to break through the long-standing capacity barriers and drive changes in the industry landscape based on creative levels.

【解讀】我們非常看好生成式AI技術的發展為長影片產業帶來的機遇，相信積極應用此技術可以顯著提升創作效率，提升創作與決策水準。它還可以在內容的策劃、開發以及製作和推廣中發揮非常重要的作用。此外，生成式AI技術的快速進步使得藝術家能夠利用該技術以更高的效率創作出更高品質的作品。尤其是由生成式人工智慧驅動的動畫內容的創作和製作，有可能突破長期以來的能力壁壘，並基於創意水平推動行業格局的變化。

(foreign language)

（外語）

[Interpreted] We have been keeping a close eye on the latest development in the generative AI industry and actively establishing cooperation with market-leading companies in China and abroad. We are implementing the latest generative AI technologies in the content production process, especially by combining iQIYI's extensive long-form video from data with large language models for training and fine tuning. Our aim is to develop generative AI-powered vertical applications tailored for long-form video scenarios. And going forward in the future, we will step up our investment in R&D and application of generative AI technology. We plan to use this technology to develop and comprehensively upgrade our in-house intelligent production system thereby empowering the creation of iQIYI's professional video content. Thank you.

【解讀】我們一直密切關註生成人工智慧產業的最新發展，並積極與國內外市場領導者建立合作。我們正在內容製作過程中實施最新的生成式人工智慧技術，特別是將愛奇藝廣泛的長影片資料與大型語言模型相結合進行訓練和微調。我們的目標是開發長影片場景的生成式人工智慧垂直應用程式。未來，我們將增加對生成式人工智慧技術研發和應用的投入。我們計劃利用此技術開發並全面升級自有智慧製作系統，為愛奇藝專業影片內容創作賦能。謝謝。

Next, we have Lei Zhang of Bank of America Securities.

接下來是美國銀行證券的張磊。

(foreign language) We noticed that major players are more focusing on the top content last year and can you share with us your view on content and communication? And how should we stay competitive in terms of content in 2024?

（外語）我們注意到去年主要玩家更加關注熱門內容，您能跟我們分享一下您對內容和傳播的看法嗎？ 2024年我們該如何在內容上保持競爭力？

(foreign language)

（外語）

[Interpreted] We'll invite our Chief Content Officer, Xiaohui to answer this question.

【解讀】我們將邀請我們的首席內容長小輝來回答這個問題。

(foreign language)

（外語）

[Interpreted] The competitive market dynamic is an ever present reality, while -- where the competition we think lies in the substantial sustainability of high-quality content (inaudible) as well as achieving a balanced and a win-win situation in terms of content quality and also commercial returns.

[解讀]市場的競爭是一直存在的現實，而－我們認為競爭在於高品質內容的實質永續性（聽不清楚）以及內容方面實現平衡共贏品質和商業回報。

(foreign language)

（外語）

[Interpreted] And in addition, capital is not the only sole barrier to competition. iQIYI's ability to maintain a market-leading position in the industry is actually underpinned by the accumulation of talent, control of industry resources and effective content review and management mechanism and support from our business intelligence system, and we believe all of which are indispensable.

【解讀】此外，資本並不是唯一的競爭障礙。愛奇藝能夠在行業中保持市場領先地位，實際上離不開人才的積累、行業資源的掌控、有效的內容審核和管理機制以及我們商業智能係統的支持，我們認為這些缺一不可。

(foreign language)

（外語）

[Interpreted] Our content creation (inaudible) actually focus on 3 areas. First is to produce content with high public recognition and market returns. Second is to create innovative high-quality content. And third is to continuously focus on content efficiency and the number of key premium titles and social insights.

[解讀]我們的內容創作（聽不清楚）其實集中在3個領域。一是生產大眾認可度高、市場回報高的內容。二是打造創新優質內容。第三是持續關注內容效率以及關鍵優質遊戲和社會洞察的數量。

(foreign language)

（外語）

[Interpreted] In terms of the foreign drama category, there has been a clear improvement in the value of our content inventory actually as key premium content is critical to maintaining a high competitive edge in the market, we maintain a market-leading level of inventory reserve for premium titles. For 2024 lineup of our iQIYI originals and exclusive license from us, the premium key titles are expected to account for over 50%. And thank you.

【解讀】海外劇品類方面，我們的內容庫存價值實際上有了明顯的提升，因為關鍵的優質內容對於保持市場的高度競爭優勢至關重要，我們的庫存水準保持在市場領先水準為高級圖書保留。對於2024年愛奇藝原創和獨家授權的產品陣容，優質主打作品預計將佔50%以上。謝謝你。

This will conclude today's question-and-answer session. I would now like to turn the conference call back over to management for any closing remarks.

今天的問答環節到此結束。我現在想將電話會議轉回給管理階層，讓他們發表結束語。

Thank you, everyone, for supporting us and joining the call today. And if you have further questions, feel free to contact our team. Thank you.

感謝大家支持我們並參加今天的電話會議。如果您還有其他疑問，請隨時聯絡我們的團隊。謝謝。

Thank you. Bye.

謝謝。再見。

And we thank you for your time also today. The conference call has now concluded. Again, we thank you all for attending today's presentation. At this time, you may disconnect your lines. Take care.

我們也感謝您今天抽出時間。電話會議現已結束。我們再次感謝大家參加今天的演講。此時，您可以斷開線路。小心。

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

[本文字記錄中標記為[已翻譯]的部分是由現場通話中的口譯員朗讀的。]