Thank you for standing by. Welcome to Kuaishou Technology Q1 2026 financial results conference call. Please note that English simultaneous interpretation will be provided for management prepared remarks. This English line will be in listen-only mode. This meeting is being recorded. Now I'll turn the call over to Mr. Matthew Zhao, VP of Capital Market and IR at Kuaishou. Thank you, operator. Good evening and good morning, everyone. Welcome to Kuaishou Technology Q1 2026 financial results conference call. Joining us today are Mr. Cheng Yixiao, Co-founder, Chairman, and CEO, and Mr. Jin Bing, CFO. Before we start, please note that today's discussion may contain forward-looking statements, which involve a number of risks and uncertainties. Actual results and outcomes may differ from those discussed. The company does not take any obligations to update any forward-looking information, except as required by law. All important information in today's call relating to forward-looking statements please refer to the company's public information on our first quarter 2026 results announcement and in March 31st, 2026, issued earlier today. During today's call, management will also discuss certain non-IFRS financial results. These are provided for additional information and should not replace IFRS-based financial results. For a definition of non-IFRS financial measures or reconciliation of IFRS to non-IFRS financial results and related risk factors, please refer to our Q1 2026 results announcement. Today's call management will use Chinese as the main language. A third-party interpreter will provide simultaneous interpretation in prepared remarks session and a consecutive interpretation during the Q&A session. Please note that English interpretation is for convenience purpose only. In case for any discrepancy, management statements in their original statement will prevail. Lastly, unless otherwise stated, all currency units mentioned are in RMB. Now, I hand the call over to Yixiao. Welcome to Kuaishou's Q1 2026 earnings conference call. In Q1 2026, amid a complex and evolving market economy environment, we continued to advance our AI strategy execution, Kling AI maintains global leadership in multi-modal video generation, and AI technologies continue to enhance the vitality of our economy ecosystem. It expand monetization and improve organizational efficiency. In Q1 2026, the average DAUs on Kuaishou App reached 413 million. Total revenue increased by 3.4% YoY to RMB 33.7 billion. Revenue from our core commercial business, including online marketing services and other services, primarily e-commerce, increased by 10.7% YoY. Adjusted net profits reached RMB 3.4 billion, with an adjusted net margin of 10%. Kling AI demonstrated strong momentum, driving our second growth curve. It sustained its global leadership in model capabilities and product experience while achieving rapid monetization growth. In Q1, Kling AI generated revenue of over RMB 650 million, representing YoY growth of more than 300%. I will walk through the details of our major business segments in Q1 2026. Our AI strategy and progress of our large video generation model, Kling AI. In Q1, Kling AI continued to advance its vision of empowering everyone to craft captivating stories with AI. Through ongoing model iteration, intelligent product upgrades, and deeper penetration across the professional scenarios, Kling AI further reinforces global leadership in AI video generation. At a model and technology level, in February 2026, we launched the Kling AI 3.0 model series. Built on an all-in-one product framework, the Kling AI 3.0 model series supports full multi-modal inputs and outputs, spanning text, images, audio, and video, integrating video understanding generation and editing in one streamlined AI workflow. While supporting video generation of up to 15 seconds, the Kling AI 3.0 model series delivers highly flexible storyboard control and a more precise semantic alignment, encompassing simultaneous audio video generation capabilities with strong subject consistency to further extend the boundaries of AI storytelling. At a product level, Kling Lab Agent Mode, upgraded the creative experience from standalone tools to an intelligent agent-driven system, with features including multi-turn conversational editing and multi-perspective intelligent shot expansion. In addition, Kling AI launched the Team Plan, supporting real-time collaborative creation for up to 15 members and enabling creators to efficiently manage content creation workflows among teams. Recently, we launched the Baseball Live effect, which once again ignited a global AI creation frenzy and swept across social media platforms worldwide. This viral hit propelled Kling AI to the top of the overall app store charts in 42 countries and regions, including Germany and Brazil. Kling AI continues to focus on the core needs of professional creators across the film and television, advertising, e-commerce, and gaming sectors, supporting content production with end-to-end industrial-grade capabilities and driving meaningful cost reduction and efficiency improvement. Kling AI was used in the creation of the selective virtual scenes and visual effects of the net heat type historical drama, "Swords into Plowshares." In the Hollywood series, "House of David," Kling AI supported generation of hundreds of high-quality shots, including brand scenes and complex battle sequences, demonstrating its exceptional strength in commercial film and television production. With broader adoption across professional creative scenarios, Kling AI's commercialization has accelerated. In Q1 2026, Kling AI generated revenue of over RMB 650 million, representing growth of more than 300% year-over-year. In March, Kling AI's annualized return run rate ARR reached approximately $500 million. We made continued solid progress in advancing research and development of our general purpose models and in deploying AI-driven enhancement across our commercial and organizational ecosystem. At the general purpose model level, we released the KAT- Coder- Pro- V2, an agentic coding model with strong capabilities in front-end UI statics, command line reasoning, and agent execution. It is compatible with the mainstream AI coding tools such as Claude Code. It has been trained and optimized for OpenClaw and is capable of navigating complex real-world application workflows. In terms of AI empowerment for our commercial ecosystem, we continue to deepen the application of our generative recommendation large models and intelligent bidding models in online marketing services scenarios, driving roughly 4% growth in domestic online marketing services revenue in Q1. To optimize our generative recommendation large models, we incorporate multi-model aligned advertising insights by combining value-aware supervised learning with ranking-guided reinforced learning. We improve the quality of the material recommendation candidate set, whilst we enhance inference efficiency through model optimization at inference stage, further improving model performance. For e-commerce business scenarios, the new generation generative search framework, OneSearch V2, was fully rolled out across e-commerce search scenarios in Q1. Through tech renovation, we have introduced a self-distillation generative search framework based on latent space reasoning and enhanced the model's inference capabilities and the search experience without incurring additional inference costs and/or service latency, withdrawing incremental GMV growth of approximately 3% in our e-commerce search business. At organizational ecosystem empowerment level, Kuaishou's proprietary coding tool, CodeFlicker, has driven AI-generated code penetration to over 50%. This also evolved into a company-wide general purpose agent, My Flicker, expanding its use scenarios from engineering coding to broader employee-facing scenarios. It now empowers the functions of cross R&D, product operations, data, et cetera, enhancing overall organizational efficiency. Second, user growth and content ecosystem. Q1, average DAUs on Kuaishou App reached 413 million, and MAU reached 772 million. Average daily time spent per user remained relatively stable. By providing differentiated premium content, iterating our traffic mechanisms, and expanding social interaction scenarios around Chinese New Year, we offer users a higher quality and a more heartwarming online community with distinctive Kuaishou characteristics. In refining our distribution mechanism, we balance user experience with monetization efficiency, resulting in increased exposure for premium content. In terms of user growth quality, we further refined operations across all channels by integrating user acquisition spending with monetization scenarios and continuing to innovate our user retention strategies, we successfully improved user growth ROI. During the 2026 Chinese New Year holiday, we created an immersive online Spring Festival experience to drive high-quality user growth through innovative interactive features and extensive premium content matrix, achieving new historic peaks in DAUs. In terms of content ecosystem, we launched a series of Kuaishou characteristic content IPs, including Kuaishou Spring Festival Gala for the Year of the Horse, Liu Laogen Grand Stage, the Northeast Comedy Show. Leveraging Kling AI, we released AI-generated Chinese New Year animation short play series, The Show Gallops On. These initiatives foster a vibrant, festive atmosphere for users while amplifying the popularity and influence of Kuaishou native content. User social interactions increased significantly during the Chinese New Year campaign. The number of user pairs using our social interaction products grew by 25% compared with the pre-Spring Festival period. The number of users that sent party messages increased by 15%. These initiatives fostered a vibrant festive atmosphere for users while amplifying the popularity and influence of Kuaishou native content. Data showed that our 2026 Chinese New Year programs generated over 15 billion live streaming views and more than 250 billion short video views, and over 6.5 billion cumulative likes, propelling user growth and reinforcing use r mindshare for existing trends. Through online marketing services, Q1 revenue from online marketing services reached RMB 19.6 billion, up 9.3% YoY, with revenue from domestic online marketing services growing by more than 10% year-over-year. In Q1, the content consumption, lifestyle services, and AI application sectors were the primary drivers of our non-e-commerce marketing services revenue. In content consumption sector, AI reduced production costs and lowered creative thresholds for comic style short plays, driving rapid growth in content supply and related marketing demand. As of the end of March 2026, the peak of daily marketing spend on Kuaishou comic style short plays exceeded RMB 20 million. Within the lifestyle service sector, where clients primarily operate on a lead-based model, we advanced the more refined industry operations across 20 verticals, including healthcare, industrial, and agricultural, materials, education, and automotive. By tailoring our solutions to the conversion characteristics of different industries, we help merchants improve customer acquisition efficiency and drove incremental advertising spend across these sectors. At the same time, we help the merchants reach potential customers more efficiently and improve user conversion rates through product upgrades. During the Chinese New Year period, demand for marketing placement in the application vertical was strong. We effectively captured relevant budgets and optimized the deep conversion outcomes, contributing to AI application clients increased marketing spend and commitment to our platform. In Q1, we accelerated significantly across diverse online marketing services scenarios covering the full pre-placement, in-placement, and post-placement lifecycle. This improved clients' placement experience and drove growth in total spending from online marketing services. In pre-placement, the generation of AIGC marketing materials enabled merchants to produce materials at a lower cost and more efficiently. As of March, AIGC short video marketing materials spending contributed 10% of total short video online marketing spending on our platform. At in-placement stage, our universal auto placement solutions became the dominant placement tool adopted by most online marketing clients. During the quarter, we added a new AI agent feature to our UAX placement solution. Learning from the best practice in placement optimization, creative generation, and ad agent across verticals, our UAX placement solutions automatically assisted our advertising teams with tasks such as ad unit creation and bid management, improving overall placement efficiency. In a post-placement stage, AI-driven analytics automatically reviewed the performance data and provided timely feedback to the clients, reducing manual operational workloads. Meanwhile, our digital employee solutions offer 24/7 automated responses, enabling clients to handle consumer inquiries in real time, especially during periods such as overnight hours when human support is limited. For e-commerce merchant services, we further advanced and deepened our omni-domain traffic synergy strategy through improved coordination between our organic and commercial traffic pools, enhancing e-commerce traffic exposure and business growth for brand merchants. In Q1, we onboarded an increasing number of brand merchants and small and medium-sized merchants. The number of active merchants using marketing placements increased by 33% YoY, and brand advertising spending increased by 42% YoY, supporting GMV growth for brand merchants' self-operated business across the omni-domain scenarios. Meanwhile, AI capabilities have been fully integrated across our end-to-end e-commerce marketing placement workflows. Through the coordinated efforts of user interest inference AI agent, creative construction AI agent, and bidding construction AI agent, both marketing placement precision and efficiency improved. On the product side, with continuous upgrades, our omni-platform marketing solutions accounted for a greater share of our total spending from e-commerce marketing services and became the primary placement offering for our e-commerce merchant services. Our net transaction ROI product helped merchants optimize their net transaction GMV, enabling more stable settlement outcomes. In Q1, client monetization rate reached 45%, outstripping the industry, and meaningfully reduced product return rates. Meanwhile, our full store hosting model allowed merchants to overcome single product placement constraints through one-click store-wide placement, freeing up manpower. Towards e-commerce, we will advance our e-commerce strategy through three key upgrades, prioritizing paying user growth, supply acquisition, and deeper integration of e-commerce and commercialization traffic. This will enable merchants to further capture the end-to-end synergies across omni-domain scenarios, amplifying growth momentum. In Q1, by standing on advancing strategy, our e-commerce business achieved a sustainable healthy growth. We remain committed to strengthening omni-domain traffic synergies and refining operations across the full buyer lifecycle to drive long-term growth in our e-commerce buyer base. In Q1, on the supply side, we prioritized onboarding brand merchants and new merchants while further improving the quality of product supply in the first quarter. For brand merchants, we continued to advance our Voyage Initiative, which launched in the fourth quarter last year, targeting top-tier brands across diverse verticals to support them on multiple fronts, including traffic operations and brand building. In the first quarter, driven by incremental growth from new brand merchants, brand merchants' contribution to overall e-commerce GMV and commercialization continued to increase, maintaining strong year-to-year growth. Meanwhile, existing merchants continued to scale and stabilize their operations while strengthening the health of resilience of e-commerce supply ecosystem. In new merchant acquisition, we work closely with our service providers across 100 targeted priority industrial zones nationwide. In Q1, the number of new merchants onboarded in these industrial zones increased by 41.8% YoY. In addition, in collaboration with industry teams and SME merchants teams, we actively empowered new merchants to thrive across our full lifecycle from onboarding and early growth to scaling through a mix of merchant incentive programs, operational tools, and business safeguards, and marketing initiatives. In Q1, the number of SME merchants grew, leading to a healthier merchant structure and a more diversified supply. In Q1, we further improved our KOL ecosystem structure. This enhanced the supply of high-quality e-commerce content, and we continued to strengthen support for mature KOLs. In January, we launched a treasure streamer spotlight initiative, leveraging platform resources to identify and support outstanding KOLs across verticals and help them scale. In addition, we further refined our incentive policies, which has significantly improved KOLs streaming frequency. In Q1, the number of average daily active streamers hosting live sessions with over 10,000 followers grew 10.1% year-on-year. To empower KOLs, we began working with distribution and industry initiatives providing top-tier merchants and KOLs with diversified monetization growth and merchant opportunities, while expanding the reach of high-quality products with distinctive cultural e-commerce characteristics for a broader user base. Through subsidy initiatives such as our KOL Blockbuster Initiative, along with continued optimization of our distribution product allocation capabilities, we improved the efficiency of KOL product matching. In addition, we hosted offline matchmaking events between merchants and KOLs and introduced tiered services for KOLs at different levels, enabling high-precision distribution matching. In Q1, the number of merchant-KOL matches in the distribution pool increased by 47% year-over-year, while the number of active KOLs participating in distribution grew by 23.5% YoY. Our omni-domain e-commerce collaboration ecosystem continued to show strong growth momentum as we strengthened coordination between our content-based and shelf-based scenarios. Through intelligent subsidies and refined operations across the full user lifecycle, we achieved end-to-end efficiency improvement from product recommendation to repeat purchase, building a stable and sustainable growth foundation for merchants. Content-based scenarios continue to serve as an important driver of user demand. As user consumption habits increasingly extend through browsing, search, and shopping mall exploration, our omni- domain consumption mindset among users have gradually taken shape. In Q1, e-commerce intent-driven search PV grew 11% year-over-year, while new and returning buyers in the shopping mall increased by approximately 36% in March, indicating users' strong activity in shopping intent. In addition, richer supply drove increase in purchase frequency among 10 shelf-based e-commerce users. Harnessing end-to-end AI capabilities, we delivered tangible operating efficiency gains for merchants and upgraded user experience. To leverage large model capabilities, we comprehensively updated the shopping decision-making process through end-to-end empowerment, spanning user latent demand activation, search engagement, guided shopping in live streaming rooms, and finally, subsidy distribution. Building large model set narratives, we launched an upgraded search experience by introducing an AI agent-based one-stop intelligent shopping assistant. With this upgraded search involved from user-initiative product lookup to an AI-led product recommendation, significantly improving search conversion efficiency. In addition, leveraging AI to empower sales operations will optimize the process of guided shopping in live streaming rooms. In live streaming scenarios, a real-time product highlight summarization and an AI-powered auto-refine posting feature generated over RMB 10 million in incremental GMV per day per merchants. Next, regarding our live streaming business. In Q1, live streaming revenue reached RMB 8.5 billion. We remain committed to the health of live streaming ecosystem as our core priority, focusing on supply quality improvements, content enrichment, and AI innovation to build a sustainable live streaming ecosystem for long-term growth. We continue to support high-quality content categories such as premium group live streaming, and strengthen the professional operations of partner talents agencies, solidifying the foundation of live streaming supply. On our product and technology front, AI capabilities further empower live streaming rooms. AI tools including AI interaction assistance, digital avatar solutions, and AI private messaging improve the streamers' service efficiency and enhance the viewers' engagement experience. Kling AI's video generation strengths has significantly empowered live streaming-based operations, accelerating AI gifts rollout and enriching creative expression while boosting user willingness to pay. In Q1, the AI universe series gifts with customizable special effects designed by users reached 1.1 million. In content, we launched a diverse range of live streaming interactive features during the Chinese New Year to build engaging live stream scenarios. The Kuaishou Mastermind Quiz series, a feature that rewards AI digital human streamers generated by Kling AI, interacting with users throughout the experience and attracting nearly 50 million users to actively participate. At the same time, we further strengthened our gaming content ecosystem. During the Chinese New Year, we launched a Spring Festival Player Carnival campaign, partnering with over 50 game developers and collaborating with major game IPs to roll out exclusive content and user benefits. Moreover, our esports business, a key strategic pillar of our gaming system, achieved a breakthrough. In April, Kuaishou KSG team won the King Pro League Spring 2025 championship, driving the further evolution of the gaming system. Finally, about our overseas business progress. In Q1, we continuously explored high-value growth strategies for our overseas business while responding to market changes with business resilience. In terms of traffic, we continue optimizing user acquisition efficiency and user growth mix to cultivate a community ecosystem rooted in real life. Meanwhile, we further expanded the content verticals to gather more users to deepen their engagement. Brazil, our key market for overseas development, maintained steady average DAUs and average daily time spent per DAU quarter-over-quarter. For online marketing services, we consistently strengthened our advertising product capabilities by leveraging AI to fully empower our end-to-end marketing workflows, improving placement efficiency and performance stability for clients. At the same time, we capitalized on our strength as content platforms to localize commercial creatives to unlock incremental advertising budgets, particularly from customers led by cross-border e-commerce players. Our e-commerce business in Brazil achieved a solid year-over-year growth in GMV and order volume in the first quarter. By strengthening key categories and high-quality product supply, we grew conversion and repeat purchase rates. Meanwhile, through AI-assisted content production and content recommendation, we continuously optimize operational efficiency and profit-generating capability. In summary, confronting many challenges and rigorous tests, we remain steadfast in our core AI strategy, breaking through barriers with our deep tech and ecosystem strength. Looking ahead, we will navigate uncertainties with long-term resolve, continuously deepening AI integration to long-term value for all stakeholders, and unlock new growth together. That concludes my remarks. Thank you. I'll hand it over to Jin Bing. Thank you, Yixiao. In Q1, we continued to advance our AI strategy and made meaningful progress. Leveraging our leading AI capabilities, we deepened our empowerment of Kuaishou's content and business ecosystem, delivering healthy, steady growth across both our operational metrics and financial performance. We continued to broaden the application of AI large models across business scenarios to further optimizing user experience and enhance our operational efficiency for our business partners. At the same time, Kling AI is rapidly realizing its commercial value as the company's second growth curve. In Q1, the group's total revenue reached RMB 33.7 billion, with revenues from our core commercial business, which includes online marketing services and other services, primarily e-commerce, growing 10.7% year-over-year. Notably, Kling AI generated revenue of over RMB 650 million, representing a year-over-year growth of more than 300%. Adjusting net profit was RMB 3.4 billion, with an adjusting net margin of 10%. While continuing to scale our investment in AI, we maintain the group's overall profitability and our operational cash flow at healthy level. Now let's take a closer look at our Q1 financial performance. Our total revenue grew 3.4% year-over-year to RMB 33.7 billion in Q1. The increase was mainly driven by growth across our online marketing, risk, e-commerce and Kling AI businesses. Online marketing services revenue increased 9.3% to RMB 19.6 billion in Q1 from RMB 18 billion in the same period last year. This growth was primarily driven by the accelerated penetration of AI across diverse online marketing services scenarios, which builds marketing material generation costs for clients and optimizes their placements in experiments, while also improving conversion efficiency and driving higher spending by our marketing clients. Revenue from other services, including our e-commerce and Kling AI businesses, reached RMB 5.6 billion in Q1, up 15.9% from RMB 4.8 billion in the same period last year. The increase was mainly driven by the continual expansion of our Kling AI business. By continuously refining Kling AI's foundation models and developing more innovative features, we have broadened the adoption of professional creative scenarios, accelerating its commercialization. In Q1, our live streaming revenue was RMB 8.5 billion. We consistently cultivated high-quality content offerings, expanded live streaming scenarios, and leveraged AI-empowered innovations to develop a rich and healthy live streaming ecosystem and diverse high-quality content. Cost of revenues increased 11.1% year-over-year to RMB 16.5 billion in Q1, accounting for 48.8% of total revenue. The increase was mainly due to higher revenue sharing costs and revenue growth, as well as increased bandwidth expenses, server custody costs and depreciation of the property and equipment and right of use assets and amortization of intangible assets. Based on the above, our gross profit was RMB 17.2 billion in Q1 compared to RMB 17.8 billion in the same period last year. Gross profit margin was 51.2%, compared to 54.6% in the same period last year. Turning to expenses in Q1, selling and marketing expenses were RMB 10.3 billion compared to RMB 9.9 billion in the same period last year. Our selling and marketing expenses slightly increased to 30.6% of total revenue from 30.4% Q1 last year, primarily attributable to increased spending in promotion activities. R&D expenses increased 9.8% year-over-year to RMB 3.6 billion, accounting for 10.7% of total revenue. The increase was mainly due to higher employee benefit expenses, including share-based compensation expenses and increasing investments in AI. Administrative expenses were RMB 770 million compared to RMB 830 million in the same period last year, primarily due to a decrease in employee benefit expenses, including related share-based compensation expenses. The group level net profit for Q1 was RMB 2.9 billion. Group level adjusted net profit was RMB 3.4 billion with an adjusted net margin of 10%. Our balance sheet remains robust. Cash and cash equivalents, time deposits, financial assets and restricted cash totaled RMB 117.7 billion as of March 31st, 2026. Net cash generated from operating activities in Q1 was RMB 3.1 billion. Additionally, we actively delivered on our commitment to shareholder returns based on market conditions. As of today, we had repurchased approximately HKD 854 million or around 17.96 million shares, representing about 0.42% of our total shares outstanding for 2026. Looking ahead, we will continue to prioritize user needs and remain committed to investing in AI, leveraging our leading capabilities that will further boost the vitality of our economy, ecosystem and monetization, reinforcing our competitive edge in the ever-changing market, and creating long-term value for users, partners and shareholders. This concludes our prepared remarks. Now we can open the floor for Q&A. The first question comes from Kenneth Fong of UBS. Please go ahead. Non-English content] Thank you, management for taking my questions and congrats on the very robust growth of Kling. I have a question on Kling AI. This commercialization progress in first quarter has exceeded expectations. What are the main drivers behind this strong revenue growth? What are the recent use case and primary application scenario for Kling? How should we assess the future application process for the video generation of large language models? Thank you. [Non-English content] Thank you for your question. In Q1 2026, Kling AI generated revenue of over RMB 650 million, up more than 300% year-over-year. In March 2026, the ARR of Kling AI was approximately $500 million. For those who recall, our ARR stood at $100 million in March of last year, so it's increased by nearly fourfold in just one year. The rapid revenue growth was driven by both corporate API services and paid subscriptions from prosumers. The number of paid prosumer subscribers and their monthly ARPU increased rapidly. From the retention perspective, our corporate clients and paid prosumer subscribers maintained healthy retention trends, underscoring Kling AI's robust technology and product capabilities in professional creative scenarios. This has translated into strong user stickiness, providing a solid foundation for Kling AI's long-term sustainable revenue growth. [Non-English content] Kling AI is built mainly for professional creative scenarios, spanning advertising and marketing, film, television, short plays and gaming. In advertising and marketing scenarios, Kling AI covers the entire visual production lifecycle. Early in the ideation phase, it rapidly generates near-final demos that turn creative concepts into tangible visuals. Those same visuals carry through to guide the final production shoot. Kling AI's model capabilities maintain strong character and product consistency across different scenes and camera angles, offering advertisers reliable visual support to establish a coherent creative tone. In film, television, and short play scenarios, Kling AI can be embedded into the entire production workflow, from script breakdown and concept design for characters and scenes to intelligent storyboarding and final video generation, enabling a highly automated creation process that significantly reduces production timelines and costs. The AI short film Paper smartphone, which went viral in early April this year and accumulated over 1 million online views, was produced by two non-professional film creators in just three days using Kling AI. The creators leveraged Kling AI to generate almost all visual elements, covering the full pipeline from storyboarding to final cut. In gaming scenarios, Kling AI supports the product initiation phase by turning concept artwork into dynamic previews, saving visual effects artists considerable time producing animated mood boards. Kling AI also supports downstream production by generating assets such as gray box renders, in-game narrative sequences, and cutscenes. [Non-English content] In terms of the outlook for the applications of large video generation models, we have already seen a compelling signal so far this year. AI-generated short plays have shown strong momentum, with AI technologies driving multi-fold increases in content supply. We have also reasons to believe that as large video generation models continue to achieve breakthroughs, professionally generated content, PGC supply, including films, is likely to hit a phase of breakout growth. This would bring not only a dramatic expansion in high-quality professional content supply, but could also enable the integration of more personalized and interactive elements into content, such as bring users' own identities and personalities into the content itself. This level of highly personalized content consumption could fundamentally reshape the relationship between users and content. Against this backdrop, Kling AI is well positioned to unlock substantial commercialization potential. Overall, we are highly confident in Kling AI and the broader AI video generation center, and we will continue to invest in Kling AI's computing power and talent development. Thank you. Operator, next question please. [Non-English content] The next question comes from Lincoln Kong of Goldman Sachs. Please go ahead. [Non-English content] [Non-English content] Thank you management for taking my question. My question is, other than Kling AI, what are the other areas we have seen progress on AI front this quarter, especially like AI agents, etc.? Thank you. [Non-English content] Thanks for the question. In Q1 2026, we will continue to deepen our AI strategy. Beyond Kling AI maintaining its global leadership in technology, product capabilities, and monetization, we also then saw progress in leveraging AI to empower our business ecosystem and improve organizational efficiency. At the beginning of the year, AI agents such as OpenClaw attracted widespread attention. I'd like to take this opportunity to highlight progress we've made with AI agents in different scenarios. [Non-English content] In e-commerce marketing services, we launched end-to-end AI agents covering user interest inference, creative production, product selection, and marketing bidding decisions. In the user interest inference stage, we leverage AI-generative recognition to consolidate user behaviors on the platform into representations that are interpretable by models. We expanded the breadth of user interest understanding and harnessed behavioral sequences to uncover deeper user consumption patterns. In the creative and product selection stage, our AI agents help merchants identify materials and products with higher potential to become blockbuster items, offering greater exposure through traffic allocation and ultimately improving the ARPU of material placement. In the bidding decision inference stage, our AI agents leverage historical data, intraday traffic trends, and traffic pricing across different scenarios to predict optimal bidding strategies, ensuring stable and efficient ad placement. By empowering merchants to achieve their full-day ROI targets, we effectively maximize the overall marketing placement scale. [Non-English content] Tailored for the local services scenario, we have launched three specialized agents: the target users exploration agent, the deeper conversion agent, and the sales agent. The target user agent leverages the capabilities of LLMs to gain a profound understanding of lead-based products and services. By inferring users' latent needs based on their behaviors on the platform, it significantly improves the conversion rates and cost stability of client marketing placements. The deep conversion agent utilizes the long context understanding capabilities of LLMs to accurately grasp user intent. This optimizes model performance specifically towards deep conversion goals, thereby boosting the efficiency of lead conversion. Finally, the sales agent integrates merchant-specific and industry knowledge bases. This enables it to respond to customer inquiries like a professional service representative, handle multi-turn conversations, and even achieve fully autonomous end-to-end workflow management. [Non-English content] In terms of organizational empowerment, My Flicker, the upgraded version of CodeFlicker, has become the AI work companion for Kuaishou employees. It integrates multiple industry-leading large models and possesses core capabilities of a general-purpose agent, including proactive response, reasoning, planning, and memory. Furthermore, it can leverage skills to invoke tools or vertical agents to handle various complex tasks. We are committed to continuously embedding AI capabilities into employees' daily work scenarios, significantly elevating their overall work experience. In summary, we will continue to accelerate the deep integration of AI into our business operations and organizations, creating greater commercial value and growth opportunities for both the company and our partners. Thank you. Next question please, operator. [Non-English content] The next question comes from Thomas Chong of Jefferies. Please go ahead. [Non-English content] [Non-English content] Hi, good evening. Thanks management for taking my question. We have seen company completed the integration of e-commerce and commercial traffic in Q4 last year. May I know the results of the integration we see so far in Q1? How should we think about the monetization in e-commerce for the full year 2026? Thank you. [Non-English content] Thank you for your question. The integration between e-commerce and commercial traffic was fundamentally designed to align our e-commerce with e-commerce advertising distribution. To be more specific, first, marketing placement helped merchants amplify their advantages in acquiring traffic within e-commerce. Second, high GPM merchants with strong operating performance were also able to secure more advertising traffic. Following this integration, we achieved increases in e-commerce traffic, our buyer base, and the number of merchants across omni-domain scenarios. In Q1, e-commerce commercialization traffic maintained high single-digit growth. Effective marketing initiatives continuously stimulated and expanded e-commerce buyer interest, driving a more than 20% year-over-year increase in the number of e-commerce monthly active paying users attributable to marketing. While the number of active merchants using marketing placement shows strong growth momentum, increasing by nearly 40% year-over-year, this mechanism has amplified the scaling leverage available to brand merchants, enabling them to achieve breakthroughs in operational scale while contributing to a healthier merchant structure. As mentioned earlier, we launched the Voyage Initiative last year. Benefiting from our own strategic focus this year on brand acquisition and traffic synergy, GMV generated for brand merchants across omni-domain scenarios increased by more than 25% year-over-year, while advertising spending in brands under the Voyage Initiative increased by 42% year-over-year. In a macro consumption environment that has yet to show significant recovery and compliance policies have weighed on operational efficiency for certain merchants on our platform in the near term. We will continue to strengthen the foundational capabilities of our intelligent placement solutions, including our omni-platform marketing solutions and our full store hosting. We are further rolling out our traffic integration mechanism and will focus our resources on introducing high-quality products and content supply, while consistently offering traffic support to brands and merchants with balanced profiles who are capable of and committed to sustainable long-term operations. Although in the near term, our overall e-commerce monetization rate growth may be impacted slightly, we see this as an opportunity to strengthen our merchant ecosystem. Over the long run, we believe this structural adjustment to the merchant ecosystem will lay a solid foundation for the healthier and more sustainable development of our business ecosystem. Thank you. Next question, please, operator. The next question comes from Miranda Zhuang of Bank of America Securities. Please go ahead. [Non-English content] My question is about the AI video content. The AI comic style short plays have been growing very fast recently. How does management view the drivers for this trend, and how to think about the growth sustainability into the future? Thank you. Thank you for your question. As you noted, in Q1, marketing spend on Kuaishou AI comic style short plays grew more than 100 times year-over-year and more than 150% quarter-over-quarter. As of the end of March, the peak of daily marketing spend on Kuaishou AI comic style short plays exceeded RMB 20 million. The core driver behind this growth is AI's ability to substantially lower production costs, enabling content supply to expand rapidly and subsequently driving stronger user consumption and marketing placement demand. [Non-English content] First, on the supply side, AI has significantly reduced production costs and lowered barriers to entry for creators. AI can now handle multiple stages of production, including character design, storyboarding, special effects, dubbing and post-production editing. It eliminates the need for actors, filming locations, and production equipment, which is significantly shortening the production cycle to just three to four weeks. Public data shows that the production cost of a single AI comic style short play ranges from RMB 80,000 to RMB 150,000, approximately 70% lower than traditional short plays. This cost advantage has lowered the entry barrier for creators and studios, driving rapid expansion in content supply. According to third-party data, around 47,000 AI comic style short plays were released in March alone, surpassing the 33,000 short plays that were released over the entirety of 2025. In Q1 2026, the average daily number of comic style short plays with active marketing placement on Kuaishou platform grew by 215% quarter-over-quarter. This massive supply expansion has propelled growth in marketing spending on AI comic style short plays. Second, on the demand side, AI comic style short plays not only cater to the content needs of existing short play viewers, but also expanding to broader user segments, especially in genres such as fantasy, sci-fi and science fiction. AI comic style short plays can transcend the cost constraints and technical limitations of live action production, therefore meeting more diverse content consumption needs. [Non-English content] Beyond broader industry needs, the fast growth of AI comic style short plays on Kuaishou is also closely tied to our continued effort in this category. First, as early as 2025, we began to closely track and invest in this emerging segment. We provided 100 million scale traffic support and cash incentives while laying the groundwork early for both content supply deployment, development and commercialization. Second, on the supply side, we have been continuously developing the UGC ecosystem to bring more creators and more small and medium-sized studios into AI comic style short plays. We are also helping connect novel copyrights with comic adaptation resources, so that high quality IP can be turned into high quality AI comic style short play content more efficiently. Meanwhile, Kuaishou already has a mature content consumption and commercialization ecosystem. This allows us to better support the growing content supply, distribute quality content more effectively, and further amplify their commercialization potential. [Non-English content] Looking ahead, we remain optimistic about the continued growth of AI comic style short plays. We expect to see robust growth in the medium term. Third-party data projects that the market size for AI comic style short plays in China will exceed RMB 30 billion in 2026 and surpass RMB 85 billion by 2030. At Kuaishou, we are well positioned with a vibrant user ecosystem, industry-leading video generation models, and mature capabilities in content distribution and commercialization. As such, we're confident that through the deep synergies between content and technology, we will drive sustained growth in AI comic style short plays on our platform. Thank you. Maybe the last question please, operator. Thank you. [Non-English content] The last question comes from Xueqing Zhang of CICC. Please go ahead. [Non-English content] [Non-English content] Thanks management for taking my question. My question about financial. Could management share your cash flow management policy? What are the plans for CapEx and shareholder returns going forward? Will these plans have any impact on the company's cash flow position? Thank you. [Non-English content] Thanks for the question. The company has consistently adhered to a prudent capital management strategy, maximizing capital efficiency while ensuring safety and liquidity. We still expect the CapEx approximately RMB 26 billion this year. Currently, there is no update to this guidance. We expect the majority of the total capital expenditures will be incurred in the first half of this year. We have taken proactive measures to build advanced procurement and inventory buffers amidst rising computing power prices. This is a deliberate step to manage market volatility, allowing us to better control procurement costs for computing resources when prices move upward. [Non-English content] We consistently prioritize the creation of sustainable long-term value for shareholders. We remain firmly committed to our proactive shareholder returns policy. Through a combination of sustained and stable dividends, share repurchases and other diverse mechanisms, we deliver tangible returns to our shareholders for their trust and support. This demonstrates our firm confidence in the positive development of our business over the long-term and our strong cash flow generation. Building on an annual dividend of HKD 3 billion this year, we will continue to actively repurchase shares. We expect total shareholder returns in 2026, including dividends and share repurchases, to increase compared to last year, with an overall shareholder return yield of around 4%. [Non-English content] In terms of cash flow, even with RMB 26 billion in CapEx, we still aim to maintain positive free cash flow at group level for full year. By executing high precision targeted investments, we aim to unlock greater profitability growth in the future. As we firmly invest in our AI strategy, we will strictly manage financial risks and maintain a healthy cash reserve, ensuring a solid financial structure to safeguard our long term high quality growth in the AI era. Thank you, operator. That's the end of the Q&A session. [Non-English content] [Non-English content] Thank you once again for joining us today. If you have any further questions, please contact our Capital Markets and Investor Relations team anytime. Thank you. Thank you.